(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, July 25, 2018 /CNW/ - New Gold Inc. ("New Gold"
or the "Company") (TSX:NGD) (NYSE American:NGD) today announces its
2018 second quarter results and updated 2018 outlook. 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 and was sold in
April 2018.
2018 Second Quarter Highlights
- Gold production of 108,550 ounces and copper production of 20.4
million pounds
- Operating expense of $680 per
gold ounce and $1.67 per copper
pound
- All-in sustaining costs(1) of $877 per ounce, including total cash
costs(2) of $453 per
ounce
- Operating cash flows generated from continuing operations of
$66 million, or $0.11 per share
- Loss from continuing operations of $302
million, or $0.52 per share,
including an impairment loss, net of tax of $282 million, or $0.49 per share
- June 30, 2018 total liquidity of
$270 million, including cash and cash
equivalents of $167 million
- Updated 2018 outlook: 415,000 to 480,000 ounces of gold
production (previously 525,000 to 595,000 ounces of gold) at all-in
sustaining costs of $1,080 to
$1,120 per ounce (previously
$860 to $900 per ounce)
- Rainy River updated
life-of-mine plan completed, NI 43-101 Technical Report will be
released in early August
2018 Outlook Update
As our Rainy River Mine is well into its start-up year, New Gold
today provides an updated 2018 production and cost outlook. Gold
production at New Afton, the Company's largest cash flow
contributor, Mesquite and Cerro San
Pedro remain in line with New Gold's original guidance.
However, largely due to the variability in the process facility's
start-up performance and lower gold grade and recoveries, the
Company is lowering its 2018 annual production guidance for
Rainy River from earlier
estimates.
Annual consolidated gold production for 2018 is expected to be
between 415,000 and 480,000 ounces, with Rainy River contributing between 210,000 and
250,000 ounces. Annual consolidated copper production remains in
line with the original guidance range of 75 to 85 million
pounds.
New Gold expects its consolidated 2018 all-in sustaining costs
to be between $1,080 to $1,120 per ounce, total cash costs to be between
$445 to $485 per ounce, and operating expense to be
between $655 to $695 per gold ounce. These estimates have
increased due to Rainy River's
revised 2018 production outlook and a $15
million increase in Rainy
River's sustaining capital expenditures associated with
completing the full tailings dam footprint. Growth capital at
Rainy River is also expected to
increase by $15 million due to higher
underground development costs. For the balance of the year, the
cost targets include assumptions for gold, silver and copper prices
of $1,300 per ounce, $16.00 per ounce and $3.00 per pound, respectively, and a Canadian
dollar exchange rate of $1.30 to the
U.S. dollar.
|
|
|
|
|
Gold
Production (Koz)
|
Q2'2018
|
YTD'2018
|
Original
Guidance
|
Revised
Guidance
|
Rainy
River
|
55
|
95
|
310 - 350
|
210 - 250
|
New Afton
|
19
|
39
|
55 - 65
|
No change
|
Mesquite
|
32
|
65
|
140 - 150
|
No change
|
Cerro San
Pedro
|
3
|
7
|
20 - 30
|
10 - 15
|
Consolidated
|
109
|
205
|
525 -
595
|
415 -
480
|
|
|
|
|
|
|
|
|
|
|
All-in Sustaining
Costs ($/oz)
|
Q2'2018
|
YTD'2018
|
Original
Guidance
|
Revised
Guidance
|
Rainy
River
|
$1,295
|
$1,794
|
$990-$1,090
|
$1,600 -
$1,700
|
New Afton
|
($917)
|
($1,118)
|
($1,020)-($980)
|
No change
|
Mesquite
|
$875
|
$864
|
$1,005-1,045
|
No change
|
Cerro San
Pedro
|
$2,522
|
$2,020
|
$1,330-$1,370
|
$2,000 -
$2,140
|
Consolidated
|
$877
|
$1,037
|
$860-$900
|
$1,080 -
$1,120
|
|
|
|
|
|
|
|
|
|
|
Gold Operating
Expense ($/oz)
|
Q2'2018
|
YTD'2018
|
Original
Guidance
|
Revised
Guidance
|
Rainy
River
|
$802
|
$993
|
$430 -
$470
|
$730 -
$770
|
New Afton
|
$412
|
$410
|
$455 -
$495
|
No change
|
Mesquite
|
$848
|
$832
|
$890 -
$930
|
No change
|
Cerro San
Pedro
|
$2,425
|
$1,905
|
$1,255 -
$1,295
|
$1,960 -
$2,000
|
Consolidated
|
$680
|
$725
|
$555 -
$595
|
$655 -
$695
|
2018 Second Quarter and Year-To-Date Operational Results from
Continuing Operations
New Gold's second quarter gold production of 108,550 ounces was
higher than 2017 primarily due to additional ounces from
Rainy River that more than offset
the planned lower production at New Afton, Mesquite and
Cerro San Pedro. Quarterly copper
production decreased by 11% to 20.4 million pounds when compared to
the second quarter of 2017.
Second quarter operating expense per gold ounce of $680 increased relative to the prior-year quarter
mainly due to higher operating expenses at Rainy River in its second full quarter of
operation due to start-up challenges impacting both production and
costs. The Company had second quarter all-in sustaining costs of
$877 per ounce, including total cash
costs of $453 per ounce. The increase
in all-in sustaining costs relative to the prior-year quarter was
attributable to the combined impact of a $164 per ounce increase in total cash costs and a
$48 per ounce, or $17 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. The increase in
consolidated sustaining costs was primarily related to increased
Rainy River sustaining capital
expenditures as the operation continues its first full year of
operations.
