(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, Feb. 19, 2015 /PRNewswire/ - New Gold Inc. ("New
Gold") (TSX:NGD) (NYSE MKT:NGD) today announces its 2014 fourth
quarter and full-year financial and operational results. The
company previously announced its 2014 operational results, 2015
guidance, updated year-end mineral reserves and resources and
project updates on February 4,
2015.
2014 FULL-YEAR HIGHLIGHTS
- Adjusted net cash generated from operations before changes in
working capital(1) of $310
million, a 20% increase from 2013
- Net cash generated from operations of $269 million, a 56% increase from 2013
- Adjusted net earnings(2) of $45 million, or $0.09 per share
- Net loss of $477 million, or
$0.95 per share, including a
$394 million after-tax impairment
expense
- Delivered on full-year gold production guidance and beat copper
production and cost guidance:
- Gold production of 380,135 ounces
- Copper production of 101.5 million pounds
- All-in sustaining costs(3) of $779 per ounce, a $120 per ounce decrease from 2013
- Record-low total cash costs(4) of $312 per ounce, a $65 per ounce decrease from 2013
- Year-end cash balance of $371
million
- Received Federal and Provincial approval of Rainy River's Environmental Assessment in
January 2015
2014 FOURTH QUARTER HIGHLIGHTS
- Net cash generated from operations of $70 million
- Adjusted net earnings(2) of $13 million, or $0.03 per share
- Net loss of $432 million, or
$0.86 per share, including a
$394 million after-tax impairment
expense
- Fourth quarter delivered highest quarterly gold production of
the year with 105,992 ounces
"We are proud to have generated the highest cash flow in our
company's history in 2014," stated Randall
Oliphant, Executive Chairman. "We were able to achieve this
record, despite lower metal prices, as a result of the strength of
our four operations and the teams who run them. The robust cash
flow generated by our portfolio of operations enabled us to advance
our portfolio of growth projects. Important progress continues to
be made at our Rainy River project
as well as at New Afton with the mill expansion and C-zone
evaluation. At the same time, given the longer timeline
contemplated for the development of Blackwater in today's metal price environment,
we felt it prudent to adjust our carrying value for the
project."
"As we progress through 2015 and future years, we look forward
to continuing to execute on our strategy of moving into longer
lived, larger scale and lower cost operations," added Mr.
Oliphant.
2014 FINANCIAL RESULTS
NEW GOLD SUMMARY FINANCIAL
RESULTS
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Three months ended December 31
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Twelve months ended December 31
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2014
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2013
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2014
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2013
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Revenues
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$188.1
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$198.4
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$726.0
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$779.7
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Operating
Margin(5)
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65.0
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76.7
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314.9
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344.2
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Adjusted Net
Earnings(2)
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13.4
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16.7
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45.2
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61.3
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Adjusted Net Earnings
per Share(2)
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0.03
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0.04
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0.09
|
0.13
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Net
(Loss)/Earnings
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(431.9)
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(254.7)
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(477.1)
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(191.2)
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Net (Loss)/Earnings
per Share
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(0.86)
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(0.51)
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(0.95)
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(0.39)
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Adjusted Net Cash
Generated from Operations before
Changes in Working
Capital(1)
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69.8
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71.8
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310.4
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258.6
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Net Cash Generated
from Operations
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69.9
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99.7
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268.8
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171.9
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Fourth quarter gold and silver sales volumes remained consistent
with the prior-year quarter and copper sales volumes increased,
however, the decrease in metal prices more than offset this,
resulting in 5% lower revenues. When compared to the fourth quarter
of 2013, the average realized price(6) decreased by
$45 per ounce of gold, by
$0.32 per pound of copper and by
$4.37 per ounce of silver. For the
full year, revenues decreased as the combination of lower metal
prices and lower gold sales volumes was only partially offset by
the 19% increase in copper sales volumes. Relative to prior year,
the 2014 average realized price(6) decreased by
$81 per ounce of gold, by
$0.22 per pound of copper and by
$4.30 per ounce of silver.
As quarterly operating expenses remained in line with the fourth
quarter of 2013, the decrease in operating margin(5)
relative to the prior-year quarter was driven by lower revenues as
noted above. In 2014, New Gold's operating expenses decreased by
$24 million, or 6%, relative to the
prior year. The company's operating expenses benefitted from the
combination of the depreciation of the Canadian and Australian
dollars and lower diesel prices, which was partially offset by
increased volumes of consumables, primarily at Cerro San Pedro. As
a result of the decrease in operating expenses, the company was
able to offset a portion of the above-noted decrease in revenues
and deliver an operating margin(5) of $315 million, despite lower metal prices.
New Gold generated adjusted net earnings(2) of
$13 million, or $0.03 per share, in the fourth quarter resulting
in 2014 full-year adjusted net earnings(2) of
$45 million, or $0.09 per share. The company reported a net loss
of $432 million, or $0.86 per share, in the fourth quarter of 2014
and a net loss of $477 million, or
$0.95 per share, for the full year.
The reported net loss in both the fourth quarter and full-year
period was primarily attributable to a $394
million after-tax impairment expense resulting from the
completion of the company's review of its portfolio of assets for
indicators of impairment. The final impairment expense is
consistent with the potential impairment range disclosed by New
Gold as part of its February 4, 2015
news release. As previously indicated, Blackwater accounts for the majority of the
impairment at $335 million, which is
primarily driven by the extended development timeline for the
project. The balance of the impairment is related to Cerro San
Pedro. The reported net loss in both the fourth quarter and full
year was further driven by the combination of: a $21 million quarterly, and $48 million full-year, pre-tax foreign exchange
loss; a $7 million quarterly, and
$27 million full-year, pre-tax
non-cash charge to revenue related to the monetization of the
company's legacy hedge position; and an $11
million quarterly and full-year inventory write down at
Cerro San Pedro. Adjusted net earnings(2) in both the
fourth quarter and full year are adjusted for the above-noted
items, among others, as well as their tax impacts.
The company's fourth quarter adjusted net cash generated from
operations before changes in working capital(1) of
$70 million remained consistent with
the fourth quarter of 2013. The prior-year quarter included a
$7 million adjustment for a
non-recurring tax refund from the filing of amended tax returns at
the Peak Mines, whereas the fourth quarter of 2014 included no
adjustments. 2014 full-year adjusted net cash generated from
operations before changes in working capital(1) of
$310 million increased by
$52 million, or 20%, when compared to
2013. For greater comparability, 2013 has been adjusted for
non-recurring cash expenditures of $66
million related to the settlement of the company's legacy
hedge position in May of 2013 and $18
million of Rainy River
transaction costs as well as the above-noted non-recurring tax
refund of $7 million. 2014 net cash
generated from operations of $269
million was $97 million higher
than the prior year despite a $45
million decrease in revenues, excluding the accounting
impact of the settlement of the legacy hedge position. The increase
in net cash generated from operations was a result of the decrease
in revenues being more than offset by the combination of the
above-noted net $77 million of 2013
expenditures not recurring in 2014, a $42
million decrease in cash taxes and lower corporate
administration, exploration and business development
expenditures.
FINANCIAL UPDATE
New Gold's 2014 year-end cash and cash equivalents were
$371 million. In addition, the
company has a $300 million revolving
credit facility of which $54 million
has been used to issue letters of credit as at February 19, 2015 with the balance remaining
undrawn. At the end of 2014, the face value of the company's
long-term debt was $889 million (book
value – $874 million). The components
of the debt include: $300 million of
7.00% face value senior unsecured notes due in April of 2020,
$500 million of 6.25% face value
senior unsecured notes due in November of 2022, and $89 in El Morro funding loans, repayable out of a
portion of New Gold's 30% share of El Morro cash flow upon the
start of production. The company currently has approximately 508
million shares outstanding.
