New Gold Inc. (“New Gold” or the “Company”) (TSX and NYSE
American: NGD) reports second quarter and six-month results for
the Company as of June 30, 2019 and reaffirms that the Company
remains on-track to achieve annual guidance. (All amounts are in
U.S. dollars unless otherwise indicated). A conference call and
webcast will follow to discuss these results at 8:30 a.m. Eastern
time (details are provided at the end of this press release).
(For detailed information, please refer to the Company’s Second
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.)
Second Quarter and Six-Month Highlights
- Total production for the quarter (excluding production from the
Cerro San Pedro Mine) of 132,556 gold equivalent (gold eq.) ounces
(85,216 ounces of gold, 151,305 ounces of silver and 21.6 million
pounds of copper). For the six-month period, production was 255,820
gold eq. ounces (164,614 ounces of gold, 287,818 ounces of silver
and 41.1 million pounds of copper). Production is on track to meet
annual guidance of 465,000 to 520,000 gold eq. ounces.
- Revenues for the quarter were $155 million and $323 million for
the six-month period.
- Operating expense of $684 per gold eq. ounce1 for the quarter
and $664 per gold eq. ounce for the six-month period.
- Total cash costs of $740 per gold eq. ounce1,2 for the quarter
and $717 per gold eq. ounce for the six-month period. Total cash
costs are on track to meet annual guidance of $740 to $820 per gold
eq. ounce.
- All-in sustaining costs (AISC) of $1,087 per gold eq. ounce1,2
for the quarter and $1,085 for the six-month period. AISC for the
year are expected to be in-line with annual guidance of $1,330 to
$1,430 per gold eq. ounce as capital projects at Rainy River and
New Afton ramp-up over the balance of the year.
- Net loss from continuing operations for the quarter were $36
million ($0.06 per share) and $49 million ($0.08 per share) for the
six-month period.
- Adjusted net loss2 from continuing operations for the quarter,
which excludes other gains and losses, was $7 million ($0.01 per
share) and $9 million ($0.02 per share) for the six-month
period.
- Operating cash flow generated from continuing operations for
the quarter was $50 million ($0.09 per share) and $125 million
($0.21 per share) for the six-month period. Operating cash flow
generated from continuing operations for the quarter, before
non-cash changes in working capital1, was $60 million ($0.10 per
share) and $131 million ($0.23 per share) for the six-month
period.
“We are excited with the significant progress to date at Rainy
River as we reach the mid-point of this pivotal and
transformational year for the operation, as well as another quarter
of solid performance from New Afton. The Rainy River and New Afton
teams have made significant progress and we look forward to
building on that success over the coming quarters.” stated Renaud
Adams, CEO. “During the second half of the year, capital
requirements are expected to increase as we plan to substantially
complete all remaining construction projects at Rainy River in
order to reposition the asset for efficient and sustainable mining,
as well as advance C-zone development at New Afton, all of which is
underpinned by our current liquidity position of $395 million.”
Financial Highlights (Continuing Operations1)
Second Quarter 2019
Second Quarter 2018
Six-months 2019
Six-months 2018
Revenues from mining operations
155.1
152.5
323.0
300.0
Net earnings (loss), per share
(0.06)
(0.54)
(0.08)
(0.59)
Adj. net earnings (loss)2 per share
(0.01)
(0.02)
(0.02)
(0.05)
Operating cash flow, per share
0.09
0.09
0.21
0.16
Adj. operating cash flow2, per share
0.10
0.12
0.23
0.21
1. Continuing operations include the Rainy River, New Afton and
Cerro San Pedro Mines. 2. Refer to the “Non-GAAP Performance
Measures” section of this press release.
newgold.com 1. “Operating expense per gold eq. ounce”,
“total cash costs per gold eq. ounce” and “AISC per gold eq. ounce”
are calculated using gold eq. ounces sold. 2. Refer to the
“Non-GAAP Performance Measures section of this press release.
- Revenues for the quarter from continuing operations were $155
million, an increase over the prior-year quarter due to an increase
in gold ounces sold, offset by a decrease in average realized
copper price.
