Rainy River Reports Improved Productivity in
September
(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, Oct. 24, 2018 /CNW/ - New Gold Inc. ("New
Gold" or the "Company") (TSX:NGD) (NYSE American:NGD) today
announces its 2018 third quarter results. Unless otherwise noted,
all operating and financial results have been presented on a
continuing basis and exclude the Mesquite Mine and Peak Mines,
which have been classified as discontinued operations.
(For detailed information, please refer to the
Company's Third Quarter Management's Discussion and Analysis and
Financial Statements that are available on the Company's website at
www.newgold.com and on SEDAR at www.sedar.com. The Company
uses certain non-GAAP financial performance measures throughout
this news release. Please refer to the "Non-GAAP Financial
Performance Measures" section of this news release.)
2018 Third Quarter Highlights
- Appointed Mr. Renaud Adams as
President and CEO effective September 12,
2018
- Appointed Mr. James Gowans to
the Board of Directors effective July 8,
2018
- Announced the sale of the Mesquite Mine for gross proceeds of
$158 million, subject to closing
adjustments, expected to close during the fourth quarter
- Gold production from total operations of 114,025
ounces and copper production of 21.7 million pounds
- Operating expense from continuing operations of $644 per gold ounce and $1.57 per copper pound
- All-in sustaining costs from total operations(1) of
$966 per ounce, including total cash
costs(2) of $424 per ounce
- Revenues of $147 million from
continuing operations
- Operating cash flows of $51
million, or $0.09 per
share
- Operating cash flows before changes in non-cash operating
working capital of $83 million, or
$0.14 per share
- Loss from continuing operations of $2
million, or $0.00 per
share
- Net loss of $166 million, or
$0.29 per share, including an
impairment loss, net of tax of $162
million, relating to the sale of the Mesquite Mine
- September 30, 2018 total
liquidity of $253 million, including
cash and cash equivalents of $129
million, prior to the receipt of Mesquite sale
proceeds
"The third quarter included many positive changes for New Gold
that will help reposition the Company as a leading,
Canadian-focused intermediate gold producer. We strengthened the
technical experience of the Board and senior executive team and
announced the sale of the Mesquite Mine, which improves our cash
position, secures the liquidity to complete the ramp-up of
Rainy River, and allows us to
focus exclusively on our two producing assets, Rainy River and New Afton, and unlocking value
for our Blackwater project," stated Renaud
Adams, President and Chief Executive Officer. "The fourth
quarter will be a pivotal quarter for New Gold as we advance a
short-term operational plan at Rainy
River to reposition this core operation for long-term
success. We are confident that additional productivity improvements
will be realized during the fourth quarter. Our New Afton Mine
continues to deliver solid and consistent results, and we are
currently evaluating alternative scenarios to advance the
development of the C-zone beginning in early 2019. We will
launch exploration programs at both assets as we seek to achieve
organic growth opportunities by expanding our resource base."
2018 Third Quarter and Year-To-Date Financial Results
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
CONTINUING
OPERATIONS(i)
|
|
|
|
|
Revenues
|
147.1
|
93.0
|
447.1
|
265.2
|
Operating
margin(6)
|
64.5
|
51.6
|
197.6
|
143.0
|
Asset impairment, net
of tax
|
-
|
-
|
282.1
|
-
|
(Loss) earnings from
continuing operations
|
(1.6)
|
26.7
|
(343.1)
|
68.9
|
Earnings (loss) from
continuing operations per share (basic)
|
(0.00)
|
0.05
|
(0.59)
|
0.12
|
Adjusted (loss)
earnings from continuing operations
|
(4.6)
|
2.6
|
(33.3)
|
(0.1)
|
Adjusted (loss)
earnings per share from continuing operations
|
(0.01)
|
0.00
|
(0.06)
|
(0.00)
|
Operating cash flows
generated from continuing operations
|
43.2
|
54.8
|
135.2
|
138.8
|
Operating cash flows
generated from continuing operations before changes in
non-cash operating working capital
|
69.7
|
45.6
|
189.8
|
114.3
|
TOTAL OPERATIONS
(includes Mesquite and Peak Mines)
|
|
|
|
|
|
|
Net (loss)
earnings
|
(165.8)
|
27.0
|
(497.3)
|
87.6
|
Net (loss) earnings
per share (basic)
|
(0.29)
|
0.05
|
(0.86)
|
0.16
|
Cash generated from
operations
|
51.1
|
66.0
|
182.1
|
223.4
|
i.
Continuing operations include the Rainy River, New Afton and Cerro
San Pedro Mines.
|
Third Quarter Financial Highlights - Continuing
Operations
- Revenues for the quarter from continuing operations increased
by $54 million, or 58%, relative to
the prior-year period, due to higher gold sales volumes which
offset lower gold prices. Relative to the prior-year period, gold
sales increased by 169%, attributable to the start-up of
Rainy River.
- The average realized gold price for the quarter decreased by
$85 per ounce, or 7%, and the average
realized copper price for the quarter increased by $0.15 per pound, or 5%, relative to the
prior-year quarter, which was only partially offset by a 6%
decrease in copper sales at New Afton.
- Operating margin for the quarter increased by $13 million relative to the prior-year period,
driven by the higher gold sales volumes, which were partially
offset by higher operating expenses as well as a heap leach
inventory and net realizable value inventory write-down of
$12 million at Cerro San Pedro as the
mine moved to reclamation activities.
- The Company reported a loss from continuing operations of
$2 million, or $0.00 per share in the quarter, a decrease
relative to earnings of $27 million,
or $0.05 per share, in the prior-year
period. The third quarter loss from continuing operations included
the net impact of finance costs of $18
million, an $11 million
pre-tax foreign exchange gain, and a $5
million gain on the revaluation of the gold stream
obligation, while the prior-year period included a $31 million pre-tax foreign exchange gain.
- New Gold had an adjusted net loss from continuing operations of
$5 million, or $0.01 per basic share, in the third quarter of
2018 relative to adjusted earnings of $3
million, or $0.01 per basic
share in the prior-year quarter. Quarterly adjusted loss from
continuing operations included the net impact of a $16 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, a
$20 million increase in depreciation
and depletion expenses, partially offset by a $23 million increase in operating margin and a
decrease of $6 million in
exploration, business development, and corporate general and
administrative expenses.