For the six-month period ended June 30,
2018, New Gold's gold production of 205,432 ounces was
significantly higher than 2017 as additional ounces from
Rainy River more than offset the
planned lower production at New Afton, Mesquite and Cerro San Pedro. Year-to-date copper production
remained in line with the prior-year period.
Year-to-date operating expense per gold ounce of $725 increased relative to the prior year mainly
due to higher operating expenses at Rainy
River in its first full year of operation. For the six-month
period ended June 30, 2018, the
Company delivered all-in sustaining costs of $1,037 per ounce, including total cash costs of
$502 per ounce. The increase in
consolidated total cash costs was primarily driven by lower than
run-rate production at Rainy
River, resulting in higher per ounce costs. The increase in
consolidated sustaining costs was primarily related to Rainy River sustaining capital expenditures as
the operation continues its first full year of operations.
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
108,550
|
79,025
|
205,432
|
140,005
|
|
Sold
|
105,924
|
73,707
|
204,612
|
133,620
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
20.4
|
22.8
|
42.6
|
43.3
|
|
Sold
|
19.6
|
20.8
|
40.9
|
40.7
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.2
|
0.3
|
0.4
|
0.5
|
|
Sold
|
0.2
|
0.2
|
0.4
|
0.4
|
Revenue:
|
|
|
|
|
|
Gold
($/ounce)
|
1,279
|
1,246
|
1,292
|
1,242
|
|
Copper
($/pound)
|
2.91
|
2.32
|
2.89
|
2.33
|
|
Silver
($/ounce)
|
15.89
|
16.72
|
16.00
|
16.90
|
Average realized
price(5):
|
|
|
|
|
|
Gold
($/ounce)
|
1,297
|
1,278
|
1,312
|
1,277
|
|
Copper
($/pound)
|
3.18
|
2.56
|
3.16
|
2.56
|
|
Silver
($/ounce)
|
16.49
|
17.22
|
16.56
|
17.37
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
680
|
603
|
725
|
604
|
|
Copper
($/pound)
|
1.67
|
1.21
|
1.75
|
1.21
|
|
Silver
($/ounce)
|
8.64
|
8.10
|
9.15
|
8.22
|
Total cash costs
($/ounce)
|
453
|
289
|
502
|
265
|
All-in sustaining
costs ($/ounce)
|
877
|
665
|
1,037
|
617
|
Rainy River
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
55,219
|
-
|
94,544
|
-
|
|
Sold
|
51,832
|
-
|
92,712
|
-
|
Silver
(ounces):
|
|
|
|
|
|
Produced
|
60,451
|
-
|
115,215
|
-
|
|
Sold
|
55,889
|
-
|
114,677
|
-
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
802
|
-
|
993
|
-
|
|
Silver
($/ounce)
|
10.20
|
-
|
12.59
|
-
|
All-in sustaining
costs ($/ounce)
|
1,295
|
-
|
1,794
|
-
|
All-in sustaining
costs on a co-product basis:
|
|
Gold
($/ounce)
|
1,295
|
-
|
1,787
|
-
|
|
Silver
($/ounce)
|
16.46
|
-
|
22.65
|
-
|
As it continues through its ramp up, Rainy River demonstrated further increases in
throughput, grade and recovery through the second quarter of 2018.
During the quarter, a total of 3.3 million tonnes of ore was mined,
1.5 million tonnes of ore was processed at an average gold grade of
1.24 grams per tonne with recoveries of 87%.
Process facility performance continued to improve, however,
operational and mechanical challenges consistent with project
startups impacted availability during the second quarter. Review
and implementation of design improvements is underway to reduce
equipment wear and failure and increase operational stability.
Importantly, the crushing and grinding circuit is robust and is
operating consistently, and the process facility continues to
demonstrate its operational potential with throughput rates
increasingly achieving over 24,000 tonnes per day. As previously
discussed, the Company is implementing a plan to increase
Rainy River's throughput to a
steady 24,000 tonne per day rate. This expansion project is on
time, and adjustments to the back end of the process facility are
expected to be completed by the beginning of the fourth quarter at
minimal capital, allowing for an immediate increase to the mine's
throughput rate.
Gold recoveries in the second quarter showed steady improvement,
increasing to 87%, compared to 81% in the first quarter. Recoveries
are expected to continue to improve throughout 2018 as the mine
achieves consistent, steady-state operations.
Since the commencement of mining in 2017, total ore mined has
reconciled positively with the global mineral reserve estimate.
While gold grade increased in the second quarter to 1.24 grams per
tonne from 1.08 grams per tonne in the first quarter, the
identification and segregation of discrete higher-grade ore blocks
has been less predictable than originally contemplated.
Improvements to grade control, sampling procedures and mine
planning criteria are being developed and implemented to address
the variability of mined gold grades on production.
