(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, April 25, 2018 /CNW/ - New Gold Inc. ("New
Gold") (TSX:NGD) (NYSE American:NGD) today announces its 2018 first
quarter results. Unless otherwise noted, all operating and
financial results have been presented on a continuing basis and
exclude Peak Mines, which has been classified as a discontinued
operation.
2018 First Quarter Highlights
- Gold production of 96,882 ounces and copper production of 22.2
million pounds
- Operating expense of $774 per
gold ounce and $1.83 per copper
pound
- All-in sustaining costs(1) of $1,219 per ounce
- Total cash costs(2) of $558 per ounce
- Operating cash flows generated from continuing operations of
$50 million, or $0.09 per share
- Operating cash flows generated from continuing operations
before changes in non-cash operating working capital(3)
of $67 million, or $0.12 per share
- Loss from continuing operations of $29
million, or $0.05 per
share
- Adjusted loss from continuing operations(4) of
$16 million, or $0.03 per share
- March 31, 2018 cash and cash
equivalents of $191 million
- On April 10, 2018, completed the
sale of Peak Mines for gross proceeds of $58
million, subject to certain closing adjustments
"The first quarter saw Rainy
River progress its continued ramp up, with the balance of
our operations delivering strong results," stated Hannes Portmann, President and Chief Executive
Officer. "Planned increases in throughput, grade and recovery at
Rainy River through the year are
expected to underpin stronger operational and financial results in
the final three quarters of 2018."
"With our solid production growth and streamlined asset base,
our focus in 2018 remains on steadily ramping up Rainy River, further optimizing the
performance of our other operations and maximizing free cash flow
to enhance our financial flexibility," added Mr. Portmann.
2018 First Quarter Operational Results from Continuing
Operations
New Gold's first quarter gold production of 96,882 ounces was
significantly higher than 2017 primarily due to the first full
quarter of production from Rainy
River and higher production from Mesquite, partially offset
by planned lower production at Cerro San Pedro. Quarterly copper
production increased by 8% to 22.2 million pounds when compared to
the first quarter of 2017.
First quarter operating expense per gold ounce of $774 increased relative to the prior-year quarter
mainly due to planned higher operating expenses at Rainy River in its first full quarter of
operation. The company had first quarter all-in sustaining costs of
$1,219 per ounce, including total
cash costs of $558 per ounce. The
increase in all-in sustaining costs relative to the prior-year
quarter was attributable to the combined impact of a $322 per ounce increase in total cash costs and a
$336 per ounce, or $46 million, increase in the company's
consolidated sustaining costs, which include New Gold's cumulative
sustaining capital, exploration, general and administrative, and
amortization of reclamation expenditures. The increase in
consolidated total cash costs was primarily driven by lower than
run rate quarterly production at Rainy
River, resulting in higher per ounce costs. At the same
time, quarterly sustaining costs of $65
million included $15 million,
or $152 per ounce, of Rainy River related sustaining capital
expenditures that were incurred in the fourth quarter of 2017 and
paid in the first quarter of 2018, resulting in higher all-in
sustaining costs.
New Gold reiterates its guidance for full-year gold production
of 525,000 to 595,000 ounces, and operating expense per gold ounce
of $555 to $595. Assuming current commodity prices and
foreign exchange rates, New Gold is also pleased to reiterate its
2018 full-year all-in sustaining costs of $860 to $900 per
ounce.
