(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, July 28, 2015 /CNW/ - New Gold Inc. ("New
Gold") (TSX:NGD) (NYSE MKT:NGD) today announces its 2015 second
quarter operational and financial results.
2015 SECOND QUARTER HIGHLIGHTS
- Gold production of 86,442 ounces relative to 89,460 ounces in
the prior-year quarter
- Copper production of 23.6 million pounds relative to 25.5
million pounds in the prior-year quarter
- Silver production of 0.4 million ounces consistent with
prior-year quarter
- All-in sustaining costs(1) of
$922 per ounce, including total cash
costs(2) of $410 per ounce
- Net cash generated from operations before changes in working
capital(3) of $63
million, or $0.12 per
share
- New Afton mill expansion successfully commissioned, ahead of
schedule and under budget, resulting in increased recoveries of
gold and copper as planned
- June 30, 2015 cash balance of
$327 million
- Further strengthened financial flexibility by previously
announced $175 million Rainy River streaming transaction with
Royal Gold
"The second quarter further solidified our company's strong
start to the year," stated Randall
Oliphant, Executive Chairman. "Our gold production
year-to-date has been consistent with our plans. After investing in
the mill expansion and waste stripping at our open pit operations
in the first six months of 2015, we are now positioned to benefit
from higher gold production coupled with lower costs in the second
half of the year. At the same time, we further increased our
financial flexibility by $175 million
with the recently announced Rainy
River streaming transaction. We look forward to the
acceleration of construction activity at Rainy River through the remainder of this year
and into 2016."
CONSOLIDATED YEAR-TO-DATE OPERATIONAL RESULTS AND 2015
GUIDANCE
Consistent with the company's February
2015 guidance for the year, production of all metals was
planned to be weighted to the second half of 2015. Based on the
company's solid production through the first six months of the
year, led by Mesquite and Cerro San Pedro, full-year gold
production has the potential to be toward the high end of the
original guidance range of 390,000 to 430,000 ounces. At the same
time, consolidated copper production may be at the low end of the
guidance range of 100 to 112 million pounds and consolidated silver
production is expected to be within the original range of 1.75 to
1.95 million ounces.
New Gold's 2015 cost guidance was for all-in sustaining
costs(1) of $745 to
$785 per ounce, including total cash
costs(2) of $340 to
$380 per ounce. The company's cost guidance is based on
assumptions of $2.75 per pound of
copper and $16.00 per ounce of silver
and foreign exchange rates for the Canadian dollar, Australian
dollar and Mexican peso of $1.25,
$1.25 and $15.00 to the U.S. dollar.
For the six-month period ended June 30,
2015, New Gold's all-in sustaining
costs(1) were $969 per ounce, including total cash
costs(2) of $449 per ounce. As the company's gross operating
expenses are tracking in line with guidance, the primary driver
behind all-in sustaining costs(1) and total
cash costs(2) per ounce being above
guidance in the first half of the year is the impact of the lower
gold and copper production weighting noted above.
Looking forward, the company's all-in sustaining
costs(1) and total cash
costs(2) per ounce are expected to decrease
as a result of the higher production in the second half of 2015.
Year-to-date, the impact of the decrease in the copper price
relative to the company's guidance assumption of $2.75 per pound has been largely offset by the
benefit associated with the continued deprecation of the Canadian
and Australian dollars relative to the U.S. dollar. Beyond the
continued potential for changes in the relative movements of the
copper price and foreign exchange rates in the second half of 2015,
New Gold's full-year all-in sustaining
costs(1) and total cash
costs(2) per ounce may be impacted by two
primary factors. As noted, full-year copper production may be at
the low end of the guidance range and the relative gold production
contribution from the company's higher cost mines has the potential
to increase relative to the initial guidance.
Based on the company's guidance assumption of $2.75 per pound, a five million pound change in
full-year copper production has the potential to impact costs by
approximately $30 to $35 per ounce.
At the same time, as a higher percentage of production is expected
to be delivered by New Gold's open pit mines, all-in sustaining
costs(1) and total cash
costs(2) per ounce may be impacted by an
additional $15 to $20 per ounce. As a
result of these two factors, and despite the company's gross
operating and sustaining capital expenditures being in line with
guidance, New Gold's all-in sustaining
costs(1) and total cash
costs(2) per ounce may be approximately
$50 per ounce above their guidance
ranges.
2015 SECOND QUARTER OPERATIONAL RESULTS
New Gold's second quarter gold production of 86,442 ounces was
slightly below that of the prior-year quarter. The slight decline
in quarterly gold production was primarily attributable to lower
production from the Peak Mines, the impact of which was only
partially offset by increased production at both Mesquite and Cerro
San Pedro. Consolidated copper production of 23.6 million pounds
decreased relative to the prior-year quarter and silver production
of 0.4 million ounces remained consistent.
Total cash costs(2) of $410 per ounce increased relative to the
prior-year quarter primarily due to a $12
million, or $136 per ounce,
decrease in copper and silver by-product revenues stemming from
lower realized copper and silver prices(4).
Quarterly all-in sustaining costs(1) of
$922 per ounce decreased by
$92 per ounce relative to the first
quarter of 2015, however, were above those of the prior-year
quarter due to the impact of lower by-product revenues. New Gold's
second quarter cumulative sustaining capital, exploration, general
and administrative, and amortization of reclamation expenditures
remained in line with the prior-year quarter at $45 million, or $512 per ounce.
New Afton
Gold production at New Afton during the second quarter of 24,358
ounces was slightly below the prior-year quarter. Quarterly
production was impacted as a planned increase in throughput was
offset by the combination of lower gold grade and recovery
decreases associated with the lower grade. The completion of the
mill expansion project during the second quarter yielded positive
results. With the benefit of finer grind size resulting from the
commissioning of the vertical grinding mill, gold recovery in the
second quarter was 83% relative to 80% in the first quarter of
2015.
New Afton's quarterly copper production of 19.9 million pounds
was in line with the second quarter of 2014. An increase in
throughput offset a decrease in copper grade, while copper recovery
remained consistent. Similar to the benefits for gold recovery
associated with the mill expansion, copper recovery in the second
quarter averaged 86% relative to 82% in the first quarter of
2015.
