New Gold Inc. has started production at its New Afton Mine, with the first ore having been processed through the mill circuit on Thursday, June 28.

The production start met the company’s original timeline.

Since the first ore was placed in the mill circuit, the mill has been running on a continuous basis, with progressively more ore being added to the circuit.

The company anticipates that, over the course of the coming weeks, the daily milling rate will continue to increase.

New Gold’s target for commercial production at New Afton, defined as 30 days of operation at 60 per cent of capacity, or 6,600 tonnes per day, remains August.

In addition to the recent mill-production start, New Afton’s underground mining operations, which began in the fourth quarter of 2011, continue to perform well, the company reported.

The daily mining rate and the growth in the surface ore stockpile are all tracking at or ahead of targeted levels.

“After a tremendous amount of hard work on the part of the entire team at New Afton, we are very excited that production has now started,” said Rbert Gallagher, company president and CEO.

“We are proud to be in a position to deliver this project on schedule, and to see it become the fourth operating mine in our portfolio.

“New Afton is an important part of the history of our company and we look forward to this mine becoming our most-significant cash-flow generator.”

New Afton’s total development cost remains approximately $765 million.

The total development cost is net of revenue from gold and copper sales between the start of production and the beginning of commercial production in August.

New Afton is forecast to produce between 35,000 and 45,000 ounces of gold and between 30-million and 35-million pounds of copper at total cash cost of between $1,200 and $1,300 per ounce in 2012.

New Afton’s production forecast includes gold and copper produced between mill start-up and commercial production.

The revenue from the pre-commercial production will be offset against capital costs.

New Afton gold and copper sales for 2012 from commercial production forward are expected to be 20,000 to 30,000 ounces of gold and 20-million to 25-million pounds of copper, respectively.

Over its estimated 12-year mine life, New Afton is expected to produce an average of 85,000-ounces of gold and 75-million pounds of copper.