New Afton
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
18,637
|
21,273
|
38,635
|
42,210
|
|
Sold
|
17,945
|
19,573
|
36,430
|
40,289
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
20.4
|
22.8
|
42.6
|
43.3
|
|
Sold
|
19.6
|
20.8
|
40.9
|
40.7
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
412
|
426
|
410
|
442
|
|
Copper
($/pound)
|
1.01
|
0.85
|
0.98
|
0.88
|
All-in sustaining
costs ($/ounce)
|
(917)
|
(358)
|
(1,118)
|
(434)
|
All-in sustaining
costs on a co-product basis:
|
|
Gold
($/ounce)
|
704
|
769
|
667
|
724
|
|
Copper
($/pound)
|
1.72
|
1.53
|
1.60
|
1.44
|
The decrease in gold production at New Afton relative to the
second quarter of 2017 was due to a planned decrease in mill
throughput and an expected decrease in gold grade, partially offset
by an increase in gold recovery. Copper production was lower than
the prior-year quarter due to lower planned mill throughput,
partially offset by an increase in copper recovery.
Second 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 due to higher by-product revenues and lower
quarterly sustaining costs. By-product revenues benefitted from an
increase in the realized copper price which more than offset lower
copper sales volumes.
For the six-month period ended June 30,
2018, New Afton's gold production was below 2017 due to
lower planned mill throughput, partially offset by an increase in
gold recovery. Copper production was slightly lower than the
prior-year period due to lower planned mill throughput, partially
offset by an increase in copper grade and copper recovery.
Operating expenses for the first six months of the year
decreased when compared to the prior year 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
six-month period versus the prior-year period. All-in sustaining
costs decreased due to higher by-product revenues and lower
sustaining costs. By-product revenues benefitted from an increase
in the realized copper price as well as higher copper sales
volumes.
Mesquite
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
31,799
|
48,183
|
64,910
|
78,586
|
|
Sold
|
33,150
|
46,462
|
67,684
|
75,615
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
848
|
703
|
832
|
700
|
All-in sustaining
costs ($/ounce)
|
875
|
789
|
864
|
779
|
The decrease in gold production at Mesquite relative to the
second quarter of 2017 was due to a planned decrease in ore tonnes
mined and placed.
Second quarter operating expense per ounce increased when
compared to the prior-year quarter due to an increase in process
solution flow on the heap leach pad and lower gold sales volumes.
All-in sustaining costs during the quarter increased due to higher
operating costs and lower gold sales volume, partially offset by a
decrease in sustaining costs.
For the six-month period ended June 30,
2018, Mesquite's gold production decreased relative to the
prior-year period due to an expected decrease in ore tonnes mined
and placed.
Operating expense per ounce for the first six months of the year
increased when compared to the prior year due to an increase in
process solution flow on the heap leach pad and lower gold sales
volumes. First six-month all-in sustaining costs increased due to
the increase in operating costs and lower gold sales volume,
partially offset by a decrease in sustaining costs.
Cerro San Pedro
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
2,895
|
9,569
|
7,343
|
19,209
|
|
Sold
|
2,996
|
7,672
|
7,785
|
17,716
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.1
|
0.2
|
0.1
|
0.3
|
|
Sold
|
0.1
|
0.2
|
0.1
|
0.3
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
2,425
|
1,269
|
1,905
|
1,203
|
|
Silver
($/ounce)
|
30.53
|
16.88
|
24.04
|
16.30
|
All-in sustaining
costs ($/ounce)
|
2,522
|
1,414
|
2,020
|
1,325
|
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 second quarter and first six-month gold
and silver production decreased compared to the prior year.
Second quarter and first six-month 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,
a significant portion of the reported all-in sustaining
costs are non-cash or are related to mining costs that were
incurred in prior periods.
2018 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)
|
2018
|
2017
|
2018
|
2017
|
CONTINUING
OPERATIONS
|
|
|
|
|
Revenues
|
195.3
|
143.8
|
388.5
|
268.3
|
Operating
margin(6)
|
89.4
|
72.5
|
165.3
|
134.6
|
Asset impairment, net
of tax
|
282.1
|
-
|
282.1
|
-
|
(Loss) earnings from
continuing operations
|
(301.6)
|
17.8
|
(330.7)
|
48.8
|
(Loss) earnings from
continuing operations per share (basic)
|
(0.52)
|
0.03
|
(0.57)
|
0.09
|
Adjusted (loss)
earnings from continuing operations
|
(1.8)
|
8.9
|
(17.9)
|
10.2
|
Adjusted (loss)
earnings per share from continuing operations
|
(0.00)
|
0.02
|
(0.03)
|
0.02
|
Operating cash flows
generated from continuing operations
|
66.0
|
56.3
|
116.2
|
113.6
|
Operating cash flows
generated from continuing operations
before changes in non-cash operating working capital
|
88.1
|
56.5
|
155.5
|
105.8
|
|
|
|
|
|
TOTAL OPERATIONS
(includes Peak Mines)
|
|
|
|
|
Net (loss)
earnings
|
(302.0)
|
23.1
|
(331.5)
|
60.7
|
Net (loss) earnings
per share (basic)
|
(0.52)
|
0.04
|
(0.57)
|
0.11
|
Cash generated from
operations
|
66.0
|
80.0
|
131.1
|
156.8
|
Continuing Operations
Second quarter revenues from continuing operations increased by
$52 million, or 36%, relative to the
prior-year quarter, due to higher gold sales volumes and higher
metal prices. Relative to the second quarter of 2017, gold sales
increased by 44%, attributable to the start-up of Rainy River, and the average realized gold
price increased by $19 per ounce, or
1%. The average realized copper price increased by $0.62 per pound, or 24%, compared to the
prior-year quarter which was only partially offset by a 6% decrease
in copper sales at New Afton.
