(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, July 26, 2017 /PRNewswire/ - New Gold Inc. ("New
Gold") (TSX:NGD) (NYSE American:NGD) today announces its 2017
second quarter results and provides an update on the construction
of the company's Rainy River
project.
2017 Second Quarter Highlights
- Gold production of 105,064 ounces increased by 6% relative to
2016 coupled with copper production of 26.4 million pounds
- Operating expense of $627 per
gold ounce and $1.26 per copper
pound
- All-in sustaining costs(1) of $737 per ounce, including total cash
costs(2) of $360 per
ounce, consistent with the prior-year quarter
- Cash generated from operations of $80
million, or $0.14 per
share
- Cash generated from operations before changes in non-cash
operating working capital(3) of $76 million
- Net earnings of $23 million, or
$0.04 per share
- Adjusted net earnings(4) of $13 million, or $0.02 per share
- Rainy River project schedule
and capital cost estimate remain in line with New Gold's updated
plan announced on January 30,
2017
-
- Rainy River project capital
expenditures totalled $160 million
during the quarter
- Entered into gold price option contracts covering 120,000
ounces of second half 2017 production (20,000 ounces per month)
ensuring a guaranteed floor price of $1,250 per ounce while providing continued
exposure to increases in the gold price up to $1,400 per ounce
- Subsequent to the end of the quarter, the company initiated a
process to divest the Peak Mines, located in New South Wales, Australia as the company
continues to focus on its America's centric portfolio of operating
mines and development projects
- June 30, 2017 cash and cash
equivalents of $199 million
"Our priorities continue to be: executing on our updated
Rainy River plan, delivering
operationally, and enhancing our financial flexibility," stated
Hannes Portmann, President and Chief
Executive Officer. "We are pleased to report that we made solid
progress in all three areas during the second quarter."
"Our Rainy River project
schedule and capital cost estimate remain in line with New Gold's
updated plan announced on January 30,
2017, and the project is scheduled to transition from
construction to operation in the third quarter of 2017," added Mr.
Portmann. "Our operating mines continue to deliver which enabled us
to generate $80 million in quarterly
cash flow. At the same time, the redemption of our 2020 Senior
Notes and extension of our revolving credit facility, further
enhanced our financial flexibility."
Rainy River
Development activities at New Gold's Rainy River project, located in northwestern
Ontario, continue to advance and
the project is scheduled to transition from construction to
operation in the third quarter of 2017. Both the project schedule
and capital cost estimate remain in line with New Gold's updated
plan announced on January 30,
2017.
Rainy River – 2017 Second
Quarter Highlights
- Project spending during the second quarter totalled
$160 million, with estimated
remaining capital to achieve November commercial production of
$229 million
- Mining rate during the quarter averaged approximately 115,000
tonnes per day despite impact of spring thaw
-
- Mining rate averaged approximately 125,000 tonnes per day in
the month of June
- Public comment period for Schedule 2 amendment concluded on
June 12th; timeline
for expected amendment accelerated to fourth quarter of 2017
- Commissioning of primary crusher and conveyor system complete,
with first crush completed on May
11th as planned
- Tailings management area corridor pipeline completed on
June 15th, with first
water moved to and from the water management pond on June 20th
- Installation of mechanical, piping, electrical and
instrumentation in processing facilities approximately 97%
complete
- Ball and SAG mill achieved mechanical completion and hand over
to operations for commissioning
- Energization of all key site power lines completed on
schedule
- Overall earthworks over 85% complete
Mining activities at Rainy
River progressed well during the second quarter. The
company's mining rate during the quarter averaged approximately
115,000 tonnes per day, which was in line with New Gold's updated
plan announced on January 30, 2017.
More importantly, the mining rate in June averaged approximately
125,000 tonnes per day and the company expects to build momentum
through the remaining summer months.
Overall earthworks are over 85% complete and are tracking in
line with New Gold's updated plan. Through June 30, 2017, over 1.1 million cubic metres of
construction material has been placed at the tailings management
starter cell. Starter cell rock deliveries are scheduled for
completion in late August 2017.
Energization of all key site overhead power lines, construction of
the tailings pipeline corridor and construction of the tailings
management area corridor pipeline have been completed.
All of the key structural components of the process facilities
have been finalized and the setting of mechanical equipment and
installation of piping, electrical and instrumentation services is
close to completion. The primary crusher and conveyor system was
successfully commissioned on schedule, and the first crush occurred
on May 11, 2017. Commissioning of the
ball mill and SAG mill has started and is scheduled to be completed
in August 2017. Commissioning of the
refining portion of the process circuit has commenced with dry and
wet commissioning of the full circuit scheduled for August 2017.
The company requires an amendment to Schedule 2 of the Metal
Mining Effluent Regulations to close two small creeks and deposit
tailings. The proposed amendment was published in Canada Gazette I on May
13, 2017 and was followed by a 30-day public comment period
which concluded on June 12, 2017. It
is the company's understanding that the comments received during
the comment period were in support of the project proceeding as
proposed. In light of the positive comments, the company has
revisited the proposed timeline with Environment and Climate Change
Canada and expects that adoption of the Schedule 2 amendment will
be accelerated to the fourth quarter of 2017.
As previously disclosed, New Gold is presently constructing a
starter tailings cell, located within the broader tailings
management area, that does not require a Schedule 2 amendment. This
will allow New Gold to commence operations prior to completion of
the Schedule 2 amendment. Based on its location and scale, the
starter cell would provide capacity for approximately six months of
production tailings when the mill is operating at full
capacity.
