April 29, 2020 – New Gold Inc. (“New Gold” or the “Company”)
(TSX and NYSE American: NGD) reports first quarter results for
the Company as of March 31, 2020. An earnings conference call and
webcast will begin at 8:30 am Eastern Time to discuss the first
quarter financial results. (Details provided at the end of this
news release).
(For detailed information, please refer to the Company’s First
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).
First Quarter Highlights
- Total production for the first quarter was 103,435 gold
equivalent (gold eq.) ounces (66,790 ounces of gold, 131,417 ounces
of silver and 18.5 million pounds of copper).
- Revenues for the quarter were $142 million.
- Operating expense for the quarter was $864 per gold eq.
ounce.
- Total cash costs1,2 for the quarter were $916 per gold eq.
ounce.
- All-in sustaining costs (AISC)1,2 for the quarter were $1,446
per gold eq. ounce.
- Net loss from operations for the quarter was $28 million ($0.04
per share).
- Adjusted net loss2 for the quarter was $18 million ($0.03 per
share).
- Cash generated from operations for the quarter was $51 million
($0.08 per share). Operating cash flow generated from operations
for the quarter, before non-cash changes in working capital2, was
$47 million ($0.07 per share).
- As of the end of the quarter, the Company had available
liquidity of approximately $600 million, including approximately
$400 million in cash and cash equivalents.
- On April 15, 2020, the Company announced that due to the
rapidly changing and unpredictable environment caused by the spread
of the COVID-19 virus, guidance for 2020 has been withdrawn.
“We are encouraged by the financial results for the quarter as
they were impacted by the 2-week suspension at Rainy River in the
latter part of March, and the enhanced COVID-19 safety protocols
put in place at both operations. Following the close of a strategic
$300 million partnership with the Ontario Teachers' Pension Plan,
the Company now has a strong liquidity position of $600 million,
which is more than adequate to fund our business during this
COVID-19 period.” stated Renaud Adams, CEO. “Throughout this
challenging time, New Gold will continue to prioritize the safety
and well-being of our employees and local communities and we will
continue to work with local governments as well as our Indigenous
and community leaders to implement and coordinate actions to reduce
the risk of the spread of COVID-19.”
1. “Total cash costs per gold equivalent ounce” and “AISC per
gold equivalent ounce” are calculated using gold equivalent ounces
sold.
2. Refer to the “Non-GAAP Performance Measures” section of this
press release.
Financial Highlights
Q1 2020
Q1 2019
Revenue
142.3
167.9
Net earnings (loss), per share
(0.04)
(0.02)
Adj. net earnings (loss)1 per share
(0.03)
0.00
Operating cash flow, per share
0.08
0.13
Adj. operating cash flow1, per share
0.07
0.12
- Refer to the “Non-GAAP Performance Measures” section of this
press release.
- Revenues for the quarter were $142 million, a decrease compared
to the prior year quarter due to a decrease in gold and copper
sales volumes, including the impact of the 12-day suspension at the
Rainy River mine, and a decrease in copper prices, partially offset
by an increase in gold prices. Sales volumes in the prior-year
period were 10% higher than production primarily due to the timing
of shipment and sales.
- Operating expenses for the quarter were consistent with the
prior-year quarter.
- Net loss for the quarter was $28 million ($0.04 per share), an
increase in loss over the prior year quarter primarily due to lower
revenues.
- Adjusted net loss for the quarter was $18 million ($0.03 per
share), which is an increase in loss over the prior year quarter
primarily due to lower revenues.
Operational Highlights
Q1 2020
Q1 2019
Gold eq. production (ounces)1
103,435
123,263
Gold production (ounces)
66,790
79,398
Copper production (Mlbs)
18.5
19.5
Average realized gold price, per
ounce2
1,458
1,301
Average realized copper price, per
pound2
2.56
2.79
Operating expense, per gold eq. ounce
864
645
Total cash costs, per gold eq. ounce2
916
697
Depreciation and depletion per gold eq.
ounce
507
457
AISC, per gold eq. ounce2
1,446
1,083
Sustaining capital and sustaining leases
($M)2
49.1
44.8
Growth capital ($M)2
19.0
7.8
- Total gold equivalent ounces include silver and copper produced
(excluding production from the Cerro San Pedro Mine) converted to a
gold equivalent based on a ratio of $1,500 per gold ounce, $17.75
per silver ounce and $2.85 per copper pound. Throughout the year
the company will report gold equivalent ounces using a constant
ratio of those prices. All copper is produced by the New Afton
Mine.