2014 PRODUCTION AND COST RESULTS
New Gold previously released it 2014 fourth quarter and
full-year operational results on February 4,
2015.
GOLD PRODUCTION
The fourth quarter provided the company with its highest
quarterly production of the year which led to full-year production
meeting the company's guidance range of 380,000 to 420,000
ounces.
Production during the quarter of 105,992 ounces remained
consistent with the prior-year quarter, as scheduled increases in
production at Mesquite and Cerro San Pedro were offset by a
decrease in production at the Peak Mines due to unscheduled mill
downtime. New Afton's quarterly gold production of 25,301 ounces
remained consistent with the prior-year quarter as a 6% increase in
tonnes processed offset a slight decrease in gold grade and lower
recovery from the combination of the higher throughput and lower
grade. Fourth quarter production at Mesquite of 36,235 ounces
benefitted from a combination of an increase in ore tonnes placed
on the leach pad and higher grade during the second half of 2014.
At the Peak Mines, fourth quarter production was slightly below
that of the prior-year quarter as a result of a total of seven days
of unscheduled mill downtime due to the combination of a SAG mill
motor failure as well as a belt tear on the SAG mill feed conveyor
later in the quarter. As scheduled, Cerro San Pedro finished 2014
with its strongest production quarter of the year. Production of
22,567 ounces increased by over 9,000 ounces relative to the third
quarter of 2014 and remained consistent with the prior-year quarter
through a combination of an increase in ore tonnes placed on the
leach pad and higher grade.
NEW GOLD SUMMARY OPERATIONAL
RESULTS
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Three months ended December 31
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Twelve months ended December 31
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2014
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2013
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2014
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2013
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GOLD PRODUCTION (thousand
ounces)
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New Afton
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25.3
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25.2
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104.6
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87.2
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Mesquite
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36.2
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34.9
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106.7
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107.0
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Peak Mines
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21.9
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24.2
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99.0
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100.7
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Cerro San
Pedro
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22.6
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22.2
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69.8
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102.8
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Total Gold Production
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106.0
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106.5
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380.1
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397.7
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Total Gold Sales
(thousand ounces)
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104.2
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104.5
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371.2
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391.8
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Average Realized Gold
Price per ounce(6)
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$1,188
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$1,233
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$1,256
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$1,337
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COPPER PRODUCTION (million
pounds)
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New Afton
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20.4
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20.5
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84.5
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72.0
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Peak Mines
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4.1
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3.5
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17.0
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13.4
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Total Copper Production
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24.5
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24.0
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101.5
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85.4
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Total Copper Sales
(million pounds)
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25.5
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23.8
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97.6
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82.6
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Average Realized
Copper Price per pound(6)
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$2.92
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$3.24
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$3.02
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$3.24
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SILVER PRODUCTION (million
ounces)
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New Afton
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0.1
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0.1
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0.2
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0.2
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Peak Mines
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0.0
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0.0
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0.1
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0.1
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Cerro San
Pedro
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0.3
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0.3
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1.1
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1.3
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Total Silver Production
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0.4
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0.4
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1.4
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1.6
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Total Silver Sales
(million ounces)
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0.4
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0.4
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1.4
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1.6
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Average Realized
Silver Price per ounce(6)
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$15.73
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$20.10
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$18.86
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$23.16
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TOTAL CASH COSTS(4)($ per
ounce)
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New Afton
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($1,199)
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($1,428)
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($1,248)
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($1,196)
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Mesquite
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852
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841
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909
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907
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Peak Mines
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707
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778
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658
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850
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Cerro San
Pedro
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1,413
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911
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1,251
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676
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Total Cash Costs(4)
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$414
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$316
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$312
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$377
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All-IN SUSTAINING COSTS(3)($ per
ounce)
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New Afton
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($560)
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$12
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($650)
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($133)
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Mesquite
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1,090
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988
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1,266
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1,108
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Peak Mines
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1,231
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1,106
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1,025
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1,331
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Cerro San
Pedro
|
1,447
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1,076
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1,354
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766
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All-in Sustaining
Costs(3)
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$845
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$883
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$779
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$899
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For the full year, increased production at New Afton was offset
by an expected decrease in production at Cerro San Pedro, resulting
in lower consolidated production relative to 2013. The 20% increase
in New Afton's 2014 gold production was driven by the combination
of a 17% increase in throughput and a 4% increase in grade, which
was only partially offset by an expected 2% decrease in recovery
stemming from the higher throughput. Mesquite's full-year
production of 106,670 ounces remained consistent with 2013 as
increased grade offset a 5% decrease in ore tonnes placed resulting
from the focus on waste stripping in the first half of 2014. At the
Peak Mines, 2014 production of 99,030 ounces remained consistent
with 2013, as increased grade and recovery offset a decrease in
tonnes processed. As scheduled, Cerro San Pedro's production in
2014 was below that of 2013 due to a combination of lower ore
tonnes placed on the leach pad, resulting from a focus on waste
stripping, and lower grade. 2014 was a transition year for Cerro
San Pedro, as the company embarked on a heavy waste stripping
initiative through the first eight months of the year to position
Cerro San Pedro for its final year of active mining in 2015.
COPPER PRODUCTION
Consolidated copper production in the fourth quarter remained
consistent with the prior-year quarter, driven by continued solid
performances from both New Afton and the Peak Mines. On a
consolidated basis, 2014 full-year copper production of 101.5
million pounds increased by 19% relative to 2013 and exceeded the
company's guidance range of 92 to 100 million pounds. 2014
full-year copper production at New Afton of 84.5 million pounds
increased by 17% as a result of higher tonnes processed. At the
same time, production at the Peak Mines of 17.0 million pounds
increased by 27% as higher copper grade and recovery more than
offset lower tonnes processed.
SILVER PRODUCTION
Consolidated fourth quarter silver production remained
consistent with the prior-year quarter. Cerro San Pedro's 2014
full-year silver production of 1.1 million ounces was slightly
below that of the prior year due to a combination of lower ore
tonnes placed and lower grade. The small silver contributions from
New Afton and the Peak Mines were both in line with expectations
resulting in consolidated silver production of 1.45 million ounces
meeting the guidance range of 1.35 to 1.75 million ounces.
ALL-IN SUSTAINING COSTS(3) AND TOTAL CASH
COSTS(4)
New Gold continued to solidify its position as one of the lowest
cost producers in the industry during 2014. Fourth quarter all-in
sustaining costs(3) of $845 per ounce were $38 per ounce below the prior-year quarter. Total
cash costs(4), which form a part of all-in sustaining
costs(3), were $414 per
ounce during the fourth quarter.
As a result of New Gold's solid operating performance, 2014
full-year all-in sustaining costs(3) decreased by
$120 per ounce relative to 2013,
including a $65 per ounce decrease in
total cash costs(4). Importantly, these cost reductions
were realized despite the decrease in by-product copper and silver
prices relative to 2013. The company's 2014 all-in sustaining
costs(3) of $779 per ounce
were below the guidance range of $815 to
$835 per ounce. Total cash costs(4) of
$312 per ounce were a record low for
New Gold and were also below the guidance range of $320 to $340 per ounce. New Afton, Mesquite and
the Peak Mines all delivered full-year all-in sustaining
costs(3) below their respective guidance ranges. Cerro
San Pedro was above its targeted cost range due to increased
reagent costs and the realization of lower than assumed silver
prices.
