On Track to Achieve Consolidated Annual
Guidance with Lower AISC
November 5, 2020– New Gold Inc. (“New Gold” or the “Company”)
(TSX and NYSE American: NGD) reports third quarter results for
the Company as of September 30, 2020 and reaffirms its revised
annual consolidated guidance, with all-in sustaining costs expected
to be below guidance levels, primarily due to lower sustaining
capital spend. On July 30, 2020, the Company issued revised
guidance estimates for 2020 to incorporate the impact of COVID-19
and readers should refer to the Company's July 30, 2020 news
release for further information. An earnings conference call and
webcast will begin at 8:30 am Eastern Time today to discuss the
third quarter financial results. (Details provided at the end of
this news release.)
The Rainy River Mine delivered another strong quarter of
operational and technical performance. During the quarter, mine
operations ramped up towards the 2021 target capacity of
approximately 150,000 tonnes per day and the mill delivered a
record of 27,000 tonnes per day, reaching the maximum monthly
average throughput allowable under the existing mill permit. With
both the mine and mill operating at capacity and unit costs
tracking towards 2021 planned levels, the Company’s efforts will
now shift to focus on identifying additional opportunities to
further optimize mine and mill productivities and unit cost
performance.
New Afton operations continued to improve during the quarter and
key B3/C-Zone projects were advanced. The focus will continue to
prioritize B3/C-Zone development, thickened and amended tailings
(TAT) construction, wick drain installation for the stabilization
of the historic tailings facility and detailed design work related
to C-Zone in-pit tailings deposition. In late October, Phase 1 of a
strategic drilling program was launched to test the potential of
the 12 kilometre Cherry Creek Trend, located within 3 kilometres of
the New Afton mill, which could increase the resource inventory of
the New Afton Mine and extend mine life.
(For detailed information, please refer to the Company’s Third
Quarter Management’s Discussion and Analysis (MD&A) 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
press release. Please refer to the “Non-GAAP Financial Performance
Measures” section of this press release and the MD&A. All
amounts are in U.S. dollars unless otherwise indicated.)
Third Quarter and Recent Highlights
- Total production for the third quarter was 115,536 gold
equivalent (gold eq.) ounces (78,959 ounces of gold, 171,825 ounces
of silver and 18.2 million pounds of copper). For the nine-month
period, production was 317,050 gold eq. ounces (210,043 ounces of
gold, 437,524 ounces of silver and 53.6 million pounds of
copper).
- Revenues for the quarter were $174 million and $444 million for
the nine-month period.
- Operating expense for the quarter was $778 per gold eq. ounce
and $791 per gold eq. ounce for the nine-month period.
- Total cash costs1,2 for the quarter were $822 per gold eq.
ounce and $839 per gold eq. ounce for the nine-month period.
- All-in sustaining costs (AISC)1,2 for the quarter were $1,313
per gold eq. ounce and $1,349 per gold eq. ounce for the nine-month
period.
- Net earnings from operations for the quarter was $16 million
($0.02 per share) and net loss from operations of $58 million
($0.09 per share) for the nine-month period.
- Adjusted net earnings2 for the quarter was $12.4 million ($0.02
per share) and adjusted net loss of $8.7 million ($0.01 per share)
for the nine-month period.
- Cash generated from operations for the quarter was $92 million
($0.14 per share) and $196 million ($0.29 per share) for the
nine-month period. Operating cash flow generated from operations
for the quarter, before non-cash changes in working capital2, was
$84 million ($0.12 per share) and was $184 million ($0.27 per
share) for the nine-month period.
- During the quarter, the Company completed the divestment of the
Blackwater Project to Artemis Gold Inc. (“Artemis”) for total cash
consideration of C$190 million. The initial cash payment of C$140
million was received during the quarter with the remaining C$50
million cash payment due on August 24, 2021. Under the terms of the
agreement with Artemis, the Company retained an 8% gold stream and
a 6% equity stake in Artemis. (Refer to the Company's June 9, 2020
and August 24, 2020 news releases for further information.)
- During the quarter, the Company transferred approximately $90
million in letters of credit related to mine closure costs to
surety bonds, increasing the funds available under the credit
facility.
- On October 9, 2020, the Company extended its secured credit
facility with a syndicate of 8 top-tier financial institutions. The
facility will now mature on October 9, 2023 and has a new maximum
borrowing limit of $350 million. (Additional details provided
below.)
- At the end of the quarter, the Company had a cash position of
$415 million and a strong liquidity position of approximately $720
million, based on the amended credit facility.
- Mr. Eric Vinet has been promoted to Senior Vice President,
Operations on October 19, 2020. Eric joined New Gold in January
2019 as Vice President, Technical Services and most recently was
the Interim General Manager at the Rainy River Mine where he led
the successful repositioning of the operation for profitability and
free cash flow generation.