New Gold's second quarter operating margin increased by
$17 million relative to the
prior-year quarter driven by the higher gold sales volumes and
higher metal prices, which were partially offset by higher
operating expenses.
The Company has completed an updated Rainy River life-of-mine plan (discussed
below) and will release an updated NI 43-101 Technical Report for
Rainy River in early August. The
updated life-of-mine plan contains updated per unit costs, changes
to the sequencing in gold production and a less than 3% reduction
in gold production over the life-of-mine. The updated life-of-mine
plan incorporates changes to open pit design and extraction
sequencing, resulting in higher ore tonnes mined and processed
at a lower average gold grade. As a result of the Company
completing its updated Rainy River
life-of-mine plan and lowering Rainy
River's 2018 outlook, the Company has reported an impairment
loss, net of tax, of $282
million.
The Company reported a loss from continuing operations of
$302 million, or $0.52 per share, in the second quarter of 2018
relative to earnings from continuing operations of $18 million, or $0.03 per share, in the prior-year quarter. The
second quarter loss from continuing operations included the net
impact of the after-tax impairment charge of $282 million relating to Rainy River, finance costs of $18 million, an $8
million pre-tax foreign exchange loss, a $6 million gain on the revaluation of the gold
stream obligation, and a $2 million
expense relating to severance and other termination benefits. The
prior-year period included an $18
million pre-tax foreign exchange gain, a $2 million loss on the revaluation of the
Company's gold option contracts, and a pre-tax loss of $2 million on the revaluation of the gold stream
obligation.
New Gold had an adjusted net loss from continuing operations of
$2 million, or $nil per basic share,
in the second quarter of 2018 relative to adjusted earnings of
$9 million or $0.02 per basic share in the prior-year quarter.
Quarterly adjusted loss from continuing operations included the net
impact of a $24 million increase in
depreciation and depletion expenses, a $17
million increase in finance costs as the Company ceased
capitalization of interest to its qualifying development property
due to the commencement of commercial production at Rainy River, partially offset by a
$17 million increase in operating
margin, a decrease of $4 million in
exploration, business development, and corporate general and
administrative expenses and an increase in income tax recovery of
$9 million.
The Company's second quarter operating cash flows generated from
continuing operations before changes in non-cash operating working
capital of $88 million was
$32 million, or 56%, higher than the
prior-year quarter due to the increase in operating margin and an
income tax refund received at Mesquite. Operating cash flows
generated from continuing operations for the second quarter were
higher than the prior-year quarter, due to the increase in
operating margin and income tax refund, partially offset by the
increase in stockpile inventory at Rainy
River.
For the six months ended June 30,
2018, revenues from continuing operations increased by
$120 million, or 45%, relative to the
prior-year period, due to higher gold sales volumes and higher
metal prices. Relative to the six months ended June 30, 2017, gold sales increased by 53%,
attributable to the start-up of Rainy
River, and the average realized gold price increased by
$35 per ounce, or 3%. The average
realized copper price increased by $0.60 per pound, or 23%.
New Gold's second quarter operating margin increased by
$31 million relative to the
prior-year period driven by higher gold sales volumes and higher
metal prices, which were partially offset by higher operating
expenses.
The Company reported a loss from continuing operations of
$331 million, or $0.57 per share, in the six months ended
June 30, 2018, relative to earnings
from continuing operations of $49
million, or $0.09 per share,
in the prior-year period. The loss from continuing operations in
the period included the net impact of the after‐tax impairment
charge of $282 million relating to
Rainy River, finance costs of
$35 million, a $28 million pre-tax foreign exchange loss, a
$10 million gain on the revaluation
of the gold stream obligation, a $6
million gain on the revaluation of copper price option
contracts, and a $2 million expense
relating to severance and other termination benefits. The
prior-year period included a $22
million pre-tax foreign exchange gain, a $13 million loss on the revaluation of the
Company's gold option contracts, and a pre-tax loss of $5 million on the revaluation of the gold stream
obligation.
New Gold had an adjusted loss from continuing operations of
$18 million, or $0.03 per basic share, in the six months ended
June 30, 2018 relative to adjusted
net earnings of $10 million, or
$0.02 per basic share in the
prior-year period. Adjusted net loss from continuing operations
included the net impact of a $46
million increase in depreciation and depletion expenses, a
$32 million increase in finance costs
as the Company ceased capitalization of interest to its qualifying
development property due to the commencement of commercial
production at Rainy River,
partially offset by a $31 million
increase in operating margin, a $7
million decrease in exploration, business development, and
corporate general and administrative expenses and a $12 million increase in income tax recovery.
For the six months ended June 30,
2018, the Company's operating cash flows generated from
continuing operations before changes in non-cash operating working
capital of $156 million was
$50 million, or 47%, higher than the
prior-year period due to the increase in operating margin and an
income tax refund received at Mesquite. Operating cash flows
generated from continuing operations for the six months ended
June 30, 2018 were consistent with
the prior-year period, due to the increase in operating margin and
income tax refund, partially offset by 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 June 30, 2018 were $167
million. At June 30, 2018, the
Company had drawn $180 million from
its $400 million revolving credit
facility and $117 million had been
used to issue letters of credit for closure obligations at the
Company's producing mines and development projects, leaving
$103 million undrawn. As a result, at
June 30, 2018, the Company's
liquidity totals $270 million (cash
and undrawn credit facility). In the second quarter of 2018 the
Company amended the credit facility's net debt to Adjusted EBITDA
covenant ("Leverage Ratio"), to increase the maximum Leverage Ratio
to 4.0 to 1.0 until June 30, 2018.
