Located 10 kilometres from Kamloops, British Columbia, the New Afton Mine is a low-cost gold and copper producer with significant upside potential, primarily through further increases to mill capacity and exploration of the site’s highly prospective C-zone.

In 2013, the mine’s first full year of operation, New Afton continued its track record of handily exceeding expectations, beating guidance for gold production, and achieving a quarter-by-quarter increase in throughput at the mill that augurs well for an even more significant contribution from the mine in the future.

After achieving production start-up in June 2012, the mine ramped up to design capacity of 11,000 tonnes per day (tpd) ahead of schedule in September that year. In 2013, the team set a goal of increasing throughput to 12,000 tpd by year end. Once again, New Afton reached its goal ahead of schedule, hitting 12,396 tpd in September, and about 12,500 tpd by year end. The combination of increased throughput as well as higher gold and copper grades and recoveries led to steady quarterly increases in gold and copper production through the year. The team’s testing of the right balance of tonnage availability, throughput and recoveries led to a plan for mill expansion that targets ramp-up to 14,000 tpd in mid-2015.

In support of the throughput increase in 2013, New Afton focused on maximizing its flexibility through the development of additional ore access points, or drawbells. Total capital expenditures for the year were $122 million. This included $90 million in sustaining capital for drawbell development as well as ongoing capital purchases and initiatives. Growth-related capital totalled $32 million, which was spent on the development of the eastern portion of the New Afton block cave to provide additional ore sources to support the mill expansion project. In 2014 and beyond, the rate of total underground and drawbell development is scheduled to decline. Estimated sustaining capital in 2014 should decrease by approximately $30 million to $60 million, due to a combination of less underground development and non-recurring 2013 expenditures, including the commissioning of a gyratory crusher and tailings projects. The reduction in sustaining capital, coupled with lower anticipated total cash costs, is expected to lead to a decrease in all-sustaining costs.

Exploration of New Afton’s C-zone provides further exciting upside potential. The C-zone is a continuation of the main New Afton deposit that lies down and along strike of the reserve that is currently being mined. Results for 2013 exceeded expectations. Crews drilled about 27,000 metres from underground stations. They increased the contained gold and copper resources in the C-zone area by more than 10 times from year-end 2012, with M&I Resources rising to 693,000 ounces of contained gold and 516 million pounds of copper. In 2014, the exploration program is focusing on further delineating the C-zone and continuing to explore its potential extensions. At the same time, the Company will continue to advance its assessment of the potential to incorporate the C-zone into New Afton’s longer-term mine plan.

In 2014, gold and copper production is expected to increase, due to a higher average annual throughput rate than in 2013 and an increase in gold grades. Meanwhile, costs are expected to decline further, reflecting further increases in operational efficiency, a targeted increase in copper production, lower sustaining capital costs, and the depreciation of the Canadian dollar. New Afton’s total cash costs, net of by-product revenues, are expected to be negative $1,260 to negative $1,240 per ounce. All-in sustaining costs are forecast to be negative $620 to negative $600 per ounce.

Preparations for the mill expansion will proceed apace. These include the addition of a tertiary grinding mill, which has already been ordered, and a related expansion of the mill building. In the future, New Afton is expected to increase its annual cash flow through processing more and improving its recoveries, while at the same time looking to extend the life of the mine.

An integral part of New Afton’s current and future success is its strong record of environmental and social responsibility. The mine’s high environmental standards were reflected in it receiving ISO 14001 and 50001 certification in 2013. In terms of being a good neighbour, the mine also has excellent relations with First Nations bands, who are sharing in the benefits of the mine through a landmark Participation Agreement. New Afton supports the local community in other ways, too. These efforts include a Miner Training Program to ensure all members of its workforce are equipped with the right skills to be safe and productive members of the team. Approximately 75 percent of employees were sourced from and live in the local community.

The success of the safety program is reflected in New Afton’s exemplary safety performance. New Afton completed 2013 with zero lost-time injuries. As well, New Afton’s team were the 2013 provincial underground mine rescue champions.