1.
"Total cash cost per gold equivalent
ounce" and AISC per gold equivalent ounce" are calculated gold
equivalent ounces sold
2.
See "Non-GAAP Measures" section of this
press release.
"We are very pleased with our overall performance for the
quarter and are tracking well to meet our revised consolidated
annual guidance with AISC that are expected to be below guidance.
We are very encouraged by the solid performance from the Rainy
River Mine as the operation has continued to meet, or exceed, all
key operational and cost targets and has substantially completed
all deferred construction capital with the objective of returning
to normalized sustaining capital levels. The Rainy River Mine is
now repositioned to deliver strong production growth at lower costs
and higher margins, which will drive a strong free cash flow stream
over the life of the mine," stated Renaud Adams, CEO. "We are
pleased with the improved performance at our New Afton Mine and
currently all teams have been mobilized to advance all key
projects, including B3/C-Zone development, thickened and amended
tailings construction, stabilization of the historic tailings
facility and detailed design work for the C-Zone tailings storage
facility. Exploration drilling at the Cherry Creek target was
recently launched with the overall objective of testing the
potential for near mine resources that could extend the mine life
of New Afton Mine and utilize existing infrastructure.”
Financial Highlights
Q3 2020
Q3 2019
9M 2020
9M 2019
Revenue ($M)
173.7
168.4
444.5
491.4
Net earnings (loss), per share ($)
0.02
(0.04)
(0.09)
(0.13)
Adj. net earnings (loss)1 per share
($)
0.02
(0.02)
(0.01)
(0.03)
Operating cash flow, per share ($)
0.14
0.15
0.29
0.37
Adj. operating cash flow1, per share
($)
0.12
0.11
0.27
0.34
- Refer to the “Non-GAAP Performance Measures” section of this
news release.
- Revenues for the quarter were $174 million, an increase
compared to the prior-year quarter due to an increase in gold and
copper prices which was partially offset by lower gold and copper
sales volume. Revenues were $444 million for the nine-month period,
a decrease compared to the prior-year quarter due to a decrease in
gold and copper sales volume which was partially offset by an
increase in gold prices.
- Operating expenses for the quarter and nine-month period were
lower than the prior-year period due to lower production.
- Net earnings for the quarter was $16 million ($0.02 per share)
and a net loss of $58 million ($0.09 per share) for the nine-month
period, an increase in earnings from the prior-year quarter
primarily due to higher revenue less cost of goods sold. Other
gains and losses for the quarter and nine-month period includes a
loss on sale of Blackwater of $30 million.
- Adjusted net earnings for the quarter was $12.4 million ($0.02
per share) and adjusted net loss of $8.7 million ($0.01 per share)
for the nine-month period, which is an increase in earnings over
the prior-year periods, primarily due to higher revenue, lower
operating expenses and lower depreciation and depletion.
Operational Highlights
Q3 2020
Q3 2019
9M 2020
9M 2019
2020 Revised Guidance
Gold eq. production (ounces)1
115,536
128,899
317,050
384,719
415,000 - 455,000
Gold production (ounces)
78,959
91,087
210,043
255,701
284,000 - 304,000
Copper production (Mlbs)
18.2
20.1
53.6
61.2
65 - 75
Average realized gold price, per
ounce2
1,613
1,383
1,532
1,329
-
Average realized copper price, per
pound2
2.99
2.62
2.69
2.72
-
Operating expense, per gold eq. ounce
778
761
791
695
$780 - $860
Total cash costs, per gold eq. ounce2
822
819
839
751
$830 - $910
Depreciation and depletion per gold eq.
ounce
452
495
469
461
$400 - $460
AISC, per gold eq. ounce2
1,313
1,318
1,349
1,161
$1,410 - $1,490
Sustaining capital and sustaining leases
($M)2
46.1
56.3
136.3
137.8
$207 - $232
Growth capital ($M)2
16.4
9.2
46.6
23.6
$82 - $102
- Total gold eq. ounces include silver and copper produced
(excluding production from the Cerro San Pedro Mine) converted to a
gold eq. based on a ratio of $1,500 per gold ounce, $17.75 per
silver ounce and $2.85 per copper pound. Throughout the year the
company will report gold eq. ounces using a constant ratio of those
prices. All copper is produced by the New Afton Mine.
- Refer to the “Non-GAAP Financial Performance Measures" section
of this news release.