In addition, New Gold has finalized the engineering design to
construct the creek closures using sheet pile at the centre of the
portion of the dam which will cover the creeks. The purpose of this
approach is both to reduce the construction time after receipt of
the Schedule 2 amendment, and most importantly, to be able to
complete the work regardless of weather conditions. New Gold has
met with the Ontario Ministry of Natural Resources and Forestry
(MNRF) to review the design and has also filed its application for
the required permit amendment in support of the design. It is
expected that the Ontario MNRF will complete its review of the
application during the third quarter of 2017.
Project spending at Rainy River
during the second quarter totalled $160
million. The remaining capital cost to the targeted November
commercial production is estimated to be approximately $229 million. Of the remaining expenditure,
approximately 45% is related to mining and owner's costs, 45% is
related to earthworks, including completion of the starter tailings
cell, with the balance of the remaining expenditure related to the
completion and commissioning of the process plant.
New Gold continues to look forward to the expected growth in the
company's production and cash flow once Rainy River transitions into operation later
this year. Rainy River has
multiple important asset qualities including its great
jurisdiction, significant annual production potential, long
estimated reserve life and continued exploration potential.
2017 Second Quarter and Year-To-Date Operational
Results
New Gold's second quarter gold production of 105,064 ounces was
above 2016 as higher production from the company's Mesquite Mine
more than offset planned lower production from New Afton, Peak
Mines and Cerro San Pedro.
Cerro San Pedro's production
decreased as the mine transitioned into residual leaching in
June 2016. Quarterly copper
production increased to 26.4 million pounds when compared to the
second quarter of 2016. Silver production of 0.3 million ounces was
in line with 2016 as Cerro San Pedro
continues residual leaching.
Second quarter operating expense per gold ounce of $627 increased relative to the prior-year quarter
due to a higher proportion of sales from Mesquite. The company
delivered second quarter all-in sustaining costs of $737 per ounce, including total cash costs of
$360 per ounce. The slight increase
in all-in sustaining costs relative to the prior-year quarter was
attributable to a $26 per ounce
increase in total cash costs to $360
per ounce, which was only partially offset by a $2 million, or $6
per ounce, decrease in the company's consolidated sustaining costs,
which include New Gold's cumulative sustaining capital,
exploration, general and administrative, and amortization of
reclamation expenditures.
For the six-month period ended June 30,
2017, New Gold's gold production of 194,391 ounces was above
2016 as higher production from the company's Mesquite and Peak
mines more than offset planned lower production from New Afton and
Cerro San Pedro. Year-to-date copper
production decreased to 50.3 million pounds when compared to 2016.
Silver production of 0.6 million ounces was below 2016 as
Cerro San Pedro transitioned to
residual leaching after June
2016.
Year-to-date operating expense per gold ounce of $616 increased relative to the prior-year due to
lower ounces sold and a higher proportion of sales coming from the
Mesquite Mine. For the six-month period ended June 30, 2017, the company delivered all-in
sustaining costs of $671 per ounce,
including total cash costs of $330
per ounce. The decrease in all-in sustaining costs relative to the
prior-year was attributable to a $13
per ounce decrease in the company's total cash costs and a
$10 million, or $52 per ounce, decrease in consolidated
sustaining costs.
As a result of the company's strong first half operational
results, New Gold reiterates its guidance for full-year gold
production of 380,000 to 430,000 ounces and operating expense per
gold ounce sold of $630 to $670. The
company expects approximately 40% of the second half 2017 gold
production to occur in the third quarter, with the remaining 60% in
the fourth quarter, benefitting from the start-up of Rainy River. Assuming current commodity prices
and foreign exchange rates, New Gold is also pleased to reiterate
its previously lowered guidance for all-in sustaining costs of
$760 to $800 per ounce. As planned,
all-in sustaining costs in the second half of 2017 are expected to
be higher due to timing of sustaining capital expenditures and the
higher operating costs attributable to the start-up of Rainy River.
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
105,064
|
99,423
|
194,391
|
190,234
|
|
Sold
|
99,235
|
101,820
|
186,538
|
187,851
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
26.4
|
25.7
|
50.3
|
51.1
|
|
Sold
|
24.1
|
25.2
|
47.1
|
50.4
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.3
|
0.3
|
0.6
|
0.7
|
|
Sold
|
0.3
|
0.3
|
0.5
|
0.7
|
Revenue:
|
|
|
|
|
|
Gold
($/ounce)
|
1,250
|
1,232
|
1,251
|
1,201
|
|
Copper
($/pound)
|
2.33
|
1.97
|
2.34
|
1.96
|
|
Silver
($/ounce)
|
16.34
|
17.05
|
16.62
|
15.66
|
Average realized
price(5):
|
|
|
|
|
|
Gold
($/ounce)
|
1,279
|
1,267
|
1,282
|
1,239
|
|
Copper
($/pound)
|
2.57
|
2.14
|
2.58
|
2.14
|
|
Silver
($/ounce)
|
16.96
|
17.39
|
17.24
|
15.96
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
627
|
570
|
616
|
587
|
|
Copper
($/pound)
|
1.26
|
0.96
|
1.24
|
1.01
|
|
Silver
($/ounce)
|
8.31
|
7.81
|
8.29
|
7.56
|
Total cash costs
($/ounce)
|
360
|
334
|
330
|
343
|
All-in sustaining
costs ($/ounce)
|
737
|
717
|
671
|
736
|
New Afton
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
21,273
|
25,287
|
42,210
|
50,355
|
|
Sold
|
19,573
|
26,302
|
40,289
|
51,433
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
22.8
|
22.1
|
43.3
|
44.5
|
|
Sold
|
20.8
|
22.6
|
40.7
|
44.6
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
426
|
434
|
442
|
404
|
|
Copper
($/pound)
|
0.85
|
0.73
|
0.88
|
0.70
|
All-in sustaining
costs ($/ounce)
|
(358)
|
(131)
|
(434)
|
(198)
|
All-in sustaining
costs on a co-product basis:
|
|
Gold
($/ounce)
|
769
|
711
|
724
|
672
|
|
Copper
($/pound)
|
1.53
|
1.19
|
1.44
|
1.16
|
The decrease in gold production at New Afton relative to the
second quarter of 2016 was due to an expected decrease in gold
grade and gold recovery, partially offset by an increase in mill
throughput. Copper production was slightly higher than the
prior-year quarter due to higher throughput.