- Net loss for the quarter was $36 million ($0.06 per share), a
decrease in net loss when compared to the prior year quarter, which
included an impairment charge of $282 million, net of tax, related
to the Rainy River Mine.
- Adjusted net loss for the quarter was $7 million ($0.01 per
share), which is consistent with the prior year quarter.
- As at June 30, 2019, the cash balance was $110 million, with
total available liquidity of $395 million, which includes cash and
cash equivalents and $285 million available under the credit
facility, which supports the implementation of the short-term
operational plan.
- In addition to the current corporate hedging strategy for 2019,
the Company has entered into gold price option contracts covering
168,000 ounces of gold production for 2020 that provides downside
price protection of $1,300 with upside to $1,355 from January to
June and $1,415 from July to December. Details of these contracts
are included in the Company’s Second Quarter Financial
Statements.
Operational Highlights
Continuing Operations1
Q2 2019
Q2 2018
H1 2019
H1 2018
2019 Guidance
Gold eq. production (ounces) 2,3
132,556
127,603
255,820
246,679
465,000 – 520,000
Gold production (ounces)
85,216
76,751
164,614
140,522
300,000 – 335,000
Copper production (Mlbs)
21.6
20.4
41.1
42.6
75 – 85
Average realized gold price, per
ounce4
1,304
1,300
1,302
1,314
-
Average realized copper price, per
pound4
2.74
3.18
2.77
3.16
-
Operating expense, per gold eq. ounce3
684
642
664
698
-
Total cash costs, per gold eq.
ounce3,4
740
699
717
761
740 – 820
AISC, per gold eq. ounce3,4
1,087
1,060
1,085
1,210
1,330 – 1,430
Sustaining capital and sustaining leases
($M)4
36.9
36.2
81.6
91.7
255 – 285
Growth capital ($M)4
6.6
13.7
14.4
26.4
50 – 55
1. Continuing operations include the Rainy River, New Afton and
Cerro San Pedro Mines. 2. All production figures exclude production
from Cerro San Pedro residual leaching. 3. Gold eq. ounces produced
includes silver ounces and copper pounds converted to a gold eq.
based on a ratio of the average spot market prices for the
commodities for each period. The ratio for Q2 2019 was calculated
based on average spot market prices of $1,310 per gold ounce,
$14.89 per silver ounce and $2.77 per copper pound. The ratio for
Q2 2018 was calculated based on average spot market prices of
$1,306 per gold ounce, $16.53 per silver ounce and $3.12 per copper
pound. 4. Refer to the “Non-GAAP Performance Measures” section of
this press release.
Rainy River Highlights
Rainy River Mine
Q2 2019
Q2 2018
H1 2019
H1 2018
2019 Guidance
Gold eq. production (ounces)1
66,765
55,984
129,043
96,000
250,000 – 275,000
Gold eq. sold (ounces)1
68,812
52,540
140,295
94,161
-
Gold produced (ounces)
66,013
55,219
127,570
94,544
245,000 – 270,000
Gold sold (ounces)
68,042
51,832
138,737
92,712
-
Average realized gold price, per
ounce2
1,301
1,301
1,298
1,313
-
Operating expense, per gold eq.
ounce
906
802
853
993
-
Total cash costs, per gold eq.
ounce2
907
802
853
993
870 – 950
AISC, per gold eq. ounce2
1,314
1,295
1,322
1,787
1,690 – 1,790
Sustaining capital and sustaining
leases($M)2
27.0
24.4
63.6
73.3
210 – 230
Growth capital ($M)2
2.8
11.1
6.6
21.3
~3.0
1. Gold eq. ounces for Rainy River includes silver ounces
produced or sold converted to a gold eq. based on a ratio of the
average spot market prices for the commodities for each period. The
ratio for Q2 2019 was calculated based on average spot market
prices of $1,310 per gold ounce and $14.89 per silver ounce and
includes 66,157 ounces of silver. The ratio for Q2 2018 was
calculated based on average spot market prices of $1,306 per gold
ounce, $16.53 per silver ounce and includes 60,451 ounces of
silver. 2. Refer to the “Non-GAAP Performance Measures” section of
this press release.