After that date, the maximum ratio will be 3.5 to 1.0.
At June 30, 2018, the face value
of the Company's long-term debt was $980
million (book value – $959
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 $180
million drawn from the revolving credit facility. The
Company currently has approximately 579 million shares
outstanding.
Rainy River Updated Life-Of-Mine Plan
The Company has completed an updated Rainy River life-of-mine plan and will release
an updated NI 43-101 Technical Report for Rainy River in early August. The updated
life-of-mine plan was informed by the experience gained over the
initial start-up period. Also, as previously disclosed, costs are
expected to be higher over the next three years (including 2018) as
a result of sustaining capital expenditures associated with
completing the full tailings dam footprint in 2018 as well as the
construction of the first tailings lift later in 2018 and into
2019.
Rainy River updated
life-of-mine highlights include:
- Mine life of 14 years (unchanged)
- Processing of open pit and underground ore, at a rate of 21,000
tonnes per day, increasing to 24,000 tonnes per day in the fourth
quarter of 2018, and 25,500 tonnes per day in 2021
- First nine years: average annual gold production of 340,000
ounces (previously 275,000 to 375,000 ounces) at all-in sustaining
costs of $1,016 per ounce (previously
approximately $875 per ounce), cost
targets include assumptions for gold and silver of $1,300 per ounce and $16.00 per ounce, respectively, and a Canadian
dollar exchange rate of $1.30 to the
U.S. dollar
- Life-of-mine average gold grade of 1.09 grams per tonne,
including stockpile (previously 1.13 grams per tonne)
- Updated Rainy River NI 43-101 Technical Report will be
released in early August
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 is working through the remaining
requests for information received in the quarter and anticipates
approval of the Blackwater EA in 2019.
Capital expenditures at Blackwater during the second quarter and
year-to-date were $2 million and
$4 million, respectively.
Conference Call and Webcast Details
Date:
|
Thursday, July 26,
2018
|
Time:
|
9:00 a.m. Eastern
Time
|
Dial in:
|
North America:
1-888-231-8191, International: 1-647-427-7450
|
Webcast:
|
https://event.on24.com/wcc/r/1792794/DF26D2A15FDB43CB77C338BF7A93D475
|
Replay:
|
North America:
1-855-859-2056, International: 1-416-849-0833
|
Passcode:
|
9269608
|
The conference call replay will be available until August 23, 2018. An archived webcast will also be
available until October 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 Outlook Update", "Rainy River" and
"Rainy River Updated Life-of-Mine
Plan", as well as other statements elsewhere in this news
release, including, among others, statements with respect to:
guidance for production and costs, and the factors contributing to
those expected results, including mill throughput, metal recoveries
and ore grade, as well as expected capital and other expenditures;
planned development activities and timing for 2018 and future years
at the Rainy River Mine, including adjustments to the back-end of
the mill; and the revised life-of-mine plan and Technical
Report.
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, exchange rates, grades, recovery
rates, mill availability and mill throughput 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; risks related to early
production at the Rainy River Mine, including failure of equipment,
machinery, the process circuit or other processes to perform as
designed or intended; 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
June 30, 2018
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
71.9
|
32.6
|
1.4
|
105.9
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
105,924
|
19.6
|
0.2
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
680
|
1.67
|
8.64
|
|
Operating
expenses(1)
|
71.9
|
32.6
|
1.4
|
105.9
|
Treatment and
refining charges on concentrate sales
|
1.9
|
5.2
|
0.1
|
7.2
|
Adjustments(2)
|
(0.2)
|
(0.1)
|
-
|
(0.3)
|
Total cash
costs
|
73.6
|
37.7
|
1.5
|
112.8
|
By-product silver and
copper sales
|
|
|
|
(65.1)
|
Total cash costs net
of by-product revenue
|
|
|
|
47.7
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
105,924
|
19.6
|
0.2
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
696
|
1.93
|
9.22