Rainy River Highlights
Rainy River Mine
Q3 2020
Q3 2019
9M 2020
9M 2019
2020 Revised Guidance
Gold eq. production (ounces)1
64,221
76,092
164,960
205,135
225,000 - 235,000
Gold eq. sold (ounces)
61,726
71,165
163,137
211,460
-
Gold production (ounces)
63,004
75,080
162,185
202,650
222,000 - 232,000
Gold sold (ounces)
60,592
70,233
160,438
208,970
-
Average realized gold price, per ounce
1,615
1,382
1,533
1,326
-
Operating expense, per gold eq. ounce
833
922
924
876
$920 - $980
Total cash costs, per gold eq. ounce
833
922
924
877
$920 - $980
Depreciation and depletion per gold eq.
ounce
602
316
634
305
$540 - $600
AISC, per gold eq. ounce
1,469
1,593
1,592
1,413
$1,610 - $1,690
Sustaining capital and sustaining leases
($M)2
37.4
46.3
103.9
110.0
$145 - $160
Growth capital ($M)
0.1
0.0
0.3
6.7
$2 - $5
1. Gold eq. ounces for Rainy River in Q3
2020 includes 102,814 ounces of silver converted to a gold eq.
based on a ratio of $1,500 per gold ounce and $17.75 per silver
ounce.
2. Refer to the “Non-GAAP Financial
Performance Measures" section of this news release.
Rainy River Mine
FY 2019
Q1 2020
Q2 2020
Q3 2020
9M 2020
Tonnes mined per day (ore and waste)
118,404
127,684
126,512
145,701
133,344
Ore tonnes mined per day
18,712
26,012
23,101
36,515
28,572
Operating waste tonnes per day
73,702
75,596
72,575
62,818
70,302
Capitalized waste tonnes per day
25,990
26,077
30,836
46,368
34,471
Total waste tonnes per day
99,692
101,673
103,411
109,186
104,773
Strip ratio (waste: ore)
5.33
3.91
4.48
2.99
3.67
Tonnes milled per calendar day
21,980
18,441
23,880
26,998
23,121
Gold grade milled (g/t)
1.08
1.03
0.78
0.88
0.89
Gold recovery (%)
91
90
89
89
90
Mill availability (%)
88
91
90
90
90
Gold production (oz)
253,772
50,381
48,800
63,004
162,185
Gold eq. production1 (oz)
257,051
51,106
49,633
64,221
164,960
- Gold eq. ounces for Rainy River in Q3 2020 includes 102,814
ounces of silver converted to a gold eq. based on a ratio of $1,500
per gold ounce and $17.75 per silver ounce.
The Rainy River Mine is expected to achieve the mid-range of the
revised annual production guidance and operating expenses and cash
costs are expected to be at, or potentially below the low end of
revised annual guidance, primarily due to lower mining costs. AISC
are expected to be below the revised annual guidance due to lower
operating expenses and sustaining capital spend. Sustaining capital
is tracking to achieve the lower end of the revised annual guidance
estimates, primarily due to realized savings related to Tailings
Management Area (TMA) construction as well as COVID-19 related
delays.
- Following the approval by Health Canada, three rapid testing
devices were procured to test for the COVID-19 virus as we continue
to prioritize the safety and well-being of our employees and our
local and Indigenous communities. Daily testing increased during
the quarter to further enhance screening protocols, which have been
instrumental in keeping the operation COVID-19 free.
- For the third quarter, gold eq. production was 64,221 ounces
(63,004 ounces of gold and 102,814 ounces of silver) and 164,960
gold eq. ounces (162,185 ounces of gold and 234,472 ounces of
silver) for the nine-month period. For the three and nine-month
production decreased when compared to the prior-year period
primarily due to planned lower grades.
- During the quarter, the open pit mine continued to ramp-up
towards our 2021 target capacity of 150,000 tonnes per day. Mine
productivity increased by 15% over the prior quarter, averaging
145,701 tonnes per day, achieving 97% of the 2021 productivity
target. Approximately 3.4 million ore tonnes and 10.0 million waste
tonnes (including 4.3 million capitalized waste tonnes) were mined
from the open pit at an average strip ratio of 2.99:1. Capitalized
waste increased in the third quarter as waste mining efforts
focused on Phase 3 stripping.
- During the quarter, the mill achieved a record of 26,998 tonnes
per day, reaching the maximum average allowable under the existing
mill permit. The mill continued to process ore directly supplied by
the open pit combined with ore from the medium grade stockpile and
processed an average grade of 0.88 grams per tonne at a gold
recovery of 89%. Low grade ore continues to be stockpiled for
future processing as part of the underground mine plan. Now that
the mill has reached its maximum capacity, efforts will focus on
additional optimization opportunities to increase recovery and unit
cost performance. Mill availability for the quarter averaged 90%,
in-line with plan.
- Operating expense and total cash costs were $833 per gold eq.
ounce for the quarter, including the Canada Emergency Wage Subsidy,
which positively impacted operating expense in the quarter. For the
nine-month period, operating expense and total cash costs per gold
eq. ounce were $924, an increase over the prior-year period due to
lower production and sales as a result of planned lower grade ore
mined and processed.
