(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, Sept. 14, 2015 /CNW/ - New Gold Inc. ("New Gold")
(TSX:NGD) (NYSE MKT:NGD) today provides an update on development
progress at the company's Rainy
River project, where New Gold is hosting an analyst and
investor tour tomorrow, and announces the planned retirement of
Robert Gallagher, the company's
President and Chief Executive Officer, in June of 2016.
Rainy River Development Update
New Gold is pleased to
provide an update on the development activities at its Rainy River project in northwestern
Ontario, where the company is
hosting an analyst and investor tour on September 15, 2015.
RAINY RIVER DEVELOPMENT
HIGHLIGHTS – THROUGH THE END OF AUGUST
2015
- Detailed engineering completed
- Temporary accommodation facility completed
- Relocation of Highway 600 – over 40% complete
- Plant Site earthworks – over 40% complete
- Concrete placement – over 10% complete
- Targeting erection of structural steel in early October
- Assembly of initial mine fleet commenced – commissioned one
218-tonne truck, one dozer, two blasthole drills and commissioning
of one hydraulic shovel 50% complete
- No Lost Time Incidents since the company acquired the project
in 2013
- Key members of operational team hired and on site including:
General Manager, Mine Manager, Mill Manager, Maintenance Manager,
Materials Manager, Environment Manager and Health and Safety
Manager
- 98 employees hired and on site to support development and
operational readiness
- Recruitment for operations phase ongoing – over 1,700
applications received including significant First Nations and other
local interest in employment
- Total project spending through August
31, 2015 – $144 million
- Total capital committed (inclusive of $144 million of spending) through August 31, 2015 – $480
million; represents 55% of total development capital
estimate
The development of Rainy River
remains on budget with a total capital estimate of $877 million, and on time with first production
targeted for mid-2017. 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 over its first nine years of full
production at all-in sustaining costs(1) of
approximately $670 per ounce,
including total cash costs(2) of $570 per ounce.
Over the course of the last two months, New Gold has completed
two transactions that further strengthen the company's balance
sheet and increase its liquidity position without requiring the
issuance of equity. In July, the company announced a $175 million streaming transaction with
Royal Gold on future gold and silver
production from Rainy River (of
which $100 million was paid on
closing) and, in August, New Gold agreed to sell its 30% interest
in El Morro to Goldcorp in exchange for $90
million of cash, the cancellation of the company's
$93 million carried funding loan and
a 4% stream on future gold production from El Morro. Subject to
meeting the conditions required for payment of the second
installment of the stream, conditions of closing of the El Morro
sale and net of applicable taxes, New Gold will have improved its
financial position by a total of approximately $333 million.
The combination of New Gold's June 30,
2015 cash balance of $327
million, the $175 million
Rainy River stream proceeds, the
$65 million (net of tax) El Morro
proceeds and the $236 million
available under the company's credit facility provides the company
with total pro forma liquidity of approximately $800 million. The total liquidity exceeds the
remaining development capital estimate to complete Rainy River. In addition, New Gold's 2015
targeted all-in sustaining costs(1) remain $300 to $350 per
ounce below the current gold price which should enable the company
to generate additional free cash flow to support the Rainy River
development.
In parallel with the ongoing construction activities, New Gold's
exploration team continues to explore for additional resources
across the company's Rainy River
claim holdings. The team's focus is currently being directed toward
prospective target areas located within a few kilometres of the
central mine development area. To date, four areas with good
potential to host significant gold mineralization in the subsurface
have been identified. A 2,500 metre reconnaissance drilling
campaign to test these targets is scheduled to commence during the
coming months. Multiple prospective gold showings have also been
identified on the broader Rainy
River claim holdings that further support the significant
potential for future discoveries in one of Canada's newly emerging gold districts. The
company will update its mineral resource and reserve estimates at
the end of 2015 to incorporate the additional mineral resources on
the Burns Block, which was added to the company's holdings as part
of New Gold's acquisition of Bayfield Ventures Corp. in late
2014.
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
progress through the remainder of 2015 and beyond.
Presentation slides that will be used during the Rainy River
tour will be made available tomorrow morning on New Gold's website
at www.newgold.com.
Robert Gallagher Planned Retirement
Mr. Gallagher
plans to retire from the company in June of 2016. Over the last
number of years, Mr. Gallagher's focus has primarily been on
overseeing the successful development and start-up of the company's
New Afton mine as well as further strengthening New Gold's
partnerships with First Nations in support of the development of
the Rainy River project and permitting of the Blackwater project.