- Operating cash flows generated from continuing operations for
the quarter, before changes in non-cash operating working capital
of $70 million, was $24 million, or 53%, higher than the prior-year
period due to the increase in operating margin and a reduction in
exploration and corporate general and administrative expenses.
Operating cash flows generated from continuing operations for the
quarter were lower than the prior-year period due to the increase
in stockpile inventory at Rainy
River.
Year-to-Date Financial Highlights - Continuing
Operations
- Revenues for the period from continuing operations increased by
$182 million, or 69%, relative to the
prior-year period, due to higher gold sales volumes and higher
copper prices. Relative to the prior-year period, gold sales
increased by 147%, attributable to the start-up of Rainy River.
- The average realized gold price for the period decreased by
$10 per ounce, or 1%, and the average
realized copper price for the quarter increased by $0.44 per pound, or 17%, relative to the
prior-year period.
- Operating margin for the period increased by $55 million relative to the prior-year period
driven by higher gold sales volumes and higher copper prices, which
was partially offset by higher operating expenses.
- During the second quarter of 2018, the Company completed an
updated Rainy River life-of-mine
plan, and in early August 2018 an
updated National Instrument 43-101 Technical Report for
Rainy River was released. 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 updated life-of-mine
plan and the associated revision of Rainy
River's 2018 outlook, the Company reported an impairment
loss, net of tax, of $282 million in
the second quarter of 2018.
- The Company reported a loss from continuing operations of
$343 million, or $0.59 per share, for the period relative to
earnings from continuing operations of $69
million, or $0.12 per share,
in the prior-year period. The loss from continuing operations
included the net impact of the after‐tax impairment charge of
$282 million relating to Rainy River, finance costs of $52 million, a $14
million gain on the revaluation of the gold stream
obligation, a $7 million gain on the
revaluation of copper price option contracts, a $17 million pre-tax foreign exchange loss, and a
$2 million restructuring charge,
while the prior-year period included a $53
million pre-tax foreign exchange gain and a $33 million gain on the sale of the El Morro
stream.
- New Gold had an adjusted loss from continuing operations of
$33 million, or $0.06 per basic share, in the period relative to
$0.1 million, or $0.00 per basic share in the prior-year period.
Adjusted net loss from continuing operations included the net
impact of a $71 million increase in
depreciation and depletion expenses, and a $48 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 $65 million
increase in operating margin, a $13
million decrease in exploration, business development, and
corporate general and administrative expenses, and an $8 million increase in income tax recovery.
- Operating cash flows generated from continuing operations for
the period, before changes in non-cash operating working capital of
$190 million, was $75 million, or 66%, higher than the prior-year
period due to the increase in operating margin. Operating cash
flows generated from continuing operations for the period were
consistent with the prior-year period, as the increase in operating
margin was offset in the prior-year period by the receipt of an
outstanding concentrate receivable of $21
million at New Afton, and in the current period by an
increase in working capital associated with the increase in
stockpile inventory at Rainy
River.
Third Quarter Financial Highlights - Total Operations
(including Mesquite and Peak Mines)
- For total operations, a net loss of $166
million, or $0.29 per share,
was reported for the quarter. The decrease in net earnings relative
to earnings from continuing operations relates to an after-tax
impairment loss of $162 million on
the classification of Mesquite as an asset held for sale.
- Cash generated from total operations of $51 million for the quarter was lower than the
prior-year period due to the increase in stockpile inventory at
Rainy River and the prior-year
year period including Peak Mines, which was sold early in the
second quarter of 2018.
Year-to-Date Financial Highlights - Total Operations
(including Mesquite and Peak Mines)
- The Company reported a net loss of $497
million, or $0.86 per share
for the period. The decrease in net earnings relative to earnings
from continuing operations primarily relates to the after-tax
impairment loss of $162 million on
the classification of Mesquite as an asset held for sale.
- Cash generated from operations for the nine-month period of
$182 million, was lower than the
prior-year period, primarily due to the receipt of an outstanding
concentrate receivable of $21 million
at New Afton in the prior-year period and an increase in working
capital associated with the increase in stockpile inventory at
Rainy River which was only
partially offset by the increase in operating margin. The
prior-year period also included Peak Mines, which was sold early in
the second quarter of 2018.
2018 Third Quarter and Year-To-Date Operational
Results
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
CONTINUING
OPERATIONS(i)
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
77,533
|
29,520
|
218,055
|
90,939
|
|
Sold
|
76,653
|
28,479
|
213,581
|
86,484
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
21.7
|
22.8
|
64.3
|
66.0
|
|
Sold
|
20.5
|
21.8
|
61.4
|
62.5
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.2
|
0.2
|
0.5
|
0.7
|
|
Sold
|
0.2
|
0.2
|
0.5
|
0.7
|
Revenue
|
|
|
|
|
|
Gold
($/ounce)
|
1,179
|
1,205
|
1,246
|
1,203
|
|
Copper
($/pound)
|
2.67
|
2.53
|
2.81
|
240
|
|
Silver
($/ounce)
|
13.69
|
16.05
|
15.31
|
16.62
|
Average realized
price(5)
|
|
|
|
|
Gold
($/ounce)
|
1,205
|
1,290
|
1,275
|
1,285
|
|
Copper
($/pound)
|
2.93
|
2.78
|
3.08
|
2.64
|
|
Silver
($/ounce)
|
14.30
|
16.55
|
15.89
|
17.10
|
Operating
expense
|
|
|
|
|
Gold
($/ounce)
|
644
|
527
|
677
|
546
|
|
Copper
($/pound)
|
1.57
|
1.14
|
1.64
|
1.12
|
|
Silver
($/ounce)
|
7.64
|
6.79
|
8.43
|
7.12
|
Total cash costs
($/ounce)
|
239
|
(535)
|
303
|
(378)
|
All-in sustaining
costs ($/ounce)
|
984
|
264
|
1,069
|
358
|
|
|
|
|
TOTAL OPERATIONS
(includes Mesquite and Peak Mines)
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
114,025
|
82,027
|
344,890
|
296,521
|
|
Sold
|
112,058
|
79,904
|
338,145
|
286,019
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
21.7
|
26.0
|
68.7
|
76.2
|
|
Sold
|
20.5
|
24.5
|
66.2
|
71.7
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.2
|
0.3
|
0.6
|
0.9
|
|
Sold
|
0.2
|
0.3
|
0.6
|
0.8
|
Total cash costs
($/ounce)
|
424
|
339
|
455
|
332
|
All-in sustaining
costs ($/ounce)
|
966
|
792
|
984
|
706
|
i.