- Depreciation and depletion was $602 per gold eq. ounce for the
quarter and $634 per gold eq. ounce for the nine-month period.
Depreciation and depletion decreased from the prior-year period
primarily due to decreased reserves and shorter mine life when
compared to prior-year.
- Sustaining capital and sustaining lease payments for the
quarter were $37.4 million and $103.9 million for the nine-month
period, including $10.8 million and $23.3 million of capitalized
mining costs, respectively. Substantially all key capital projects
were completed during the quarter, including the Stage 2 tailings
dam raise, wick drain installation for stabilization of the east
waste dump, commissioning of the maintenance and warehouse
facilities as well as the water treatment train following the
commissioning of the Biochemical Reactor (BCR2) that allows clean
water effluent discharge. As previously disclosed, a small portion
of the TMA construction as well as potentially other smaller
projects that were originally scheduled for completion in 2021 are
now planned for completion in 2020, thereby potentially reducing
planned capital requirements for 2021.
- AISC were $1,469 per gold eq. ounce for the quarter and $1,592
per gold eq. ounce for the nine-month period. For the quarter AISC
decreased from the prior-year period, due to the decrease in
sustaining capital spend and lower operating costs. For the
nine-month period, AISC increased over the prior-year period due to
lower gold eq. ounces sold.
- In late August, development of the decline towards the Intrepid
underground zone resumed with approximately 170 metres of the
planned 550 metres completed to date. The objective of the 2021
program will be focused on refinement of the long-hole mining
methodology as the operation prepares for the expected start of
mining in 2022.
- In the latter part of the quarter, drilling permits were
received, and an exploration drilling program will be launched
during the fourth quarter that will initially focus on the
northeast trend area, located approximately 18 kilometers northeast
of the Rainy River Mine. The 8,000 metre drilling campaign has been
designed in two phases and will test previously identified high
priority targets.
New Afton Highlights
New Afton Mine
Q3 2020
Q3 2019
9M 2020
9M 2019
2020 Revised Guidance
Gold eq. production (ounces) 1
51,315
52,807
152,090
179,584
190,000 - 220,000
Gold eq. sold (ounces)
49,179
53,326
143,094
172,259
-
Gold production (ounces)
15,955
16,007
47,858
53,051
62,000 - 72,000
Gold sold (ounces)
15,168
15,634
44,948
50,393
-
Copper production (Mlbs)
18.2
20.1
53.6
61.2
65 - 75
Copper sold (Mlbs)
17.5
20.6
50.5
59.2
-
Average realized gold price, per ounce
1,606
1,390
1,529
1,343
-
Average realized copper price, per
pound
2.99
2.62
2.69
2.72
-
Operating expense, per gold eq. ounce
708
545
640
473
$630 - $710
Total cash costs, per gold eq. ounce
807
682
742
596
$740 - $820
Depreciation and depletion per gold eq.
ounce
255
729
272
650
$240 - $300
AISC, per gold eq. ounce
988
869
971
761
$1,080 - $1,160
Sustaining capital and sustaining leases
($M)2
8.7
9.7
32.0
27.4
$62 - $72
Growth capital ($M)
16.1
8.2
37.2
13.6
$70 - $85
- Gold eq. ounces for New Afton in Q3 2020 includes 18.2 pounds
of copper and 69,011 ounces of silver converted to a gold eq. based
on a ratio of $1,500 per gold ounce, $2.85 per copper pound and
$17.75 per silver ounce.
- Refer to the “Non-GAAP Financial Performance Measures" section
of this news release.
New Afton Mine
FY 2019
Q1 2020
Q2 2020
Q3 2020
9M 2020
Tonnes mined per day (ore and waste)
15,620
16,727
15,358
17,249
16,448
Tonnes milled per calendar day
15,300
15,377
14,240
15,483
15,035
Gold grade milled (g/t)
0.47
0.45
0.46
0.44
0.45
Gold recovery (%)
82
81
81
80
80
Gold production (oz)
68,785
16,409
15,494
15,955
47,858
Copper grade milled (%)
0.78
0.73
0.72
0.71
0.72
Copper recovery (%)
83
82
83
82
82
Copper production (Mlbs)
79.4
18.5
16.9
18.2
53.6
Mill availability (%)
97
98
92
98
96
Gold eq. production1 (oz)
229,091
52,329
48,446
51,315
152,090
- Gold eq. ounces for New Afton in Q3 2020 includes 18.2 million
pounds of copper and 69,011 ounces of silver converted to a gold
eq. based on a ratio of $1,500 per gold ounce, $2.85 per copper
pound and $17.75 per silver ounce.