PROJECTS UPDATE
New Gold previously provided detailed updates on its portfolio
of growth projects on February 4,
2015.
RAINY RIVER
At New Gold's Rainy River
project, located in northwestern Ontario, two key permitting milestones were
achieved on schedule in January 2015.
The Federal and Provincial governments approved the project's
Environmental Assessment which now enables the processing of
construction-related permits. Site clearing is expected to commence
in the coming weeks.
RAINY RIVER – KEY PROJECT
UPDATES
Permitting, Environment and Land Consolidation
- Canadian Environmental Assessment Agency approved Environmental
Assessment for the project on January 12,
2015
- Ontario Ministry of Environment and Climate Change approved
Environmental Assessment on January 29,
2015
- Impacts and Benefits agreements completed with key First
Nations and Métis
- Completed acquisition of Bayfield Ventures Ltd. ("Bayfield") on
January 1, 2015 further consolidating
New Gold's holdings in the district and adding gold and silver
mineral resources to the project inventory
Project Timelines, Engineering, Capital Expenditures and
Project Economics
- Proactively decided to extend the project construction timeline
by six months in response to the current commodity price
environment
- Commissioning now targeted for mid-2017
- Detailed engineering 70% complete
- Current total development capital cost estimate of $877 million, including $69 million spent in 2014
- Reflects the combination of estimated capital adjustments from
the detailed engineering work completed over the last 12 months and
offsetting depreciation of the Canadian dollar relative to
the U.S. dollar
- Project economics – at $1,300 per
ounce gold, $16 per ounce silver and
a C$1.25/US$ exchange rate,
Rainy River has an after-tax 5%
NPV of $484 million, an IRR of 13.7%
and payback period of 5.2 years
- For every $100 per ounce change
in the gold price (at a constant foreign exchange rate and silver
price), the after-tax NPV and IRR change by approximately
$180 million and 3.0%
- For every $0.05 change in the
foreign exchange rate (at a constant gold and silver price), the
after-tax NPV and IRR change by approximately $100 million and 2.0%
Though the timing of receipt of Rainy
River's environmental approvals was consistent with the
company's project timeline, to maintain its financial flexibility,
New Gold has decided to extend the originally planned construction
timeline by six months. New Gold now plans to construct
Rainy River over a 30-month
period, instead of the 24-month period contemplated in the
January 2014 Feasibility Study,
resulting in commissioning being targeted in mid-2017. At the
company's assumed exchange rate of C$1.25/US$, Rainy
River's development capital cost estimate, inclusive of the
$69 million spent in 2014, is
$877 million. The estimated remaining
development capital is $808
million.
In 2015, New Gold's planned capital expenditures at Rainy River are $300
million which is approximately $120
million lower than the capital that was estimated for 2015
under the 24-month Feasibility Study construction schedule. Capital
expenditures in 2015 are scheduled to include: payments upon
delivery of long lead time equipment, land clearing, including
power line right of way, temporary accommodations, road building,
pouring of concrete foundation and erecting steel for the mill
building as well as the construction of a waterline, pump station
and initial tailings dam foundation.
Under the 30-month construction schedule, the company is
targeting first production from Rainy
River in mid-2017. Over its first nine years of full
production, the 21,000 tonne per day, combined open pit-underground
operation is scheduled to produce an average of 325,000 ounces of
gold per year. At the company's assumed exchange rate of
C$1.25/US$, all-in sustaining
costs(3) average $658 per
ounce over the first nine years of the project's life.
Overall, the Rainy River project enhances New Gold's growth
pipeline through its manageable capital costs, significant
production scale at below current industry average costs and
exciting regional exploration potential in a great mining
jurisdiction. The company looks forward to advancing the Rainy
River project and providing further updates on its development
through the remainder of 2015 and beyond.
BLACKWATER
The company's Blackwater
project is located in south-central British Columbia. Once in production,
Blackwater is expected to produce
an average of 485,000 ounces of gold per year at below industry
average costs. Consistent with Rainy
River, the depreciation of the Canadian dollar relative to
the U.S. dollar benefits both Blackwater's development and operating costs
as well as the project's economics.
In the current commodity price environment, New Gold plans to
sequence the development of its projects with the near-term focus
being on the advancement of the lower capital cost Rainy River project. Thereafter, the timing of
Blackwater's development will be
driven by prevailing market conditions over the coming years.
Capital expenditures during 2014 were $13
million which primarily related to the continued advancement
of the environmental assessment process and related environmental
and engineering studies. 2014 spending was more than offset by the
receipt of a British Columbia
mining and exploration tax credit of $24
million related to exploration work the company completed in
2012. Capital expenditures in 2015 are scheduled to be $8 million with New Gold's focus being to advance
the project through the permitting phase.
NEW AFTON C-ZONE
New Gold is pleased to report the results of the scoping study
the company completed to evaluate the potential for the New Afton
C-zone to extend the mine's life. The C-zone is the down plunge
extension of the B-zone block cave that is currently being mined at
New Afton.
NEW AFTON C-ZONE – SCOPING STUDY RESULTS
- Five years of additional mine life, including ramp-up
period
- 21.5 million tonnes at 0.76 grams per tonne gold and 0.80%
copper
- 522 thousand ounces of gold and 377 million pounds of copper
contained
- Gold and copper recovery of 86%
- Full-year average annual production of 107,000 ounces of gold
and 77 million pounds of copper
- Development capital costs of $349
million at an exchange rate assumption of C$1.25/US$, including $40
million of contingency
- Total sustaining capital costs of $110
million
- Total operating costs, including mining, processing and general
and administrative, of $19.24 per
tonne
- Cash costs expected to remain in line with current levels
- Project economics – at $1,300 per
ounce gold, $3.00 per pound copper
and a C$1.25/US$ exchange rate, the
C-zone project has an after-tax 5% NPV of $138 million, an IRR of 13.5% and payback period
of 3.0 years
- For every $100 per ounce change
in the gold price (at a constant copper price and foreign exchange
rate), the after-tax NPV and IRR changes by approximately
$10 million
- For every $0.25 per pound change
in the copper price (at a constant gold price and foreign exchange
rate), the after-tax NPV and IRR changes by approximately
$10 million
- For every $0.05 change in the
foreign exchange rate (at a constant gold and copper price), the
after-tax NPV and IRR changes by approximately $5 million
The scoping study relates to the economic potential of the
C-zone mineral resources at the New Afton property and is not part
of, and should be distinguished from, the current mining of the
B-zone reserves. Mineral resources that are not mineral reserves do
not have demonstrated economic viability. The reader is cautioned
that a scoping study is preliminary in nature and accordingly
subject to a high degree of uncertainty. A preliminary and/or
definitive feasibility study will be required to further evaluate
the C-zone project's economics.
The scoping study was prepared by New Gold with Roscoe Postle
Associates Inc. ("RPA") providing an independent third party
review. The independent Qualified Persons who reviewed and approved
the disclosure contained on the C-zone scoping study included in
this news release were David W.
Rennie, P.Eng., Principal Geologist, RPA; Holger
Krutzellmann, P.Eng. Associate Principal Metallurgist, RPA;
and R. Dennis Bergen, P.Eng.,
Associate Principal Mining Engineer, RPA.