Rainy River Mine
Q1 18
Q2 18
Q3 18
Q4 18
Q1 2019
Q2 2019
Tonnes mined per day (ore and waste)
112,432
107,416
102,290
111,507
111,679
114,544
Ore tonnes mined per day
36,296
36,043
30,439
32,054
15,739
21,368
Operating waste tonnes per day
54,321
43,570
23,333
67,406
62,955
82,488
Capitalized waste tonnes per day
21,816
27,802
48,518
12,047
32,986
10,688
Total waste tonnes per day
76,137
71,372
71,851
79,453
95,941
93,176
Strip ratio (waste:ore)
2.1
1.98
2.36
2.48
6.10
4.36
Tonnes milled per calendar day
17,534
16,549
16,962
20,668
19,725
21,117
Gold grade milled (g/t)
1.08
1.24
1.21
1.42
1.19
1.15
Gold recovery
81%
87%
87%
89%
90%
93%
Mill availability
77%
74%
76%
80%
89%
88%
Gold production (oz)
39,325
55,219
55,538
77,202
61,557
66,013
Gold eq. production1 (oz)
40,016
55,984
56,275
78,074
62,278
66,765
1. Gold eq. ounces for Rainy River include silver ounces
produced converted to a gold eq. based on a ratio of the average
spot market prices for the commodities for each period. The ratio
for Q2 2019 was calculated based on average spot market prices of
$1,310 per gold ounce and $14.89 per silver ounce and includes
66,157 ounces of silver.
- The Rainy River Mine reported gold eq. production of 66,765
ounces (66,013 ounces of gold and 66,157 ounces of silver) for the
quarter, despite the previously disclosed 10-day mill shutdown due
to the buildup of water in the Tailings Management Area (TMA) (see
the Company’s May 1, 2019 press release). Ore production during the
quarter included planned lower grades as mining operations
continued the transition from Phase 1 to Phase 2 of the mine plan.
For the six-month period, production was 129,043 gold eq. ounces
(127,570 ounces of gold and 126,540 ounces of silver). The mine is
on track to achieve annual production guidance of 250,000 to
275,000 gold eq. ounces.
- Operating expense per gold eq. ounce was $906 for the quarter,
a 13% increase over the prior year quarter, due to an increase in
operating waste tonnes mined. For the six-month period, operating
expense per gold eq. ounce was $853, a decrease over the prior year
period due to increased gold ounces sold.
- Total cash costs per gold eq. ounce were $907 for the quarter
and $853 for the six-month period, on-track to achieve annual
guidance of $870 to $950 per gold eq. ounce.
- AISC per gold eq. ounce for the quarter were $1,314 for the
quarter, which included $3.5 million of capitalized mining costs
(approximately $51 per gold eq. ounce) and $23.5 million of other
sustaining capital expenditure and lease payments, primarily
related to the Tailings Facility (Stage 2), the water treatment
plant and major equipment overhauls. AISC per gold eq. ounce for
the quarter increased by 2% over the prior year quarter due to an
increase in sustaining capital and leases coupled with an increase
in mining costs per ounce, offset by an increase in gold sales. For
the six-month period, AISC per gold eq. ounce were $1,322 and are
expected to be in-line with annual guidance of $1,690 to $1,790 per
gold eq. ounce as capital construction activities ramp-up over the
balance of the year, including the planned completion of Stage 2 of
the TMA as well as the expected ramp-up of construction activities
related to the maintenance, warehouse and camp facilities.
- Sustaining capital and sustaining lease payments for the
quarter were $27.0 million and $63.6 million for the six-month
period. Sustaining capital is expected to be in-line with guidance
of $210 to $230 million as management plans to substantially
complete all capital construction projects over the balance of the
year.
- Growth capital for the quarter was $2.8 million, related to the
transfer of equipment from the underground contractor.