The New Afton Mine is expected to achieve the mid-range of the
revised annual production guidance as well as the operating expense
and cash costs guidance. AISC are expected to be at, or below the
low end of the revised annual guidance, primarily due to lower
sustaining capital spend. Sustaining and growth capital are also
expected to be at, or below, the low end of the revised annual
guidance estimates, primarily due to B3 development efforts being
shifted in the third quarter to focus on the east cave recovery
areas, as well as COVID-19 delays primarily related to construction
of the thickener.
- For the third quarter, the mine produced 51,315 gold eq. ounces
(15,955 ounces of gold, and 18.2 million pounds of copper) and
152,090 gold eq. ounces (47,858 ounces of gold, and 53.6 million
pounds of copper) for the nine-month period. For the three- and
nine-month production decreased when compared to the prior-year
period primarily due to planned lower grades.
- The underground mine averaged 17,249 tonnes per day for the
quarter, above original planned levels.
- During the quarter, the mill averaged 15,483 tonnes per day,
in-line with plan. The mill processed an average gold and copper
grade of 0.44 grams per tonne gold and 0.71% copper, respectively,
with gold and copper recoveries of 80% and 82%, respectively. Mill
availability for the quarter averaged 98%, in-line with plan.
- Operating expense per gold eq. ounce were $708 for the quarter
and $640 per gold eq. ounce for the nine-month period. Operating
expense per gold eq. ounce has increased as compared to the
prior-year period due to lower gold and copper production and sales
as a result of lower grades.
- Total cash costs were $807 per gold eq. ounce for the quarter
and $742 per gold eq. ounce for the nine-month period. Total cash
costs per gold eq. ounce have increased as compared to the
prior-year period, driven by lower equivalent sales in the
quarter.
- Depreciation and depletion was $255 per gold eq. ounce for the
quarter and $272 for the nine-month period. Depreciation and
depletion decreased from the prior-year periods as a result of the
inclusion of C-zone reserves in its depletion base and a longer
mine life.
- Sustaining capital and sustaining lease payments for the
quarter were $8.7 million and for the nine-month period were $32.0
million, primarily related to B3 mine development and advancement
of the planned tailings dam raise. As a result of the delays in B3
development, there is a deferral of up to $10 million of sustaining
capital to 2021. Currently, efforts are refocused on accelerating
B3 development with the objective of returning to target levels in
the near term and production from the B3 Zone remains on schedule
for the second half of 2021.
- AISC were $988 per gold eq. ounce for the quarter and $971 per
gold eq. ounce for the nine-month period. AISC increased compared
to prior-year periods due to lower gold eq. ounces sold as a result
of lower gold and copper production in the quarter.
- Growth capital was $16.1 million for the quarter and $37.2
million for the nine-month period. Growth capital in the quarter
was primarily related to C-Zone development and detailed
engineering, earthworks, associated with concrete, lime system and
starting steel erection of the TAT project. Short term delays in
thickener construction have been experienced by the manufacturer
due to COVID-19 and as a result, up to $20 million of growth
capital will be deferred to 2021. The thickener is expected to be
delivered in Q1 2021 and the overall TAT project remains on
schedule. In the fourth quarter, key capital projects will focus on
C-Zone development, TAT construction, wick drain installation for
the stabilization of the historic tailings facility and detailed
design work related to C-Zone in-pit tailings deposition.
- During the quarter, total development towards the B3 and C-Zone
advanced by approximately 1,150 metres, achieving 92% of planned
levels year to date as B3 development efforts were shifted to focus
on the east cave recovery areas. Currently, C-Zone development is
at target levels while B3 development will be accelerated in the
fourth quarter and the overall B3/C-Zone execution remains on
schedule.
- As previously disclosed, the mill continues to process lower
copper and gold grades than originally planned. Both the 2020 and
2021 mine plans incorporate multiple sources of mined ore,
including extraction from the east and west caves and
rehabilitation and pillar recoveries of medium-high grade. During
the quarter, a new access point into the east cave recovery zone
was completed supporting an initial average extraction rate of
1,400 tonnes per day, including a peak of 2,000 tonnes per day,
with an ultimate target extraction rate of 4,000 tonnes per
day.
- During the quarter, a key portion of the water permit was
received and the Phase 1 permit for the Thickened and Amended
Tailings was received in late October. B3 permitting remains on
schedule and submission of the C-Zone permit is expected during the
fourth quarter.
- Approval for Phase 1 of the Cherry Creek Trend drilling program
was recently received, and drilling was launched in late October.
The program will focus on drilling high priority targets defined by
coincidental geochemical and geophysical anomalies. The objective
of the 10,000 metre Phase 1 drilling campaign is to evaluate both
near surface epithermal gold and underlying copper-gold system
potential within the approximately 12 kilometre trend of the
prospective structural corridor located approximately 3 kilometres
west of the New Afton mill.