|
Continuing operations
include the Rainy River, New Afton and Cerro San Pedro
Mines.
|
Third Quarter Operational Highlights
- Third quarter gold production of 114,025 ounces (including
36,492 ounces from Mesquite) was higher than the prior-year period
primarily due to additional ounces from Rainy River that more than offset the planned
lower production at New Afton, Mesquite and Cerro San Pedro. Copper
production of 21.7 million pounds and silver production of 0.2
million ounces for the quarter was lower than the prior-year
period, consistent with planned lower copper and silver production
in 2018.
- Operating expense per gold ounce for the quarter from
continuing operations of $644
increased relative to the prior-year period mainly due to planned
higher operating expenses at Rainy
River and the impact of a heap leach inventory and net
realizable value write-down at Cerro San Pedro.
- All-in sustaining costs for the quarter from continuing
operations were $984 per ounce,
including total cash costs of $239
per ounce. All-in sustaining costs from all operations were
$966 per ounce, including total cash
costs of $424 per ounce. The increase
in all-in sustaining costs from all operations relative to the
prior-year period was attributable to the combined impact of an
$85 per ounce increase in total cash
costs and a $25 million increase in
the Company's consolidated sustaining costs, which include
sustaining capital, exploration, general and administrative, and
amortization of reclamation expenditures. The increase in
consolidated total cash costs was primarily driven by higher per
ounce operating costs at Rainy
River. The increase in consolidated sustaining costs was
primarily related to Rainy River
sustaining capital expenditures as construction of certain
infrastructure continued in the quarter.
Year-to-Date Operational Highlights
- For the nine-month period, gold production of 344,890 ounces
(including 101,402 ounces from Mesquite and 25,432 ounces from
Peak) was significantly higher than the prior-year period as
additional ounces from Rainy River
more than offset the planned lower production at New Afton,
Mesquite and Cerro San Pedro. Copper production of 68.7 million
pounds (including 4.4 million pounds from Peak) and silver
production of 0.6 million ounces (including 0.1 million ounces from
Peak) were lower than the prior-year period, consistent with
planned lower copper and silver production in 2018.
- Operating expense per gold ounce of $677 for the period from continuing operations
increased relative to the prior-year period mainly due to planned
higher operating expenses at Rainy
River in its first nine months of operations.
- All-in sustaining costs from continuing operations were
$1,069 per ounce for the period,
including total cash costs of $303
per ounce. All-in sustaining costs from all operations were
$984 per ounce, including total cash
costs of $455 per ounce. The increase
in consolidated total cash costs was primarily driven by higher per
ounce operating costs at Rainy
River. The increase in consolidated sustaining costs was
primarily related to sustaining capital expenditures at
Rainy River incurred during its
first full year of operations.
Rainy River
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
55,538
|
-
|
150,082
|
-
|
|
Sold
|
55,968
|
-
|
148,680
|
-
|
Silver
(ounces):
|
|
|
|
|
|
Produced
|
59,643
|
-
|
174,858
|
-
|
|
Sold
|
61,708
|
-
|
176,385
|
-
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
760
|
-
|
905
|
-
|
|
Silver
($/ounce)
|
9.40
|
-
|
11.41
|
-
|
All-in sustaining
costs ($/ounce)
|
1,546
|
-
|
1,700
|
-
|
All-in sustaining
costs on a co-product basis:
|
|
Gold
($/ounce)
|
1,541
|
-
|
1,694
|
-
|
|
Silver
($/ounce)
|
19.07
|
-
|
21.35
|
-
|
Rainy River
Operational Metrics
|
|
Q4 2017
|
Q1 2018
|
Q2 2018
|
Q3 2018
|
Sept. 2018
|
Tonnes mined per
day
(ore and
waste)
|
111,820
|
112,432
|
107,416
|
102,290
|
110,248
|
Ore tonnes mined per
day
|
29,639
|
36,296
|
36,043
|
30,439
|
23,085
|
Strip Ratio
(waste:ore)
|
2.77
|
2.10
|
1.98
|
2.36
|
3.78
|
Tonnes milled per
day
|
16,022
|
17,534
|
16,549
|
16,962
|
20,462
|
Gold grade milled
(g/t)
|
0.94
|
1.08
|
1.24
|
1.21
|
1.32
|
Gold recovery
(%)
|
86.1
|
81.0
|
87.0
|
87.0
|
89.0
|
Mill availability
(%)
|
N/A
|
77
|
74
|
76
|
90
|
Production
|
28,509
|
39,325
|
55,219
|
55,538
|
25,517
|
- During the quarter, overall operational performance at
Rainy River improved, particularly
following the completion of a five-day mill shutdown in late
August. During the shutdown, the work completed included a
Semi-Autogenous Grinding (SAG) mill reline, modifications to the
elution circuit and the replacement of carbon elution circuit
screens. Immediately following the upgrade, mill availability,
processing rates and metal recoveries improved and supported the
best-ever monthly performance in September.
- During the quarter, the mill facility processed 1.6 million
tonnes, or 16,962 tonnes per day, at a grade of 1.21 grams per
tonne, with recoveries of 87%. Following the mill upgrade, mill
availability increased to average approximately 90% in September.
Supported by the improved availability of the mill facility,
September processing rates increased to average 20,462 tonnes per
day, at a gold recovery rate of 89%.
- Production for the quarter was 55,538 gold ounces, which
included the five days related to the mill shutdown in August.
Following the completion of the modifications, mill performance
improved, which supported solid monthly production of 25,517 gold
ounces in September. The operation is on track to meet the low end
of the revised 2018 production guidance.