Second quarter operating expenses were in line with the
prior-year quarter. All-in sustaining costs decreased as the
benefit of lower operating expenses and higher by-product revenues
was only partially offset by higher sustaining costs. By-product
revenues benefitted from an increase in the realized copper price
which more than offset lower copper sales volumes. New Afton's
quarterly sustaining costs increased by $3
million to $14 million when
compared to the second quarter of 2016.
For the six-month period ended June 30,
2017, New Afton's gold production was below 2016 due to an
expected decrease in gold grade and gold recovery. Copper
production was slightly lower than the prior-year period due to
lower grade and recovery.
Operating expenses for the first half of the year increased when
compared to the prior year due to higher ore tonnes mined and
processed at lower grades. All-in sustaining costs decreased as the
benefit of higher by-product revenues was only partially offset by
the increase in operating expenses. By-product revenues benefitted
from an increase in the realized copper price which more than
offset lower copper sales volumes. New Afton's quarterly sustaining
costs were in line with the prior year.
Mesquite
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
48,183
|
25,564
|
78,586
|
52,935
|
|
Sold
|
46,462
|
31,115
|
75,615
|
56,043
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
703
|
602
|
700
|
608
|
All-in sustaining
costs ($/ounce)
|
789
|
999
|
779
|
1,044
|
The increase in gold production at Mesquite relative to the
second quarter of 2016 was due to higher recoveries as total ore
tonnes mined and placed included less transitional material than
was mined in 2016, and the increase of the process solution flow on
the heap leach pad.
Second quarter operating expenses increased when compared to the
prior-year quarter due to increased ore tonnes mined and processed
and the higher process solution flow. All-in sustaining costs
during the quarter decreased due to an $8
million, or $302 per ounce,
decrease in sustaining costs primarily due to no waste stripping
being capitalized, the benefit of which was only partially offset
by higher operating expenses.
For the six-month period ended June 30,
2017, Mesquite's gold production increased by 48% relative
to the prior-year period due to increased ore tonnes and gold
recovery.
Operating expenses for the first half of the year increased when
compared to the prior year due to higher ore tonnes mined and
increased process solution flow. First half all-in sustaining costs
decreased due to an $18 million, or
$347 per ounce, decrease in
sustaining costs primarily due to no waste stripping being
capitalized, which was only partially offset by higher operating
expenses.
Peak Mines
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
26,039
|
31,285
|
54,386
|
50,881
|
|
Sold
|
25,528
|
27,784
|
52,919
|
44,934
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
3.6
|
3.6
|
7.0
|
6.6
|
|
Sold
|
3.3
|
2.5
|
6.4
|
5.8
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
715
|
581
|
654
|
700
|
|
Copper
($/pound)
|
1.46
|
0.97
|
1.34
|
1.20
|
All-in sustaining
costs ($/ounce)
|
945
|
706
|
805
|
827
|
The decrease in gold production at Peak Mines relative to the
second quarter of 2016 was due to an expected decrease in gold
grade, which was partially offset by higher gold recovery.
Quarterly copper production was in line with the second quarter of
2016.
Second quarter operating expenses increased when compared to the
prior-year quarter primarily due to lower gold sales volumes.
All-in sustaining costs increased during the quarter as the benefit
of increased by-product revenues was offset by higher sustaining
costs and lower gold sales volumes.
For the six-month period ended June 30,
2017, Peak Mines' gold production increased by 7% relative
to the prior-year period due to mining and processing higher gold
grade material.
Operating expenses for the first half of the year remained in
line with the prior-year period. First half all-in sustaining costs
decreased as higher by-product revenues and gold sales volumes were
only partially offset by a $7
million, or $105 per ounce,
increase in sustaining costs.
Subsequent to the end of the quarter, the company initiated a
process to divest the Peak Mines, located in New South Wales, Australia. The sale of Peak
Mines will further enable the company to focus on its America's
centric portfolio of operating mines and development projects while
offering a prospective buyer an opportunity to continue to leverage
Peak's strong track record of performance, and unlock its longer
term potential.
Cerro San Pedro
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
9,569
|
17,287
|
19,209
|
36,063
|
|
Sold
|
7,672
|
16,619
|
17,716
|
35,441
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.2
|
0.2
|
0.3
|
0.5
|
|
Sold
|
0.2
|
0.2
|
0.3
|
0.5
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
1,269
|
961
|
1,203
|
978
|
|
Silver
($/ounce)
|
16.88
|
12.88
|
16.30
|
12.61
|
All-in sustaining
costs ($/ounce)
|
1,414
|
941
|
1,325
|
947
|
Cerro San Pedro finished active
mining late in the second quarter of 2016 and has transitioned to
residual leaching. As a result, and consistent with expectations,
the mine's second quarter and first half gold and silver production
decreased compared to the prior year. Second quarter and first half
operating expenses and all-in sustaining costs increased when
compared to the prior-year periods due to lower gold sales volumes.