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
453
|
Total co-product cash
costs
|
73.6
|
37.7
|
1.5
|
|
Total cash costs net
of by-product revenue
|
|
|
|
47.7
|
Sustaining capital
expenditures
|
24.7
|
11.2
|
0.5
|
36.4
|
Sustaining
exploration - expensed
|
0.3
|
0.2
|
-
|
0.5
|
Corporate G&A
including share-based compensation(4)
|
3.7
|
1.7
|
0.1
|
5.6
|
Reclamation
expenses
|
1.7
|
0.8
|
-
|
2.5
|
Total co-product
all-in sustaining costs
|
104.0
|
51.6
|
2.1
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
92.7
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
984
|
2.63
|
12.88
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
877
|
|
|
(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.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Six months ended June
30, 2018
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
148.4
|
71.4
|
3.4
|
223.2
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
204,612
|
40.9
|
0.4
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
725
|
1.75
|
9.15
|
|
Operating
expenses(1)
|
148.4
|
71.4
|
3.4
|
223.2
|
Treatment and
refining charges on concentrate sales
|
4.1
|
11.2
|
0.2
|
15.5
|
Adjustments(2)
|
(0.3)
|
(0.2)
|
-
|
(0.5)
|
Total cash
costs
|
152.2
|
82.4
|
3.6
|
238.2
|
By-product silver and
copper sales
|
|
|
|
(135.4)
|
Total cash costs net
of by-product revenue
|
|
|
|
102.8
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
204,612
|
40.9
|
0.4
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
744
|
2.01
|
9.69
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
502
|
Total co-product cash
costs
|
152.2
|
82.4
|
3.6
|
|
Total cash costs net
of by-product revenue
|
|
|
|
102.8
|
Sustaining capital
expenditures(5)
|
61.3
|
29.5
|
1.4
|
92.2
|
Sustaining
exploration - expensed
|
0.7
|
0.3
|
-
|
1.0
|
Corporate G&A
including share-based compensation(4)
|
7.9
|
3.8
|
0.2
|
11.9
|
Reclamation
expenses
|
2.9
|
1.4
|
0.1
|
4.4
|
Total co-product
all-in sustaining costs
|
225.0
|
117.4
|
5.3
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
212.3
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
1,099
|
2.87
|
14.18
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
1,037
|
|
|
(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 six months
ended June 30, 2018, sustaining capital expenditures are net of
$0.3 million in proceeds from disposal of assets.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Three months ended
June 30, 2017
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
44.4
|
25.1
|
1.8
|
71.3
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
73,707
|
20.8
|
0.2
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
603
|
1.21
|
8.1
|
|
Operating
expenses(1)
|
44.4
|
25.1
|
1.8
|
71.3
|
Treatment and
refining charges on concentrate sales
|
2.4
|
5.0
|
0.1
|
7.5
|
Adjustments(2)
|
(0.2)
|
(0.1)
|
-
|
(0.3)
|
Total cash
costs
|
46.6
|
30.0
|
1.9
|
78.5
|
By-product silver and
copper sales
|
|
|
|
(57.2)
|
Total cash costs net
of by-product revenue
|
|
|
|
21.3
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
73,707
|
20.8
|
0.2
|
73,707
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
632
|
1.44
|
8.58
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
289
|
Total co-product cash
costs
|
46.6
|
30.0
|
1.9
|
|
Total cash costs net
of by-product revenue
|
|
|
|
21.3
|
Sustaining capital
expenditures
|
10.0
|
5.7
|
0.4
|
16.1
|
Sustaining
exploration - expensed
|
0.2
|
0.2
|
-
|
0.4
|
Corporate G&A
including share-based compensation(4)
|
5.3
|
3.0
|
0.2
|
8.5
|
Reclamation
expenses
|
1.6
|
0.9
|
0.1
|
2.7
|
Total co-product
all-in sustaining costs
|
63.8
|
39.7
|
2.6
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
49.0
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
866
|
1.91
|
11.73
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
665
|
|
|
(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.
|
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)
|
80.7
|
49.4
|
3.6
|
133.7
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
133,620
|
40.7
|
0.4
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
604
|
1.21
|
8.22
|
|
Operating
expenses(1)
|
80.7
|
49.4
|
3.6
|
133.7
|
Treatment and
refining charges on concentrate sales
|
4.7
|
9.4
|
0.2
|
14.3
|
Adjustments(2)
|
(0.3)
|
(0.2)
|
-
|
(0.5)
|
Total cash
costs
|
85.1
|
58.6
|
3.8
|
147.5
|
By-product silver and