- Operating expense for the quarter was $760 per ounce. Operating expense per ounce is
expected to exceed revised 2018 guidance estimates due to the
impact of unplanned maintenance costs related to the mill facility.
Operating expense is expected to decline in the coming quarters, as
operational performance improves.
- All-in sustaining costs for the quarter were $1,546 per ounce, and are expected to be within
revised 2018 annual guidance estimates. It is expected that all-in
sustaining costs will continue to decline, corresponding with the
planned productivity improvements and the completion of
construction activities.
- During the quarter, the open pit mined approximately 9.4
million tonnes of ore and waste (102,290 tonnes per day).
- Reconciliation of tonnes and grades from blast hole samples in
the quarter were in line with the resource model. Optimization of
mining practices to reduce overall mine dilution continued during
the quarter.
- At the end of the quarter, approximately 3.4 million tonnes of
medium grade and 2.9 million tonnes of lower grade ore, at grades
of 0.73 and 0.46 grams per tonne respectively, was stockpiled ahead
of the mill facility for future processing.
Rainy River: The
Operational Plan Forward
The Company has launched a near-term operational plan that will
focus on creating a culture of continuous improvement to drive
operational efficiencies. The plan is focused on optimizing mine
practices, enhancing grade control procedures, and further
improving mill availability and gold recoveries.
- During the fourth quarter, ongoing efforts will primarily focus
on improving mine and mill productivity.
- Concurrently, the Company will maintain a diligent focus on
optimizing capital allocation strategies and has undertaken a
comprehensive review of all key cost drivers that could support
improved cost efficiencies as well as procurement practices.
- A key component of the Company's strategic operating plan is to
expand the technical and operational capacity of the Rainy River
team.
- During the fourth quarter, the Company will assess the
potential launch of an exploration program in 2019 that has the
overall objective of increasing mineral resources and potentially
extending the mine life over the near and longer terms.
New Afton
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
19,916
|
21,569
|
58,551
|
63,779
|
|
Sold
|
18,883
|
20,646
|
55,313
|
60,935
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
21.7
|
22.8
|
64.3
|
66.0
|
|
Sold
|
20.5
|
21.8
|
61.4
|
62.5
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
342
|
407
|
387
|
430
|
|
Copper
($/pound)
|
0.84
|
0.88
|
0.94
|
0.88
|
All-in sustaining
costs ($/ounce)
|
(1,057)
|
(643)
|
(1,097)
|
(505)
|
All-in sustaining
costs on a co-product basis:
|
|
Gold
($/ounce)
|
588
|
709
|
640
|
718
|
|
Copper
($/pound)
|
1.44
|
1.53
|
1.55
|
1.47
|
New Afton Operational
Metrics
|
|
Q4 2017
|
Q1 2018
|
Q2 2018
|
Q3 2018
|
Tonnes mined per
day
|
19,436
|
16,751
|
13,654
|
17,105
|
Tonnes milled per
day
|
16,121
|
14,333
|
14,804
|
14,518
|
Gold grade
(g/t)
|
0.58
|
0.57
|
0.50
|
0.55
|
Gold recovery
(%)
|
80.8
|
84.1
|
85.5
|
84.7
|
Gold
Production
|
22,384
|
19,998
|
18,637
|
19,916
|
Copper grade
(%)
|
93.0
|
94.0
|
82.0
|
89.0
|
Copper recovery
(%)
|
80.9
|
83.2
|
83.8
|
83.0
|
Copper Production
(Mlbs)
|
24.6
|
22.2
|
20.4
|
21.7
|
- The New Afton Mine delivered another quarter of solid, low-cost
production and free cash flow generation. The positive results over
the first nine months of the year have positioned the asset to
meet, or exceed, 2018 production and cost guidance.
- Production for the quarter was 19,196 gold ounces and 21.7
million pounds of copper, on track to meet, or exceed, the high-end
of 2018 production guidance.
- Operating expense for the quarter was $342 per gold ounce and $0.84 per pound of copper. Operating expense for
both gold and copper continue to trend below 2018 guidance
levels.
- All-in sustaining costs for the quarter were ($1,057) per gold ounce, trending lower than 2018
guidance estimates.
- During the fourth quarter, the Company will evaluate various
scenarios to advance an internally funded development strategy for
the C-zone, which could extend the mine life of this asset. A
decision is anticipated in late 2018 with development activities
beginning in early 2019.
- A two-stage project is currently underway to increase copper
recoveries from supergene ore, which is anticipated to become part
of the mill feed in 2019 to 2022, peaking at approximately 40% of
total mill feed in 2020. Commissioning of a gravity recovery
circuit with pressure jigs and a magnetic separator is scheduled
for the fourth quarter, and a Knelson concentrator is anticipated
to be commissioned in the third quarter of 2019.
- During the fourth quarter, the Company will assess the
potential launch of an exploration program in 2019 that has the
overall objective of increasing mineral resources and extending the
mine life over the medium and longer terms.
Cerro San Pedro
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
2,079
|
7,951
|
9,422
|
27,160
|
|
Sold
|
1,802
|
7,833
|
9,587
|
25,549
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.1
|
0.1
|
0.1
|
0.5
|
|
Sold
|
0.1
|
0.1
|
0.1
|
0.5
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
7,715
|
1,388
|
2,950
|
1,260
|
|
Silver
($/ounce)
|
95.81
|
18.10
|
37.31
|
16.86
|
All-in sustaining
costs ($/ounce)
|
3,287
|
1,532
|
2,258
|
1,389
|
- Cerro San Pedro finished active mining late in the second
quarter of 2016 and transitioned to residual leaching. The Company
has discontinued the addition of cyanide to the heap leach pad and
a staged closure process is underway.
Discontinued Operations
Mesquite
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2018
|
2017
|
2018
|
2017
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
36,492
|
38,133
|
101,402
|
116,720
|
|
Sold
|
35,405
|
38,573
|
103,089
|
114,188
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
826
|
750
|
830
|
717
|
All-in sustaining
costs ($/ounce)
|
927
|
866
|
886
|
809
|
- On September 19, 2018, the
Company announced the strategic sale of the Mesquite Mine to
Equinox Gold Corp. for gross cash proceeds of $158 million, subject to closing adjustments, and
results are presented as discontinued operations. The transaction
is expected to close during the fourth quarter.