The $322 per ounce increase in New
Afton's total cash costs(2) to ($940) per ounce was primarily attributable to a
$7 million, or $286 per ounce, decrease in copper by-product
revenue relative to the prior-year quarter driven by a decrease in
the realized price(4). Total cash
costs(2) in the second quarter were further
affected by the increase in ore tonnes mined and processed, the
impact of which was largely offset by a 13% depreciation of the
Canadian dollar relative to the U.S. dollar. New Afton's sustaining
capital expenditures of $17 million
increased by $3 million, or
$111 per ounce, relative to the
prior-year quarter, thus resulting in all-in sustaining
costs(1) of ($235) per ounce in the second quarter of
2015.
NEW GOLD SUMMARY OPERATIONAL
RESULTS
|
|
|
Three months ended June 30
|
Six months ended June 30
|
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
GOLD PRODUCTION (thousand
ounces)
|
|
|
|
|
New Afton
|
24.4
|
26.3
|
48.3
|
53.7
|
Mesquite
|
22.5
|
18.4
|
48.2
|
44.2
|
Peak Mines
|
14.9
|
27.9
|
34.3
|
48.8
|
Cerro San Pedro
|
24.7
|
16.8
|
50.6
|
34.1
|
Total Gold Production
|
86.4
|
89.5
|
181.4
|
180.8
|
|
|
|
|
|
|
|
|
|
|
Total Gold Sales (thousand ounces)
|
87.8
|
84.7
|
180.2
|
178.8
|
Average Realized Gold Price per
ounce(4)
|
$1,191
|
$1,304
|
$1,210
|
$1,306
|
|
|
|
|
|
COPPER PRODUCTION (million
pounds)
|
|
|
|
|
New Afton
|
19.9
|
21.0
|
39.5
|
43.0
|
Peak Mines
|
3.7
|
4.5
|
7.1
|
8.4
|
Total Copper Production
|
23.6
|
25.5
|
46.6
|
51.4
|
|
|
|
|
|
|
|
|
|
|
Total Copper Sales (million pounds)
|
23.7
|
24.3
|
45.8
|
49.4
|
Average Realized Copper Price per
pound(4)
|
$2.72
|
$3.09
|
$2.66
|
$3.03
|
|
|
|
|
|
SILVER PRODUCTION (thousand
ounces)
|
|
|
|
|
New Afton
|
61.2
|
59.7
|
121.4
|
123.4
|
Peak Mines
|
26.8
|
34.5
|
52.3
|
66.8
|
Cerro San Pedro
|
338.9
|
326.0
|
635.5
|
644.7
|
Total Silver Production
|
426.9
|
420.2
|
809.2
|
834.9
|
|
|
|
|
|
|
|
|
|
|
Total Silver Sales (thousand
ounces)
|
444.1
|
414.2
|
776.8
|
830.8
|
Average Realized Silver Price per
ounce(4)
|
$16.23
|
$19.53
|
$16.41
|
$19.97
|
|
|
|
|
|
TOTAL CASH COSTS(2)($ per
ounce)
|
|
|
|
|
New Afton
|
($940)
|
($1,262)
|
($889)
|
($1,273)
|
Mesquite
|
839
|
993
|
867
|
928
|
Peak Mines
|
1,157
|
627
|
974
|
681
|
Cerro San Pedro
|
879
|
1,169
|
944
|
1,051
|
Total Cash
Costs(2)
|
$410
|
$251
|
$449
|
$253
|
|
|
|
|
|
|
|
|
|
|
All-IN SUSTAINING COSTS(1)($ per
ounce)
|
|
|
|
|
New Afton
|
($235)
|
($678)
|
($295)
|
($671)
|
Mesquite
|
1,533
|
1,413
|
1,632
|
1,191
|
Peak Mines
|
1,549
|
928
|
1,337
|
1,000
|
Cerro San Pedro
|
889
|
1,322
|
955
|
1,193
|
All-in Sustaining
Costs(1)
|
$922
|
$745
|
$969
|
$707
|
|
|
|
|
|
New Afton's second quarter co-product cash
costs(2) were $466 per ounce of gold and $1.06 per pound of copper relative to
$442 per ounce and $1.02 per pound in the prior-year quarter. The
mine's second quarter co-product all-in sustaining
costs(1) of $708 per ounce of gold and $1.61 per pound of copper increased when compared
to $643 per ounce and $1.48 per pound in the second quarter of 2014 due
to the $3 million increase in
sustaining capital expenditures.
For the six-month period ended June 30,
2015, gold production at New Afton of 48,270 ounces was
below the prior-year period production of 53,676 ounces as the
combination of lower gold grade and first quarter recovery was only
partially offset by higher throughput.
New Afton's first half copper production of 39.5 million pounds
was below prior-year period production of 43.0 million pounds for
reasons consistent with those noted above for gold production.
New Afton's total cash costs(2) for the
six-month period ended June 30, 2015
of ($889) per ounce were impacted by
a $22 million, or $469 per ounce, decrease in copper by-product
revenue relative to the prior-year period driven by a combination
of the decrease in the realized price(4)
and lower copper sales volumes. New Afton's sustaining capital
expenditures in the first half of 2015 of $27 million remained in line with the prior-year
period, thus resulting in all-in sustaining
costs(1) of ($295) per ounce for the six-month period ended
June 30, 2015.
New Afton's co-product cash costs(2)
were $480 per ounce of gold and
$1.04 per pound of copper in the
first half of 2015 relative to $427
per ounce and $0.97 per pound in the
prior-year period and the mine's co-product all-in sustaining
costs(1) were $689 per ounce of gold and $1.49 per pound of copper compared to
$636 per ounce and $1.45 per pound.