Based on the results of the scoping study, New Gold is targeting
the completion of a feasibility study in the first quarter of 2016.
Subject to the completion of a positive feasibility study, a
development decision by the company and receipt of the requisite
permits, development of the C-zone could begin in 2017, with the
main access ramps being completed by the end of 2020. Based on this
development schedule, production could begin in early 2023 with an
18-month ramp up to full production in mid-2024. One of the
opportunities that the company will pursue as the access ramps are
developed is to further drill test the C-zone to expand and upgrade
the resource classification of the minable tonnage. The deposit
remains open at depth and to the west.
In 2015, the company has planned capital expenditures of
$5 million to further advance the
C-zone project toward a feasibility study. New Gold looks forward
to providing updates on the continued progress of the C-zone
project.
The key parameters and assumptions associated with the C-zone
scoping study do not impact the current New Afton mining operation
or the New Afton B-zone mineral reserves.
The scoping study discussed above is based on measured,
indicated and inferred resources and is preliminary in nature.
Accordingly, the scoping study is subject to a high degree of
uncertainty. The scoping study includes mineral resources that are
considered too speculative geologically to have economic
considerations applied to them that would enable them to be
categorized as mineral reserves and there is no certainty the
results of the scoping study will be realized.
EL MORRO
New Gold's share of the El Morro project provides the company
with a 30% fully-carried interest in a world-class copper-gold
project in north-central Chile.
Under the terms of New Gold's agreement with Goldcorp Inc.
("Goldcorp"), Goldcorp is responsible for funding New Gold's full
30% share of capital costs. The carried funding accrues interest at
a fixed rate of 4.58%. New Gold will repay its share of capital
plus accumulated interest out of 80% of its share of the project's
cash flow with New Gold retaining 20% of its share of cash flow
from the time production commences.
On November 7, 2014, Goldcorp
announced that it had withdrawn the Environmental Impact Study
("EIS") for the El Morro project. The decision was made after an
October 7, 2014 ruling by the Chilean
Supreme Court that invalidated the EIS. Since that time, the El
Morro project team has continued to progress its studies to
determine the optimal development plan for the El Morro
project.
2015 GUIDANCE AND COST SENSITIVITIES
NEW GOLD 2015 GUIDANCE
|
|
|
|
|
|
|
|
Gold Production
|
Copper Production
|
Silver Production
|
Total Cash Costs(4)
|
All-in Sustaining
Costs(3)
|
|
(thousand ounces)
|
(million pounds)
|
(million ounces)
|
($ per ounce)
|
($ per ounce)
|
|
|
|
|
|
|
New Afton
|
105 - 115
|
85 - 95
|
--
|
($1,070) -
($1,030)
|
($560) -
($520)
|
Mesquite
|
110 - 120
|
--
|
--
|
$925 -
$965
|
$1,290 -
$1,330
|
Peak Mines
|
85 -
95
|
15 - 17
|
--
|
$660 -
$700
|
$1,005 -
$1,045
|
Cerro San
Pedro
|
90 -
100
|
--
|
1.75 -
1.95
|
$955 -
$995
|
$1,005 -
$1,045
|
New Gold Consolidated
|
390-430
|
100 - 112
|
1.75 - 1.95
|
$340 - $380
|
$745 - $785
|
|
|
|
|
|
|
CONSOLIDATED PRODUCTION AND COSTS
In 2015, New Gold is scheduled to deliver production increases
in all three of the metals that the company produces. Consolidated
gold production is expected to increase approximately 8% relative
to 2014, driven by targeted production increases at three of the
company's four operations. At the same time, copper production is
scheduled to increase by approximately 4% with the benefit of the
mill expansion at New Afton, and silver production should increase
by over 25% as Cerro San Pedro places more ore on the leach
pad.
The company's 2015 all-in sustaining cash costs(3)
are expected to remain among the lowest in the industry and stay
consistent with the low costs of $779
per ounce achieved in 2014. Total cash costs(4), which
form a component of all-in sustaining costs(3), are
expected to increase slightly when compared to $312 per ounce in 2014. This is driven by the
combination of the increased production weighting from the
company's higher cost mines and the lower by-product pricing
assumptions for 2015 of $2.75 per
pound of copper and $16.00 per ounce
of silver relative to the prices of $3.02 per pound of copper and $18.86 per ounce of silver realized in 2014. At
the same time, the 2015 assumptions for the Canadian dollar,
Australian dollar and Mexican peso exchange rates of $1.25, $1.25 and
$15.00 to the U.S. dollar, as well as
a $2.25 per gallon assumption for
Mesquite's diesel price, should benefit costs relative to the
actual 2014 rates.
New Gold's 2015 cumulative sustaining capital, exploration, general
and administrative, and amortization of reclamation expenditures
are scheduled to be approximately $65
per ounce below those of 2014.
NEW GOLD 2015 ALL-IN SUSTAINING
COSTS(3)SENSITIVITIES
|
|
|
|
|
|
|
|
Category
|
Copper Price
|
Silver Price
|
AUD/USD
|
CDN/USD
|
MXN/USD
|
Diesel
|
Base Assumption
|
$2.75
|
$16.00
|
$1.25
|
$1.25
|
$15.00
|
$2.25
|
Sensitivity
|
+/-$0.25
|
+/-$1.00
|
+/-$0.05
|
+/-$0.05
|
+/-$1.00
|
+/-$0.25
|
|
|
|
|
|
|
|
COST PER OUNCE IMPACT
|
|
|
|
|
|
New Afton
|
+/-$200
|
--
|
--
|
+/-$90
|
--
|
--
|
Mesquite
|
--
|
--
|
--
|
--
|
--
|
+/-$15
|
Peak Mines
|
+/-$40
|
--
|
+/-$90
|
--
|
--
|
--
|
Cerro San
Pedro
|
--
|
+/-$20
|
--
|
--
|
+/-$50
|
--
|
New Gold Total
|
+/-$65
|
+/-$5
|
+/-$20
|
+/-$25
|
+/-$10
|
+/-$5
|
|
|
|
|
|
|
|
Consistent with previous years, New Gold's 2015 full-year
production is not scheduled to be evenly distributed across the
four quarters. The first half of 2015 is expected to contribute
approximately 45% of the full-year production, with the balance of
the production scheduled for the second half of the year.
ADVANCE NOTICE POLICY
The Board of Directors has approved an advance notice policy for
New Gold. The advance notice policy establishes a framework for
advance notice of nominations of directors by shareholders of the
company. Among other things, the advance notice policy fixes a
deadline by which shareholders must submit a notice of director
nomination to the company prior to any annual or special meeting of
shareholders at which directors are to be elected. The advance
notice policy also sets out the information that a shareholder must
include in the notice for it to be valid.
The advance notice policy is similar to the advance notice
requirements adopted by many other Canadian public companies. The
purpose of the advance notice policy is to facilitate an orderly
and efficient meeting process and ensure that all shareholders
receive adequate notice of the nominations to be considered at a
meeting and sufficient information with respect to the nominees.
This allows New Gold and its shareholders to evaluate each
nominee's qualifications and suitability as a director of New Gold
so shareholders can cast an informed vote.
The advance notice policy is effective immediately, subject to
confirmation and ratification by the shareholders. At the next
meeting of shareholders of New Gold, shareholders will be asked to
confirm and ratify the advance notice policy by ordinary
resolution. If the policy is not confirmed at the shareholders
meeting, it will be of no further force and terminate. The full
text of the advance notice policy has been filed under New Gold's
profile at sedar.com, and posted on New Gold's website at
newgold.com.