Financial Update
New Gold's $400 million revolving
credit facility is currently secured by the New Afton and Mesquite
mines. Upon closure of the Mesquite sale and the receipt of
the anticipated proceeds, Rainy
River will be added as security to replace Mesquite in order
to maintain the facility at $400
million and extend it by one year to August 2021. Until the Rainy River security is
perfected, which is expected to occur by 2019 (assuming the
sale closes in the coming weeks), the credit facility will be
limited to a maximum draw of $225
million. The Company expects to direct approximately
$60 million of the Mesquite sale
proceeds to reduce the outstanding balance on the revolving credit
facility and intends to retain approximately $100 million of the proceeds in cash.
At September 30, 2018, the face
value of the Company's long-term debt was $960 million (book value – $940 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 $160 million drawn from the revolving credit
facility. The Company currently has approximately 579 million
shares outstanding.
Projects Update
Blackwater
Internal trade-off studies to potentially optimize and enhance
project economics of the Blackwater project are currently underway.
Concurrently, activities continue to focus on attaining the
approval of the Environmental Assessment ("EA"), which is
anticipated to be received in 2019.
Capital expenditures at Blackwater during the third quarter and
year-to-date were $2 million and
$6 million, respectively.
Conference Call and Webcast Details
Date:
|
Thursday, October 25,
2018
|
Time:
|
10:00 a.m. Eastern
Time
|
Dial in:
|
North America:
1-888-231-8191, International: 1-647-427-7450
|
Webcast:
|
https://event.on24.com/wcc/r/1852623/BAD4CACA14493316D3FDFA5882CBEB76
|
Replay:
|
North America:
1-855-859-2056, International: 1-416-849-0833
|
Passcode:
|
4183034
|
The conference call replay will be available until November 25, 2018. An archived webcast will also
be available until January 26, 2019
at www.newgold.com.
About New Gold Inc.
New Gold is a Canadian-focused 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 "Rainy
River: The Operational Plan Forward", 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, mill availability, 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 the National Instrument
43-101 Technical Report for Rainy
River dated July 25, 2018.
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 the Rainy River National Instrument
43-101 Technical Report dated June 30,
2018 and 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, 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
September 30, 2018
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
49.3
|
32.1
|
1.2
|
82.6
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
76,653
|
20.5
|
0.2
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
644
|
1.57
|
7.64
|
|
Operating
expenses(1)
|
49.3
|
32.1
|
1.2
|
82.6
|
Treatment and
refining charges on concentrate sales
|
2.0
|
5.4
|
0.1
|
7.5
|
Adjustments(2)
|
(5.7)
|
(3.7)
|
-
|
(9.4)
|
Total cash costs from
continuing operations
|
45.6
|
33.8
|
1.3
|
80.7
|
By-product silver and
copper sales from continuing operations
|
|
|
|
(62.4)
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
18.3
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
76,653
|
20.5
|
0.2
|
|
Total cash costs on a
co-product basis(3) from continuing operations ($/ounce
or pound)
|
596
|
1.65
|
7.37
|
|
Total cash costs per
gold ounce sold from continuing operations ($/ounce)
|
|
|
|
239
|
Total co-product cash
costs from continuing operations
|
45.6
|
33.8
|
1.3
|
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
18.3
|
Sustaining capital
expenditures
|
31.2
|
20.3
|
0.8
|
52.3
|
Sustaining
exploration - expensed
|
0.3
|
0.2
|
-
|
0.5
|
Corporate G&A
including share-based compensation(4)
|
1.5
|
1.0
|
-
|
2.5
|
Reclamation
expenses
|
1.0
|
0.7
|
-
|
1.7
|
Total co-product
all-in sustaining costs from continuing operations
|
79.6
|
56.0
|
2.1
|
|
Total all-in
sustaining costs net of by-product revenue from continuing
operations
|
|
|
|
75.4
|
All-in sustaining
costs on a co-product basis from continuing operations
(3) ($/ounce or pound)
|
1,041
|
2.73
|
12.64
|
|
All-in sustaining
costs per gold ounce sold from continuing operations
($/ounce)
|
|
|
|
984
|
Total co-product
all-in sustaining costs (5)
|
113.5
|
55.1
|
2.0
|
|
Total all-in
sustaining costs net of by-product revenue
(5)
|
|
|
|
108.2
|
All-in sustaining
costs on a co-product basis (3) ($/ounce or
pound)
|
1,013
|
2.69
|
12.43
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
966
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
the non-cash heap leach inventory write-down associated with
discontinuing the addition of cyanide to the heap leach pad at
Cerro San Pedro and social closure costs incurred at Cerro San
Pedro 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)
|
Includes the impact
of Mesquite, which has been classified as a discontinued operation
as at and for the three and nine months ended September 30,
2018.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Nine months ended
September 30, 2018
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
144.5
|
100.5
|
4.5
|
249.5
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
213,581
|
61.4
|
0.5
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
677
|
1.64
|
8.43
|
|
Operating
expenses(1)
|
144.5
|
100.5
|
4.5
|
249.5
|
Treatment and
refining charges on concentrate sales
|
6.2
|
16.6
|
0.3
|
23.1
|
Adjustments(2)
|
(5.9)
|
(4.1)
|
(0.2)
|
(10.2)
|
Total cash costs from
continuing operations
|
144.5
|
113.0
|
4.6
|
262.4
|
By-product silver and
copper sales from continuing operations
|
|
|
|
(197.7)
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
64.7
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
213,581
|
61.4
|
0.5
|
|
Total cash costs on a
co-product basis(3) from continuing operations ($/ounce
or pound)
|
683
|
1.84
|
8.67
|
|
Total cash costs per
gold ounce sold from continuing operations ($/ounce)
|
|
|
|
303
|
Total co-product cash
costs from continuing operations
|
144.9
|
113.0
|
4.6
|
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
64.7
|
Sustaining capital
expenditures
|
83.3
|
57.9
|
2.6
|
143.8
|
Sustaining
exploration - expensed