As New Afton moves into the second half of 2015, production of
both gold and copper is expected to benefit from the completion of
the mill expansion in the second quarter. Production should
increase in each of the final two quarters of the year and New
Afton is expected to finish the year within its gold production
guidance range of 105,000 to 115,000 ounces. Full-year copper
production is expected to be at the low end of the guidance range
of 85 to 95 million pounds as year-to-date realized copper grades
have been slightly below the company's expectations. Though New
Afton's gross operating costs have been in line with the company's
plans, the year-to-date average realized copper
price(4) of $2.66 per pound has been below the company's
guidance assumption of $2.75 per
pound which, when combined with planned lower first half gold and
copper production, has negatively impacted the mine's total cash
costs(2) and all-in sustaining
costs(1) per ounce relative to guidance. At
New Afton, every $0.25 per pound
change in the copper price results in an approximate $200 per ounce change in the mine's total cash
costs(2) and all-in sustaining
costs(1) per ounce.
Total cash costs(2) and all-in
sustaining costs(1) per ounce in the second
half of 2015 should benefit from the combination of higher gold and
copper production, however, costs will also continue to be impacted
by external variables including the copper price and Canadian
dollar exchange rate. Based on the potential for full-year copper
production to be at the low end of the guidance range and the
copper price currently being below the company's guidance
assumption of $2.75 per pound, New
Afton's costs have the potential to be approximately $200 per ounce above the mine's guidance of
($1,070) to ($1,030) per ounce for
total cash costs(2) and ($560) to ($520) per ounce for all-in sustaining
costs(1).
Mesquite
Mesquite's second quarter gold production of 22,501 ounces
increased by 22% relative to the prior-year quarter. The increase
in production was driven by the combination of a 78% increase in
ore tonnes mined and placed on the leach pad and faster process
recoveries resulting from the new leach pad being commissioned
ahead of schedule during the second quarter. The benefit of the
significant increase in ore tonnes was partially offset as a
portion of the tonnes contained lower gold grades relative to the
second quarter of 2014. Consistent with the company's expectations,
Mesquite delivered a significant increase in ore tonnes mined and
placed relative to the first quarter of 2015 which positions the
mine well for a strong second half of 2015.
Mesquite's second quarter total cash
costs(2) of $839 per ounce were $154 per ounce below the prior-year quarter with
the decrease primarily attributable to higher quarterly production.
Second quarter sustaining capital expenditures of $15 million were $10
million higher than the prior-year quarter. This resulted in
Mesquite's all-in sustaining costs(1) of
$1,533 per ounce temporarily
remaining above normal levels. The increase in sustaining capital
expenditures was attributable to costs associated with Mesquite's
leach pad expansion as well as the capitalization of waste
stripping costs in April, a period during which the waste to ore
ratio was well above the life-of-mine average.
For the six-month period ended June 30,
2015, gold production of 48,188 ounces increased by 9%
relative to the same period of the prior year. The increase in
production was attributable to an increase in ore tonnes mined and
placed on the leach pad which was partially offset by lower gold
grade.
Mesquite's total cash costs(2) of
$867 per ounce for the six-month
period ended June 30, 2015 were
$61 per ounce below the same period
of the prior year. At the same time, as a result of the company's
planned focus on waste stripping as well as the leach pad
expansion, Mesquite's all-in sustaining
costs(1) in the first half of 2015 were
$1,632 per ounce.
As a result of Mesquite's strong first half operating
performance, the mine's full-year gold production has the potential
to exceed the high end of its guidance range of 110,000 to 120,000
ounces by 5,000 to 10,000 ounces. The combination of the planned
higher second half production and lower sustaining capital
expenditures is expected to result in a significant decrease in
all-in sustaining costs(1) in the final two
quarters of 2015. Mesquite's 2015 full-year total cash
costs(2) are expected to come in
significantly below the guidance range of $925 to $965 per ounce due to the combined
benefit of higher production and approximately $20 million of waste stripping costs being
capitalized. Mesquite's all-in sustaining
costs(1) are expected to be slightly below
the guidance range of $1,290 to
$1,330 per ounce.
Peak Mines
Second quarter gold production at the Peak Mines of 14,892
ounces was well below that of the prior-year quarter due to the
combined impact of lower tonnes processed, gold grade and recovery.
As previously disclosed, the main stoping area of the Perseverance
ore body experienced geotechnical challenges in March of 2015 which
led to reduced accessibility and a decrease in tonnes mined and
processed from this area during the second quarter. As a result,
ore was primarily sourced from the Peak Mines' more copper-rich ore
bodies, including Chesney and New Cobar. Activity in the
Perseverance ore body during the quarter focused primarily on
rehabilitation and remediation of the impacted area, however, by
the end of the quarter, mining activity at Perseverance was
operating at 60% to 70% of historical levels. With the benefit of
the improved operating performance at Perseverance towards the end
of the quarter, ore tonnes mined and processed increased toward
planned levels which helped drive gold production of 9,112 ounces
in June.
Quarterly copper production of 3.7 million pounds was 0.8
million pounds below the prior-year quarter due to the combination
of lower ore tonnes processed and lower recoveries, while copper
grade remained consistent. Similar to the strong gold production
month in June, copper production in the final month of the second
quarter was 1.4 million pounds.
Total cash costs(2) at the Peak Mines of
$1,157 per ounce increased relative
to the prior-year quarter primarily due to a 50% decrease in gold
sales volumes. The Peak Mines' quarterly operating expenses, net of
copper by-product revenue, remained in line with the second quarter
of 2014 as the benefit of the 20% depreciation of the Australian
dollar relative to the U.S. dollar offset the combination of lower
copper by-product revenue and costs associated with the
rehabilitation of Perseverance. All-in sustaining
costs(1) per ounce in the second quarter
also increased, despite a $3 million
decrease in sustaining capital expenditures relative to the
prior-year quarter, as they were similarly impacted by the lower
gold sales volumes.
For the six-month period ended June 30,
2015, gold production at the Peak Mines of 34,320 ounces was
well below production of 48,826 ounces in the same period of the
prior year due to a combination of lower throughput and gold grade
primarily related to the geotechnical challenges at
Perseverance.
Copper production in the first half of 2015 of 7.1 million
pounds was below the 8.4 million pounds produced in prior-year
period primarily due to lower throughput.
