Located in north-central Chile, the El Morro site covers 417 square kilometres, and is accessible from the Chilean city of Vallenar.

Under the terms of New Gold's agreement with Goldcorp, Goldcorp is responsible for funding New Gold's full 30 percent share of capital costs. The carried funding accrues interest at a fixed rate of 4.58 percent. New Gold will repay its share of capital plus accumulated interest out of 80 percent of its share of the project's cash flow with New Gold retaining 20 percent of its share of cash flow from the time production commences.

A late 2011 feasibility study estimated development costs at $3.9 billion, of which New Gold's share is $1.2 billion. The El Morro project will be developed as an open pit mine, supplying material for crushing and processing in a copper flotation mill producing a copper-gold concentrate. Planned production is approximately 90,000 tonnes of ore per day, equating to an annual average production of over 300 million pounds of copper and 300,000 ounces of gold on a 100 percent project basis.

The project comprises three areas of copper-gold mineralization: La Fortuna, El Negro and El Morro. At present, reserves are entirely located in the La Fortuna deposit, which is slated to be the location of an open pit mine.

The project has terrific upside exploration potential. Future exploration will test the potential to underground bulk mine the gold and copper resource situated below the current La Fortuna open pit and to add additional resources at the namesake El Morro deposit.

Activity at the site has been limited recently pending a court ruling. Previously, on October 22, 2013, the Environmental Assessment Commission of Atacama analyzed a final report prepared by the Chilean environmental permitting authority (SEA) and unanimously decided on the reinstatement of the environmental permit for the El Morro project that had been temporarily suspended since April 2012. Subsequently, on November 22, 2013, the Copiapo Court of Appeals granted an injunction suspending development of the El Morro project. The injunction was requested in constitutional actions filed by the Huascoaltino and Diaguita communities regarding inadequate consultations by the SEA. The injunction effectively suspends construction activity or development work until the Court has completed its review.

Activities during 2014 will continue to focus on gathering information to support permit applications for submission following the reinstatement of the environmental permit and optimization of the project economics including securing a long-term power supply.