|
0.9
|
0.6
|
-
|
1.5
|
Corporate G&A
including share-based compensation(4)
|
7.9
|
5.5
|
0.2
|
13.6
|
Reclamation
expenses
|
2.6
|
1.8
|
0.1
|
4.5
|
Total co-product
all-in sustaining costs from continuing operations
|
239.6
|
178.8
|
7.5
|
|
Total all-in
sustaining costs net of by-product revenue from continuing
operations
|
|
|
|
228.1
|
All-in sustaining
costs on a co-product basis from continuing operations
(3) ($/ounce or pound)
|
1,122
|
2.91
|
14.19
|
|
All-in sustaining
costs per gold ounce sold from continuing operations
($/ounce)
|
|
|
|
1,069
|
Total co-product
all-in sustaining costs (5)
|
357.5
|
183.6
|
8.0
|
|
Total all-in
sustaining costs net of by-product revenue
(5)
|
|
|
|
332.9
|
All-in sustaining
costs on a co-product basis (3) ($/ounce or
pound)
|
1,057
|
2.78
|
13.60
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
984
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
the non-cash heap leach inventory write-down associated with
discontinuing the addition of cyanide to the heap leach pad at
Cerro San Pedro and social closure costs incurred at Cerro San
Pedro included in operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
(5)
|
Includes the impact
of Mesquite, which has been classified as a discontinued operation
as at and for the three and nine months ended September 30,
2018.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Three months ended
September 30, 2017
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
15.0
|
24.9
|
1.5
|
41.4
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
28,479
|
21.8
|
0.2
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
527
|
1.14
|
6.79
|
|
Operating
expenses(1)
|
15.0
|
24.9
|
1.5
|
41.4
|
Treatment and
refining charges on concentrate sales
|
2.4
|
5.4
|
0.1
|
7.9
|
Adjustments(2)
|
(0.1)
|
(0.2)
|
-
|
(0.3)
|
Total cash costs from
continuing operations
|
17.5
|
30.1
|
1.6
|
49.0
|
By-product silver and
copper sales from continuing operations
|
|
|
|
(64.3)
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
(15.3)
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
28,479
|
21.8
|
0.2
|
|
Total cash costs on a
co-product basis(3) from continuing operations ($/ounce
or pound)
|
610
|
1.40
|
7.20
|
|
Total cash costs per
gold ounce sold from continuing operations ($/ounce)
|
|
|
|
(535)
|
Total co-product cash
costs from continuing operations
|
17.5
|
30.1
|
1.6
|
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
(15.3)
|
Sustaining capital
expenditures
|
4.2
|
7.0
|
0.4
|
11.6
|
Sustaining
exploration - expensed
|
0.4
|
0.6
|
-
|
1.0
|
Corporate G&A
including share-based compensation(4)
|
3.0
|
5.0
|
0.3
|
8.3
|
Reclamation
expenses
|
0.6
|
1.0
|
0.1
|
1.7
|
Total co-product
all-in sustaining costs from continuing operations
|
25.7
|
43.7
|
2.4
|
|
Total all-in
sustaining costs net of by-product revenue from continuing
operations
|
|
|
|
7.5
|
All-in sustaining
costs on a co-product basis from continuing operations
(3) ($/ounce or pound)
|
898
|
2.00
|
11.20
|
|
All-in sustaining
costs per gold ounce sold from continuing operations
($/ounce)
|
|
|
|
264
|
Total co-product
all-in sustaining costs (5)
|
78.1
|
56.7
|
3.3
|
|
Total all-in
sustaining costs net of by-product revenue
(5)
|
|
|
|
63.3
|
All-in sustaining
costs on a co-product basis (3) ($/ounce or
pound)
|
977
|
2.31
|
12.88
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
792
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments relate to
non-cash items related to inventory write-down reversals and social
closure costs incurred at Cerro San Pedro that are included in
operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
(5)
|
Includes the impact
of Mesquite, which has been classified as a discontinued operation
as at and for the three and nine months ended September 30,
2017.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Nine months ended
September 30, 2017
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
47.2
|
70.3
|
4.7
|
122.2
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
86,484
|
62.5
|
0.7
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
546
|
1.10
|
7.10
|
|
Operating
expenses(1)
|
47.2
|
70.3
|
4.7
|
122.2
|
Treatment and
refining charges on concentrate sales
|
7.1
|
14.9
|
0.3
|
22.3
|
Adjustments(2)
|
(0.4)
|
(0.5)
|
-
|
(0.9)
|
Total cash costs from
continuing operations
|
53.9
|
84.7
|
5.0
|
143.6
|
By-product silver and
copper sales from continuing operations
|
|
|
|
(176.3)
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
(32.7)
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
86,484
|
62.5
|
0.7
|
|
Total cash costs on a
co-product basis(3) from continuing operations ($/ounce
or pound)
|
625
|
1.40
|
7.50
|
|
Total cash costs per
gold ounce sold from continuing operations ($/ounce)
|
|
|
|
(378)
|
Total co-product cash
costs from continuing operations
|
53.9
|
84.7
|
5.0
|
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
(32.7)
|
Sustaining capital
expenditures
|
12.2
|
18.3
|
1.2
|
31.7
|
Sustaining
exploration - expensed
|
0.6
|
0.9
|
0.1
|
1.6
|
Corporate G&A
including share-based compensation(4)
|
9.8
|
14.6
|
1.0
|
25.4
|
Reclamation
expenses
|
1.9
|
2.8
|
0.2
|
4.9
|
Total co-product
all-in sustaining costs from continuing operations
|
78.4
|
121.3
|
7.5
|
|
Total all-in
sustaining costs net of by-product revenue from continuing
operations
|
|
|
|
30.9
|
All-in sustaining
costs on a co-product basis from continuing operations
(3) ($/ounce or pound)
|
907
|
1.9
|
11.50
|
|
All-in sustaining
costs per gold ounce sold from continuing operations
($/ounce)
|
|
|
|
358
|
Total co-product
all-in sustaining costs (5)
|
240.4
|
146.4
|
9.4
|
|
Total all-in
sustaining costs net of by-product revenue
(5)
|
|
|
|
188.2
|
All-in sustaining
costs on a co-product basis (3) ($/ounce or
pound)
|
902
|
2.04
|
12.19
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
706
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments relate to
non-cash items related to inventory write-down reversals and social
closure costs incurred at Cerro San Pedro that are included in
operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
(5)
|
Includes the impact
of Mesquite, which has been classified as a discontinued operation
as at and for the three and nine months ended September 30,
2017.