WEBCAST AND CONFERENCE CALL
A webcast and conference call to discuss the 2014 fourth quarter
and full-year results will be held on Friday, February 20, 2015 beginning at
9:00 a.m. Eastern time. Participants
may listen to the webcast by registering here or from our website
at www.newgold.com. You may also listen to the conference by
calling toll-free 1-888-231-8191 or 1-647-427-7450 outside of
Canada and the U.S. A recorded
playback of the call will be available until March 20, 2015 by calling toll-free
1-855-859-2056, or 1-416-849-0833 outside of Canada and the U.S., passcode 61179174. An
archived webcast will also be available until February 20, 2016 at www.newgold.com following
the event.
ABOUT NEW GOLD INC.
New Gold is an intermediate gold mining company. The company has
a portfolio of four producing assets and three significant
development projects. The New Afton Mine in Canada, the Mesquite Mine in the United States, the Peak Mines in
Australia and the Cerro San Pedro
Mine in Mexico, provide the
company with its current production base. In addition, New Gold
owns 100% of the Rainy River and Blackwater projects, both in Canada, as well as 30% of the El Morro project
located in Chile. New Gold's
objective is to be the leading intermediate gold producer, focused
on the environment and social responsibility. For further
information on the company, please visit www.newgold.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this news release, including
any information relating to New Gold's future financial or
operating performance are "forward looking". All statements in this
news release, other than statements of historical fact, which
address events, results, outcomes or developments that New Gold
expects to occur are "forward-looking statements". Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the use of forward-looking
terminology such as "plans", "expects", "is expected", "budget",
"scheduled", "targeted", "estimates", "forecasts", "intends",
"anticipates", "projects", "potential", "believes" or variations of
such words and phrases or statements that certain actions, events
or results "may", "could", "would", "should", "might" or "will be
taken", "occur" or "be achieved" or the negative connotation of
such terms. Forward-looking statements in this news release
include, among others, statements made under the heading "2015
Guidance and Cost Sensitivities" and statements with respect to:
guidance for production, total cash costs and all-in sustaining
costs, and the factors contributing to those expected results, as
well as expected capital expenditures; expected reductions in the
carrying value of New Gold's assets; mine life; mineral reserve and
resource estimates; grades expected to be mined at the company's
operations; the expected production, costs, economics and operating
parameters of the Rainy River project; planned activities for 2015
and beyond at the company's operations and projects, as well as
planned exploration activities and expenses; the results of the
C-zone study, including operating parameters and expected mine
life, production, costs and project economics; plans to advance the
C-zone project, including permitting requirements, capital
expenditures and potential timelines; expected production for the
Blackwater project; targeted
timing for commissioning and full production (and other activities)
related to the New Afton mill expansion and Rainy River and the sequencing of Blackwater; and cash flow expected from Cerro
San Pedro to the end of the residual leach period relative to
expected closure costs.
All forward-looking statements in this news release are based on
the opinions and estimates of management as of the date such
statements are made and are subject to important risk factors and
uncertainties, many of which are beyond New Gold's ability to
control or predict. Certain material assumptions regarding such
forward-looking statements are discussed in this news release, New
Gold's annual and quarterly management's discussion and analysis
("MD&A"), its Annual Information Form and its Technical Reports
filed at www.sedar.com. In addition to, and subject to, such
assumptions discussed in more detail elsewhere, the forward-looking
statements in this news release are also subject to the following
assumptions: (1) there being no significant disruptions affecting
New Gold's operations; (2) political and legal developments in
jurisdictions where New Gold operates, or may in the future
operate, being consistent with New Gold's current expectations; (3)
the accuracy of New Gold's current mineral reserve and resource
estimates; (4) the exchange rate between the Canadian dollar,
Australian dollar, Mexican peso and U.S. dollar being approximately
consistent with current levels; (5) prices for diesel, natural gas,
fuel oil, electricity and other key supplies being approximately
consistent with current levels; (6) equipment, labour and materials
costs increasing on a basis consistent with New Gold's current
expectations; (7) arrangements with First Nations and other
Aboriginal groups in respect of Rainy
River and Blackwater being
consistent with New Gold's current expectations; (8) all required
permits, licenses and authorizations being obtained from the
relevant governments and other relevant stakeholders within the
expected timelines; (9) the results of the feasibility studies for
the Rainy River and Blackwater
projects being realized; and (10) in the case of production, cost
and expenditure outlooks at operating mines for 2016 and 2017,
additionally, commodity prices and exchange rates being consistent
with those estimated for purposes of 2015 guidance.
Forward-looking statements are necessarily based on estimates
and assumptions that are inherently subject to known and unknown
risks, uncertainties and other factors that may cause actual
results, level of activity, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. Such factors include, without
limitation: significant capital requirements and the availability
and management of capital resources; additional funding
requirements; price volatility in the spot and forward markets for
metals and other commodities; fluctuations in the international
currency markets and in the rates of exchange of the currencies of
Canada, the United States, Australia, Mexico and Chile; discrepancies between actual and
estimated production, between actual and estimated reserves and
resources and between actual and estimated metallurgical
recoveries; changes in national and local government legislation in
Canada, the United States, Australia, Mexico and Chile or any other country in which New Gold
currently or may in the future carry on business; taxation;
controls, regulations and political or economic developments in the
countries in which New Gold does or may carry on business; the
speculative nature of mineral exploration and development,
including the risks of obtaining and maintaining the validity and
enforceability of the necessary licenses and permits and complying
with the permitting requirements of each jurisdiction in which New
Gold operates, including, but not limited to: in Canada, obtaining the necessary permits for
the Rainy River and Blackwater
projects; in Mexico, where Cerro
San Pedro has a history of ongoing legal challenges related to our
environmental authorization (EIS); and in Chile, where certain activities at El Morro
have been delayed due to litigation relating to its environmental
permit; the lack of certainty with respect to foreign legal
systems, which may not be immune from the influence of political
pressure, corruption or other factors that are inconsistent with
the rule of law; the uncertainties inherent to current and future
legal challenges New Gold is or may become a party to; diminishing
quantities or grades of reserves and resources; competition; loss
of key employees; rising costs of labour, supplies, fuel and
equipment; actual results of current exploration or reclamation
activities; uncertainties inherent to mining economic studies
including the feasibility studies for Rainy River and Blackwater and the C-zone study; the
uncertainty with respect to prevailing market conditions necessary
for a positive development decision at Blackwater; changes in project parameters as
plans continue to be refined; accidents; labour disputes; defective
title to mineral claims or property or contests over claims to
mineral properties; unexpected delays and costs inherent to
consulting and accommodating rights of First Nations and other
Aboriginal groups; uncertainties with respect to obtaining all
necessary surface and other land use rights or tenure for
Rainy River; risks, uncertainties
and unanticipated delays associated with obtaining and maintaining
necessary licenses, permits and authorizations and complying with
permitting requirements, including those associated with the
environmental assessment process for Blackwater. In addition, there are risks and
hazards associated with the business of mineral exploration,
development and mining, including environmental events and hazards,
industrial accidents, unusual or unexpected formations, pressures,
cave-ins, flooding and gold bullion losses (and the risk of
inadequate insurance or inability to obtain insurance to cover
these risks) as well as "Risk Factors" included in New Gold's
disclosure documents filed on and available at www.sedar.com.