Credit Facility Highlights On October 9, 2020, the
Company entered into an amended and restated credit agreement with
a syndicate of financial institutions, including The Bank of Nova
Scotia, Royal Bank of Canada, Canadian Imperial Bank of Commerce,
The Toronto Dominion Bank, Bank of America N.A., Bank of Montreal,
JP Morgan Chase Bank N.A., and National Bank of Canada. The amended
and restated credit agreement extends the maturity date for the
facility from August 14, 2021 to October 9, 2023 and modifies the
maximum borrowing limit to $350 million from $400 million. All
material financial covenants remain the same.
Third Quarter 2020 Conference Call and Webcast The
Company will host an earnings call and webcast on Thursday,
November 5, 2020 at 08:30 AM Eastern Time to discuss the financial
results. Details are provided below:
Participants may listen to the webcast by registering on our
website at www.newgold.com or via the following link
https://onlinexperiences.com/Launch/QReg/ShowUUID=669A87CE-F2EB-4685-A672-8B43399BEAFE
- Participants may also listen to the conference call by calling
toll free 1-833-350-1329, or 1-236-389-2426 outside of the U.S. and
Canada.
- A recorded playback of the conference call will be available
until by calling toll free 1-800-585-8367, or 1-416-621-4642
outside of the U.S. and Canada, passcode 7759268. An archived
webcast will also be available until December 5, 2020 at
www.newgold.com.
About New Gold Inc. New Gold is a Canadian-focused
intermediate gold mining company with a portfolio of two core
producing assets in Canada, the Rainy River and New Afton Mines.
The Company also holds an 8% gold stream on the Artemis Gold
Blackwater project located in British Columbia and a 6% equity
stake in Artemis. The Company also operates the Cerro San Pedro
Mine in Mexico (in reclamation). New Gold's vision is to build a
leading diversified intermediate gold company based in Canada that
is committed to environment and social responsibility. For further
information on the Company, visit www.newgold.com.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this news release, including any
information relating to New Gold’s future financial or operating
performance are “forward looking”. All statements in this news
release, other than statements of historical fact, which address
events, results, outcomes or developments that New Gold expects to
occur are “forward-looking statements”. Forward-looking statements
are statements that are not historical facts and are generally, but
not always, identified by the use of forward-looking terminology
such as “plans”, “expects”, “is expected”, “budget”, “scheduled”,
“targeted”, “estimates”, “forecasts”, “intends”, “anticipates”,
“projects”, “potential”, “believes” or variations of such words and
phrases or statements that certain actions, events or results
“may”, “could”, “would”, “should”, “might” or “will be taken”,
“occur” or “be achieved” or the negative connotation of such terms.
Forward-looking statements in this news release include, among
others, statements with respect to: the Company’s plans to optimize
mine and mill productivities and unit cost performance; the
Company’s expectations relating to achieving the revised annual
production guidance at the Rainy River Mine and the New Afton Mine;
the Company’s expectations with respect to the operating expenses,
cash costs, AISC and sustaining and growth capital at the Rainy
River Mine and the New Afton Mine; the cash payment and gold stream
from the divestment of the Blackwater Project to Artemis; the
timing of completion for capital projects at the Rainy River Mine
and the New Afton Mine; the timing and nature of activities
relating to the B3 mine development, C-Zone development and TAT
construction at the New Afton Mine; the timing and scope of the
exploration drilling programs to be launched at the Rainy River
Mine and Cherry Creek; and the timing of receipt of permits at the
New Afton Mine.
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”), its most recent annual information form and technical
reports on the Rainy River Mine and New Afton Mine 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 other than
as set out herein; (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 New Afton
Mine and Rainy River Mine being consistent with New Gold’s current
expectations, particularly in the context of the outbreak of
COVID-19; (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; (9) there being no new cases of COVID-19 in the
Company’s workforce at either the Rainy River or New Afton Mine and
the assumption that no additional members of the workforce are
expected to be required to self-isolate due to cross-border travel
to the United States or any other country; (10) the responses of
the relevant governments to the COVID-19 outbreak being sufficient
to contain the impact of the COVID-19 outbreak; (11) there being no
material disruption to the Company’s supply chains and workforce
that would interfere with the Company’s anticipated course of
action at the Rainy River Mine and the systematic ramp-up of
operations, including the completion of the capital projects,
including the Tailings Management Area, and the commencement and
completion of the planned exploration drilling program; (12) the
Company being able to release updated annual guidance on the timing
described herein; (13) the long-term economic effects of the
COVID-19 outbreak not having a material adverse impact on the
Company’s operations or liquidity position; and (14) Artemis being
able to complete the remaining C$50 million cash payment due on
August 24, 2021 for the acquisition of the Blackwater Project.