Total cash costs(2) of $974 per ounce and all-in sustaining
costs(1) of $1,337 per ounce at the Peak Mines in the
six-month period ended June 30, 2015
increased relative to the prior-year period primarily due to the
lower gold sales volumes as the impact of lower copper by-product
revenue was offset by the depreciation of the Australian dollar
relative to the U.S. dollar.
As remediation of Perseverance continues to completion, gold
production in the second half of 2015 is expected to increase
significantly relative to the first two quarters of the year. With
the benefit of a stronger finish to the year, full-year gold
production at the Peak Mines is expected to be close to the low end
of the guidance range of 85,000 to 95,000 ounces despite the
geotechnical challenges experienced in March. Copper production in
the final two quarters of 2015 should remain consistent with that
of the first half, thus full-year copper production is expected to
come in below the guidance range of 15 to 17 million pounds. Total
cash costs(2) and all-in sustaining
costs(1) per ounce in the second half of
2015 should benefit from the combination of higher gold production
and lower rehabilitation requirements, however, as a result of the
lower than planned copper production, full-year costs at the Peak
Mines are expected to be remain approximately $50 per ounce above the guidance of $660 to $700 per ounce for total cash
costs(2) and $1,005
to $1,045 per ounce for all-in sustaining
costs(1).
Beyond the operational results, the Peak Mines further
solidified its track record of continual exploration success during
the second quarter. Results of exploration drilling at the historic
Great Cobar mine, located approximately nine kilometres from the
Peak Mines mill, continued to extend and delineate a new high-grade
copper-gold lode located approximately 200 metres to the south of
the historic mine workings. Recent exploration highlights include
drill hole GC17 which intercepted two lenses of strong
mineralization at a vertical depth ranging from 550 to 625 metres
from surface. The first lens included 14 metres (10 metres true
thickness) averaging 1.08 grams per tonne gold, 6.11% copper and 47
grams per tonne silver at a down-hole depth of 622 to 636 metres.
This intercept was followed by a second lens that included 8 metres
(5.8 metres true thickness) averaging 0.46 grams per tonne gold,
0.84% copper, 22 grams per tonne silver, 0.46% lead and 2.64% zinc
at a down-hole depth of 693 to 701 metres. Beginning at a depth of
less than 100 metres from surface, the southern lode has been
delineated over dimensions measuring approximately 800 metres
vertically, 250 metres along strike and 10 metres true thickness.
Additional exploration drilling to test the limits of the southern
lode at Great Cobar is planned for the second half of 2015.
Cerro San Pedro
Cerro San Pedro continued its strong start to the year with
second quarter gold production of 24,691 ounces increasing relative
to the prior-year quarter. The 47% increase in gold production
relative to the second quarter of 2014 was driven by a significant
increase in ore tonnes mined and placed on the leach pad coupled
with higher gold grade. Consistent with the company's plans, the
focus on waste stripping in 2014 has enabled Cerro San Pedro to
deliver strong gold production in 2015.
Quarterly silver production at Cerro San Pedro of 0.3 million
ounces was consistent with the prior-year quarter.
Both Cerro San Pedro's second quarter total cash
costs(2) of $879 per ounce and all-in sustaining
costs(1) of $889 per ounce were well below those of the
prior-year quarter. When compared to the second quarter of 2014,
costs benefitted from a combination of the higher gold production
base, depreciation of the Mexican peso relative to the U.S. dollar
and lower sustaining capital expenditures. These benefits were only
partially offset by a decrease in silver by-product revenue
resulting from the lower realized silver
price(4).
For the six-month period ended June 30,
2015, Cerro San Pedro's gold production of 50,641 ounces
increased by 48% when compared to the same period of the prior
year. The increase in production was attributable to a combination
of an increase in ore tonnes mined and placed on the leach pad and
higher gold grade.
Silver production in the first half of 2015 of 0.6 million
ounces remained consistent with the prior-year period.
Cerro San Pedro's total cash costs(2) of
$944 per ounce and all-in sustaining
costs(1) of $955 per ounce in the six-month period ended
June 30, 2015 were below those of the
prior-year period for reasons consistent with those related to the
decrease in second quarter costs.
On July 16, 2015, Cerro San Pedro
achieved a very significant milestone by surpassing three million
man-hours worked without a lost time incident.
Cerro San Pedro's operating performance through the first six
months of 2015 has positioned the mine well relative to its
full-year production and cost guidance. Cerro San Pedro's full-year
gold production could reach the high end of its guidance range of
90,000 to 100,000 ounces. At the same time, Cerro San Pedro's costs
in the six-month period ended June 30,
2015 are tracking well when compared to the guidance for
total cash costs(2) of $955 to $995 per ounce and all-in sustaining
costs(1) of $1,005
to $1,045 per ounce. The mine is expected to have a strong
second half and has the potential to deliver full-year costs below
the guidance range. It should be noted, however, that Cerro San
Pedro's full-year costs will also continue to be impacted by
external variables including the silver price and Mexican peso
exchange rate.
"The second quarter demonstrated the value of having a portfolio
of operating mines," stated David
Schummer, Executive Vice President and Chief Operating
Officer. "As we worked through some of the challenges at the Peak
Mines, both Mesquite and Cerro San Pedro stepped up with strong
production quarters while New Afton extended its solid operational
track record. We look forward to building on our operating
performance with a strong second half of 2015."