As the company is drawing down leach pad inventory during the
residual leach period, $417 per ounce
in the second quarter, and $405 per
ounce in the first half, of the reported all-in sustaining costs
are related to mining costs that were incurred in prior
periods.
2017 Second Quarter and Year-To-Date Financial
Results
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
$185.6
|
$180.3
|
$355.1
|
$334.8
|
Operating
margin(6)
|
90.9
|
95.6
|
177.5
|
168.2
|
Net earnings
(loss)
|
23.1
|
(13.9)
|
60.7
|
11.7
|
Net earnings (loss)
per basic share
|
0.04
|
(0.03)
|
0.11
|
0.02
|
Adjusted net
earnings
|
13.3
|
8.6
|
22.8
|
7.1
|
Adjusted net earnings
per share
|
0.02
|
0.02
|
0.04
|
0.01
|
Cash generated from
operations
|
80.0
|
79.2
|
156.8
|
140.7
|
Cash generated from
operations before changes in non-cash operating working
capital
|
76.1
|
82.4
|
145.5
|
144.5
|
Second quarter revenues increased by $5
million, or 3%, relative to the prior-year quarter, due to
higher metal prices. Relative to the second quarter of 2016, the
average realized price increased by $12 per ounce of gold, or 1%, and $0.43 per pound of copper, or 20%. Despite higher
second quarter production, metal sales volumes were lower than the
prior-year quarter due to timing of sales at the period end.
New Gold's second quarter operating margin decreased by
$5 million relative to the prior-year
quarter due to a $10 million increase
in operating expenses as a result of mining and processing more
tonnes.
The company reported net earnings of $23
million, or $0.04 per share,
in the second quarter of 2017 relative to a net loss of
$14 million, or $0.03 per share, in the prior-year quarter.
Second quarter net earnings included an $18
million non-cash foreign exchange gain and a $3 million pre-tax loss on the revaluation of
company's gold price option contracts and gold stream obligation,
while the prior-year quarter included a non-cash pre-tax loss of
$10 million on the revaluation of the
gold stream obligation, a non-cash pre-tax loss of $8 million on the revaluation of the company's
gold price option contracts, and a $5
million pre-tax foreign exchange loss.
New Gold had adjusted net earnings of $13
million, or $0.02 per share,
in the second quarter of 2017 relative to $9
million, or $0.02 per share,
in the prior-year quarter. Quarterly adjusted net earnings were
positively impacted by the combination of a $5 million increase in revenues, a $3 million decrease in depreciation and
depletion, a $5 million decrease in
adjusted income tax expense and a $2
million decrease in finance costs as more interest has been
capitalized to Rainy River. These
items were offset by a $10 million
increase in operating expenses and a $1
million increase in exploration and business development
expenses.
The company's second quarter cash generated from operations
before changes in non-cash operating working capital of
$76 million was lower than the
prior-year quarter due to the reduction in operating margin and
increase in income taxes paid. Cash generated from operations in
the second quarter of $80 million was
consistent with the prior-year quarter.
For the six-month period ended June 30,
2017, revenues increased by $20
million, or 6%, relative to the prior-year period, due to
higher metal prices. Relative to the first half of 2016, the
average realized price increased by $43 per ounce of gold, or 3%, and $0.44 per pound of copper, or 20%.
New Gold's operating margin for the six months ended
June 30, 2017 increased by
$9 million relative to the prior-year
period as the increase in revenues was only partially offset by an
$11 million increase in operating
expenses.
The company reported net earnings of $61
million, or $0.11 per share,
for the six-months ended June 30,
2017, relative to $12 million,
or $0.02 per share, in the prior-year
period. Current period net earnings included a $33 million pre-tax gain on the disposal of the
El Morro stream, a $24 million
non-cash foreign exchange gain, a $16
million pre-tax loss on the revaluation of company's gold
price option contracts and a $5
million pre-tax loss on the revaluation of the company's
gold stream obligation.
New Gold had adjusted net earnings of $23
million, or $0.04 per share,
for the six months ended June 30,
2017, relative to $7 million,
or $0.01 per share, in the prior-year
period. Adjusted net earnings were positively impacted by the
combination of a $20 million increase
in revenues, a $6 million decrease in
depreciation and depletion, and a $5
million decrease in finance costs as more interest has been
capitalized to Rainy River. These
items were partially offset by an $11
million increase in operating expenses, a $3 million increase in adjusted income tax
expense, and a $1 million increase in
exploration, business development, and corporate general and
administrative expenses.
The company's cash generated from operations before changes in
non-cash operating working capital for the six months ended
June 30, 2017 was $146 million, which remained consistent with the
prior-year period. Cash generated from operations for the six
months ended June 30, 2017 of
$157 million was $16 million, or 11%, higher than the prior-year
period, benefitting from the collection of a concentrate receivable
outstanding at December 31, 2016.
Financial Update
New Gold's cash and cash equivalents at June 30, 2017 were $199
million. The company also has a $400
million revolving credit facility, of which $100 million has been drawn and $126 million has been used to issue letters of
credit for closure obligations at the company's producing mines and
development projects, leaving $174
million undrawn. As a result, the company's liquidity totals
$373 million (cash and undrawn credit
facility) plus its expected free cash flow generation from its
operating mines through the balance of 2017.
On June 27, 2017, New Gold entered
into gold price option contracts covering 120,000 ounces of its
second half 2017 production, with put options at a strike price of
$1,250 per ounce and call options at
a strike price of $1,400 per ounce.
As previously announced, the company also fixed the price for 43.7
million pounds of the company's second half 2017 copper production
at $2.73 per pound. These initiatives
increase the company's cash flow certainty during the remaining
Rainy River development
period.