|
|
|
Three months ended
March 31
|
|
2018
|
2017
|
Operating
information
|
|
|
Gold
(ounces):
|
|
|
|
Produced
|
96,882
|
60,980
|
|
Sold
|
98,688
|
59,913
|
Copper (millions
of pounds):
|
|
|
|
Produced
|
22.2
|
20.5
|
|
Sold
|
21.3
|
19.9
|
Silver (millions
of ounces):
|
|
|
|
Produced
|
0.2
|
0.2
|
|
Sold
|
0.2
|
0.2
|
Revenue:
|
|
|
|
Gold
($/ounce)
|
1,306
|
1,238
|
|
Copper
($/pound)
|
2.86
|
2.34
|
|
Silver
($/ounce)
|
16.09
|
17.09
|
Average realized
price(5):
|
|
|
|
Gold
($/ounce)
|
1,328
|
1,276
|
|
Copper
($/pound)
|
3.14
|
2.57
|
|
Silver
($/ounce)
|
16.61
|
17.52
|
Operating
expense:
|
|
|
|
Gold
($/ounce)
|
774
|
607
|
|
Copper
($/pound)
|
1.83
|
1.22
|
|
Silver
($/ounce)
|
9.68
|
8.34
|
Total cash costs
($/ounce)
|
558
|
236
|
All-in sustaining
costs ($/ounce)
|
1,219
|
561
|
Rainy River
|
|
|
Three months ended
March 31
|
|
2018
|
2017
|
Operating
information
|
|
|
Gold
(ounces):
|
|
|
|
Produced
|
39,325
|
-
|
|
Sold
|
40,880
|
-
|
Silver
(ounces):
|
|
|
|
Produced
|
54,764
|
-
|
|
Sold
|
58,788
|
-
|
Operating
expense:
|
|
|
|
Gold
($/ounce)
|
1,240
|
-
|
|
Silver
($/ounce)
|
15.57
|
-
|
All-in sustaining
costs ($/ounce)
|
2,447
|
-
|
Mining activity continued to progress on plan during the
quarter. Rainy River mined a total
of 3.3 million tonnes of ore and currently has a high/medium grade
stockpile of approximately 1.3 million tonnes that is available for
processing in the near-term, and a low-grade stockpile of
approximately 2.1 million tonnes that is scheduled to be processed
at the end of the mine life. During the quarter, the mine processed
1.6 million tonnes of ore at an average gold grade of 1.1 grams per
tonne with recoveries of 81%.
The process facility encountered operational and mechanical
challenges during the quarter that impacted availability. No single
issue accounted for a significant portion of the unplanned
downtime. However, plugged apron feeders, premature motor failure
on the cyclone feed pump, and additional time required for the
initial replacement of SAG mill liners are examples of the issues
encountered. These issues were addressed through the quarter which
also provided insight into minor design improvements that should
improve the process facility performance going forward. Review and
implementation of the design improvements is underway, ultimately
reducing reoccurrence and increasing operational stability.
Importantly, the process facility demonstrated its operational
potential with throughput rates averaging approximately 22,500
tonnes per operating day. Recoveries in the quarter were lower than
planned due to the previously described process interruptions as
well as performance and increased wear of various screens, which
have since been addressed. The focus in the second quarter is on
increasing and stabilizing the process facility availability as
well as recoveries.
Through the first twenty-three days of April, gold recovery has
increased to over 87% resulting in month-to-date production of
approximately 15.7 thousand ounces of gold as the operation is
beginning to see the positive impact of addressing the above-noted
challenges. Rainy River's 2018
production profile is expected to increase quarter-over-quarter, as
both gold grade and gold recoveries continue to increase, while the
team also continues to focus on further enhancing the mechanical
availability of the process facility.
In addition, there continues to be an opportunity to increase
the process facility's throughput rate. During the quarter, New
Gold engaged an external engineering firm and are currently
finalizing a study that could increase Rainy River's throughput to a steady 24,000
tonne per day rate. Based on the findings to date, the adjustments
to the back-end of the mill could be completed for a minimal
capital expenditure. The Company plans to provide further details
on the study as part of its second quarter results.
First quarter operating expenses and all-in sustaining costs
were above the annual guidance ranges as expected, due to the first
quarter being the lowest production volume quarter of the year.
New Afton
|
|
|
Three months ended
March 31
|
|
2018
|
2017
|
Operating
information
|
|
|
Gold
(ounces):
|
|
|
|
Produced
|
19,988
|
20,937
|
|
Sold
|
18,485
|
20,716
|
Copper (millions
of pounds):
|
|
|
|
Produced
|
22.2
|
20.5
|
|
Sold
|
21.3
|
19.9
|
Operating
expense:
|
|
|
|
Gold
($/ounce)
|
408
|
458
|
|
Copper
($/pound)
|
0.96
|
0.92
|
All-in sustaining
costs ($/ounce)
|
(1,313)
|
(505)
|
All-in sustaining
costs on a co-product basis:
|
|
|
|
Gold
($/ounce)
|
631
|
679
|
|
Copper
($/pound)
|
1.48
|
1.36
|
Gold production at New Afton remained consistent with the first
quarter of 2017 as a planned decrease in ore mined and processed
was partially offset by an increase in gold recovery. Copper
production increased relative to the prior-year quarter due to an
increase in copper grade and copper recovery.