As part of Mr. Gallagher's planned retirement, New Gold has an
established leadership transition plan that will see Randall Oliphant, the company's Executive
Chairman, continuing to lead New Gold and Mr. Gallagher's portfolio
of responsibilities transitioned to members of the company's
executive leadership team over the next nine months.
From an operational and project development continuity
perspective, Mr. Gallagher has already been working closely with
David Schummer, New Gold's Chief
Operating Officer, since Mr. Schummer joined the company in 2014.
In addition to the significant experience already provided by Mr.
Schummer and his current team, the company is in the final stages
of hiring a Vice President, Operations to further strengthen the
operations group.
Mr. Gallagher's scheduled retirement will culminate a remarkable
40-year career in the industry. He has served as
New Gold's President and Chief Executive Officer since the
company's transformational three-way merger in 2008. Under Mr.
Gallagher's stewardship, New Gold has created a culture of
values-based leadership which has served as a foundation for the
company's track record of meeting operational targets and
delivering on development projects. Among his many significant
contributions, Mr. Gallagher played a key role in the advancement
of New Gold's three Canadian assets. He was instrumental in leading
the successful development of the company's New Afton Mine in
British Columbia, which achieved
commercial production six weeks ahead of schedule in mid-2012 and
has outperformed expectations since production commenced. In 2014,
Mr. Gallagher received the E.A.
Scholz Award for Excellence in Mine Development from the
Association for Mineral Exploration British Columbia for his
involvement in the development of New Afton. Mr. Gallagher has
built upon the strong First Nations partnerships previously
established at New Afton to form lasting relationships, founded on
mutual respect and trust, with First Nations communities in the
areas surrounding both Rainy River
in Ontario and Blackwater in
British Columbia. Mr. Gallagher
will continue to remain involved with the company in an advisory
role subsequent to his retirement.
"Bob's leadership and breadth of operational expertise have been
key components of New Gold's growth into a leading intermediate
gold producer," stated Randall
Oliphant, Executive Chairman. "It has been a privilege to
work alongside Bob and to see him further establish himself as one
of the most respected operational leaders in the gold business. Bob
will forever be part of the New Gold family and, on behalf of our
board of directors and all of our employees, I thank him for his
dedication to our company."
"It has been tremendously rewarding for me to help lead New Gold
to become the great company that it is today," stated Robert Gallagher, President and Chief Executive
Officer. "The company has a robust portfolio of mines and projects
in great jurisdictions, but I am proud to say that New Gold's
greatest asset is its people. After spending over 40 years in the
industry, it is very rewarding to be in a position to turn over
responsibility for New Gold's operations and development projects
to very capable and experienced hands. I look forward to working
with the executive leadership team over the coming months to ensure
a seamless transition."
Mr. Gallagher will remain in his role as President and Chief
Executive Officer of New Gold until his planned retirement in
June 2016.
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 an interest in
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 with respect
to: guidance for all-in sustaining costs; the expected production,
costs, economics and operating parameters of the Rainy River
project; targeted timing for commissioning and full production (and
other activities) related to Rainy
River; exploration potential and planned exploration
activities; statements with satisfaction of the conditions of the
sale of New Gold's interest in the El Morro property to Goldcorp
Inc. ("El Morro sale"); and the ability of Teck Resources Limited
and Goldcorp Inc. to satisfy the conditions of and complete the El
Morro – Relincho joint venture ("Project Corridor"); and statements
with respect to the payment of the remaining $75 million for Royal
Gold.
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 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 projects being realized;
and (10) conditions of the El Morro sale and conditions of the
remaining $75 million payment from
Royal Gold being satisfied in a
timely manner.
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 project; the failure to satisfy the closing
conditions to the El Morro sale or the Project Corridor between
Goldcorp Inc. and Teck Resources Limited, upon which El Morro sale
is conditional 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; loss of key
employees; rising costs of labour, supplies, fuel and equipment;
actual results of current exploration activities; uncertainties
inherent to mining economic studies including the feasibility study
for Rainy River; 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. 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.
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 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 in the MD&A accompanying New
Gold's financial statements filed from time to time on
www.sedar.com.
SOURCE New Gold Inc.