Forward-looking statements are not guarantees of future
performance, and actual results and future events could materially
differ from those anticipated in such statements. All of the
forward-looking statements contained in this news release are
qualified by these cautionary statements. New Gold expressly
disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
events or otherwise, except in accordance with applicable
securities laws.
CAUTIONARY NOTE TO U.S. READERS CONCERNING ESTIMATES OF
MINERAL RESERVES AND MINERAL RESOURCES
Information concerning the properties and operations of New Gold
has been prepared in accordance with Canadian standards under
applicable Canadian securities laws, and may not be comparable to
similar information for United
States companies. The terms "Mineral Resource", "Measured
Mineral Resource", "Indicated Mineral Resource" and "Inferred
Mineral Resource" used in this news release are Canadian mining
terms as defined in the Canadian Institute of Mining, Metallurgy
and Petroleum ("CIM") Definition Standards for Mineral Resources
and Mineral Reserves adopted by CIM Council on May 10, 2014 and incorporated by reference in
National Instrument 43-101 ("NI 43-101"). While the terms
"Mineral Resource", "Measured Mineral Resource", "Indicated Mineral
Resource" and "Inferred Mineral Resource" are recognized and
required by Canadian securities regulations, they are not defined
terms under standards of the United States Securities and Exchange
Commission. As such, certain information contained in this
news release concerning descriptions of mineralization and
resources under Canadian standards is not comparable to similar
information made public by United
States companies subject to the reporting and disclosure
requirements of the United States Securities and Exchange
Commission.
An "Inferred Mineral Resource" has a great amount of uncertainty
as to its existence and as to its economic and legal
feasibility. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility of
pre-feasibility studies. It cannot be assumed that all or any
part of an "Inferred Mineral Resource" will ever be upgraded to a
higher confidence category. Readers are cautioned not
to assume that all or any part of an "Inferred Mineral Resource"
exists or is economically or legally mineable.
Under United States standards,
mineralization may not be classified as a "Reserve" unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve estimation is made. Readers are cautioned not to
assume that all or any part of the measured or indicated mineral
resources will ever be converted into mineral reserves. In
addition, the definitions of "Proven Mineral Reserves" and
"Probable Mineral Reserves" under CIM standards differ in certain
respects from the standards of the United States Securities and
Exchange Commission.
TECHNICAL INFORMATION
The scientific and technical information in this news release
has been reviewed and approved by Mark A.
Petersen, Vice President, Exploration of New Gold. Mr.
Petersen is an AIPG Certified Professional Geologist and a
"Qualified Person" under NI 43-101.
NON-GAAP MEASURES
(1) ADJUSTED NET CASH GENERATED FROM OPERATIONS BEFORE CHANGES
IN WORKING CAPITAL
"Adjusted net cash generated from operations before changes in
working capital" is a non-GAAP financial measure. Net cash
generated from operations has been adjusted for one-time charges
incurred in 2013 related to the settlement of the company's legacy
gold hedge position, the company's acquisition of the Rainy River
project and a one-time tax refund related to the filing of amended
tax returns for prior periods at the Peak Mines. There is also an
adjustment to remove the impact of the change in working capital.
The company believes the presentation of adjusted net cash
generated from operations before changes in working capital enables
investors and analysts to better understand the underlying
operating performance of our core mining business. Adjusted net
cash generated from operations before changes in working capital is
intended to provide additional information only and does not have
any standardized meaning under IFRS. It should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
ADJUSTED NET CASH GENERATED FROM OPERATIONS BEFORE
CHANGES IN WORKING CAPITAL RECONCILIATION
|
|
|
|
|
|
|
Three months ended December 31
|
Year ended December 31
|
|
2014
|
2013
|
2014
|
2013
|
|
|
|
|
|
Net cash (used)
generated from operations
|
$69.9
|
$99.7
|
$268.8
|
$171.9
|
|
Add back: Hedge
settlement payment
|
-
|
-
|
-
|
65.7
|
|
Add back: Rainy River
transaction costs
|
-
|
0.1
|
-
|
5.0
|
|
Add back: Payment of
Rainy River acquisition expenses
|
-
|
-
|
-
|
12.9
|
|
Deduct: Amended tax
returns
|
-
|
(6.6)
|
-
|
(6.6)
|
Adjusted net cash
generated from operations
|
69.9
|
93.2
|
268.8
|
248.9
|
|
Add back (deduct):
Change in non-cash operating working capital
|
(0.1)
|
(21.4)
|
41.6
|
9.7
|
Adjusted net cash
generated from operations before changes in non-cash
working capital
|
69.8
|
71.8
|
310.4
|
258.6
|
|
|
|
|
|
(2) ADJUSTED NET EARNINGS
"Adjusted net earnings" and "adjusted net earnings per share" are
non-GAAP financial measures. Net earnings have been adjusted and
tax affected for the group of costs in "Other gains and losses" on
the condensed consolidated income statement. The adjusted entries
are also impacted for tax to the extent that the underlying entries
are impacted for tax in the unadjusted net earnings from continuing
operations. The company uses this measure for its own internal
purposes. Management's internal budgets and forecasts and public
guidance do not reflect fair value changes on senior notes and
non-hedged derivatives, foreign currency translation and fair value
through profit or loss and financial asset gains/losses.
Consequently, the presentation of adjusted net earnings and
adjusted net earnings per share enables investors and analysts to
better understand the underlying operating performance of our core
mining business through the eyes of management. Management
periodically evaluates the components of adjusted net earnings and
adjusted net earnings per share based on an internal assessment of
performance measures that are useful for evaluating the operating
performance of our business and a review of the non-GAAP measures
used by mining industry analysts and other mining companies.
Adjusted net earnings and adjusted net earnings per share are
intended to provide additional information only and do not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other companies. They should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. The measures are not
necessarily indicative of operating profit or cash flows from
operations as determined under IFRS.
ADJUSTED NET EARNINGS
RECONCILIATION
|
|
|
|
|
|
|
|
|
Three months ended December 31
|
Year ended December 31
|
|
2014
|
2013
|
2014
|
2013
|
|
|
|
|
|
Net (loss) earnings
before taxes
|
($420.5)
|
($281.8)
|
($409.5)
|
($191.6)
|
|
Loss on disposal of
assets
|
1.9
|
0.9
|
1.7
|
2.6
|
|
Ineffectiveness on
hedging instruments
|
-
|
-
|
-
|
(9.5)
|
|
Realized and
unrealized gain on non-hedged derivatives
|
(4.1)
|
(4.5)
|
(8.5)
|
(49.3)
|
|
Loss (gain) on
foreign exchange
|
21.4
|
13.9
|
47.5
|
25.7
|
|
Other
|
(0.7)
|
2.8
|
(0.7)
|
4.5
|
|
Loss on hedge
monetization over original term of hedge
|
6.8
|
7.0
|
27.3
|
18.7
|
|
Rainy River
transaction costs
|
-
|
0.1
|
-
|
5.0
|
|
Redundancy
charges
|
-
|
2.4
|
-
|
2.4
|
|
Asset
impairment
|
395.8
|
272.5
|
395.8
|
272.5
|
|
Inventory
write-down
|
10.5
|
7.3
|
10.5
|
7.3
|
Adjusted net earnings
(loss) before tax
|
11.1
|
20.6
|
64.1
|
88.3
|
|
Income tax
expense
|
(11.4)
|
27.1
|
(67.6)
|
0.4
|
|
Income tax
adjustments
|
13.7
|
(31.0)
|
48.7
|
(27.4)
|
Adjusted income tax
expense
|
2.3
|
(3.9)
|
(18.9)
|
(27.0)
|
Adjusted net earnings
(loss)
|
13.4
|
16.7
|
45.2
|
61.3
|
Adjusted earnings
(loss) per share (basic)
|
0.03
|
0.04
|
0.09
|
0.13
|
Adjusted effective
tax rate
|
21%
|
19%
|
30%
|
31%
|
(3) ALL-IN SUSTAINING COSTS
Consistent with guidance announced in 2013 by the World Gold
Council, an association of various gold mining companies from
around the world of which New Gold is a member, New Gold defines
"all-in sustaining costs" per ounce as the sum of total cash costs,
capital expenditures that are sustaining in nature, corporate
general and administrative costs, capitalized and expensed
exploration that is sustaining in nature and environmental
reclamation costs, all divided by the ounces of gold sold to arrive
at a per ounce figure. New Gold believes this non-GAAP financial
measure provides further transparency into costs associated with
producing gold and will assist analysts, investors and other
stakeholders of the company in assessing the company's operating
performance, its ability to generate free cash flow from current
operations and its overall value. This data is furnished to provide
additional information and is a non-GAAP financial measure. All-in
sustaining costs presented do not have a standardized meaning under
IFRS and may not be comparable to similar measures presented by
other mining companies. It should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS and is not necessarily indicative of cash flow from
operations under IFRS or operating costs presented under IFRS.
