New Gold's (TSX:NGD) Blackwater project, a large-scale gold and silver deposit located southwest of Vanderhoof, will not be built by the company until market conditions "over the coming years" improve.
News of New Gold's decision to halt development of the mine came with the release of Blackwater's feasibility study on December 12.
The company originally planned on developing the $1.9 billion mine in 2015, with initial production slated for 2017.
According to a New Gold press release, the total cash cost per ounce at Blackwater – $555 per ounce for the first nine years of the mine – was too expensive with gold trading at US$1,250 per ounce.
Instead, the company will focus its attention on its Rainy River project – an advanced-exploration-stage gold project in northwestern Ontario.
"The completion of the Blackwater feasibility study is an important milestone for our
company," said Randall Oliphant.
"The Project has many great attributes including: its secure jurisdiction, long life, robust production potential, all-in sustaining costs well below industry average, and continued exploration potential. However, the combination of gold being down by over $500 per ounce since we completed the preliminary economic assessment for Blackwater in September of 2012 and our Rainy River project having a more modest capital requirement, results in our primary objective being the advancement of Rainy River."
Blackwater contains 8.6 million ounces of gold and 5.7 million ounces of silver in measured and indicated resources, according to its feasibility study. Lifespan of the mine was forecasted for 17 years, with a capacity to process 60,000 tonnes of ore per day.
New Gold currently has four producing properties including the New Afton mine near Kamloops.