First quarter operating expense per gold ounce decreased as
expenses were apportioned to each metal on a percentage of revenue
basis, with gold revenue representing a lower portion of total
sales in the quarter versus the prior-year quarter. All-in
sustaining costs decreased as the benefit of higher by-product
revenues was only partially offset by higher sustaining costs.
By-product revenues benefitted from both an increase in the
realized copper price and higher copper sales volumes.
Mesquite
|
|
|
Three months ended
March 31
|
|
2018
|
2017
|
Operating
information
|
|
|
Gold
(ounces):
|
|
|
|
Produced
|
33,111
|
30,403
|
|
Sold
|
34,534
|
29,153
|
Operating
expense:
|
|
|
|
Gold
($/ounce)
|
818
|
695
|
All-in sustaining
costs ($/ounce)
|
854
|
765
|
The increase in gold production at Mesquite relative to the
first quarter of 2017, was due to higher ore tonnes mined and
placed, and an increase in process solution flow on the heap leach
pad which resulted in a continued drawdown of leach pad
inventory.
First quarter operating expenses increased when compared to the
prior-year quarter due to increased ore tonnes mined and processed,
and higher process solution flow. First quarter all-in sustaining
costs were higher quarter-over-quarter due to the increase in
operating costs partially offset by a decrease in sustaining
capital.
Cerro San Pedro
|
|
|
Three months ended
March 31
|
|
2018
|
2017
|
Operating
information
|
|
|
Gold
(ounces):
|
|
|
|
Produced
|
4,448
|
9,640
|
|
Sold
|
4,789
|
10,044
|
Silver (millions
of ounces):
|
|
|
|
Produced
|
0.1
|
0.2
|
|
Sold
|
0.1
|
0.2
|
Operating
expense:
|
|
|
|
Gold
($/ounce)
|
1,594
|
1,150
|
|
Silver
($/ounce)
|
20.09
|
15.84
|
All-in sustaining
costs ($/ounce)
|
1,706
|
1,255
|
Cerro San Pedro finished active mining late in the second
quarter of 2016 and has since transitioned to residual leaching. As
a result, and consistent with expectations, the mine's first
quarter gold and silver production decreased compared to the prior
year. First quarter operating expenses and all-in sustaining costs
increased when compared to the prior-year quarter due to lower gold
sales volumes. As the company is drawing down leach pad inventory
during the residual leach period, $397 per ounce of the reported all-in sustaining
costs are related to mining costs that were incurred in prior
periods.
2018 First Quarter Financial Results
|
|
|
Three months ended
March 31
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
CONTINUING
OPERATIONS
|
|
|
Revenues
|
$193.2
|
$124.5
|
Operating
margin(6)
|
75.9
|
62.1
|
(Loss) earnings from
continuing operations
|
(29.1)
|
30.9
|
(Loss) earnings from
continuing operations per share (basic)
|
(0.05)
|
0.06
|
Adjusted (loss)
earnings from continuing operations
|
(16.1)
|
1.2
|
Adjusted (loss)
earnings per share from continuing operations
|
(0.03)
|
0.00
|
Operating cash flows
generated from continuing operations
|
50.2
|
57.3
|
Operating cash flows
generated from continuing operations before changes in
non-cash operating working capital
|
67.4
|
49.3
|
|
|
|
TOTAL OPERATIONS
(includes Peak Mines)
|
|
|
Net (loss)
earnings
|
(29.5)
|
37.5
|
Net (loss) earnings
per share (basic)
|
(0.05)
|
0.07
|
Cash generated from
operations
|
65.1
|
76.8
|
Continuing Operations
First quarter revenues from continuing operations increased by
$69 million, or 55%, relative to the
prior-year quarter, due to higher metal sales volumes and prices.
