Achieves Annual Production and Cash Cost
Guidance; AISC Below Guidance
All amounts are in U.S.
dollars unless otherwise indicated
February 18, 2021 – New Gold Inc. (“New Gold” or the
“Company”) (TSX and NYSE American: NGD) reports fourth quarter
and annual results as of December 31, 2020, achieving the mid-range
of the revised annual production and cash cost guidance, with
All-in Sustaining Costs ("AISC") below revised annual guidance. An
earnings conference call and webcast will begin on February 19,
2021 at 8:30 am Eastern Time to discuss the fourth quarter and
year-end financial results (details provided at the end of this
news release).
The Company ended the year repositioned for long-term success
and is expected to transition to positive free cash flow in 2021.
Operational and cost performance has improved, strategic capital
projects have been advanced, the balance sheet was restructured,
and our liquidity position has significantly improved. The focus in
2021 has now shifted to driving further operational and cost
optimizations at Rainy River and advancing B3 and C-Zone
development at the New Afton Mine. Exploration drilling programs at
Rainy River and New Afton are currently underway that could
potentially increase resource inventory and extend mine life as we
advance on our growth strategy. New Gold begins 2021 as a much
stronger Company with a growing, higher-margin production profile
from the Rainy River Mine and the Company now fully benefits from
higher gold and copper prices.
"The recent tragic event at the New Afton Mine has further
entrenched our commitment to the health, safety and wellbeing of
our employees, contractors and their families. Underground
operations are ramping-up, B3 and C-Zone development has resumed,
and the mill is currently processing ore from the mine as well as
the surface stockpiles. We will continue to ramp-up the New Afton
Mine in a safe, sequential and disciplined manner that underpins
our commitment to putting people first," stated Renaud Adams,
President and CEO. "During the year we made significant progress in
transforming the Rainy River Mine, and the asset is now entering a
phase of strong high-margin production growth and free cash flow
generation along with the potential to further extend the life of
the underground mine. We also continued to advance the B3 and
C-Zone projects at the New Afton Mine that we expect will unlock
the potential of this asset. New Gold is now repositioned for
long-term success as we expect to transition to free cash flow
generation in 2021."
Sustainability and ESG
New Gold has four sustainability focus areas: Indigenous
Peoples, Tailings Management, Water and Climate. In 2020, New Gold
adapted its sustainability efforts to align with the most pressing
ESG reporting issues facing the mining industry. As such, our ESG
approach continues to prioritize the health, safety and well-being
of our people. The protection of our people is central to our
success as we believe people are our greatest asset. New Gold is
committed to providing training, opportunities and progression
paths for our teams, and we actively seek to ensure we promote
diversity within our teams at all levels of the organization. We
have adopted an embedded approach that aligns with ESG reporting
standards.
(For detailed information, please refer to the Company’s Fourth
Quarter Management’s Discussion and Analysis (“MD&A”) and
Financial Statements that are available to the Company’s website at
www.newgold.com and on SEDAR at www.sedar.com. The Company uses
certain non-GAAP financial performance measures throughout this
news release. Please refer to the “Non-GAAP Financial Performance
Measures” section of this news release and the MD&A.)
Consolidated Fourth Quarter and Annual Highlights
- Total production for the fourth quarter was 120,567 gold
equivalent1 ("gold eq.") ounces (83,096 ounces of gold, 199,428
ounces of silver and 18.5 million pounds of copper). For the year,
production was 437,617 gold eq. ounces (293,139 ounces of gold,
636,952 ounces of silver and 72.1 million pounds of copper),
achieving mid-range of the revised annual production guidance.
- Revenues for the quarter were $199 million and $643 million for
the year.
- Operating expense for the quarter was $799 per gold eq. ounce
and $794 per gold eq. ounce for the year.
- Total cash costs for the quarter were $841 per gold eq. ounce
and $840 per gold eq. ounce for the year, achieving the lower end
of the revised annual production guidance.
