Hammerdown Delivers First Cash Flow as Queensway Advances in 3 Phases

• New Found Gold is targeting commercial production at Hammerdown in the second half of 2026, with the ramp-up underway.
• Hammerdown is planned to deliver the company's first cash flow, ahead of Queensway Phase 1 production, rather than to be its primary cash generator.
• Hammerdown's projected free cash flow for years 1 and 2 is C$73 million, within a total funding position of C$321 million.
• The Hammerdown mine plan covers 13 years and a total gold production of 251,287 ounces.
• Queensway is built in 3 phases, with Phase 1 planned to fund Phase 2.

What Has Happened

New Found Gold (TSXV: NFG | NYSE American: NFGC) is ramping up the Hammerdown deposit in central Newfoundland and Labrador toward a commercial production declaration targeted for the second half of 2026. The company acquired the operation in a transaction announced in the third quarter of 2025 and closed in the fourth, and published a preliminary economic assessment and an updated mineral resource estimate (MRE) for it in the first quarter of 2026.

Management does not present the declaration as a step up in scale. It describes Hammerdown as one asset inside a larger plan, and the company's funding position sets out what that asset contributes.

Hammerdown's Place in the Funding Structure

The funding position for Queensway places Hammerdown's contribution alongside all other sources. Against a total funding position of C$321 million, projected Hammerdown free cash flow for years 1 and 2 is C$73 million, based on assumed gold prices of US$4,132 per ounce for 2026 and US$4,100 per ounce for 2027. The balance comes from C$194 million of cash and marketable securities held at the end of the second quarter of 2026, a C$35 million second tranche of the company's EdgePoint senior secured credit facility, and C$19 million from warrants expiring in 2027.

Against that, Queensway Phase 1 capital of C$155 million is targeted for deployment between the second quarter of 2026 and the third quarter of 2027. Corporate general and administrative (G&A) spending accounts for C$20 million over that window and exploration and drilling for C$61 million. Hammerdown's C$73 million is the first cash flow into the plan against those two calls, with the cash position, the credit facility and the warrants carrying the rest.

The bridge ends with C$85 million of excess cash at the point when the first ore reaches the mill in the fourth quarter of 2027.

The Scale of the Hammerdown Plan

The mine plan covers 13 years and a total gold production of 251,287 ounces, at an average mill feed head grade of 2.89 grams per metric ton (g/t) gold. That averages to under 20,000 ounces a year, compared with roughly 69,000 ounces a year for Queensway Phase 1.

On a base case averaging US$3,656 per ounce for gold over the life of mine, the after-tax net present value at a 5% discount rate (NPV5%) is C$199.2 million and total after-tax free cash flow C$243.3 million, at a life-of-mine all-in sustaining cost (AISC) of US$2,429 per ounce. That base case steps down through the schedule, from US$4,132 per ounce for gold in year 1 to US$3,475 thereafter. At US$5,000 per ounce for gold, the NPV5% increases to C$415.1 million.

The resource, effective January 22, 2026, holds 2,094 thousand metric tons (kt) at 2.77 g/t for 187 thousand ounces (koz) in the combined measured and indicated categories at the Hammerdown deposit, with 973 kt at 2.59 g/t for 81 koz inferred. The nearby Orion deposit adds 1,234 kt at 1.84 g/t for 72.9 koz indicated, and Stog'er Tight holds 545 kt at 2.16 g/t for 37.8 koz inferred.

One Mill, Two Projects

The mine plan centers 3 deposits, Hammerdown, Orion, and Stog'er Tight, on the company's Pine Cove mill, a permitted mill and tailings facility roughly 95 kilometers (km) by road from the Hammerdown deposit. The mill currently processes 700 metric tons of Hammerdown material per day.

That same plant is being converted and expanded, with the company targeting 1,400 metric tons per day by the second half of 2027, so it can take Queensway Phase 1 feed from 2027. Queensway Phase 1 is itself a 700-metric-ton-per-day open-pit operation sending material to the same Pine Cove mill, which makes the 2 operations closely comparable in configuration rather than in output.

Chief Executive Officer of New Found Gold, Keith Boyle, ties the two open pits to the same trucking and milling cost base:

"It's a 700 ton a day open pit that we'll be trucking the ore up to the mill at Pine Cove. So, we know what those costs are."

Running the smaller pit first gives the company cost data it can apply to Queensway Phase 1.

The Phased Build at Queensway 

Phase 1 requires C$155 million in initial capital and is planned to produce an average of 69.3 koz of gold per year at an AISC of US$1,282 per ounce across years 1 to 4, based on US$2,500 per ounce for gold. Phase 1 is planned to fund Phase 2, and it is fully funded; the growth capital behind Phases 2 and 3 is not.

Phase 2 requires C$442 million in growth capital for a 7,000-metric-ton-per-day open pit with on-site processing, producing an average of 172.2 koz per year at an AISC of US$1,090 per ounce across years 5 to 9, with payback in less than 1 year. Phase 3 adds C$143 million of growth capital for a high-grade underground mine across years 6 to 10, open at depth.  

Across all 3, the plan totals 1.5 million ounces of gold over a 15-year life at an average total cash cost of US$1,085 per ounce and an AISC of US$1,256 per ounce. On the base case of US$2,500 per ounce for gold, the after-tax NPV5% is C$743 million, and the internal rate of return is 56%, rising to C$1.45 billion and 197% at US$3,300 per ounce for gold.

Broader Context 

The company benchmarks its own 2 phases against the estimated 2026 gold production for a group of 7 gold producers. Phase 1 puts the combined company at 93 koz a year, of which approximately 69 koz comes from Queensway and approximately 24 koz from Hammerdown, ahead of only Integra at 74 koz and below McEwen at 121 koz and Hemlo at 131 koz. Phase 2 lifts that to 191 koz, of which approximately 172 koz comes from Queensway and approximately 19 koz from Hammerdown, level with Wesdome and below Orezone at 231 koz, Discovery Silver at 260 koz, and Artemis at 278 koz. Hammerdown's share of the company's output declines as Queensway scales.

Exploration is the other claim on the cash. The 2026 program covers 90,000 meters (m) of drilling on a C$44 million budget, split 55% to conversion within the study areas and 45% to exploration, with approximately 40,100 m completed in 284 holes by July 2026. The Dropkick discovery, which was not included in the initial MRE, has been extended to approximately 1.4 km of strike length and to a depth of around 300 m, and remains open, with 2026 drilling underway.

Boyle names the kind of drill result the company is chasing:

"So, that's the kind of discovery we want. We want to be able to add to the production profile as opposed to just adding to a mine life."

A discovery large enough to justify more milling capacity would change the shape of the funding structure, not only its duration.

What to Watch Next 

The nearest milestone is the Hammerdown commercial production declaration, targeted for the second half of 2026, at which point the free cash flow line in the funding position begins to be tested against the plan.

The company is targeting an updated technical report for Queensway in the same period, including an updated MRE.   

On the Queensway side, the company is targeting submission of the Phase 1 environmental preview report in the third quarter of 2026 and the Pine Cove conversion and expansion in the second half of 2027. First ore to the mill follows in the fourth quarter of 2027, ahead of Phase 1 commercial production in 2028.  

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