At June 30, 2017, the face value
of the company's long-term debt was $900
million (book value – $880
million). The components of the long-term debt include:
$500 million of 6.25% face value
senior unsecured notes due in November of 2022; $300 million of 6.375% face value senior
unsecured notes due in May of 2025; and $100
million drawn from the revolving credit facility. The
company currently has approximately 576 million shares
outstanding.
Projects Update
Blackwater
Activities at the company's Blackwater project, located in
south-central British Columbia,
continued to focus on attaining the approval of the Environmental
Assessment ("EA"). The coordinated Federal and Provincial EA
technical review is in progress. Technical review comments have now
been received from the Federal government, Provincial agencies and
local Indigenous communities, and New Gold has responded to the
review comments. The company anticipates approval of the Blackwater
EA in late 2017 or early 2018.
Capital expenditures at Blackwater during the second quarter and
first half of 2017 were $2 million
and $4 million, respectively.
In British Columbia, New Gold
is providing material and logistical support to manage the wildfire
situation in the interior of the province. This assistance has come
from both our Blackwater project camp and our New Afton Mine. From
Blackwater, in partnership with an area First Nations community,
New Gold has mobilized its Blackwater construction camp to host
fire crews. Use of this facility by firefighting crews could extend
over the next few months as part of efforts to protect nearby First
Nations communities and the homes and ranches of other area
residents. The Blackwater camp can house up to 80 crew members and
is currently hosting 75 people. In the southern interior, New
Afton's Fire & Mine Rescue Team has responded to three
significant outbreaks and played a key role in saving several homes
outside of Kamloops, BC. This team
has also provided support and equipment to the Skeetchestn Band to
assist residents to be prepared in the event of an evacuation
order.
Webcast and Conference Call
A webcast and conference call to discuss these results will be
held on Thursday, July 27, 2017 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 27, 2017 by calling toll free
1-855-859-2056, or 1-416-849-0833 outside of the U.S. and
Canada, passcode 54129223. An
archived webcast will also be available until October 27, 2017 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 two 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 (which transitioned
to residual leaching in 2016), provide the company with its current
production base. In addition, New Gold owns 100% of the Rainy River
and Blackwater projects located in Canada. 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
the statements made under "Projects Update", as well as other
statements elsewhere in this news release, including, among others,
statements with respect to: guidance for production, operating
expense and all-in sustaining costs, and the factors contributing
to those expected results, as well as expected capital and other
expenditures; planned development activities for 2017 at the Rainy
River project, including the completion and commissioning of the
processing facilities; planned preparations for operations at the
Rainy River project, including the mining rate, removal of
overburden and waste, and storage of water; the expected
production, costs, economics, grade and other operating parameters
of the Rainy River project; the capacity of the starter dam;
targeted timing for permits, including the amendment to Schedule 2
of the Metal Mining Effluent Regulations; targeted timing for
commissioning, start-up, production and commercial production; and
targeting timing for development and other activities related to
the Rainy River project.
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 latest annual management's discussion and analysis
("MD&A"), Annual Information Form and Technical Reports filed
at www.sedar.com and on EDGAR at www.sec.gov. 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 mineral 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 the
Rainy River project being consistent with New Gold's current
expectations; (8) all required permits, licenses and
authorizations, including the amendment to Schedule 2 of the Metal
Mining Effluent Regulations, being obtained from the relevant
governments and other relevant stakeholders within the expected
timelines and the absence of material negative comments during the
applicable regulatory processes; (9) the results of the feasibility
study for the Rainy River project being realized; and (10) in
the case of production, cost and expenditure outlooks at the
operating mines and the Rainy River project for 2017, commodity
prices and exchange rates being consistent with those estimated for
the purposes for 2017.
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 and Mexico; discrepancies between actual and
estimated production, between actual and estimated mineral reserves
and mineral resources and between actual and estimated
metallurgical recoveries; fluctuation in treatment and refining
charges; changes in national and local government legislation in
Canada, the United States, Australia and Mexico 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 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 mineral reserves and
mineral resources; competition; inherent uncertainties with cost
estimates and estimated schedule for the construction and
commencement of production at Rainy
River as contemplated; 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 the
Rainy River project; 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 Indigenous 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
amendment to Schedule 2 of the Metal Mining Effluent Regulations
for the Rainy River project. 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 risks associated
with the start of production of a mine, such as Rainy River, (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 Annual Information
Form, MD&A and other disclosure documents filed on and
available at www.sedar.com and on EDGAR at www.sec.gov.
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. 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 relating to the
construction of and expected operations at New Gold's Rainy River project contained herein has been
reviewed and approved by Binsar
Sirait, Director, Mine
Engineering of New Gold. All other scientific and technical
information contained herein has been reviewed and approved by
Mark A. Petersen, Vice President,
Exploration of New Gold, except for the scientific and technical
information relating to the construction of and expected operations
at New Gold's Rainy River project,
which has been reviewed and approved by Binsar Sirait, Director, Mine Engineering of New Gold. Mr. Sirait
is an engineer and a SME Registered Member. Mr. Petersen is a SME
Registered Member, AIPG Certified Professional Geologist. Mr.
Petersen and Mr. Sirait are "Qualified Persons" for the purposes of
NI 43-101.
For additional technical information on New Gold's material
properties, including 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, 2016
filed on www.sedar.com.
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.
"Sustaining costs" is a non-GAAP financial measure. New Gold
defines sustaining costs as the difference between all-in
sustaining costs and total cash costs, being the sum of net 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.