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; there being cases of COVID-19 in the
Company’s workforce at either the Rainy River or New Afton Mine, or
both; the Company’s workforce at either the Rainy River Mine or the
New Afton Mine, or both, being required to self-isolate due to
cross-border travel to the United States or any other country; the
responses of the relevant governments to the COVID-19 outbreak not
being sufficient to contain the impact of the COVID-19 outbreak;
disruptions to the Company’s supply chain and workforce due to the
COVID-19 outbreak; an economic recession or downturn as a result of
the COVID-19 outbreak that materially adversely affects the
Company’s operations or liquidity position; there being further
shutdowns at the Rainy River or New Afton Mines; the Company not
being able to complete its construction or mine development
projects at the Rainy River Mine or the New Afton Mine on the
timing described herein or at all; the Company not being able to
commence or complete the planned exploration drilling programs at
the Rainy River Mine and Cherry Creek on the timing described
herein or at all; and Artemis not being able to make the remaining
C$50 million cash payment due on August 24, 2021. In addition,
there are risks and hazards associated with the business of mineral
exploration, development and mining, including environmental events
and hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion losses
(and the risk of inadequate insurance or inability to obtain
insurance to cover these risks) as well as “Risk Factors” included
in New Gold’s 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.
Technical Information The scientific and technical
information contained herein has been reviewed and approved by Eric
Vinet, Senior Vice President, Operations of New Gold. Mr. Vinet is
a Professional Engineer and member of the Ordre des ingénieurs du
Québec. He is a "Qualified Person" for the purposes of National
Instrument 43-101 – Standards of Disclosure for Mineral Projects
(“NI 43-101”).
Cautionary Note to U.S. Readers Concerning Estimates of
Mineral Reserves and Mineral Resources This news release was
prepared in accordance with Canadian standards for reporting of
mineral resource estimates, which differ in some respects from
United States standards. In particular, and without limiting the
generality of the foregoing, the terms “inferred mineral
resources,” “indicated mineral resources,” “measured mineral
resources” and “mineral resources” used or referenced in this news
release are Canadian mineral disclosure terms as defined in
accordance with NI 43-101 under the guidelines set out in the 2014
Canadian Institute of Mining, Metallurgy and Petroleum Standards
for Mineral Resources and Mineral Reserves, Definitions and
Guidelines, May 2014 (the “CIM Standards”). Until recently, the CIM
Standards differed significantly from standards in the United
States. The U.S. Securities and Exchange Commission (the “SEC”) has
adopted amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are
registered with the SEC under the U.S. Securities Exchange Act of
1934, as amended (the “Exchange Act”). These amendments became
effective February 25, 2019 (the “SEC Modernization Rules”) with
compliance required for the first fiscal year beginning on or after
January 1, 2021. The SEC Modernization Rules replace the historical
property disclosure requirements for mining registrants that were
included in SEC Industry Guide 7, which will be rescinded from and
after the required compliance date of the SEC Modernization Rules.
As a result of the adoption of the SEC Modernization Rules, the SEC
now recognizes estimates of “measured mineral resources”,
“indicated mineral resources” and “inferred mineral resources”. In
addition, the SEC has amended its definitions of “proven mineral
reserves” and “probable mineral reserves” to be “substantially
similar” to the corresponding definitions under the CIM Standards,
as required under NI 43-101. Accordingly, during this period
leading up to the compliance date of the SEC Modernization Rules,
information regarding mineral resources or mineral reserves
contained or referenced in this news release may not be comparable
to similar information made public by United States companies.
Readers are cautioned that “inferred mineral resources” have a
great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot
be assumed that all or any part of an inferred mineral resource
will ever be upgraded to a higher category. Under Canadian rules,
estimates of inferred mineral resources may not form the basis of
feasibility or other economic studies, except in limited
circumstances. The term “resource” does not equate to the term
“reserves”. Readers should not to assume that all or any part of
measured or indicated mineral resources will ever be converted into
mineral reserves. Readers are also cautioned not to assume that all
or any part of an inferred mineral resource exists, or is
economically or legally mineable.
Non-GAAP Financial Performance Measures All-in sustaining
costs (AISC) per gold eq. ounce, total cash costs per gold ounce
and per gold eq. ounce, sustaining capital, sustaining lease and
growth capital, adjusted net earnings/(loss), operating cash flows
generated from operations, before changes in non-cash operating
working capital, and average realized price, are non-GAAP financial
measures that 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. The Company believes that these measures, together with
measures determined in accordance with IFRS, provide investors with
an improved ability to evaluate the underlying performance of the
Company. In addition, certain non-GAAP measures are utilized, along
with other measures, in the Company scorecard to set incentive
compensation goals and assess performance of its executives.
All-In Sustaining Costs per Gold eq. Ounce
“All-in sustaining costs per gold eq. 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, 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, lease payments that are sustaining in nature,
and environmental reclamation costs, all divided by the ounces of
gold eq. sold to arrive at a per ounce figure.