Relative to the first quarter of 2017, gold sales increased by 65%,
attributable to the start-up of Rainy
River, and the average realized gold price increased by
$52 per ounce, or 4%. Copper sales at
New Afton increased by 7%, and the average realized copper price
increased by $0.57 per pound, or 22%,
compared to the prior-year quarter.
New Gold's first quarter operating margin increased by
$14 million relative to the
prior-year quarter driven by the higher gold and copper sales
volumes and prices, which were partially offset by higher operating
expenses.
The Company reported a loss from continuing operations of
$29 million, or $0.05 per share, in the first quarter of 2018
relative to earnings from continuing operations of $31 million, or $0.06 per share, in the prior-year quarter. The
first quarter loss from continuing operations included a
$20 million non-cash foreign exchange
loss and a $10 million pre-tax gain
on the revaluation of the Company's copper price option contracts
and gold stream obligation. The prior-year quarter included the net
impact of a $33 million pre-tax gain
on the disposal of the El Morro stream, a $14 million pre-tax loss on the revaluation of
the Company's gold price option contracts and gold stream
obligation, and a $4 million pre-tax
foreign exchange gain.
New Gold had an adjusted loss from continuing operations of
$16 million, or $0.03 per share, in the first quarter of 2018
relative to adjusted earnings of $1
million, or $0.00 per share,
in the prior-year quarter. Quarterly adjusted loss from continuing
operations included the net impact of a $22
million increase in depreciation and depletion expense, a
$16 million increase in finance
costs, partially offset by a $14
million increase in operating margin, a $4 million decrease in adjusted income tax
expense, and a $3 million decrease in
exploration, business development, and corporate general and
administrative expenses.
The Company's first quarter operating cash flows generated from
continuing operations before changes in non-cash operating working
capital of $67 million was
$18 million, or 37%, higher than the
prior-year quarter due to the increase in operating margin and the
decrease in exploration, business development, and corporate
general and administrative expenses. Operating cash flows generated
from continuing operations in the first quarter of $50 million was lower than the prior-year quarter
due to the prior-year period including an outstanding concentrate
receivable of $21 million at New
Afton and the current period including an increase in working
capital associated with the increase in stockpile inventory at
Rainy River.
Financial Update
New Gold's cash and cash equivalents as at March 31, 2018 were $191
million. At March 31, 2018,
the Company has drawn $230 million
from its $400 million revolving
credit facility and $136 million has
been used to issue letters of credit for closure obligations at the
Company's producing mines and development projects, leaving
$34 million undrawn. As a result, at
March 31, 2018, the Company's
liquidity totals $225 million (cash
and undrawn credit facility). In addition to this, net proceeds and
release of letters of credit related to the sale of Peak Mines
totaling approximately $60 million,
and the expected free cash flow generation from our operating
mines, will further increase the Company's liquidity position.
At March 31, 2018, the face value
of the Company's long-term debt was $1,030
million (book value – $1,008
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 $230
million drawn from the revolving credit facility. The
Company currently has approximately 579 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 2018.
Capital expenditures at Blackwater during the first quarter were
$2 million.
Webcast and Conference Call
A webcast and conference call to discuss these results will be
held on Thursday, April 26, 2018 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
May 26, 2018 by calling toll free
1-855-859-2056, or 1-416-849-0833 outside of the U.S. and
Canada, passcode 1553528. An
archived webcast will also be available until July 26, 2018 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 in top-rated jurisdictions.
The New Afton and Rainy River Mines in Canada, the Mesquite Mine in the United States 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 Blackwater
project 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 "2018 first quarter operational results
from continuing operations" and "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, and timing for approval of the
environmental assessment for the Blackwater 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 and U.S. dollar, and to a lesser
extent, the Mexican Peso, 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 mine and Blackwater
project 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 and the absence of material negative
comments during the applicable regulatory processes; and (9)
in the case of production, cost and expenditure outlooks at the
operating mines for 2018, commodity prices and exchange rates being
consistent with those estimated for the purposes for 2018.
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 and, to a lesser extent,
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 and, to a lesser
extent, 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, 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; 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; 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. 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
operation of New Gold's operating mines contained herein has been
reviewed and approved by Mr. Nicholas
Kwong, Director, Business Improvement 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. Mr. Kwong
is a Professional Engineer and member of the Association of
Professional Engineers and Geoscientists of British Columbia. Mr. Petersen is a SME
Registered Member, AIPG Certified Professional Geologist. Mr.