- Refer to the “Non-GAAP Financial Performance Measures" section
of this press release.
Rainy River Highlights
Rainy River Mine
Q1 2020
Q1 2019
Gold eq. production (ounces)1
51,106
62,278
Gold eq. sold (ounces)
53,538
71,483
Gold production (ounces)
50,381
61,557
Gold sold (ounces)
52,782
70,695
Average realized gold price, per ounce
1,455
1,295
Operating expense, per gold eq. ounce
1,060
801
Total cash costs, per gold eq. ounce
1,060
801
Depreciation and depletion per gold eq.
ounce
661
303
AISC, per gold eq. ounce
1,755
1,330
Sustaining capital and sustaining leases
($M)2
35.7
36.6
Growth capital ($M)
0.1
3.8
- Gold equivalent ounces for Rainy River in Q1 2020 includes
61,265 ounces of silver converted to a gold equivalent based on a
ratio of $1,500 per gold ounce and $17.75 per silver ounce.
- Refer to the “Non-GAAP Financial Performance Measures" section
of this press release.
Rainy River Mine
FY 2018
Q1 19
Q2 19
Q3 19
Q4 19
Q1 2020
Tonnes mined per day (ore and waste)
108,392
111,679
114,544
111,078
136,124
127,684
Ore tonnes mined per day
33,687
15,739
21,368
18,220
19,485
26,012
Operating waste tonnes per day
47,128
62,955
82,488
75,206
74,020
75,596
Capitalized waste tonnes per day
25,576
32,986
10,688
17,652
42,619
26,077
Total waste tonnes per day
74,705
95,941
93,176
92,858
116,639
101,673
Strip ratio (waste:ore)
2.22
6.10
4.36
5.10
5.99
3.91
Tonnes milled per calendar day
17,934
19,725
21,117
24,500
22,521
18,441
Gold grade milled (g/t)
1.25
1.19
1.15
1.14
0.85
1.03
Gold recovery (%)
86
90
93
91
91
90
Mill availability (%)
77
89
88
88
89
91
Gold production (oz)
227,284
61,557
66,013
75,080
51,122
50,381
Gold eq. production1 (oz)
230,349
62,278
66,765
76,092
51,915
51,106
- Gold equivalent ounces for Rainy River in Q1 2020 includes
61,265 ounces of silver converted to a gold equivalent based on a
ratio of $1,500 per gold ounce and $17.75 per silver ounce.
- The Rainy River mine completed a temporary two-week shutdown
from March 20 to April 2 that allowed the local workforce to follow
a 14-day period of self-isolation relating to travel outside of
Canada. On April 3, operations resumed with operations gradually
ramping up over the coming weeks. (refer to the Company's April 3,
2020 press release for further information)
- The mine is currently utilizing its local workforce and will
steadily ramp-up operations over the coming weeks as we continue to
assess different scenarios to safely reintroduce the non-local
workforce into the daily operations to enhance our drilling and
maintenance capacity. To date, the mine is averaging approximately
100,000 tonnes per day, which is approximately 70% of the
productivity achieved prior to the shutdown.
- The mill facility has been restarted and is currently
processing ore directly supplied by the open pit mine combined with
ore from the medium grade stockpile and is operating at full
capacity.
- For the first quarter, the mine reported gold eq. production of
51,106 ounces (50,381 ounces of gold and 61,265 ounces of silver),
including 12-days of downtime related to the suspension of
operations.
- Operating expenses and total cash costs were $1,060 per gold
eq. ounce for the quarter, which is an increase from the prior-year
quarter primarily due to an increase in operating waste tonnes
mined as well as lower production and sales as a result of planned
lower grade ore mined and processed.
- Depreciation and depletion was $661 per gold eq. ounce for the
quarter, which is an increase from the prior-year quarter primarily
due to decreased reserves and shorter mine life when compared to
the prior year.
- Sustaining capital and sustaining lease payments for the
quarter were $35.7 million, including $6.6 million of capitalized
mining costs. During the quarter, sustaining capital activities
included advancement of the planned tailings dam raise, preparation
for wick drain installation for stabilization of the east waste
dump, ongoing construction of the maintenance and warehouse
facilities, as well as the installation of a bio-chemical reactor
(BCR2) that will allow for discharge of water, currently scheduled
to begin in Q2 2020.