Management uses sustaining costs to understand the aggregate net
result of the drivers of all-in sustaining costs other than total
cash costs. The line items between cash costs and all in
sustaining costs in the tables below break down the components of
sustaining costs. Sustaining costs is intended to provide
additional information only and does not have any 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.
(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.
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Three months ended
June 30, 2017
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
62.2
|
30.4
|
2.1
|
94.7
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
99,235
|
24.1
|
0.3
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
627
|
1.26
|
8.31
|
|
Operating
expenses(1)
|
62.2
|
30.4
|
2.1
|
94.7
|
Treatment and
refining charges on concentrate sales
|
2.9
|
5.8
|
0.2
|
8.9
|
Adjustments(2)
|
(0.2)
|
(0.1)
|
-
|
(0.3)
|
Total cash
costs
|
64.9
|
36.1
|
2.3
|
103.3
|
By-product silver and
copper sales
|
|
|
|
(67.6)
|
Total cash costs net
of by-product revenue
|
|
|
|
35.7
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
99,235
|
24.1
|
0.3
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
654
|
1.50
|
8.91
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
360
|
Total co-product cash
costs
|
64.9
|
36.1
|
2.3
|
|
Total cash costs net
of by-product revenue
|
|
|
|
35.7
|
Sustaining capital
expenditures
|
15.8
|
7.7
|
0.5
|
24.0
|
Sustaining
exploration - expensed
|
1.4
|
0.7
|
-
|
2.1
|
Corporate G&A
including share-based compensation(4)
|
5.6
|
2.7
|
0.2
|
8.3
|
Reclamation
expenses
|
1.9
|
0.9
|
0.1
|
2.9
|
Total co-product
all-in sustaining costs
|
89.4
|
48.2
|
3.1
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
73.1
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
901
|
2.00
|
12.19
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
737
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
non-cash items related to inventory write-down reversals and social
closure costs incurred at Cerro San Pedro that are included in
operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Six months ended June
30, 2017
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
115.0
|
58.3
|
4.3
|
177.6
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
186,538
|
47.1
|
0.5
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
616
|
1.24
|
8.29
|
|
Operating
expenses(1)
|
115.0
|
58.3
|
4.3
|
177.6
|
Treatment and
refining charges on concentrate sales
|
5.8
|
11.1
|
0.3
|
17.2
|
Adjustments(2)
|
(0.1)
|
-
|
-
|
(0.1)
|
Total cash
costs
|
120.7
|
69.4
|
4.6
|
194.7
|
By-product silver and
copper sales
|
|
|
|
(133.2)
|
Total cash costs net
of by-product revenue
|
|
|
|
61.5
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
186,538
|
47.1
|
0.5
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
647
|
1.47
|
8.90
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
330
|
Total co-product cash
costs
|
120.6
|
69.4
|
4.6
|
|
Total cash costs net
of by-product revenue
|
|
|
|
61.6
|
Sustaining capital
expenditures
|
24.8
|
12.5
|
0.9
|
38.2
|
Sustaining
exploration - expensed
|
2.5
|
1.3
|
0.1
|
3.9
|
Corporate G&A
including share-based compensation(4)
|
11.2
|
5.6
|
0.4
|
17.2
|
Reclamation
expenses
|
3.1
|
1.6
|
0.1
|
4.8
|
Total co-product
all-in sustaining costs
|
161.8
|
90.4
|
6.1
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
125.1
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
867
|
1.92
|
11.86
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
671
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
the amortization of Mesquite's Purchase Price Allocation associated
with royalties and social closure costs incurred at Cerro San Pedro
that are included in operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Three months ended
June 30, 2016
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
58.1
|
24.2
|
2.4
|
84.7
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
101,820
|
25.2
|
0.3
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
570
|
0.96
|
7.81
|
|
Operating
expenses(1)
|
58.1
|
24.2
|
2.4
|
84.7
|
Treatment and
refining charges on concentrate sales
|
3.8
|
4.2
|
0.1
|
8.1
|
Adjustments(2)
|
0.4
|
0.2
|
-
|
0.6
|
Total cash
costs
|
62.1
|
28.8
|
2.5
|
93.4
|
By-product silver and
copper sales
|
|
|
|
(59.4)
|
Total cash costs net
of by-product revenue
|
|
|
|
34.0
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
101,820
|
25.2
|
0.3
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
609
|
1.15
|
8.21
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
334
|
Total co-product cash
costs
|
62.0
|
28.8
|
2.6
|
|
Total cash costs net
of by-product revenue
|
|
|
|
34.0
|
Sustaining capital
expenditures
|
18.6
|
7.8
|
0.7
|
27.1
|
Sustaining
exploration - expensed
|
1.4
|
0.6
|
0.1
|
2.1
|
Corporate G&A
including share-based compensation(4)
|
5.8
|
2.4
|
0.2
|
8.4
|
Reclamation
expenses
|
0.9
|
0.4
|
-
|
1.3
|
Total co-product
all-in sustaining costs
|
88.7
|
40.0
|
3.7
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
72.9
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
871
|
1.59
|
11.81
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
717
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
non-cash items related to inventory write-down reversals and social
closure costs incurred at Cerro San Pedro that are included in
operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Six months ended June
30, 2016
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
110.2
|
51.3
|
5.1
|
166.6
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
187,851
|
50.4
|
0.7
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
587.0
|
1.01
|
7.56
|
|
Operating
expenses(1)
|
110.2
|
51.3
|
5.1
|
166.6
|
Treatment and
refining charges on concentrate sales
|
7.3
|
9.3
|
0.2
|
16.8
|
Adjustments(2)
|
117.5
|
60.6
|
5.3
|
183.3
|
Total cash
costs
|
|
|
|
(118.5)
|
By-product silver and
copper sales
|
|
|
|
64.4
|
Total cash costs net
of by-product revenue
|
|
|
|
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
187,851
|
50.4
|
0.7
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
625
|
1.20
|
7.85
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
343
|
Total co-product cash
costs
|
117.5
|
60.6
|
5.3
|
|
Total cash costs net
of by-product revenue
|
|
|
|
64.4
|
Sustaining capital
expenditures
|
32.8
|
15.2
|
1.5
|
49.5
|
Sustaining
exploration - expensed
|
3.1
|
1.4
|
0.1
|
4.6
|
Corporate G&A
including share-based compensation(4)
|
11.4
|
5.2
|
0.5
|
17.2
|
Reclamation
expenses
|
1.7
|
0.8
|
-
|
2.5
|
Total co-product
all-in sustaining costs
|
166.3
|
83.2
|
7.5
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
137.9
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
885
|
1.65
|
11.20
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
736
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
the amortization of Mesquite's Purchase Price Allocation associated
with royalties and social closure costs incurred at Cerro San Pedro
that are included in operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
(3) Cash Generated from Operations before Changes in Working
Capital
"Cash generated from operations before changes in working
capital" is a non-GAAP financial measure with no standard meaning
under IFRS, 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 working capital changes.