- During the quarter, approximately 1.9 million ore tonnes and
8.5 million waste tonnes (including 1.0 million capitalized waste
tonnes) were mined from the open pit at an average strip ratio of
4.36:1. Phase 2 waste stripping was prioritized in the quarter as
mining operations were diverted from the Phase 1 pit due to low
drill availability, excess water at the bottom of the pit early in
the quarter, and the planned 27-day outage of the PC8000 shovel for
a partial overhaul. Additionally, 2.0 million tonnes of out-pit
material were mined during the quarter in preparation for planned
dam raises over the balance of the year.
- Mill throughput for the quarter averaged 21,117 tonnes per day
and achieved a record 24,230 average tonnes per day in June,
surpassing the target of 24,000 tonnes per day. Milled grades are
expected to be lower in the second half of the year as mining
operations shift from Phase 1 to Phase 2 due to the depletion of
Phase 1 ore.
- Mill availability for the quarter averaged 88% (93% in June).
Downtime was related to mill upgrades and repairs, including brakes
systems on both mills, as well as grid power interruptions due to
weather conditions in early June.
- Gold recovery improved to average 93% for the quarter as
efforts continued to focus on ongoing circuit optimizations.
- During the quarter, the Company advanced a comprehensive mine
optimization study that includes the review of alternative open pit
and underground mining scenarios with the overall objective of
accelerating free cash flow over the life of mine by reducing open
pit waste, overall underground development, and sustaining capital.
An updated life of mine plan is anticipated to be completed in the
fourth quarter.
- A strategic exploration drilling program was launched in the
second quarter which will test near-mine targets in the Intrepid
North area. To date, 2,500 metres (5 holes) of the planned 7,500
metres (15 holes) have been completed. The drilling program is
expected to conclude in the third quarter.
New Afton Highlights
New Afton Mine
Q2 2019
Q2 2018
H1 2019
H1 2018
2019 Guidance
Gold eq. produced (ounces) 1
65,791
68,340
126,777
142,057
215,000 – 245,000
Gold eq. sold (ounces) 1
55,717
65,669
118,933
135,583
-
Gold produced (ounces)
19,203
18,637
37,044
38,635
55,000 – 65,000
Gold sold (ounces)
16,142
17,945
34,759
36,430
-
Copper produced (Mlbs)
21.6
20.4
41.1
42.6
75 - 85
Copper sold (Mlbs)
18.3
19.6
38.6
40.9
-
Average realized gold price, per
ounce2
1,314
1,299
1,321
1,318
-
Average realized copper price, per
pound2
2.74
3.18
2.77
3.16
-
Operating expense, per gold eq. ounce
409
420
441
412
-
Operating expense, per gold ounce
413
412
447
410
480 - 520
Operating expense, per copper pound
0.86
1.01
0.94
0.98
0.95 – 1.15
Total cash costs, per gold ounce (net of
by-product credits)2
(1,338)
(1,604)
(1,228)
(1,654)
(1,350) – (1,310)
Total cash costs, per gold eq. ounce2
534
530
557
527
600 - 640
AISC, per gold ounce (net of by-product
credits)2
(726)
(917)
(697)
(1,118)
(500) – (420)
AISC, per gold eq. ounce2
711
718
712
670
810 - 890
Sustaining capital and sustaining leases
($M)2
9.7
11.8
17.7
18.4
45 - 55
Growth capital ($M)2
2.8
0.5
5.4
1.1
40 - 45
1. Gold eq. ounces for New Afton includes silver ounces and
copper pounds produced or sold converted to a gold eq. based on a
ratio of the average spot market prices for the commodities for
each period. The ratio for Q2 2019 was calculated based on average
spot market prices of $1,310 per gold ounce, $14.89 per silver
ounce and $2.77 per copper pound and includes 85,148 ounces of
silver. The ratio for Q2 2018 was calculated based on average spot
market prices of $1,306 per gold ounce, $16.53 per silver ounce and
$3.12 per copper pound and includes 79,171 ounces of silver. 2.
Refer to the “Non-GAAP Performance Measures section of this press
release.