|
(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
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
Operating cash flows
generated from continuing operations
|
43.2
|
54.8
|
135.2
|
138.8
|
Add back (deduct):
Change in non-cash operating working capital from continuing
operations
|
26.5
|
(9.2)
|
54.6
|
(24.5)
|
Operating cash flows
generated from continuing operations before changes in
non-cash working capital
|
69.7
|
45.6
|
189.8
|
114.3
|
Cash generated from
discontinued operations
|
7.9
|
11.2
|
46.9
|
84.6
|
Add back: Change in
non-cash operating working capital from discontinued
operations
|
4.9
|
3.8
|
20.4
|
7.4
|
Cash generated from
operations before changes in non-cash operating working
capital
|
82.5
|
60.6
|
257.1
|
206.3
|
(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 impairment
losses, inventory write-downs, corporate restructuring, and gain on
modification of long-term debt 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
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
Earnings (loss)
before taxes from continuing operations
|
-
|
31.7
|
(423.3)
|
75.1
|
Other losses
(gains)
|
(14.3)
|
(25.2)
|
(3.8)
|
(70.8)
|
Asset
impairment
|
-
|
-
|
383.7
|
-
|
Gain on modification
of long-term debt
|
-
|
(3.3)
|
-
|
(3.3)
|
Corporate
restructuring
|
-
|
-
|
2.3
|
-
|
Inventory
impairment
|
10.5
|
-
|
10.5
|
-
|
Adjusted net (loss)
earnings from continuing operations before tax
|
(3.8)
|
3.2
|
(39.6)
|
1.0
|
Income tax (expense)
recovery
|
(1.6)
|
(5.0)
|
89.2
|
(6.2)
|
Income tax
adjustments
|
0.8
|
4.4
|
(82.9)
|
5.1
|
Adjusted income tax
expense
|
(0.8)
|
(0.6)
|
6.3
|
(1.1)
|
Adjusted net earnings
(loss) from continuing operations
|
(4.6)
|
2.6
|
(33.3)
|
(0.1)
|
Adjusted earnings
(loss) per share from continuing operations (basic and
diluted)
|
(0.01)
|
0.00
|
(0.06)
|
(0.00)
|
(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
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
Revenues
|
141.7
|
93.0
|
447.1
|
265.2
|
Less: Operating
expenses
|
82.6
|
41.4
|
249.5
|
122.2
|
Operating
margin
|
64.5
|
51.6
|
197.6
|
143.0
|
Consolidated Income Statements (unaudited)
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
Revenues
|
147.1
|
93.0
|
447.1
|
265.2
|
Operating
expenses
|
82.6
|
41.4
|
249.5
|
122.2
|
Depreciation and
depletion
|
57.4
|
37.0
|
179.2
|
108.6
|
Revenue less cost of
goods sold
|
7.1
|
14.6
|
18.4
|
34.4
|
Corporate
administration
|
4.7
|
5.4
|
15.6
|
18.8
|
Corporate
restructuring
|
-
|
-
|
2.3
|
-
|
Share-based payment
expenses
|
(1.0)
|
3.1
|
0.5
|
6.9
|
Asset
impairment
|
-
|
-
|
383.7
|
-
|
Exploration and
business development
|
0.5
|
1.9
|
1.5
|
5.1
|
Earnings (loss) from
operations
|
2.9
|
4.2
|
(385.2)
|
3.6
|
Finance
income
|
0.3
|
0.3
|
1.0
|
0.9
|
Finance
costs
|
(17.5)
|
2.0
|
(51.9)
|
(0.2)
|
Other gains
(losses)
|
14.3
|
25.2
|
3.8
|
70.8
|
Earnings (loss)
before taxes
|
-
|
31.7
|
(432.3)
|
75.1
|
Income tax (expense)
recovery
|
(1.6)
|
(5.0)
|
89.2
|
(6.2)
|
(Loss) earnings
from continuing operations
|
(1.6)
|
26.7
|
(343.1)
|
68.9
|
(Loss) earnings from
discontinued operations, net of tax
|
(164.2)
|
0.3
|
(154.2)
|
18.7
|
Net (loss)
earnings
|
(165.8)
|
27.0
|
(497.3)
|
87.6
|
(Loss) earnings from
continuing operations per share
|
|
|
|
Basic
|
(0.00)
|
0.05
|
(0.59)
|
0.12
|
Diluted
|
(0.00)
|
0.05
|
(0.59)
|
0.12
|
(Loss) earnings per
share
|
|
|
|
|
Basic
|
(0.29)
|
0.05
|
(0.86)
|
0.16
|
Diluted
|
(0.29)
|
0.05
|
(0.86)
|
0.16
|
Weighted average
number of shares outstanding (in millions)
|
Basic
|
578.7
|
576.2
|
578.7
|
560.2
|
Diluted
|
578.7
|
577.0
|
578.7
|
560.9
|
Consolidated Statements of Financial Position
(unaudited)
|
|
|
|
As at September
30
|
As at December
31
|
(in millions of
U.S. dollars)
|
2018
|
2017
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
129.0
|
216.2
|
Trade and other
receivables
|
33.4
|
27.1
|
Inventories
|
122.8
|
193.2
|
Current income tax
receivable
|
4.3
|
12.9
|
Prepaid expenses and
other
|
4.9
|
5.6
|
Total current
assets
|
294.4
|
455.0
|
Non-current
inventories
|
13.3
|
78.7
|
Mining
interests
|
2,581.3
|
3,200.4
|
Deferred tax
assets
|
113.0
|
171.6
|