Petersen and Mr. Kwong 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, 2017
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
March 31, 2018
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
76.4
|
38.9
|
2.0
|
117.3
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
98,688
|
21.3
|
0.2
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
774
|
1.83
|
9.68
|
|
Operating
expenses(1)
|
76.4
|
38.9
|
2.0
|
117.3
|
Treatment and
refining charges on concentrate sales
|
2.2
|
6.0
|
0.1
|
8.3
|
Adjustments(2)
|
(0.1)
|
(0.1)
|
-
|
(0.2)
|
Total cash
costs
|
78.4
|
44.8
|
2.1
|
125.4
|
By-product silver and
copper sales
|
|
|
|
(70.3)
|
Total cash costs net
of by-product revenue
|
|
|
|
55.1
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
98,688
|
21.3
|
0.2
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
795
|
2.11
|
10.19
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
558
|
Total co-product cash
costs
|
78.4
|
44.8
|
2.1
|
|
Total cash costs net
of by-product revenue
|
|
|
|
55.1
|
Sustaining capital
expenditures(5)
|
36.3
|
18.5
|
1.0
|
55.8
|
Sustaining
exploration - expensed
|
0.3
|
0.1
|
-
|
0.4
|
Corporate G&A
including share-based compensation(4)
|
4.3
|
2.2
|
0.1
|
6.6
|
Reclamation
expenses
|
1.6
|
0.8
|
0.1
|
2.5
|
Total co-product
all-in sustaining costs
|
120.9
|
66.4
|
3.3
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
120.3
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
1,225
|
3.12
|
15.57
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
1,219
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments relate to
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.
|
(5)
|
For the three months
ended March 31, 2018, sustaining capital expenditures are net of
$0.3 million in proceeds from disposal of assets
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Three months ended
March 31, 2017
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
36.4
|
24.3
|
1.7
|
62.4
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
59,913
|
19.9
|
0.2
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
607
|
1.22
|
8.34
|
|
Operating
expenses(1)
|
36.4
|
24.3
|
1.7
|
62.4
|
Treatment and
refining charges on concentrate sales
|
2.3
|
4.4
|
0.1
|
6.8
|
Adjustments(2)
|
(0.1)
|
(0.1)
|
-
|
(0.2)
|
Total cash
costs
|
38.6
|
28.7
|
1.8
|
69.1
|
By-product silver and
copper sales
|
|
|
|
(54.9)
|
Total cash costs net
of by-product revenue
|
|
|
|
14.2
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
59,913
|
19.9
|
0.2
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
644
|
1.44
|
8.74
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
236
|
Total co-product cash
costs
|
38.6
|
28.7
|
1.8
|
|
Total cash costs net
of by-product revenue
|
|
|
|
14.2
|
Sustaining capital
expenditures
|
5.2
|
3.4
|
0.3
|
8.9
|
Sustaining
exploration - expensed
|
0.3
|
0.2
|
-
|
0.5
|
Corporate G&A
including share-based compensation(4)
|
5.0
|
3.4
|
0.2
|
8.6
|
Reclamation
expenses
|
0.9
|
0.6
|
0.1
|
1.6
|
Total co-product
all-in sustaining costs
|
50.0
|
36.2
|
2.4
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
33.7
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
834
|
1.82
|
11.35
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
561
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments relate to
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) Operating Cash Flows Generated from Continuing Operations
before Changes in Working Capital
"Operating cash flows generated from continuing operations
before changes in working capital" is a non-GAAP financial measures
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 operating cash
flows generated from continuing 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.