2015 SECOND QUARTER FINANCIAL RESULTS
NEW GOLD SUMMARY FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30
|
Six months ended June 30
|
(in millions of U.S. dollars, except where
noted)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Revenues
|
167.7
|
178.1
|
$336.6
|
$368.6
|
|
|
|
|
|
Operating Margin(6)
|
69.5
|
82.8
|
138.8
|
174.8
|
|
|
|
|
|
Adjusted Net
(Loss)/Earnings(5)
|
(1.3)
|
8.2
|
(6.4)
|
26.4
|
Adjusted Net (Loss)/Earnings per
Share(5)
|
(0.00)
|
0.02
|
(0.01)
|
0.05
|
|
|
|
|
|
Net Earnings/(Loss)
|
9.4
|
16.2
|
(34.4)
|
14.4
|
Net Earnings/(Loss) per Share
|
0.02
|
0.03
|
(0.07)
|
0.03
|
|
|
|
|
|
Net Cash Generated from Operations before Changes
in
|
|
|
|
|
Working Capital(3)
|
62.7
|
71.9
|
130.1
|
162.0
|
Net Cash Generated from Operations
|
56.9
|
59.3
|
126.7
|
140.7
|
|
|
|
|
|
Second quarter revenues decreased relative to the prior-year
quarter as the impact of lower realized metal
prices(4) was only partially offset by New
Gold's operations delivering higher gold and silver sales volumes
when compared to the second quarter of 2014. When compared to the
prior-year quarter, the average realized
price(4) decreased by $113 per ounce of gold, $0.37 per pound of copper and $3.30 per ounce of silver. For the six-month
period ended June 30, 2015, revenues
were impacted by the combination of lower realized metal
prices(4) and copper sales volumes which
was only partially offset by higher gold sales volumes relative to
the same period of the prior year.
The decrease in New Gold's operating
margin(6) in the second quarter was driven
by lower revenues. The company's operating expenses were in line
with the prior-year quarter as costs associated with increased
mining activity at each of New Afton, Mesquite and the Peak Mines
were largely offset by the combined benefit of the depreciation of
the Canadian and Australian dollars relative to the U.S. dollar.
The company's operating margin(6) in the
first half of 2015 was similarly impacted by lower revenues and
increased mining activity which was partially offset by the
depreciation of the Canadian and Australian dollars relative to the
U.S. dollar.
New Gold had an adjusted net loss(5) of
$1 million, or $0.00 per share, in the second quarter of 2015.
The adjusted net loss(5) was attributable
to the decrease in operating margin(6)
coupled with increased finance costs which was partially offset by
lower depreciation and depletion and corporate administration and
exploration and business development expenditures. The increase in
finance costs was due to the company no longer capitalizing a
portion of its interest expense for activities at Blackwater. The company reported net earnings
of $9 million, or $0.02 per share. The reported net earnings
included the impact of a $4 million
pre-tax foreign exchange gain and a $7
million pre-tax gain on the mark to market of the company's
share purchase warrants.
The company's second quarter net cash generated from operations
before changes in working capital(3) was
$63 million. The impact to cash flow
generation of lower metal prices was partially offset by an
aggregate $6 million decrease in
corporate administration and exploration and business development
expenses relative to the prior-year quarter. Cash generated from
operations of $57 million remained in
line with the second quarter of 2014 despite the decrease in metal
prices. For the six-month period ended June
30, 2015, New Gold's net cash generated from operations
before changes in working capital(3) was
$130 million and cash generated from
operations was $127 million. The
impact of lower metal prices in the first half of 2015 was
partially offset by an $8 million
reduction in corporate administration and exploration and business
development expenses as well as lower cash taxes when compared to
the same period of the prior year.
FINANCIAL UPDATE
New Gold's cash and cash equivalents were $327 million as at June
30, 2015. In addition, on July 20,
2015, the company announced that it entered into a
$175 million streaming transaction
with RGLD Gold AG, a wholly-owned subsidiary of Royal Gold Inc.
("Royal Gold"), which provides New Gold with further financial
flexibility. Royal Gold paid the
first $100 million of the deposit
concurrent with the entering into the transaction. The remaining
$75 million will be paid when 60% of
the estimated Rainy River project
development capital has been spent, which is expected to be by
mid-2016, and other customary conditions precedent have been met.
The company also has a $300 million
revolving credit facility of which $64
million has been used to issue letters of credit with the
balance remaining undrawn. New Gold's June
30, 2015 cash balance of $327
million together with Royal
Gold's full $175 million
deposit and the amount available for drawdown under New Gold's
revolving credit facility provide the company with approximately
$738 million of liquidity.
At the end of the second quarter of 2015, the face value of the
company's long-term debt was $893
million (book value – $879
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 $93 million 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 commercial
production. The company currently has approximately 509 million
shares outstanding.
"Our quarter-end cash balance coupled with the Rainy River
stream deposit leaves us well positioned from a liquidity
perspective," stated Brian Penny,
Executive Vice President and Chief Financial Officer. "Importantly,
as the majority of the Rainy River capital is denominated in
Canadian dollars, the continued depreciation of the dollar has the
potential to provide significant economic benefit to us as
expenditures at Rainy River
increase in the coming quarters."
PROJECTS UPDATE
RAINY
RIVER
Development activity at New Gold's Rainy River project, located in northwestern
Ontario, has continued to advance
on schedule, with first production remaining on target for
mid-2017. Over its first nine years of full production, the 21,000
tonne per day, combined open pit-underground operation is expected
to produce an average of 325,000 ounces of gold per year at all-in
sustaining costs(1) of approximately
$670 per ounce, including total cash
costs(2) of $570 per ounce.
RAINY RIVER – SECOND
QUARTER 2015 PROJECT UPDATES
- Permits to enable commencement of major earthworks construction
received in May
- Detailed engineering – on schedule and approximately 95%
complete
- Construction-related activities progressing on schedule
- Temporary accommodation facility – 80% complete
- First major earthworks for the process plant site commenced in
May; scheduled for completion in the fourth quarter of 2015
- First concrete pour for primary crusher foundation successfully
completed on July 20, 2015
- Delivery of initial truck fleet and shovels on schedule for the
third quarter of 2015
- Delivery of mills on schedule for the fourth quarter of
2015
- Five prospective areas within five-kilometre radius of mine
development area identified for potential drill testing in the
second half of 2015
Project capital expenditures at Rainy
River during the second quarter totalled $33 million, bringing the total project
development capital spending through June
30, 2015 to $120 million.
Through mid-2015, New Gold has spent 14% of the total development
capital estimate of $877 million.
Beyond the $119 million that has been
spent, the company has committed an additional $258 million of the project development capital.
Through mid-2016, with approximately 43% of the total capital
either spent or committed, the project's capital estimate remains
on budget.