Further details regarding cash generated from operations before
changes in working capital and a reconciliation to the nearest IFRS
measure is provided in the MD&A accompanying New Gold's
financial statements filed from time to time on www.sedar.com.
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 per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Cash generated from
operations
|
$80.0
|
$ 79.2
|
$156.8
|
$140.7
|
Add back (deduct):
Change in non-cash operating working capital
|
(3.9)
|
3.2
|
(11.3)
|
3.8
|
Cash generated from
operations before changes in non-cash working capital
|
76.1
|
82.4
|
145.5
|
144.5
|
(4) Adjusted Net Earnings/(Loss)
"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 Earnings Reconciliation
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Net earnings before
taxes
|
$30.4
|
($7.1)
|
$70.3
|
$10.7
|
Other (gains)
losses
|
(15.7)
|
22.7
|
(39.5)
|
1.0
|
Inventory
write-down
|
-
|
(0.7)
|
(0.5)
|
-
|
Adjusted net earnings
before tax
|
14.7
|
14.9
|
30.3
|
11.7
|
Income tax (expense)
recovery
|
(7.3)
|
(6.8)
|
(9.6)
|
1.0
|
Income tax
adjustments
|
5.9
|
0.5
|
2.1
|
(5.6)
|
Adjusted income tax
expense
|
(1.4)
|
(6.3)
|
(7.5)
|
(4.6)
|
Adjusted net earnings
(loss)
|
13.3
|
8.6
|
22.8
|
7.1
|
Adjusted earnings per
share (basic and diluted)
|
0.02
|
0.02
|
0.04
|
0.01
|
Adjusted effective
tax rate
|
9.5%
|
42.3%
|
24.9%
|
39.3%
|
(5) 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 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.
Further details regarding average realized price and a
reconciliation to the nearest IFRS measure is provided in the
MD&A accompanying New Gold's financial statements filed from
time to time on www.sedar.com.
(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 per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
$185.6
|
$180.3
|
$355.1
|
$334.8
|
Less: Operating
expenses
|
(94.7)
|
(84.7)
|
(177.6)
|
(166.6)
|
Operating
margin
|
90.9
|
95.6
|
177.5
|
168.2
|
Consolidated Income Statements (unaudited)
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
$185.6
|
$180.3
|
$355.1
|
$334.8
|
Operating
expenses
|
94.7
|
84.7
|
177.6
|
166.6
|
Depreciation and
depletion
|
63.6
|
66.4
|
121.0
|
127.4
|
Revenue less cost of
goods sold
|
27.3
|
29.2
|
56.5
|
40.8
|
Corporate
administration
|
5.9
|
5.9
|
13.4
|
11.6
|
Share-based payment
expenses
|
2.6
|
2.8
|
3.8
|
5.8
|
Exploration and
business development
|
3.2
|
2.0
|
6.4
|
4.5
|
Earnings from
operations
|
15.6
|
18.5
|
32.9
|
18.9
|
Finance
income
|
0.4
|
0.2
|
0.6
|
0.5
|
Finance
costs
|
(1.3)
|
(3.1)
|
(2.7)
|
(7.7)
|
Other gains
(losses)
|
15.7
|
(22.7)
|
39.5
|
(1.0)
|
Earnings before
taxes
|
30.4
|
(7.1)
|
70.3
|
10.7
|
Income tax (expense)
recovery
|
(7.3)
|
(6.8)
|
(9.6)
|
1.0
|
Net earnings
(loss)
|
23.1
|
(13.9)
|
60.7
|
11.7
|
Earnings per
share
|
|
|
|
|
Basic
|
0.04
|
(0.03)
|
0.11
|
0.02
|
Diluted
|
0.04
|
(0.03)
|
0.11
|
0.02
|
Weighted average
number of shares outstanding (in millions)
|
Basic
|
575.8
|
511.2
|
552.1
|
510.4
|
Diluted
|
576.3
|
511.2
|
552.7
|
511.6
|
(1)
|
Prior-year period
comparatives have been revised. Please refer to Note 2 of the
unaudited condensed consolidated interim financial statements for
further information.