- AISC were $1,755 per gold eq. ounce for the quarter, which is
an increase from the prior-year quarter, primarily due to lower
gold eq. ounces sold in the quarter.
- During the quarter, approximately 2.4 million ore tonnes and
9.3 million waste tonnes (including 2.4 million capitalized waste
tonnes) were mined from the open pit at an average strip ratio of
3.91:1. Prior to the suspension of operations, the open pit was
mining an average of approximately 140,000 tonnes per day.
- Mill throughput for the quarter averaged 18,441 tonnes per day,
including the 12-days of downtime related to the suspension of
operations in the quarter, as well as completion of maintenance
projects and adjustments related to the grinding circuit early in
the quarter. Adjustments to the grinding circuit, including the
commissioning of the pebble crusher were required to process harder
ore feed, which contributed to lower run rates in January. Mill
productivity achieved target levels in February and early March
(prior to the suspension) averaging approximately 23,800 tonnes per
day, in-line with the first quarter target range of 24,000 tonnes
per day.
- Mill availability for the quarter averaged 91%, excluding the
12-days of downtime, in-line with plan.
- Gold recovery averaged 90% for the quarter, slightly above
planned levels.
- Exploration activities included exploration reconnaissance
target definition and drill campaign planning, aimed to commence
upon the receipt of the required permits.
New Afton Highlights
New Afton Mine
Q1 2020
Q1 2019
Gold eq. production (ounces) 1
52,329
60,986
Gold eq. sold (ounces)
50,398
63,216
Gold production (ounces)
16,409
17,841
Gold sold (ounces)
15,991
18,617
Copper production (Mlbs)
18.5
19.5
Copper sold (Mlbs)
17.7
20.2
Average realized gold price, per
ounce2
1,464
1,327
Average realized copper price, per
pound2
2.56
2.79
Operating expense, per gold eq. ounce
655
468
Total cash costs, per gold eq. ounce2
762
578
Depreciation and depletion per gold eq.
ounce
334
630
AISC, per gold eq. ounce2
1,033
714
Sustaining capital and sustaining leases
($M)2
13.3
8.0
Growth capital ($M) 2
10.8
2.6
- Gold equivalent ounces for New Afton in Q1 2020 includes 18.5
pounds of copper and 70,152 ounces of silver converted to a gold
equivalent 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 press release.
New Afton Mine
FY 2018
Q1 19
Q2 19
Q3 19
Q4 19
Q1 2020
Tonnes mined per day (ore and waste)
16,156
15,824
16,357
15,773
14,539
16,727
Tonnes milled per calendar day
14,668
14,759
14,992
15,572
15,861
15,377
Gold grade milled (g/t)
0.53
0.50
0.53
0.43
0.42
0.45
Gold recovery (%)
85
83
83
80
79
81
Gold production (oz)
77,329
17,841
19,203
16,007
15,734
16,409
Copper grade milled (%)
0.87
0.80
0.86
0.76
0.70
0.73
Copper recovery (%)
83
83
83
84
81
82
Copper production (Mlbs)
85.1
19.5
21.6
20.1
18.3
18.5
Gold eq. production1 (oz)
279,755
60,986
65,791
52,807
49,507
52,329
- Gold equivalent ounces for New Afton in Q1 2020 includes 18.5
pounds of copper and 70,152 ounces of silver converted to a gold
equivalent based on a ratio of $1,500 per gold ounce, $2.85 per
copper pound and $17.75 per silver ounce.
- The mine produced 52,329 gold eq. ounces for the quarter
(16,409 ounces of gold, and 18.5 million pounds of copper).
- Operating expenses and total cash costs for the quarter were
$655 per gold eq. ounce, and $762 per gold eq. ounce, respectively,
which is an increase from the prior-year quarter primarily due to
higher tonnes mined as well as lower gold eq. ounces as a result of
lower gold and copper production in the quarter.
- Depreciation and depletion was $334 per gold eq. ounce for the
quarter, which is a decrease from the prior-year quarter 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 $13.3 million, primarily related to B3 mine
development and advancement of the planned tailings dam raise.