Subsequent to the end of the quarter, New Gold entered into a
streaming transaction with Royal
Gold. Under the terms of the agreement, Royal Gold will provide New Gold with a deposit
of $175 million in exchange for the
delivery by New Gold of a percentage of the future gold and silver
production from the Rainy River project. Royal Gold paid $100
million of the deposit concurrent with entering into the
transaction and the remaining $75
million will be paid when 60% of the estimated project
development capital has been spent and other customary conditions
precedent are met. Based on the currently planned timing of
development capital expenditures at Rainy
River, it is estimated that 60% of the project development
costs will have been spent by mid-2106.
Upon the start of production at Rainy
River, New Gold will deliver 6.50% of the Project's monthly
gold production and 60% of the monthly silver production to
Royal Gold until a total of 230,000
ounces of gold and 3.1 million ounces of silver have been delivered
(the "Ounce Thresholds"). Once each of the Ounce Thresholds has
been satisfied, the stream percentage for that metal will decrease
by 50% such that New Gold will be required to deliver 3.25% of the
Project's gold production and 30% of the silver production. In
addition to the $175 million deposit,
Royal Gold will be required to pay
New Gold in cash 25% of the average spot gold price and silver
price at the time the stream ounces are delivered.
The streaming transaction enabled New Gold to secure over 20% of
the remaining development capital costs for less than 6% of the
project's estimated future revenues at today's metal prices. The
transaction increases the project's rate of return for New Gold
equity holders by approximately 3% and, importantly, was structured
to maximize the company's exposure to both the continued
exploration potential of the Rainy River district and long-term
gold and silver prices.
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.
"Construction activity at Rainy
River is advancing quickly and on schedule," stated
Robert Gallagher, President and
Chief Executive Officer. "During the second quarter we had our
official ground breaking, last week we had our first concrete pour
for the processing facility and over the next two months the
initial equipment fleet will arrive which will position us to start
the pre-stripping of the open pit later this year and construction
of the tailings facility in early 2016."
BLACKWATER
The company's Blackwater
project, located in south-central British
Columbia, is expected to produce an average of 485,000
ounces of gold per year at below industry average costs. The
current focus at Blackwater is
working towards the approval of the Environmental Assessment. Work
continued with the Canadian Environmental Assessment Agency and the
British Columbia Environmental Assessment Office to advance the
Federal and Provincial Environmental Assessment. The final
Environmental Assessment is scheduled to be issued to First Nations
and regulators during the third quarter of 2015. Capital
expenditures during the second quarter were $1 million and were related to the continued
advancement of the environmental assessment process and associated
environmental and engineering studies. For the six-month period
ended June 30, 2015, capital
expenditures at Blackwater were
$3 million.
Exploration field activities at Blackwater resumed in May to follow up on the
favourable results of the 2014 field program. During last year's
program the company's exploration team confirmed the presence a
broad area of prospective porphyry and epithermal style geology
extending three to five kilometres south and west of the main
Blackwater deposit. Detailed
surface reconnaissance and geophysical surveys completed in June
have identified three target areas scheduled for drill testing
during the third quarter of 2015.
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.
EL MORRO
New Gold's share of the El Morro project provides the company
with a 30% fully-carried interest in a world-class gold-copper
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.
El Morro remains one of the highest-grade undeveloped deposits
in the world with a substantial base of gold and copper mineral
reserves. In addition, the broader El Morro land package totals 417
square kilometres with significant untested exploration
potential.
WEBCAST AND CONFERENCE CALL
A webcast and conference call to discuss these results and the
streaming transaction will be held on Wednesday, July 29, 2015 at 9:00 a.m. Eastern time. Participants may listen
to the webcast by registering on our website at www.newgold.com.
You may also listen to the conference call by calling toll free
1-888-231-8191, or 1-647-427-7450 outside of the U.S. and
Canada. A recorded playback of the
conference call will be available until August 31, 2015 by calling toll free
1-855-859-2056, or 1-416-849-0833 outside of the U.S. and
Canada, passcode 76281198. An
archived webcast will also be available until October 28, 2015 at www.newgold.com.
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, the statements under the heading "2015
Outlook" and statements with respect to: mineral reserve and
resource estimates; total cash costs and all-in sustaining costs,
and the factors contributing to those expected results, as well as
expected capital expenditures; the expected production, costs and
operating parameters of the Rainy River project; payment of the
remaining $75 million from
Royal Gold and the timing of such
payment; planned production and activities for 2015 and beyond at
the company's operations and projects, as well as planned
exploration activities; grades expected to be mined at the
company's operations; expected production for the Blackwater project; targeted timing for
commissioning and full production (and other activities) related to
Rainy River and the sequencing of
Blackwater.
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) 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; 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 New Afton 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; 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. 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 mineral
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 or
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 through additional exploration drilling
and technical evaluation. 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 a Registered Member of the Society for Mining,
Metallurgy & Exploration (SME), a Certified Professional
Geologist and member of the American Institute of Professional
Geologists (AIPG), and a "Qualified Person" as defined under
National Instrument 43-101.
For a detailed breakdown of Mineral Reserves and Mineral
Resources by category, as well as key assumptions, parameters and
risks, refer to New Gold's Annual Information Form for the year
ended December 31, 2014.
NON-GAAP MEASURES
(1) ALL-IN SUSTAINING COSTS
"All-in sustaining costs" per ounce is a non-GAAP financial
measure. 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 assists 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 below and
in the MD&A accompanying New Gold's financial statements filed
from time to time on www.sedar.com.
