cerro san pedro mine
Through continued operational success, Cerro San Pedro made a stellar contribution to results at New Gold during 2009. Both gold and silver sales exceeded 2008 levels at a total cash cost(1) of $407 per ounce, helping to increase operating cash flow for the company.
BACKGROUND
Cerro San Pedro (CSP) is a gold-silver, heap-leach operation located in central Mexico. It is situated 20 kilometres northeast of the state capital city of San luis Potosi, a city of approximately one million inhabitants with a strong industrial base. Cerro San Pedro has a rich history of mining activity dating back to the late 1500s. In the 1970s interest shifted toward evaluating the district's potential for a bulk mineable gold-silver resource amenable to modern open-pit mining and heap-leach processing methods. These efforts culminated in the successful development of New Gold's Cerro San Pedro mine. The mine realized its first gold sale in may of 2007.
SAFETY AND SUSTAINABILITY
At CSP, the management and workforce are committed to continuously improving their safety practices. In 2009, the Mexican Chamber of Mines (CAMIMEX) presented CSP with the "Casco de Plata" (Silver Hardhat) award as the safest mine in Mexico among open-pit operations of its size. This was the second year in a row CSP has won the honour. At the international level, CSP was awarded the Orica World Prize in 2009 for best operational practices and control in the management of explosives. The operation sustained zero lost-Time Injuries (lTIs) during the year and as of February 2010 had achieved 1,116 days without lost time due to injury.
Protecting the environment is a priority for New Gold, which includes the integration of reclamation into all phases of mining. In 2009, 5.4 hectares were reforested with about 5,100 plants in neighbouring areas. The site maintains a botanical nursery that has raised more than 151,600 indigenous plants to be used for ongoing reclamation work. To date, New Gold has reforested more than 57 hectares of land outside the Cerro San Pedro mine site.
In 2009, Cerro San Pedro's environmental management system was recertified by the International Organization for Standardization (ISO) as fully compliant with ISO 14001:2004.
CSP is playing a major role in community development through the Foundation for Preservation of the Village of Cerro de San Pedro AC, which responds to the most pressing needs of communities and provides financing for small and promising businesses.
New Gold operates in a socially responsible and sustainable manner at CSP, as it does at all our operations. Despite an enviable record of environmental stewardship at CSP, activists continue to challenge the legality of the company's operating permits, a process that has been ongoing since 2000. While the company continues to work co-operatively with all levels of the government to find a long-term solution that will see continued operation of Cerro San Pedro, the mine continues to operate and produce gold and silver.
2009 RESULTS
CSP had a successful second full year with gold sales increasing by 9% over 2008 to 93,312 ounces. Silver production increased by 38% over 2008 to 1.5 million ounces. Total cash cost(1) was $407 per ounce, net of by-product sales compared to $421 per ounce in the preceding year. The increased gold and silver production reflected additional tonnes placed on the pad and higher recoveries. In addition, the increased silver production reflected higher grades mined and the incremental benefits of secondary leaching.
Operating practices continue to improve markedly at CSP and in 2009 resulted in improved pit access, wider operating areas and multiple loading faces — all of which increased haulage capability. These improvements in mine layout, combined with the use of a leased mining fleet at CSP, provide additional flexibility to increase throughput at the mine.
FUTURE UPSIDE
In the first quarter of 2010, New Gold announced the results of its 2009 drilling program aimed at testing the potential of sulphides occurring below the current CSP pit. This initial phase involved drilling about 17,000 metres over 29 holes, and was completed in early October. The measured and Indicated sulphide resources now stand at 0.9 million ounces of gold, 26 million ounces of silver, as well as zinc and lead. In the Inferred category, there is an additional 3.5 million ounces of gold, 76 million ounces of silver, as well as zinc and lead. metallurgical testing and conceptual pit designs are currently being evaluated prior to initiating a second stage of drilling to further delineate the mineralization and increase the confidence of the resource estimates.
AT A GLANCE
| 2009 PRODUCTION | |
|---|---|
| Gold: | 95,502 ounces |
| Silver: | 1.5 million ounces |
| Total Cash Cost(1)/oz: (net of by-product sales) | $407 |
| 2010 TARGETS | |
|---|---|
| Gold: | 95,000 to 105,000 ounces |
| Silver: | 1.4 to 1.6 million ounces |
| Total Cash Cost(1)/oz: (net of by-product sales) | $390 to $410 |