Operating Cash Flows Generated from Continuing Operations
before Changes in Working Capital Reconciliation
|
|
|
Three months ended
March 31
|
(in millions of
U.S. dollars)
|
2018
|
2017
|
Operating cash flows
generated from continuing operations
|
$50.2
|
$57.3
|
Add back (deduct):
Change in non-cash operating working capital
|
17.2
|
(8.0)
|
Operating cash flows
generated from continuing operations before changes in
non-cash working capital
|
67.4
|
49.3
|
(4) Adjusted Net Earnings/(Loss) from Continuing
Operations
"Adjusted net (loss)/earnings from continuing operations" and
"adjusted net (loss)/earnings per share from continuing operations"
are non-GAAP financial measures. Earnings/(loss) from continuing
operations 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 from continuing operations and
adjusted net (loss)/earnings per share from continuing operations
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 from Continuing Operations
Reconciliation
|
|
|
Three months ended
March 31
|
(in millions of
U.S. dollars, except per share amounts)
|
2018
|
2017
|
Earnings (loss)
before taxes from continuing operations
|
($24.1)
|
30.5
|
|
Other losses
(gains)
|
8.2
|
(25.7)
|
Adjusted net earnings
(loss) from continuing operations before tax
|
(15.9)
|
4.8
|
|
Income tax recovery
(expense)
|
(5.0)
|
0.4
|
|
Income tax
adjustments
|
4.8
|
(4.0)
|
Adjusted income tax
expense
|
(0.2)
|
(3.6)
|
Adjusted net earnings
(loss) from continuing operations
|
(16.1)
|
1.2
|
Adjusted earnings
(loss) per share from continuing operations (basic and
diluted)
|
(0.03)
|
0.00
|
Adjusted effective
tax rate
|
1%
|
(75%)
|
(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
March 31
|
(in millions of
U.S. dollars)
|
2018
|
2017
|
Revenues
|
$193.2
|
$124.5
|
Less: Operating
expenses
|
(117.3)
|
(62.4)
|
Operating
margin
|
75.9
|
62.1
|
Condensed Consolidated Income Statements (unaudited)
|
|
|
Three months ended
March 31
|
(in millions of
U.S. dollars, except per share amounts)
|
2018
|
2017
|
Revenues
|
$193.2
|
$124.5
|
Operating
expenses
|
117.3
|
62.4
|
Depreciation and
depletion
|
68.2
|
45.9
|
Revenue less cost of
goods sold
|
7.7
|
16.2
|
Corporate
administration
|
5.4
|
7.5
|
Share-based payment
expenses
|
1.4
|
1.2
|
Exploration and
business development
|
0.6
|
1.7
|
Earnings from
operations
|
0.3
|
5.8
|
Finance
income
|
0.5
|
0.2
|
Finance
costs
|
(16.7)
|
(1.2)
|
Other (losses)
gains
|
(8.2)
|
25.7
|
(Loss) earnings
before taxes
|
(24.1)
|
30.5
|
Income tax (expense)
recovery
|
(5.0)
|
0.4
|
(Loss) earnings
from continuing operations
|
(29.1)
|
30.9
|
(Loss) earnings from
continuing operations, net of tax
|
(0.4)
|
6.6
|
Net (loss)
earnings
|
(29.5)
|
37.5
|
(Loss) earnings from
continuing operations per share
|
|
|
Basic
|
(0.05)
|
0.06
|
Diluted
|
(0.05)
|
0.06
|
(Loss) earnings per
share
|
|
|
Basic
|
(0.05)
|
0.07
|
Diluted
|
(0.05)
|
0.07
|
Weighted average
number of shares outstanding (in millions)
|
|
|
Basic
|
578.7
|
528.1
|
Diluted
|
578.7
|
528.9
|
Condensed Consolidated Statements of Financial Position
(unaudited)
|
|
|
|
As at March
31
|
As at December
31
|
(in millions of
U.S. dollars)
|
2018
|
2017
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$191.3
|
$216.2
|
Trade and other
receivables
|
24.0
|
27.1
|
Inventories
|
195.3
|
193.2
|