copper sales
|
|
|
|
(112.0)
|
Total cash costs net
of by-product revenue
|
|
|
|
35.4
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
133,620
|
40.7
|
0.4
|
|
Total cash costs on a
co-product basis(3) ($/ounce or pound)
|
637
|
1.44
|
8.65
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
265
|
Total co-product cash
costs
|
85.1
|
58.6
|
3.8
|
|
Total cash costs net
of by-product revenue
|
|
|
|
35.4
|
Sustaining capital
expenditures
|
15.1
|
9.3
|
0.7
|
25.1
|
Sustaining
exploration - expensed
|
0.4
|
0.3
|
-
|
0.7
|
Corporate G&A
including share-based compensation(4)
|
10.3
|
6.3
|
0.5
|
17.1
|
Reclamation
expenses
|
2.6
|
1.6
|
0.1
|
4.3
|
Total co-product
all-in sustaining costs
|
113.5
|
76.0
|
5.1
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
82.6
|
All-in sustaining
costs on a co-product basis(3) ($/ounce or
pound)
|
849
|
1.87
|
11.53
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
617
|
|
|
(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
June 30
|
Six months ended June
30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
Operating cash flows
generated from continuing operations
|
66.0
|
56.3
|
116.2
|
113.6
|
Add back (deduct):
Change in non-cash operating working capital
|
22.1
|
0.2
|
39.3
|
(7.8)
|
Operating cash flows
generated from continuing operations before
changes in non-cash working capital
|
88.1
|
56.5
|
155.5
|
105.8
|
(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
June 30
|
Six months ended June
30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
(Loss) earnings
before taxes from continuing operations
|
(399.4)
|
23.3
|
(423.5)
|
53.9
|
Other losses
(gains)
|
2.3
|
(14.7)
|
10.5
|
(40.4)
|
Asset
impairment
|
383.7
|
-
|
383.7
|
-
|
Corporate
restructuring
|
2.3
|
-
|
2.3
|
-
|
Adjusted net earnings
(loss) from continuing operations before tax
|
(11.1)
|
8.6
|
(27.0)
|
13.5
|
Income tax recovery
(expense)
|
97.8
|
(5.5)
|
92.8
|
(5.1)
|
Income tax
adjustments
|
(88.5)
|
5.8
|
(83.7)
|
1.8
|
Adjusted income tax
expense
|
9.3
|
0.3
|
9.1
|
(3.3)
|
Adjusted net earnings
(loss) from continuing operations
|
(1.8)
|
8.9
|
(17.9)
|
10.2
|
Adjusted earnings
(loss) per share from continuing operations (basic and
diluted)
|
nil
|
0.02
|
(0.03)
|
0.02
|
(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)
|
2018
|
2017
|
2018
|
2017
|
Revenues
|
195.3
|
143.8
|
388.5
|
268.3
|
Less: Operating
expenses
|
105.9
|
71.3
|
223.2
|
133.7
|
Operating
margin
|
89.4
|
72.5
|
165.3
|
134.6
|
Consolidated Income Statements (unaudited)
|
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
Revenues
|
195.3
|
143.8
|
388.5
|
268.3
|
Operating
expenses
|
105.9
|
71.3
|
223.2
|
133.7
|
Depreciation and
depletion
|
77.1
|
53.1
|
145.3
|
99.0
|
Revenue less cost of
goods sold
|
12.3
|
19.4
|
20.0
|
35.6
|
Corporate
administration
|
5.5
|
5.9
|
10.9
|
13.4
|
Corporate
restructuring
|
2.3
|
-
|
2.3
|
-
|
Share-based payment
expenses
|
0.1
|
2.6
|
1.5
|
3.8
|
Asset
impairment
|
383.7
|
-
|
383.7
|
-
|
Exploration and
business development
|
0.4
|
1.5
|
1.0
|
3.2
|
(Loss) earnings from
operations
|
(379.7)
|
9.4
|
(379.4)
|
15.2
|
Finance
income
|
0.6
|
0.3
|
1.1
|
0.6
|
Finance
costs
|
(18.0)
|
(1.1)
|
(34.7)
|
(2.3)
|
Other (losses)
gains
|
(2.3)
|
14.7
|
(10.5)
|
40.4
|
(Loss) earnings
before taxes
|
(399.4)
|
23.3
|
(423.5)
|
53.9
|
Income tax recovery
(expense)
|
97.8
|
(5.5)
|
92.8
|
(5.1)
|
(Loss) earnings
from continuing operations
|
(301.6)
|
17.8
|
(330.7)
|
48.8
|
(Loss) earnings from
discontinued operations, net of tax
|
(0.4)
|
5.3
|
(0.8)
|
11.9
|
Net (loss)
earnings
|
(302.0)
|
23.1
|
(331.5)
|
60.7
|
(Loss) earnings from
continuing operations per share
|
|
|
|
Basic
|
(0.52)
|
0.03
|
(0.57)
|
0.09
|
Diluted
|
(0.52)
|
0.03
|
(0.57)
|
0.09
|
(Loss) earnings per
share
|
|
|
|
|
Basic
|
(0.52)
|
0.04
|
(0.57)
|
0.11
|
Diluted
|
(0.52)
|
0.04
|
(0.57)
|
0.11
|
Weighted average
number of shares outstanding (in millions)
|
Basic
|
578.7
|
575.8
|
578.7
|
552.1
|
Diluted
|
578.7
|
576.3
|
578.7
|
552.7
|
Consolidated Statements of Financial Position
(unaudited)
|
|
|
|
As at June
30
|
As at December
31
|
(in millions of
U.S. dollars)
|
2018
|
2017
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
167.4
|
216.2
|
Trade and other
receivables
|
25.8
|
27.1
|
Inventories
|
198.9
|
193.2
|
Current income tax
receivable
|
9.5
|
12.9