New Afton Mine
Q1 18
Q2 18
Q3 18
Q4 18
Q1 19
Q2 19
Tonnes mined per day (ore and waste)
16,751
13,654
17,105
17,099
15,824
16,357
Tonnes milled per calendar day
14,333
14,804
14,518
15,012
14,759
14,992
Gold grade milled (g/t)
0.57
0.50
0.55
0.51
0.50
0.53
Gold recovery
84.1%
85.5%
84.7%
83.5%
83.2%
83.3%
Gold production (oz)
19,998
18,637
19,916
18,778
17,841
19,203
Copper grade milled
0.94%
0.82%
0.89%
0.82%
0.80%
0.86%
Copper recovery
83.2%
83.8%
83.0%
83.0%
83.2%
83.1%
Copper production (Mlbs)
22.2
20.4
21.7
20.8
19.5
21.6
Gold equivalent production1 (oz)
73,717
68,340
70,416
67,191
60,986
65,791
1. Gold eq. ounces for New Afton includes silver ounces and
copper pounds produced converted to a gold eq. based on a ratio of
the average spot market prices for the commodities for each period.
The ratio for Q2 2019 was calculated based on average spot market
prices of $1,310 per gold ounce, $14.89 per silver ounce and $2.77
per copper pound and includes 85,148 ounces of silver.
- The mine produced 65,791 gold eq. ounces for the quarter
(19,203 ounces of gold and 21.6 million pounds of copper) and
126,777 (37,044 ounces of gold and 41.1 million pounds of copper)
for the six-month period. The mine is on track to achieve annual
production guidance of 215,000 to 245,000 gold eq. ounces.
- Operating expense per gold eq. ounce was $409 for the quarter
and $441 for the six-month period. Year to date, operating expense
per gold eq. ounce has increased when compared to the prior year
period due to decreased sales.
- Total cash costs per gold eq. ounce was $534 for the quarter
and $557 per gold eq. ounce for the six-month period. Total cash
costs remain on track to achieve annual guidance of $600 to $640
per gold eq. ounce.
- AISC per gold eq. ounce for the quarter were $711 and AISC per
gold ounce (net of by-product credits) were ($726). For the
six-month period, AISC per gold eq. ounce were $712 and AISC per
gold ounce (net of by-product credits) were ($697). AISC per gold
eq. ounce and per gold ounce (net of by-product credits) are
expected to be in-line with annual guidance of $810 to $890 and
($500) to ($420), respectively, as sustaining capital projects are
expected to ramp-up over the balance of the year, primarily
relating to B3 mine development and a tailings dam raise.
- Sustaining capital and sustaining lease payments for the
quarter were $9.7 million and $17.7 million for the six-month
period. Sustaining capital is expected to be in-line with annual
guidance of $45 to $55 million as capital projects are
advanced.
- Growth capital for the quarter was $2.8 million, primarily
related to C-zone development. During the second half of the year,
planned growth capital expenditures are expected to increase,
related to the recent delivery of an additional jumbo drill as well
as scheduled payments for the thickened and amended tailings
facility and is expected to achieve annual guidance of $40 to $45
million.
- Mining and milling performance were in-line with planned levels
for the quarter, achieving 16,357 tonnes mined per day and 14,992
tonnes milled per day, respectively, at gold and copper recoveries
of 83%.
- The second phase of a planned mill upgrade to address supergene
ore recovery advanced during the quarter and is expected to be
commissioned in the third quarter.
- Development of the B3 and C-zones continued to advance in the
quarter.
- Efforts during the quarter continued to focus on de-risking the
execution of the C-zone project, primarily focusing on the
finalization of the tailings disposal plan and advancing permitting
efforts. An updated life of mine plan is expected to be completed
in the fourth quarter but could be delayed to the first quarter of
2020 to incorporate the sub-level cave (SLC) zone. During the
quarter, exploration-heading development towards the C-zone
commenced and advanced by approximately 200 metres.