Further details regarding historical all-in sustaining costs and a
reconciliation to the nearest IFRS measures are provided in the
MD&A accompanying New Gold's financial statements filed from
time to time on www.sedar.com.
(4) TOTAL CASH COSTS
"Total cash costs" per ounce figures are non-GAAP measures which
are calculated in accordance with a standard developed by The Gold
Institute, a worldwide association of suppliers of gold and gold
products that ceased operations in 2002. Adoption of the standard
is voluntary and the cost measures presented may not be comparable
to other similarly titled measures of other companies. New Gold
reports total cash costs on a sales basis. The company believes
that certain investors use this information to evaluate the
company's performance and ability to generate liquidity through
operating cash flow to fund future capital expenditures and working
capital needs. This measure, along with sales, is considered
to be a key indicator of the company's ability to generate
operating earnings and cash flow from its mining operations. Total
cash costs include mine site operating costs such as mining,
processing and administration costs, royalties, production taxes,
and realized gains and losses on fuel contracts, but are exclusive
of amortization, reclamation, capital and exploration costs and net
of by-product sales. Total cash costs are then divided by ounces of
gold sold to arrive at a per ounce figure. Co-product cash costs
remove the impact of other metal sales that are produced as a
by-product of gold production and apportion the cash costs to each
metal produced on a percentage of revenue basis, and subsequently
divides the amount by the total ounces of gold or silver or pounds
of copper sold, as the case may be, to arrive at per ounce or per
pound figures. Unless otherwise indicated, all total cash cost
information in this news release is net of by-product sales. This
data is furnished to provide additional information and is a
non-GAAP financial measure. Total cash costs and co-product cash
costs presented do not have a standardized meaning under IFRS and
may not be comparable to similar measures presented by other mining
companies. It should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS and is not necessarily indicative of cash flow from operations
under IFRS or operating costs presented under GAAP. Further details
regarding historical total cash costs and a reconciliation to the
nearest IFRS measures are provided in the MD&A accompanying New
Gold's financial statements filed from time to time on
www.sedar.com.
TOTAL CASH COSTS AND ALL-IN SUSTAINING COSTS
RECONCILIATION
|
|
|
|
|
|
|
|
Three months ended December 31
|
Year ended December 31
|
|
2014
|
2013
|
2014
|
2013
|
|
|
|
|
|
Operating expenses
from continuing operations
|
$123.1
|
$121.7
|
$411.1
|
$435.5
|
Treatment and
refining charges on concentrate sales
|
8.8
|
8.0
|
34.5
|
29.4
|
Adjustments
|
(8.7)
|
(12.3)
|
(8.1)
|
(13.3)
|
Total cash costs
before by-product revenue
|
123.2
|
117.4
|
437.5
|
451.6
|
By-product copper and
silver sales
|
(80.0)
|
(84.5)
|
(321.8)
|
(303.8)
|
Total cash costs net
of by-product revenue
|
43.2
|
32.9
|
115.7
|
147.8
|
Gold ounces
sold
|
104,224
|
104,523
|
371,179
|
391,823
|
Total cash costs per
gold ounce sold ($/ounce)
|
$414
|
$316
|
$312
|
$377
|
Total cash costs per
gold ounce sold on a co-product basis($/ounce)
|
$695
|
$658
|
$675
|
$712
|
Total cash costs net
of by-product revenue
|
43.2
|
32.9
|
115.7
|
147.8
|
Sustaining Capital
Expenditure
|
35.4
|
48.4
|
126.0
|
157.0
|
Sustaining
exploration - expensed & capitalized
|
1.5
|
3.0
|
10.2
|
11.6
|
Corporate G&A
including share-based compensation
|
6.6
|
7.3
|
32.1
|
34.4
|
Reclamation
expenses
|
1.4
|
0.5
|
5.4
|
1.5
|
Total all-in
sustaining costs
|
88.1
|
92.1
|
289.2
|
352.4
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
$845
|
$883
|
$779
|
$899
|
All-in sustaining
costs per gold ounce sold on a co-product basis($/ounce)
|
$957
|
$1,000
|
$952
|
$1,042
|
(5) OPERATING MARGIN
"Operating margin" is a non-GAAP financial measure with no standard
meaning under IFRS, which management uses to further evaluate the
company's results of operations in each reporting period. Operating
margin is calculated as revenue less operating expenses and
therefore does not include depreciation and depletion. Operating
margin is intended to provide additional information only and does
not have any standardized meaning under IFRS; it should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Other companies may
calculate this measure differently and this measure is unlikely to
be comparable to similar measures presented by other companies.