(2) TOTAL CASH COSTS
"Total cash costs" per ounce is a non-GAAP financial measure which
is 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 below and 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 June 30
|
Six months ended June 30
|
(in millions of U.S. dollars, except where
noted)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Operating expenses
|
98.2
|
95.3
|
197.8
|
193.8
|
Treatment and refining charges on concentrate
sales
|
8.5
|
8.7
|
15.9
|
17.5
|
Adjustments
|
1.0
|
0.5
|
1.6
|
0.4
|
Total cash costs before by-product
revenue
|
107.7
|
104.5
|
215.3
|
211.7
|
By-product copper and silver sales
|
(71.7)
|
(83.2)
|
(134.5)
|
(166.5)
|
Total cash costs net of by-product
revenue
|
36.0
|
21.3
|
80.8
|
45.2
|
Gold ounces sold
|
87,754
|
84,736
|
180,152
|
178,788
|
Total cash costs per gold ounce sold
($/ounce)
|
410
|
251
|
$449
|
$253
|
Total cash costs per gold ounce sold on a co-product
basis($/ounce)
|
704
|
682
|
$717
|
$670
|
Total cash costs net of by-product
revenue
|
36.0
|
21.3
|
80.8
|
45.2
|
Sustaining capital expenditures
|
35.7
|
26.5
|
73.4
|
54.0
|
Sustaining exploration - expensed &
capitalized
|
1.2
|
4.2
|
3.2
|
6.3
|
Corporate G&A including share-based
compensation
|
7.1
|
9.9
|
15.1
|
18.2
|
Reclamation expenses
|
0.9
|
1.2
|
2.0
|
2.7
|
Total all-in sustaining costs
|
80.9
|
63.1
|
174.5
|
126.4
|
All-in sustaining costs per gold ounce sold
($/ounce)
|
922
|
745
|
$969
|
$707
|
All-in sustaining costs per gold ounce sold on a
co-product basis($/ounce)
|
1,007
|
974
|
$1,038
|
$935
|
(3) NET CASH GENERATED FROM OPERATIONS BEFORE CHANGES IN WORKING
CAPITAL
"Net cash generated from operations before changes in working
capital" and "Net cash generated from operations before changes in
working capital per share" are non-GAAP financial measures with no
standard meaning under IFRS, which excludes changes in non-cash
operating working capital. Management uses this measure to evaluate
the Company's ability to generate cash from its operations before
temporary working capital changes.
NET CASH GENERATED
FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL
RECONCILIATION
|
|
|
|
|
|
|
|
|
Three months ended
June 30
|
Six months ended
June 30
|
(in millions of
U.S. dollars, except where noted)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Net cash (used)
generated from operations
|
56.9
|
59.3
|
$126.7
|
$140.7
|
Add back (deduct):
Change in non-cash operating working capital
|
5.8
|
12.6
|
3.4
|
21.3
|
Net cash generated
from operations before changes in non-cash working
capital
|
62.7
|
71.9
|
130.1
|
162.0
|
|
|
|
|
|
Weighted average
number of shares outstanding (in millions)
|
509.1
|
503.8
|
508.8
|
503.6
|
Net cash generated
from operations per share
|
0.11
|
0.12
|
0.25
|
0.28
|
Net cash generated
from operations before changes in working capital per
share
|
0.12
|
0.14
|
0.26
|
0.32
|
(4) 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 definition 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.
(5) ADJUSTED NET (LOSS)/EARNINGS
"Adjusted net (loss)/earnings" and "adjusted net (loss)/earnings
per share" are non-GAAP financial measures. Net (loss)/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 (loss)/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
(loss)/earnings and adjusted net (loss)/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 (LOSS)/EARNINGS
RECONCILIATION
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30
|
Six months ended June 30
|
(in millions of U.S. dollars, except where
noted)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Net earnings (loss) before taxes
|
10.3
|
17.0
|
($26.7)
|
$22.5
|
|
Loss (gain) on disposal of assets
|
0.8
|
0.0
|
0.7
|
(0.3)
|
|
Realized and unrealized gain on non-hedged
derivatives
|
(7.0)
|
7.1
|
(11.5)
|
4.8
|
|
(Gain) loss on foreign exchange
|
(4.2)
|
(15.8)
|
31.8
|
3.0
|
|
Other
|
(0.7)
|
0.2
|
(0.9)
|
0.2
|
|
Loss on hedge monetization over original term of
hedge
|
0.0
|
6.9
|
0.0
|
13.7
|
Adjusted net earnings (loss) before
tax
|
(0.8)
|
15.4
|
(6.6)
|
43.9
|
|
Income tax expense
|
(0.9)
|
(0.8)
|
(7.7)
|
(8.1)
|
|
Income tax adjustments
|
0.4
|
(6.4)
|
7.9
|
(9.4)
|
Adjusted income tax expense
|
(0.5)
|
(7.2)
|
0.2
|
(17.5)
|
Adjusted net earnings (loss)
|
(1.3)
|
8.2
|
(6.4)
|
26.4
|
Adjusted earnings (loss) per share
(basic)
|
(0.00)
|
0.02
|
(0.01)
|
0.05
|
Adjusted effective tax rate
|
68%
|
(47%)
|
(2%)
|
(40%)
|
(6) OPERATING MARGIN
"Operating margin" is a non-GAAP financial measure with no standard
meaning under IFRS, which management uses to evaluate the Company's
aggregated and mine-by-mine contribution to net earnings before
non-cash depreciation and depletion charges.
OPERATING MARGIN
RECONCILIATION
|
|
|
|
|
|
|
|
|
|
Three months ended June 30
|
Six months ended June 30
|
(in millions of U.S. dollars, except where
noted)
|
2015
|
2014
|
2015
|
2014
|
|
|
|
|
|
Revenues
|
167.7
|
178.1
|
$336.6
|
$368.6
|
Less: Operating expenses
|
(98.2)
|
(95.3)
|
(197.8)
|
(193.8)
|
Operating margin
|
69.5
|
82.8
|
138.8
|
174.8
|
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)
|
|
|
|
|
|
|
|
|
Three months ended June 30
|
Six months ended June 30
|
(in millions of U.S. dollars, except per share
amounts)
|
2015
|
2014
|
2015
|
2014
|
Revenues
|
167.7
|
178.1
|
336.6
|
368.6
|
Operating expenses
|
98.2
|
95.3
|
197.8
|
193.8
|
Depreciation and depletion
|
50.9
|
52.7
|
106.0
|
104.3
|
Earnings from mine operations
|
18.6
|
30.1
|
32.8
|
70.5
|
Corporate administration
|
5.5
|
7.9
|
11.5
|
14.2
|
Share-based payment expenses
|
1.9
|
2.3
|
4.0
|
4.5
|
Exploration and business
development
|
1.2
|
4.3
|
2.3
|
7.4
|
(Loss) earning from operations
|
10.0
|
15.6
|
15.0
|
44.4
|
Finance income
|
0.4
|
0.2
|
0.6
|
0.5
|
Finance costs
|
(10.6)
|
(7.3)
|
(21.4)
|
(14.7)
|
Other (losses)
|
10.5
|
8.5
|
(20.9)
|
(7.7)
|
(Loss) earning before taxes
|
10.3
|
17.0
|
(26.7)
|
22.5
|
Income tax recovery (expense)
|
(0.9)
|
(0.8)
|
(7.7)
|
(8.1)
|
Net (loss)
|
9.4
|
16.2
|
(34.4)
|
14.4
|
(Loss) earnings per share
|
|
|
|
|
Basic
|
0.02
|
0.03
|
(0.07)
|
0.03
|
Diluted
|
0.02
|
0.03
|
(0.07)
|
0.03
|
Weighted average number of shares outstanding (in
millions)
|
|
|
|
|
Basic
|
509.1
|
503.8
|
508.8
|
503.6
|
Diluted
|
509.8
|
505.6
|
508.8
|
505.6
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION (unaudited)
|
|
|
|
|
As at June 30
|
As at December 31
|
(in millions of U.S.