Current income tax
receivable
|
15.2
|
12.9
|
Prepaid expenses and
other
|
8.4
|
5.6
|
Total current
assets
|
434.2
|
455.0
|
|
|
|
Non-current
inventories
|
99.5
|
78.7
|
Mining
interests
|
3,154.4
|
3,200.4
|
Deferred tax
assets
|
159.8
|
171.6
|
Other
|
2.6
|
2.6
|
|
3,850.5
|
3,908.3
|
Assets held for
sale
|
101.0
|
109.0
|
Total
assets
|
3,951.5
|
4,017.3
|
LIABILITIES AND
EQUITY
|
|
|
Current
liabilities
|
|
|
Trade and other
payables
|
150.8
|
178.2
|
Current income tax
payable
|
3.0
|
3.0
|
Total current
liabilities
|
153.8
|
181.2
|
|
|
|
Reclamation and
closure cost obligations
|
120.4
|
121.5
|
Gold stream
obligation
|
235.3
|
249.0
|
Provisions
|
2.9
|
2.6
|
Long-term
debt
|
1,008.4
|
1,007.7
|
Deferred tax
liabilities
|
257.9
|
250.3
|
Other
|
2.3
|
2.7
|
|
1,781.0
|
1,815.0
|
Liabilities held for
sale
|
55.2
|
62.8
|
Total
liabilities
|
1,836.2
|
1,877.8
|
Equity
|
|
|
Common
shares
|
3,036.7
|
3,036.5
|
Contributed
surplus
|
104.3
|
103.2
|
Other
reserves
|
(34.9)
|
(38.9)
|
Deficit
|
(990.8)
|
(961.3)
|
Total
equity
|
2,115.3
|
2,139.5
|
Total liabilities
and equity
|
3,951.5
|
4,017.3
|
Condensed Consolidated Statements of Cash Flow
(unaudited)
|
|
|
Three months ended
March 31
|
(in millions of
U.S. dollars)
|
2018
|
2017
|
OPERATING
ACTIVITIES
|
|
|
(Loss) earnings
from continuing operations
|
($29.1)
|
$30.9
|
Adjustments
for:
|
|
|
Foreign exchange
losses (gains)
|
19.9
|
(4.4)
|
Reclamation and
closure costs paid
|
(0.2)
|
(0.4)
|
Gain on disposal of
El Morro stream
|
-
|
(33.0)
|
Depreciation and
depletion
|
68.0
|
46.3
|
Other non-cash
adjustments
|
(11.4)
|
11.7
|
Income tax expense
(recovery)
|
5.0
|
(0.4)
|
Finance
income
|
(0.5)
|
(0.2)
|
Finance
costs
|
16.7
|
1.2
|
|
68.4
|
51.7
|
Change in non-cash
operating working capital
|
(17.2)
|
8.0
|
Income taxes (paid)
refunded
|
(1.0)
|
(2.4)
|
Operating cash flows
generated from continuing operations
|
50.2
|
57.3
|
Operating cash flows
generated from discontinued operations
|
14.9
|
19.5
|
Cash generated from
operations
|
65.1
|
76.8
|
INVESTING
ACTIVITIES
|
|
|
Mining
interests
|
(68.7)
|
(138.3)
|
Proceeds from the
sale of El Morro stream and other assets
|
0.3
|
65.3
|
Interest
received
|
0.3
|
0.2
|
Investing cash flows
used by continuing operations
|
(68.1)
|
(72.8)
|
Investing cash flows
used by discontinued operations
|
(8.7)
|
(5.4)
|
Cash used by
investing activities
|
(76.8)
|
(78.2)
|
FINANCING
ACTIVITY
|
|
|
Proceeds received
from exercise of options
|
-
|
0.1
|
Net proceeds received
from issuances of common shares
|
-
|
165.7
|
Cash settlement of
gold stream obligation
|
(3.1)
|
-
|
Interest
paid
|
(3.6)
|
(1.5)
|
Cash (used by)
generated from financing activities
|
(6.7)
|
164.3
|
Effect of exchange
rate changes on cash and cash equivalents
|
(0.8)
|
0.7
|
Cash and cash
equivalents as held for sale
|
(5.7)
|
-
|
Change in cash and
cash equivalents
|
(24.9)
|
163.6
|
Cash and cash
equivalents, beginning of period
|
216.2
|
185.9
|
Cash and cash
equivalents, end of year
|
191.3
|
349.5
|
Cash and cash
equivalents are comprised of:
|
|
|
Cash
|
141.4
|
255.8
|
Short-term money
market instruments
|
49.9
|
93.7
|
|
191.3
|
349.5
|
View original
content:http://www.prnewswire.com/news-releases/new-gold-announces-2018-first-quarter-results-300636645.html
SOURCE New Gold Inc.