OPERATING MARGIN RECONCILIATION
|
|
|
|
|
|
|
|
Three months ended December 31
|
Year ended December 31
|
|
2014
|
2013
|
2014
|
2013
|
|
|
|
|
|
Revenues
|
$188.1
|
$198.4
|
$726.0
|
$779.7
|
Less: Operating
expenses
|
(123.1)
|
(121.7)
|
(411.1)
|
(435.5)
|
Operating
margin
|
65.0
|
76.7
|
314.9
|
344.2
|
(6) AVERAGE REALIZED PRICE
"Average realized price per ounce or pound sold" is a non-GAAP
financial measure with no standard meaning under IFRS. Management
uses this measure to better understand the price realized in each
reporting period for gold, silver, and copper sales. Average
realized price includes realized gains and losses from gold hedge
settlements up until May 15, 2013 but
excludes from revenues unrealized gains and losses on non-hedged
derivative contracts and the revenue reduction related to the
non-cash accounting charge as the loss incurred on the monetization
of the company's legacy hedge position is realized into income over
the original term of the hedge contract. Average realized price is
intended to provide additional information only and does not have
any standardized meaning under IFRS; it should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. Other companies may calculate this measure
differently and this measure is unlikely to be comparable to
similar measures presented by other companies.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
|
|
|
|
|
|
|
|
|
Three months ended December 31
|
Year ended December 31
|
(in millions of U.S. dollars, except per share
amounts)
|
2014
|
2013
|
2014
|
2013
|
Revenues
|
188.1
|
198.4
|
726.0
|
779.7
|
Operating
expenses
|
123.1
|
121.7
|
411.1
|
435.5
|
Depreciation and
depletion
|
59.6
|
52.7
|
217.6
|
177.4
|
Earnings from mine
operations
|
5.4
|
24.0
|
97.3
|
166.8
|
|
|
|
|
|
Corporate
administration
|
5.2
|
5.6
|
25.4
|
26.7
|
Share-based payment
expenses
|
1.5
|
2.0
|
7.5
|
8.5
|
Asset
impairment
|
395.8
|
272.5
|
395.8
|
272.5
|
Exploration and
business development
|
(0.6)
|
5.7
|
11.8
|
34.1
|
Loss from
operations
|
(396.5)
|
(261.8)
|
(343.2)
|
(175.0)
|
|
|
|
|
|
Finance
income
|
0.1
|
1.5
|
1.1
|
2.7
|
Finance
costs
|
(4.9)
|
(8.3)
|
(26.7)
|
(40.3)
|
Rainy River
acquisition costs
|
-
|
(0.1)
|
-
|
(5.0)
|
Other (losses)
gains
|
(19.2)
|
(13.1)
|
(40.7)
|
26.0
|
Loss before
taxes
|
(420.5)
|
(281.8)
|
(409.5)
|
(191.6)
|
Income tax (expense)
recovery
|
(11.4)
|
27.1
|
(67.6)
|
0.4
|
Net loss
|
(431.9)
|
(254.7)
|
(477.1)
|
(191.2)
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
Basic
|
(0.86)
|
(0.51)
|
(0.95)
|
(0.39)
|
Diluted
|
(0.86)
|
(0.51)
|
(0.95)
|
(0.39)
|
Weighted average
number of shares outstanding (in millions)
|
|
|
|
|
Basic
|
503.9
|
503.3
|
503.9
|
488.0
|
Diluted
|
503.9
|
503.3
|
503.9
|
488.0
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION (unaudited)
|
|
As at December 31
|
(in millions of U.S. dollars)
|
2014
|
2013
|
ASSETS
|
|
|
Current assets
|
|
|
Cash and cash
equivalents
|
370.5
|
414.4
|
Trade and other
receivables
|
34.8
|
19.3
|
Inventories
|
222.4
|
182.0
|
Current income tax
receivable
|
31.1
|
35.1
|
Prepaid expenses and
other
|
10.6
|
10.5
|
Total current
assets
|
669.4
|
661.3
|
Non-current
inventories
|
31.6
|
31.0
|
Mining
interests
|
3,008.7
|
3,336.5
|
Deferred tax
assets
|
168.3
|
171.0
|
Other
|
3.8
|
2.5
|
Total assets
|
3,881.8
|
4,202.3
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
Current liabilities
|
|
|
Trade and other
payables
|
97.0
|
90.2
|
Current income tax
payable
|
7.9
|
3.3
|
Total current
liabilities
|
104.9
|
93.5
|
Reclamation and
closure cost obligations
|
63.5
|
61.4
|
Provisions
|
9.4
|
9.4
|
Share purchase
warrants
|
16.9
|
27.8
|
Long-term
debt
|
874.3
|
862.5
|
Deferred tax
liabilities
|
494.9
|
381.0
|
Deferred
benefit
|
46.3
|
46.3
|
Other
|
0.4
|
0.5
|
Total
liabilities
|
1,610.6
|
1,482.4
|
Equity
|
|
|
Common
shares
|
2,820.9
|
2,815.3
|
Contributed
surplus
|
96.7
|
90.0
|
Other
reserves
|
(1.5)
|
(17.6)
|
Deficit
|
(644.9)
|
(167.8)
|
Total
equity
|
2,271.2
|
2,719.9
|
Total liabilities and equity
|
3,881.8
|
4,202.3
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
|
|
|
|
|
|
|
Three months ended December 31
|
Year ended December 31
|
(in millions of U.S. dollars)
|
2014
|
2013
|
2014
|
2013
|
OPERATING ACTIVITIES
|
|
|
|
|
Net loss
|
(431.9)
|
(254.7)
|
(477.1)
|
(191.2)
|
Adjustments for:
|
|
|
|
|
Realized losses on
gold contracts
|
6.8
|
7.0
|
27.3
|
15.2
|
Realized and
unrealized foreign exchange losses
|
21.4
|
13.9
|
47.5
|
25.7
|
Settlement payment of
gold hedge contracts
|
-
|
-
|
-
|
(65.7)
|
Payment of Rainy
River acquisition expenses
|
-
|
-
|
-
|
(12.9)
|
Reclamation and
closure costs paid
|
(0.5)
|
(0.8)
|
(1.4)
|
(2.2)
|
Loss on disposal and
impairment of assets
|
397.7
|
273.4
|
397.5
|
275.1
|
Depreciation and
depletion
|
60.3
|
53.5
|
218.1
|
178.6
|
Other non-cash
adjustments
|
(2.2)
|
0.4
|
1.3
|
(46.5)
|
Income tax expense
(recovery)
|
11.4
|
(27.1)
|
67.6
|
(0.4)
|
Finance
income
|
(0.1)
|
(1.5)
|
(1.1)
|
(2.7)
|
Finance
costs
|
4.9
|
8.3
|
26.7
|
40.3
|
|
67.8
|
72.4
|
306.4
|
213.3
|
Change in non-cash
operating working capital
|
0.1
|
21.4
|
(41.6)
|
(9.7)
|
Income taxes refunded
(paid)
|
2.0
|
5.9
|
4.0
|
(31.7)
|
Net cash generated
from operations
|
69.9
|
99.7
|
268.8
|
171.9
|
INVESTING ACTIVITIES
|
|
|
|
|
Mining
interests
|
(88.7)
|
(88.2)
|
(279.3)
|
(289.3)
|
Government grant
received
|
-
|
5.7
|
20.5
|
5.7
|
Proceeds from the
sale of assets
|
-
|
0.4
|
0.4
|
0.4
|
Acquisition of Rainy
River (net of cash received)
|
-
|
(5.4)
|
-
|
(112.6)
|
Interest
received
|
0.1
|
1.3
|
0.7
|
2.1
|
Cash used in
investing activities
|
(88.6)
|
(86.2)
|
(257.7)
|
(393.7)
|
FINANCING ACTIVITIES
|
|
|
|
|
Issuance of common
shares on exercise of options and warrants
|
0.2
|
0.3
|
1.6
|
5.5
|
Financing initiation
costs
|
-
|
-
|
(2.2)
|
(0.3)
|
Interest
paid
|
(26.1)
|
(26.0)
|
(52.3)
|
(52.3)
|
Cash used by
financing activities
|
(25.9)
|
(25.7)
|
(52.9)
|
(47.1)
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND
CASH EQUIVALENTS
|
(1.0)
|
(2.2)
|
(2.1)
|
(4.5)
|
Change in cash and
cash equivalents
|
(45.6)
|
(14.4)
|
(43.9)
|
(273.4)
|
Cash and cash
equivalents, beginning of year
|
416.1
|
428.8
|
414.4
|
687.8
|
Cash and cash equivalents, end of
year
|
370.5
|
414.4
|
370.5
|
414.4
|
Cash and cash equivalents are comprised
of:
|
|
|
|
|
Cash
|
250.5
|
274.4
|
250.5
|
274.4
|
Short-term money
market instruments
|
120.0
|
140.0
|
120.0
|
140.0
|
|
370.5
|
414.4
|
370.5
|
414.4
|
SOURCE New Gold Inc.