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New Gold achieves output guidance, record-low costs in 2016

New Gold Inc. on Jan. 30 said it produced 381,663 ounces of gold in 2016, achieving the midpoint of its guidance for the year, at record low all-in sustaining costs of US$692 per ounce in 2016, beating its updated guidance range of US$750 to US$790 per ounce.

Despite meeting its output target for the year, the company's 2016 gold production stood lower than the 435,718 ounces of gold produced in 2015, primarily due to the transition of its Cerro San Pedro mine in Mexico to residual leaching in the middle of the year.

Copper production, meanwhile, reached 102.3 million pounds, exceeding the high end of its target copper output by 10% and beating the 99.9 million pounds produced in the preceding 12-month period.

The company's gold sales volumes in 2016 fell to 378,239 ounces from 428,852 ounces in 2015, while copper sales increased to 99.2 million pounds from 92.9 million pounds in the previous comparable period. However, gold revenues per ounce increased to US$1,219 from US$1,120, and copper revenues fell to US$2.23 per pound from US$2.42 per pound.

In the fourth quarter, New Gold's gold output fell year on year to 95,883 ounces, along with sales, which slumped to 93,936 ounces. The miner produced 131,719 ounces of gold and sold 133,005 ounces of gold in the fourth quarter of 2015.

New Gold expects its 2017 gold production to increase to between 380,000 ounces and 430,000 ounces, as it anticipates first production from its Rainy River project in Ontario in September, about three months later than previous estimates due to the slower-than-planned ramp-up of mining rates.

Rainy River is slated to reach commercial production in November, with remaining capital to achieve commercial production estimated at US$515 million, including US$40 million of contingency.

The company also aims to produce 100 million pounds to 110 million pounds of copper, while all-in sustaining costs are estimated at US$825 to US$865 per ounce of gold.

Furthermore, New Gold said Randall Oliphant stepped down as its executive chairman but will remain as a member of the company's board. Ian Pearce, meanwhile, was named as the company's nonexecutive chairman, and New Gold President Hannes Portmann was appointed as CEO.