In addition to gold, the Company produces copper and silver.
Gold eq. ounces of copper and silver produced or sold in a quarter
are computed by calculating the ratio of the average spot market
copper and silver prices to the average spot market gold price in a
quarter and multiplying this ratio by the pounds of copper and
silver ounces produced or sold during that quarter. Gold eq. ounces
produced or sold in a period longer than one quarter are calculated
by adding the number of gold eq. ounces in each quarter of that
period. In 2020 the Company will report gold eq. ounces using a
consistent ratio. Notwithstanding the impact of copper and silver
sales, as a Company focused on gold production, New Gold aims to
assess the economic results of its operations in relation to gold,
which is the primary driver of New Gold’s business.
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.
Sustaining Capital and Sustaining Lease
“Sustaining capital” and “sustaining lease” are non-GAAP
financial measures. New Gold defines sustaining capital as net
capital expenditures that are intended to maintain operation of its
gold producing assets. A sustaining lease is similarly a capital
lease payment that is sustaining in nature. To determine sustaining
capital expenditures, New Gold uses cash flow related to mining
interests from its statement of cash flows and deducts any
expenditures that are non-sustaining or growth capital. Management
uses sustaining capital and other sustaining costs, to understand
the aggregate net result of the drivers of all-in sustaining costs
other than total cash costs. Sustaining capital and sustaining
lease are 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.
Growth Capital
“Growth capital” is a non-GAAP financial measure. New Gold terms
non-sustaining capital costs to be “growth capital”, which are
capital expenditures to develop new operations or capital
expenditures related to major projects at existing operations where
these projects will materially increase production. To determine
growth capital expenditures, New Gold uses cash flow related to
mining interests from its statement of cash flows and deducts any
expenditures that are sustaining capital. Growth capital 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.
Total Cash Costs
“Total cash costs per ounce” and total cash costs per gold eq.
ounce are non-GAAP financial measures which are 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, but are
exclusive of amortization, reclamation, capital and exploration
costs. Total cash costs per gold ounce are net of by-product sales
and are divided by gold ounces sold to arrive at a per ounce
figure. Total cash costs per gold eq. ounce are divided by gold eq.
ounces sold to arrive at a per ounce figure. Unless otherwise
indicated, all total cash cost information in this news release is
on a gold eq. ounce basis. Gold eq. ounces of copper and silver
produced in a quarter are computed by calculating the ratio of the
average spot market copper and silver prices to the average spot
market gold price in a quarter and multiplying this ratio by the
pounds of copper and silver ounces produced during that quarter.
Gold eq. ounces produced in a period longer than one quarter are
calculated by adding the number of gold eq. ounces in each quarter
of that period. In 2020 the Company will report gold eq. ounces
using a consistent ratio. This data is furnished to provide
additional information and is a non-GAAP financial measure. Total
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.
Adjusted Net Earnings/(Loss)
“Adjusted net earnings/(loss)” and “adjusted net earnings/(loss)
per share” are non-GAAP financial measures. Net earnings/(loss)
have been adjusted and tax affected for the group of costs in
“Other gains and losses” on the condensed consolidated income
statement and other nonrecurring items. The adjusted entries are
also impacted for tax to the extent that the underlying entries are
impacted for tax in the unadjusted net earnings/(loss) 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 items which are included in other
gains and losses. Consequently, the presentation of adjusted net
earnings and adjusted net earnings per share enables investors and
analysts to better understand the underlying operating performance
of our core mining business through the eyes of management.
Management periodically evaluates the components of adjusted net
earnings and adjusted net earnings per share based on an internal
assessment of performance measures that are useful for evaluating
the operating performance of our business and a review of the
non-GAAP measures used by mining industry analysts and other mining
companies. Adjusted net (loss)/earnings and adjusted net
(loss)/earnings per share are intended to provide additional
information only and do not have any standardized meaning under
IFRS and may not be comparable to similar measures presented by
other companies. They should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. The measures are not necessarily indicative of operating
profit or cash flows from operations as determined under IFRS.
Operating Cash Flows Generated from Operations, before Changes
in Non-Cash Operating Working Capital
“Operating cash flows generated from operations, before changes
in non-cash operating working capital” is a non-GAAP financial
measure with no standard meaning under IFRS, and 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 temporary working capital changes.
Operating cash flows generated from operations, before non-cash
changes in working capital is intended to provide additional
information only and does not have any standardized meaning 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.
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.
For additional information with respect to the non-GAAP measures
used by the Company, including reconciliation to the nearest IFRS
measures, refer to the detailed non-GAAP performance measure
disclosure in the Management’s Discussion and Analysis for the nine
months ended September 30, 2020 filed at www.sedar.com and on EDGAR
at www.sec.gov.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105005164/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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