Rainy River Achieves Record Mine and Mill
Productivity
Reaffirms Annual Production Guidance
October 13, 2020 – New Gold Inc. (“New Gold” or the
“Company”) (TSX and NYSE American: NGD) reports third quarter
operational results for the Company as of September 30, 2020 and
reaffirms annual production guidance. (All amounts are in US
dollars unless otherwise indicated)
An earnings conference call and webcast will be held on November
5, 2020 beginning at 8:30 am Eastern Time to discuss the third
quarter financial results. (Details provided at the end of this
news release)
During this quarter, the Rainy River Mine delivered another
strong quarter of operational and technical performance. 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, the Company's efforts
will now shift to focus on identifying additional opportunities to
further optimize mine and mill productivities and unit cost
performance.
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), on track to achieve
revised annual production guidance.
- The Rainy River Mine produced 64,221 gold eq. ounces (63,004
ounces of gold and 102,814 ounces of silver) for the quarter, on
track to achieve the mid-range of revised annual production
guidance.
- The New Afton Mine produced 51,315 gold eq. ounces (15,955
ounces of gold and 18.2 million pounds of copper) for the quarter,
on track to achieve the mid-range of revised annual production
guidance.
- During the quarter, the Company completed the divestment of the
Blackwater Project to Artemis Gold (“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, the Company has retained an 8% gold stream and a 6%
equity stake in Artemis. (Refer to the Company's June 24, 2020 and
August 24, 2020 news releases for further information)
- During the quarter, the Company completed the full redemption
of its outstanding 6.25% senior notes due in 2022 that was funded
from the proceeds of the $400 million senior notes offering that
was completed on June 24, 2020. (Refer to the Company's June 24,
2020 and July 10, 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 to be effective 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.
"We are very pleased with the results from the Rainy River Mine
as the operations met, or exceeded, target levels. Supported by the
strong operational performance delivered in the quarter and with
all deferred site construction capital substantially complete, the
operation is well positioned to deliver on its life of mine plan
that includes strong production growth at lower costs along with a
significant and corresponding reduction in capital requirements."
stated Renaud Adams, CEO. "Our improved operational performance has
allowed New Gold to complete key corporate transactions during the
year that supported the restructuring of our balance sheet and
strengthened our liquidity position. As we enter the final quarter
of the year, we will continue to build on the progress made during
the year as we position the Company for the future and deliver free
cash flow generation beginning in 2021."
Consolidated Third Quarter Operational Results
Q3 2020
9M 2020
2020 Revised Consolidated
Guidance
Gold eq. production (ounces)1
115,536
317,050
415,000 - 455,000
Gold production (ounces)
78,959
210,043
284,000 - 304,000
Copper production (Mlbs)
18.2
53.6
65 - 75
Average realized gold price, per
ounce2
1,613
1,532
-
Average realized copper price, per
pound2
2.99
2.69
-
- 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 press release.
Rainy River Mine Highlights
Rainy River Mine
Q3 2020
9M 2020
2020 Revised Guidance
Gold eq. production (ounces)1
64,221
164,960
225,000 - 235,000
Gold eq. sold (ounces)
61,726
163,137
-
Gold production (ounces)
63,004
162,185
222,000 - 232,000
Gold sold (ounces)
60,592
160,438
-
Average realized gold price, per
ounce2
1,615
1,533
-
- 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.
- Refer to the “Non-GAAP Financial Performance Measures" section
of this press release.
Rainy River Operating KPI’s
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.
- 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), well
positioned to achieve the mid-range of revised annual production
guidance as the overall grade is expected to continue to improve in
the fourth quarter.
- During the third 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.
- During the quarter, 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.
- 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.
- All key capital projects were substantially 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 Tailings
Management Area (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 reducing
planned capital requirements for 2021.
- 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 Mine Operational Highlights
New Afton Mine
Q3 2020
9M 2020
2020 Revised Guidance
Gold eq. production (ounces) 1
51,315
152,090
190,000 - 220,000
Gold eq. sold (ounces)
49,179
143,094
-
Gold production (ounces)
15,955
47,858
62,000 - 72,000
Gold sold (ounces)
15,168
44,948
-
Copper production (Mlbs)
18.2
53.6
65 - 75
Copper sold (Mlbs)
17.5
50.5
-
Average realized gold price, per
ounce2
1,606
1,529
-
Average realized copper price, per
pound2
2.99
2.69
-
- 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.
- Refer to the “Non-GAAP Financial Performance Measures” section
of this press release.
New Afton Operating KPI’s
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 mine produced 51,315 gold eq. ounces for the quarter
(15,955 ounces of gold, and 18.2 million pounds of copper) and the
operation remains well positioned to achieve the mid-range of
revised annual production guidance.
- 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.
- The underground mine averaged 17,249 tonnes per day for the
quarter, above original planned levels.
- The mill averaged 15,483 tonnes per day for the quarter,
in-line with plan, at 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.
- 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.
- Capital projects continued to be advanced during the quarter,
including the construction of the Thickened and Amended Tailings
("TAT") facility. Installation of the lime system was completed,
and foundation piling work is in progress. Manufacturing of the
thickener is currently underway and is expected to be delivered in
Q1 2021.
- During the quarter, a key portion of the water permit was
received, and the Phase 1 permit for the Thickened and Amended
Tailings is expected to be received in the fourth quarter. 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 with drilling expected to be launched in the
fourth quarter. 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 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: statements with
respect to the Company’s plans to optimize mine and mill
productivities and unit cost performance; statements with respect
to the Company being able to achieve revised annual production
guidance at the Rainy River Mine and the New Afton Mine; statements
with respect to the cash payment and stream from the divestment of
the Blackwater Project to Artemis; the timing of completion for
capital projects at Rainy River Mine and the New Afton Mine;
statements with respect to the timing and scope of the exploration
drilling program 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, 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 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; (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 projects at the Rainy River
Mine or the New Afton Mines on the timing described herein or at
all; the Company not being able to complete the exploration
drilling program to be launched at the Rainy River Mine and Cherry
Creek on the timing described herein or at all; 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
Non-GAAP Financial Performance Measures
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.
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 NI 43-101.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201013005346/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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