dollars)
|
2015
|
2014
|
ASSETS
|
|
|
Current assets
|
|
|
Cash and cash equivalents
|
326.8
|
370.5
|
Trade and other receivables
|
22.8
|
34.8
|
Inventories
|
186.8
|
187.5
|
Current income tax receivable
|
22.7
|
31.1
|
Prepaid expenses and other
|
5.7
|
10.6
|
Total current assets
|
564.8
|
634.5
|
Non-current inventories
|
70.5
|
66.5
|
Mining interests
|
3,092.5
|
3,008.7
|
Deferred tax assets
|
179.0
|
168.3
|
Other
|
3.7
|
3.8
|
Total assets
|
3,910.5
|
3,881.8
|
LIABILITIES AND EQUITY
|
|
|
Current liabilities
|
|
|
Trade and other payables
|
95.9
|
97.0
|
Current income tax payable
|
3.9
|
7.9
|
Total current liabilities
|
99.8
|
104.9
|
Reclamation and closure cost
obligations
|
71.6
|
63.5
|
Provisions
|
10.0
|
9.4
|
Derivative liabilities
|
4.5
|
16.9
|
Long-term debt
|
879.3
|
874.3
|
Deferred tax liabilities
|
538.7
|
494.9
|
Deferred benefit
|
46.3
|
46.3
|
Other
|
0.3
|
0.4
|
Total liabilities
|
1,650.5
|
1,610.6
|
Equity
|
|
|
Common shares
|
2,839.9
|
2,820.9
|
Contributed surplus
|
100.6
|
96.7
|
Other reserves
|
(1.2)
|
(1.5)
|
Deficit
|
(679.3)
|
(644.9)
|
Total equity
|
2,260.0
|
2,271.2
|
Total liabilities and equity
|
3,910.5
|
3,881.8
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three months ended June 30
|
Six months ended June 30
|
(in millions of U.S.
dollars)
|
2015
|
2014
|
2015
|
2014
|
OPERATING ACTIVITIES
|
|
|
|
|
Net loss
|
9.4
|
16.2
|
(34.4)
|
14.4
|
Adjustments for:
|
|
|
|
|
Realized losses on gold contracts
|
-
|
6.9
|
-
|
13.7
|
Realized and unrealized foreign exchange
losses
|
(4.2)
|
(15.8)
|
31.8
|
3.0
|
Reclamation and closure costs paid
|
(0.1)
|
(0.4)
|
(0.2)
|
(0.6)
|
Gain on disposal of assets
|
0.8
|
-
|
0.7
|
(0.3)
|
Depreciation and depletion
|
50.7
|
52.5
|
105.8
|
104.0
|
Other non-cash adjustments
|
(1.4)
|
6.0
|
(5.9)
|
7.0
|
Income tax (recovery) expense
|
0.9
|
0.8
|
7.7
|
8.1
|
Finance income
|
(0.4)
|
(0.2)
|
(0.6)
|
(0.5)
|
Finance costs
|
10.6
|
7.3
|
21.4
|
14.7
|
|
66.3
|
73.3
|
126.3
|
163.5
|
Change in non-cash operating working
capital
|
(5.8)
|
(12.6)
|
(3.4)
|
(21.3)
|
Income taxes refunded (paid)
|
(3.6)
|
(1.4)
|
3.8
|
(1.5)
|
Cash generated from operations
|
56.9
|
59.3
|
126.7
|
140.7
|
INVESTING ACTIVITIES
|
|
|
|
|
Mining interests
|
(73.9)
|
(60.3)
|
(143.1)
|
(116.9)
|
Proceeds from the sale of assets
|
0.6
|
-
|
0.8
|
0.3
|
Interest received
|
0.4
|
0.2
|
0.6
|
0.4
|
Cash used in investing activities
|
(72.9)
|
(60.1)
|
(141.7)
|
(116.2)
|
FINANCING ACTIVITY
|
|
|
|
|
Issuance of common shares on exercise of options and
warrants
|
-
|
0.4
|
0.1
|
1.0
|
Cash generated from financing
activities
|
(26.1)
|
(25.7)
|
(26.0)
|
(25.1)
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS
|
3.1
|
2.4
|
(2.7)
|
0.2
|
Change in cash and cash equivalents
|
(39.0)
|
(24.1)
|
(43.7)
|
(0.4)
|
Cash and cash equivalents, beginning of
period
|
365.8
|
438.1
|
370.5
|
414.4
|
Cash and cash equivalents, end of
period
|
326.8
|
414.0
|
326.8
|
414.0
|
Cash and cash equivalents are comprised
of:
|
|
|
|
|
Cash
|
232.8
|
284.0
|
232.8
|
284.0
|
Short-term money market instruments
|
94.0
|
130.0
|
94.0
|
130.0
|
|
326.8
|
414.0
|
326.8
|
414.0
|
SOURCE New Gold Inc.