Acquired in 2011, the Blackwater project is located in a secure jurisdiction 112 kilometres southwest of the town of Vanderhoof in south-central British Columbia. The project is close to existing infrastructure with access to low-cost hydroelectric power available through construction of a transmission line from an existing B.C. Hydro substation. While the site is accessible by service road, a new access road is planned that would provide a more direct route to the site.

An important milestone for New Gold was the completion of the Blackwater Feasibility Study in December 2013. The Feasibility Study has solid economics and confirmed the project's many great attributes including: its long life, robust production potential, all-in sustaining costs well below industry average, and continued exploration potential.

The study calls for a conventional truck and shovel open pit mine with a 60,000 tonne per day whole ore leach processing plant. It estimates a 17-year mine life with direct processing for the first 14 years and processing of stockpile thereafter.

Development capital costs for the project are estimated at $1.9 billion, inclusive of a $190 million contingency. In view of current gold market conditions, the Company is proceeding first with the development of the Rainy River project, which has a more modest capital requirement. At Blackwater in 2014, we are moving forward with environmental permitting, detailed engineering studies and exploration. The goal is to have the project fully permitted in preparation for a development decision. The timing of Blackwater's development will be driven by the prevailing market conditions over the coming years.

Blackwater is shaping up to be an early-stage new gold district. Exploration achieved an 18 percent increase in Blackwater's M&I resources by year-end 2013. At the Capoose property, located 25 kilometres west of the Blackwater project, the M&I gold and silver resource base also increased as 2013 drilling successfully converted a portion of the Inferred resources.

The exploration program in 2014 will continue to assess prospective targets on this 1,000 square kilometre land package. The program is taking a regional approach. Targets are identified through a combination of surface geochem, geophysics, and geologic mapping, followed by first-pass reconnaissance drilling. New Gold has identified 14 new target areas despite only 50 percent of the property having been evaluated thus far. Seven of the 14 targets were drill tested in 2013, with three intercepting gold and silver mineralization. The 2014 drill program is targeting the completion of 10,000 to 15,000 metres of follow-up drilling as well as the continued early-stage work to identify additional targets on the property.

Environmental work is moving forward in 2014 toward submission of the project's Environmental Assessment (EA) application. For the past three years, we have studied the project area to make sure there is a comprehensive understanding of current air, water and other environmental conditions. These baseline studies are crucial components of the EA and will help us achieve best practices in environmental protection during the mine's life.

Building strong partnerships with First Nations groups and local communities has been of paramount importance since day one. To support local hiring, the Blackwater project has partnered with the BC Aboriginal Mine Training Association, Northwest College and the College of New Caledonia.