|
Prepaid expenses and
other
|
5.7
|
5.6
|
Total current
assets
|
407.3
|
455.0
|
Non-current
inventories
|
109.1
|
78.7
|
Mining
interests
|
2,786.5
|
3,200.4
|
Deferred tax
assets
|
211.9
|
171.6
|
Other
|
2.3
|
2.6
|
|
3,517.1
|
3,908.3
|
Assets held for
sale
|
-
|
109.0
|
Total
assets
|
3,517.1
|
4,017.3
|
LIABILITIES AND
EQUITY
|
|
|
Current
liabilities
|
|
|
Trade and other
payables
|
136.4
|
178.2
|
Current income tax
payable
|
1.2
|
-
|
Deferred benefit –
Peak sale prepayment
|
-
|
3.0
|
Total current
liabilities
|
137.6
|
181.2
|
Reclamation and
closure cost obligations
|
116.1
|
121.5
|
Gold stream
obligation
|
222.5
|
249.0
|
Provisions
|
2.3
|
2.6
|
Long-term
debt
|
959.1
|
1,007.7
|
Deferred tax
liabilities
|
256.9
|
250.3
|
Other
|
3.8
|
2.7
|
|
1,698.3
|
1,815.0
|
Liabilities held for
sale
|
-
|
62.8
|
Total
liabilities
|
1,698.3
|
1,877.8
|
Equity
|
|
|
Common
shares
|
3,036.7
|
3,036.5
|
Contributed
surplus
|
104.3
|
103.2
|
Other
reserves
|
(29.4)
|
(38.9)
|
Deficit
|
(1,292.8)
|
(961.3)
|
Total
equity
|
1,818.8
|
2,139.5
|
Total liabilities
and equity
|
3,517.1
|
4,017.3
|
Consolidated Statements of Cash Flow (unaudited)
|
|
|
(in millions of
U.S. dollars,
except per share amounts)
|
Three months ended
June 30
|
Six months ended June
30
|
2018
|
2017
|
2018
|
2017
|
OPERATING
ACTIVITIES
|
|
|
|
|
(Loss) earnings from
continuing operations
|
(301.6)
|
17.8
|
(330.7)
|
48.8
|
Adjustments
for:
|
|
|
|
|
Foreign exchange
losses (gains)
|
8.1
|
(17.6)
|
28.0
|
(22.0)
|
Asset
impairment
|
383.7
|
-
|
383.7
|
-
|
Reclamation and
closure costs paid
|
(0.1)
|
(0.2)
|
(0.3)
|
(0.6)
|
Gain on disposal of
El Morro stream
|
-
|
-
|
-
|
(33.0)
|
Depreciation and
depletion
|
78.2
|
53.2
|
146.2
|
99.5
|
Other non-cash
adjustments
|
(1.6)
|
4.4
|
(13.0)
|
16.1
|
Income tax (recovery)
expense
|
(97.8)
|
5.5
|
(92.8)
|
5.1
|
Finance
income
|
(0.6)
|
(0.3)
|
(1.1)
|
(0.6)
|
Finance
costs
|
18.0
|
1.1
|
34.7
|
2.3
|
|
86.3
|
63.9
|
154.7
|
115.6
|
Change in non-cash
operating working capital
|
(22.1)
|
(0.2)
|
(39.3)
|
7.8
|
Income taxes received
(paid)
|
1.8
|
(7.4)
|
0.8
|
(9.8)
|
Operating cash flows
generated from continuing operations
|
66.0
|
56.3
|
116.2
|
113.6
|
Operating cash flows
generated from discontinued operations
|
-
|
23.7
|
14.9
|
43.2
|
Cash generated
from operations
|
66.0
|
80.0
|
131.1
|
156.8
|
INVESTING
ACTIVITIES
|
|
|
|
|
Mining
interests
|
(50.1)
|
(179.6)
|
(118.8)
|
(317.9)
|
Proceeds from the
sale of Peak Mines, net of transaction costs
|
42.4
|
-
|
42.4
|
-
|
Proceeds from the
sale of the El Morro stream and other assets
|
-
|
-
|
0.2
|
65.3
|
Interest
received
|
0.5
|
0.3
|
0.9
|
0.5
|
Gold price option
contract investment costs
|
-
|
(0.9)
|
-
|
(0.9)
|
Investing cash flows
used by continuing operations
|
(7.2)
|
(180.2)
|
(75.3)
|
(253.0)
|
Investing cash flows
used by discontinued operations
|
-
|
(8.5)
|
(8.7)
|
(13.9)
|
Cash used by
investing activities
|
(7.2)
|
(188.7)
|
(84.0)
|
(266.9)
|
FINANCING
ACTIVITY
|
|
|
|
|
Proceeds received
from exercise of options
|
-
|
0.5
|
-
|
0.6
|
Net proceeds received
from issuance of common shares
|
-
|
(1.0)
|
-
|
164.7
|
Repayment of credit
facility
|
(50.0)
|
-
|
(50.0)
|
-
|
Finance lease
payments
|
(0.6)
|
-
|
(0.6)
|
-
|
Cash settlement of
gold stream obligation
|
(3.5)
|
-
|
(6.6)
|
-
|
Issuance of senior
unsecured notes, net of transaction costs
|
-
|
295.1
|
-
|
295.1
|
Repayment of senior
unsecured notes
|
-
|
(305.3)
|
-
|
(305.3)
|
Interest
paid
|
(28.7)
|
(31.3)
|
(32.3)
|
(32.8)
|
Cash (used by)
generated by financing activities
|
(82.8)
|
(42.0)
|
(89.5)
|
122.3
|
Effect of exchange
rate changes on cash and cash equivalents
|
0.1
|
-
|
(0.7)
|
0.7
|
Cash and cash
equivalents classified as held for sale
|
-
|
-
|
(5.7)
|
-
|
Change in cash and
cash equivalents
|
(23.9)
|
(150.7)
|
(48.8)
|
12.9
|
Cash and cash
equivalents, beginning of period
|
191.3
|
349.5
|
216.2
|
185.9
|
Cash and cash
equivalents, end of period
|
167.4
|
198.8
|
167.4
|
198.8
|
Cash and cash
equivalents are comprised of:
|
Cash
|
136.1
|
145.4
|
136.1
|
145.4
|
Short-term money
market instruments
|
31.3
|
53.4
|
31.3
|
53.4
|
|
167.4
|
198.8
|
167.4
|
198.8
|
View original
content:http://www.prnewswire.com/news-releases/new-gold-announces-2018-second-quarter-results-and-updates-2018-outlook-300686820.html
SOURCE New Gold Inc.