Other
|
2.1
|
2.6
|
|
3,004.1
|
3,908.3
|
Assets held for
sale
|
206.2
|
109.0
|
Total
assets
|
3,210.3
|
4,017.3
|
LIABILITIES AND
EQUITY
|
|
|
Current
liabilities
|
|
|
Trade and other
payables
|
138.7
|
178.2
|
Deferred benefit –
Peak sale prepayment
|
-
|
3.0
|
Total current
liabilities
|
138.7
|
181.2
|
Reclamation and
closure cost obligations
|
96.3
|
121.5
|
Gold stream
obligation
|
181.3
|
249.0
|
Provisions
|
1.0
|
2.6
|
Long-term
debt
|
939.8
|
1,007.7
|
Deferred tax
liabilities
|
128.4
|
250.3
|
Other
|
10.5
|
2.7
|
|
1,496.0
|
1,815.0
|
Liabilities held for
sale
|
36.0
|
62.8
|
Total
liabilities
|
1,532.0
|
1,877.8
|
Equity
|
|
|
Common
shares
|
3,036.8
|
3,036.5
|
Contributed
surplus
|
105.0
|
103.2
|
Other
reserves
|
(4.9)
|
(38.9)
|
Deficit
|
(1,458.6)
|
(961.3)
|
Total
equity
|
1,678.3
|
2,139.5
|
Total liabilities
and equity
|
3,210.3
|
4,017.3
|
Consolidated Statements of Cash Flow (unaudited)
|
|
|
(in millions of
U.S. dollars,
except per share amounts)
|
Three months ended
September 30
|
Nine months ended
September 30
|
2018
|
2017
|
2018
|
2017
|
OPERATING
ACTIVITIES
|
|
|
|
|
(Loss) earnings from
continuing operations
|
(1.6)
|
26.7
|
(343.1)
|
68.9
|
Adjustments
for:
|
|
|
|
|
Foreign exchange
(gains) loss
|
(10.7)
|
(30.6)
|
17.3
|
(52.6)
|
Asset
impairment
|
-
|
-
|
383.7
|
-
|
Reclamation and
closure costs paid
|
(0.4)
|
(0.3)
|
(0.6)
|
(0.8)
|
Gain on disposal of
El Morro stream
|
-
|
-
|
-
|
(33.0)
|
Depreciation and
depletion
|
57.7
|
37.3
|
180.1
|
108.8
|
Other non-cash
adjustments
|
6.6
|
10.7
|
(6.4)
|
22.1
|
Income tax expense
(recovery)
|
1.6
|
5.0
|
(89.2)
|
6.2
|
Finance
income
|
(0.3)
|
(0.3)
|
(1.0)
|
(0.9)
|
Finance
costs
|
17.5
|
(2.0)
|
51.9
|
0.2
|
|
70.4
|
46.5
|
192.7
|
118.9
|
Change in non-cash
operating working capital
|
(26.5)
|
9.2
|
(54.6)
|
24.5
|
Income taxes
paid
|
(0.8)
|
(0.9)
|
(2.9)
|
(4.6)
|
Operating cash flows
generated from continuing operations
|
43.2
|
54.8
|
135.2
|
138.8
|
Operating cash flows
generated from discontinued operations
|
7.9
|
11.2
|
46.9
|
84.6
|
Cash generated
from operations
|
51.1
|
66.0
|
182.1
|
223.4
|
INVESTING
ACTIVITIES
|
|
|
|
|
Mining
interests
|
(56.4)
|
(146.6)
|
(174.5)
|
(459.6)
|
Proceeds from the
sale of Peak Mines, net of transaction costs
|
-
|
-
|
42.4
|
-
|
Proceeds from the
sale of the El Morro stream and other assets
|
0.1
|
-
|
0.3
|
65.3
|
Interest
received
|
0.2
|
0.3
|
0.8
|
0.7
|
Gold price option
contract investment costs
|
-
|
-
|
-
|
(0.9)
|
Investing cash flows
used by continuing operations
|
(56.1)
|
(146.3)
|
(131.0)
|
(394.5)
|
Investing cash flows
used by discontinued operations
|
(2.8)
|
(11.7)
|
(11.8)
|
(30.5)
|
Cash used by
investing activities
|
(58.9)
|
(158.0)
|
(142.8)
|
(425.0)
|
FINANCING
ACTIVITY
|
|
|
|
|
Proceeds received
from exercise of options
|
-
|
-
|
-
|
0.6
|
Net proceeds received
from issuance of common shares
|
-
|
-
|
-
|
164.7
|
(Repayment) drawdown
of Credit Facility
|
(20.0)
|
100.0
|
(70.0)
|
100.0
|
Finance lease
payments
|
(1.3)
|
-
|
(1.9)
|
-
|
Cash settlement of
gold stream obligation
|
(4.2)
|
-
|
(10.8)
|
-
|
Issuance of senior
unsecured notes, net of transaction costs
|
-
|
-
|
-
|
295.1
|
Repayment of senior
unsecured notes
|
-
|
-
|
-
|
(305.3)
|
Interest
paid
|
(3.4)
|
(2.5)
|
(35.7)
|
(35.3)
|
Cash (used by)
generated by financing activities
|
(28.9)
|
97.5
|
(118.4)
|
219.8
|
Effect of exchange
rate changes on cash and cash equivalents
|
0.6
|
2.8
|
(0.1)
|
3.0
|
Cash and cash
equivalents classified as held for sale
|
(2.3)
|
-
|
(2.3)
|
-
|
Cash and cash
equivalents sold
|
-
|
-
|
(5.7)
|
-
|
Change in cash and
cash equivalents
|
(38.4)
|
8.3
|
(87.2)
|
21.2
|
Cash and cash
equivalents, beginning of period
|
167.4
|
198.8
|
216.2
|
185.9
|
Cash and cash
equivalents, end of period
|
129.0
|
207.1
|
129.0
|
207.1
|
Cash and cash
equivalents are comprised of:
|
Cash
|
117.0
|
134.2
|
117.0
|
134.2
|
Short-term money
market instruments
|
12.0
|
72.9
|
12.0
|
72.9
|
|
129.0
|
207.1
|
129.0
|
207.1
|
View original
content:http://www.prnewswire.com/news-releases/new-gold-announces-2018-third-quarter-results-300737498.html
SOURCE New Gold Inc.