- The New Afton delineation and exploration programs are
currently underway and include three key initiatives: 1)
underground drilling to delineate and expand mineral resources
within the SLC zone located to the east of the planned B3 block
cave; 2) underground exploration drilling of the D-zone target to
test the potential for additional mineral resources down plunge of
the C-zone block cave mineral reserve; and 3) surface geophysical
and geochemical surveys along the prospective Cherry Creek trend
located within three kilometres of the New Afton mill (see the
Company’s May 29, 2019 press release).
Blackwater Project Highlights
- On June 24, 2019, the BC Ministers of Environment and Climate
Change Strategy and Energy, Mines and Petroleum Resources has
issued an Environmental Assessment (EA) certificate for the
Blackwater Project.
Upcoming News and Events
- New Afton and Rainy River Exploration Updates (Q3 2019)
- Updated Life of Mine plan for Rainy River (Q4 2019)
- Updated Life of Mine plan for New Afton (Q4 2019 or Q1
2020)
Conference Call and Webcast Information
The Company will host a webcast and conference call on Thursday,
August 1, 2019 at 8:30 am (EDT) to discuss the Company’s first
quarter financial and operating results.
Via Webcast: Available on the Company’s website at
www.newgold.com or from the following link:
https://event.on24.com/wcc/r/2039737/4E6FF041274DE92A24B76EBDE19A69FC
Via Telephone: Please dial 1-647-427-2311 or toll free
1-866-521-4909
Replay Archive: Please dial 1-416-621-4642 or toll free
1-800-585-8367, access code 4957917
The recorded playback of the conference call will be available
until September 2, 2019. An archived webcast will be available
until September 2, 2019.
About New Gold Inc.
New Gold is a Canadian-focused intermediate gold mining company.
The Company has a portfolio of two core producing assets, the Rainy
River and New Afton Mines in Canada. The Company also operates the
Cerro San Pedro Mine in Mexico (which transitioned to residual
leaching in 2016). In addition, New Gold owns 100% of the
Blackwater project located in Canada. New Gold’s objective is to be
a 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, among others, statements with respect to: guidance for
production, operating expenses per gold ounce sold, total cash
costs and all-in sustaining costs as well as expected capital
expenditures; planned construction, development and exploration
activities for 2019 and beyond at the Company’s operations; and the
expected timing of a revised life-of-mine plan for New Afton and
Rainy River.
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, New Afton and
Blackwater being consistent with New Gold's current expectations;
and (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) and metals and other commodity prices and exchange
rates being consistent with those estimated for the purposes of
2019 guidance.
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 a mine
with relatively limited history of commercial production, 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.
Technical Information All scientific and technical
information in this news release has been reviewed and approved by
Mr. Eric Vinet, Vice President, Technical Services for the Company.
Mr. Vinet is a Professional Engineer and member of the Ordre des
ingénieurs du Québec. Mr. Vinet is a "Qualified Person" for the
purposes of NI 43-101.
Non-GAAP Financial Performance Measures All-in sustaining
costs (AISC) per gold equivalent ounce, total cash costs per gold
ounce and per gold equivalent 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
Equivalent Ounce "All-in sustaining costs per gold equivalent
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 equivalent sold to arrive at a
per ounce figure.
In addition to gold the Company produces copper and silver. Gold
equivalent 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
equivalent ounces produced or sold in a period longer than one
quarter are calculated by adding the number of gold equivalent
ounces in each quarter of that period. 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
"Sustaining capital" is a non-GAAP financial measure as well as
“sustaining lease” and “growth capital”. 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 payments that are sustaining in
nature. 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 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, sustaining lease and growth capital are
intended to provide additional information only, do not have any
standardized meaning under IFRS, and may not be comparable to
similar measures presented by other mining companies. They 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 equivalent 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 equivalent ounce are divided by gold equivalent 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 equivalent ounce basis. Gold
equivalent 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 equivalent ounces
produced in a period longer than one quarter are calculated by
adding the number of gold equivalent ounces in each quarter of that
period. 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. 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, which 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 year
ended December 31, 2018 filed at www.sedar.com and on EDGAR at
www.sec.gov.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005141/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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