|
Consolidated Statements of Financial Position
(unaudited)
|
|
|
|
As at June
30
|
As at December
31
|
(in millions of
U.S. dollars)
|
2017
|
2016
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$198.8
|
$185.9
|
Trade and other
receivables
|
43.2
|
37.1
|
Inventories
|
165.1
|
150.4
|
Current income tax
receivable
|
6.5
|
12.5
|
Derivative
assets
|
4.4
|
18.0
|
Prepaid expenses and
other
|
5.1
|
6.1
|
Total current
assets
|
423.1
|
410.0
|
|
|
|
Non-current
inventories
|
91.9
|
103.3
|
Mining
interests
|
3,383.7
|
3,191.3
|
Deferred tax
assets
|
241.4
|
224.9
|
Other
|
3.3
|
3.5
|
Total
assets
|
4,143.4
|
3,933.0
|
LIABILITIES AND
EQUITY
|
|
|
Current
liabilities
|
|
|
Trade and other
payables
|
165.2
|
169.2
|
Current income tax
payable
|
11.7
|
6.2
|
Total current
liabilities
|
176.9
|
175.4
|
|
|
|
Reclamation and
closure cost obligations
|
97.7
|
81.0
|
Provisions
|
230.9
|
246.5
|
Gold stream
obligation
|
14.1
|
12.0
|
Long-term
debt
|
880.1
|
889.5
|
Deferred tax
liabilities
|
433.3
|
455.2
|
Other
|
2.0
|
0.2
|
Total
liabilities
|
1,835.0
|
1,859.8
|
Equity
|
|
|
Common
shares
|
3,027.7
|
2,859.0
|
Contributed
surplus
|
102.7
|
100.5
|
Other
reserves
|
(29.4)
|
(33.0)
|
Deficit
|
(792.6)
|
(853.3)
|
Total
equity
|
2,308.4
|
2,073.2
|
Total liabilities
and equity
|
4,143.4
|
3,933.0
|
(1)
|
Prior-year period
comparatives have been revised. Please refer to Note 2 of the
unaudited condensed consolidated interim financial statements for
further information.
|
Consolidated Statements of Cash Flow
(unaudited)
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net earnings
(loss)
|
$23.1
|
($13.9)
|
$60.7
|
$11.7
|
Adjustments
for:
|
|
|
|
|
Foreign exchange
losses (gains)
|
(17.7)
|
4.9
|
(23.9)
|
(29.0)
|
Reclamation and
closure costs paid
|
(0.2)
|
-
|
(0.6)
|
(0.9)
|
Gain on disposal of
El Morro
|
-
|
-
|
(33.0)
|
-
|
Depreciation and
depletion
|
63.7
|
66.7
|
121.5
|
127.7
|
Other non-cash
adjustments
|
4.0
|
16.4
|
18.9
|
30.3
|
Income tax
recovery
|
7.3
|
6.8
|
9.6
|
(1.0)
|
Finance
income
|
(0.4)
|
(0.2)
|
(0.6)
|
(0.5)
|
Finance
costs
|
1.3
|
3.1
|
2.7
|
7.7
|
|
81.1
|
83.8
|
155.3
|
146.0
|
Change in non-cash
operating working capital
|
3.9
|
(3.2)
|
11.3
|
(3.8)
|
Income taxes (paid)
refunded
|
(5.0)
|
(1.4)
|
(9.8)
|
(1.5)
|
Cash generated from
operations
|
80.0
|
79.2
|
156.8
|
140.7
|
INVESTING
ACTIVITIES
|
|
|
|
|
Mining
interests
|
(188.1)
|
(138.2)
|
(331.8)
|
(245.6)
|
Proceeds from the
sale of El Morro stream and other assets
|
-
|
0.6
|
65.3
|
1.1
|
Interest
received
|
0.3
|
0.2
|
0.5
|
0.5
|
Gold price option
contract and other investment costs
|
(0.9)
|
-
|
(0.9)
|
(2.1)
|
Cash used by
investing activities
|
(188.7)
|
(137.4)
|
(266.9)
|
(246.1)
|
FINANCING
ACTIVITY
|
|
|
|
|
Proceeds received
from exercise of options
|
0.5
|
6.4
|
0.6
|
7.2
|
Net proceeds received
from issuances of common shares
|
(1.0)
|
-
|
164.7
|
-
|
Financing initiation
costs
|
-
|
-
|
-
|
(0.3)
|
Interest
paid
|
(31.3)
|
(26.7)
|
(32.8)
|
(27.5)
|
Issuance of senior
unsecured notes, net of transaction costs
|
295.1
|
-
|
295.1
|
-
|
Repayment of senior
unsecured notes
|
(305.3)
|
-
|
(305.3)
|
-
|
Cash generated from
financing activities
|
(42.0)
|
(20.3)
|
122.3
|
(20.6)
|
Effect of exchange
rate changes on cash and cash equivalents
|
-
|
(0.3)
|
0.7
|
10.0
|
|
|
|
|
|
Change in cash and
cash equivalents
|
(150.7)
|
(78.8)
|
12.9
|
(116.0)
|
Cash and cash
equivalents, beginning of period
|
349.5
|
298.3
|
185.9
|
335.5
|
Cash and cash
equivalents, end of year
|
198.8
|
219.5
|
198.8
|
219.5
|
Cash and cash
equivalents are comprised of:
|
Cash
|
145.4
|
154.2
|
145.4
|
154.2
|
Short-term money
market instruments
|
53.4
|
65.3
|
53.4
|
65.3
|
|
198.8
|
219.5
|
198.8
|
219.5
|
(1)
|
Prior-year period
comparatives have been revised. Please refer to Note 2 of the
unaudited condensed consolidated interim financial statements for
further information.
|
SOURCE New Gold Inc.