- AISC were $1,033 per gold eq. ounce for the quarter, which is
an increase from the prior-year quarter due to higher total cash
costs, higher sustaining capital expenditures, as well as an lower
gold eq. ounces as a result of lower gold and copper production in
the quarter.
- Growth capital was $10.8 million for the quarter, primarily
related to C-zone development and the Thickened and Amended
Tailings ("TAT") project.
- During the quarter, total development towards the B3 and C-zone
advanced by approximately 1,231 metres.
- B3 and C-zone development may be reduced in the coming weeks
due to the implementation of COVID-19 protocols, which will
temporarily impact productivity levels.
- The underground mine averaged 16,727 tonnes per day for the
quarter.
- The mill averaged 15,377 tonnes per day for the quarter, at an
average gold and copper grade of 0.45 g/t gold and 0.73% copper,
respectively, at gold and copper recoveries of 81% and 82%,
respectively. During the quarter, lower than planned copper grades
were mined in a portion of the Lift 1 east cave, primarily due to
higher than expected dilution rates that were encountered. The
Company will continue to review the causes of the lower grade and
potential impact.
- Exploration activities in the quarter included underground
delineation drilling on the East Extension zone and refinement of
exploration targets for the planned drilling campaign within the
Cherry Creek Trend area.
First Quarter 2020 Conference Call and Webcast The
Company will host a webcast and conference call on Wednesday, April
29, 2020 at 8:30 am (EDT) to discuss the Company’s first quarter
financial and operating results.
- 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=615FC5AC-FAB0-45B9-90A9-32381B1CFF2A
- Participants may also listen to the conference call by calling
toll free 1-877-255-3077, or 1-647-689-6603 outside of the U.S. and
Canada, passcode 3881419.
- A recorded playback of the conference call will be available
until May 29, 2020 by calling toll free 1-800-585-8367, or
1-416-621-4642 outside of the U.S. and Canada, passcode 3881419. An
archived webcast will also be available until April 29, 2021 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 as
well as the 100% owned Blackwater development project. 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
anticipated course of action at the Rainy River mine and the
gradual ramp-up of operations; the Company’s ability to reduce the
risk of the spread of COVID-19; the Company’s review of lower than
planned copper grades at New Afton; and the adequacy of the
Company’s liquidity position.
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, Rainy River Mine and Blackwater project 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 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; and (12) the long-term economic effects of the COVID-19
outbreak not having a material adverse impact on the Company’s
operations or liquidity position.
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; difficulties in the
gradual ramp-up of operations at the Rainy River Mine due to
various factors, including lack of availability of manpower or
equipment. In addition, there are risks and hazards associated with
the business of mineral exploration, development and mining,
including environmental events and hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins, flooding and
gold bullion losses and risks associated with the ramp-up of
production of a mine, such as Rainy River, (and the risk of
inadequate insurance or inability to obtain insurance to cover
these risks) as well as “Risk Factors” included in New Gold’s
Annual Information Form, MD&A and other disclosure documents
filed on and available at www.sedar.com and on EDGAR at
www.sec.gov. Forward-looking statements are not guarantees of
future performance, and actual results and future events could
materially differ from those anticipated in such statements. All of
the forward-looking statements contained in this news release are
qualified by these cautionary statements. New Gold expressly
disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
events or otherwise, except in accordance with applicable
securities laws.
Technical Information
The scientific and technical information contained herein has
been reviewed and approved by Eric Vinet, Vice President, Technical
Services 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 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 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" is a non-GAAP financial measure as well as
“sustaining lease”. 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 per Gold eq. Ounce
"Total cash costs per gold eq. ounce" is a non-GAAP financial
measure which is calculated in accordance with a standard developed
by The Gold Institute, a worldwide association of suppliers of gold
and gold products that ceased operations in 2002. Adoption of the
standard is voluntary and the cost measures presented may not be
comparable to other similarly titled measures of other companies.
New Gold reports total cash costs on a sales basis. The Company
believes that certain investors use this information to evaluate
the Company's performance and ability to generate liquidity through
operating cash flow to fund future capital expenditures and working
capital needs. This measure, along with sales, is considered to be
a key indicator of the Company's ability to generate operating
earnings and cash flow from its mining operations. Total cash costs
include mine site operating costs such as mining, processing and
administration costs, royalties, production taxes, but are
exclusive of amortization, reclamation, capital and exploration
costs. 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, 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
three months ended March 31, 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/20200429005183/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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