- AISC for the quarter were $1,491 per gold eq. ounce and $1,389
per gold eq. ounce for the year, below the revised annual
production guidance due to lower cash costs and sustaining capital
spend.
- Net loss for the quarter was $21 million ($0.03 per share) and
$79 million ($0.12 per share) for the year.
- Adjusted net earnings for the quarter was $28 million ($0.04
per share) and adjusted net earnings of $19 million ($0.03 per
share) for the year.
- Cash generated from operations for the quarter was $98 million
($0.15 per share) and $295 million ($0.44 per share) for the year.
Operating cash flow generated from operations for the quarter,
before non-cash changes in working capital, was $95 million ($0.14
per share) and was $279 million ($0.41 per share) for the
year.
- The Company announced that a tragic mud-rush incident occurred
at the New Afton Mine on February 2, 2021. Currently, surface
operations such as mill and tailings operations have returned to
normal levels. Underground operations are ramping up, and B3 and
C-Zone development has resumed. Mining operations are being safely
and sequentially ramped-up (refer to the Company's news releases
dated February 2, 4, 5, and 8, 2021 for further information).
- On February 10, 2021, the Company announced its annual
operational outlook for the Rainy River Mine, as well as the
Company's updated 2020 Mineral Reserves and Mineral Resources
(refer to the Company's news release dated February 10, 2021).
- On February 18, 2021, annual consolidated operational estimates
were released that incorporate estimates for the New Afton Mine
that were delayed to allow the Company sufficient time to consider
the impact of the tragic mud-rush incident of February 2, 2021 on
the 2021 operating and cost estimates (refer to the Company's news
release dated February 18, 2021).
- The Company completed the partial redemption of $200 million of
the principal amount of the outstanding 6.375% senior notes due in
2025 that was funded with cash on hand (refer to the Company's
November 23, 2020 and December 24, 2020 news releases for further
information).
- The Company recently purchased low cost copper put options with
a floor of $3.10 per pound, covering 1,700 tonnes per month
(approximately 65% of anticipated production), over the period from
April 2021 to September 2021, while maintaining full exposure to
higher copper prices. At the end of 2020, all gold option contracts
had expired and the Company is now fully exposed to current gold
prices.
- Exploration drilling programs at the Rainy River and New Afton
mines were launched late in the fourth quarter and an update is
expected to be released in the latter part of the first quarter of
2021.
- At the end of the quarter, the Company had a cash position of
approximately $185 million and a strong liquidity position of
approximately $490 million.
Financial Highlights
Q4 2020
Q4 2019
2020
2019
Revenue ($M)
198.9
139.2
643.4
630.6
Net earnings (loss), per share ($)
(0.03)
0.00
(0.12)
(0.12)
Adj. net earnings (loss)1 per share
($)
0.04
(0.04)
0.03
(0.08)
Operating cash flow, per share ($)
0.15
0.07
0.44
0.43
Adj. operating cash flow1, per share
($)
0.14
0.06
0.41
0.39
- These are non-GAAP financial performance measures with no
standardized meaning under IFRS and therefore may not be comparable
to similar measures provided by other issuers. For more
information, refer to the “Non-GAAP Financial Performance Measures”
section of this press release below for additional details on these
non-GAAP financial performance measures.
- Revenues for the quarter were $199 million, an increase as
compared to the prior-year quarter due to an increase in gold and
copper prices and gold sales volume. Revenues were $643 million for
the year, an increase as compared to the prior-year due to an
increase in gold and copper prices which was partially offset by a
decrease in sales volume which included the impact related to a
voluntary two-week suspension due to COVID-19 at Rainy River.
- Operating expenses for the quarter were lower than the prior
year period due to improved operational and cost performance and an
inventory write-down of $14.1 million in the prior year period.
Operating expenses for the year were lower than the prior-year
period due to improved operational and cost performance and lower
production.
- Net loss for the quarter was $21 million ($0.03 per share) and
a net loss of $79 million ($0.12 per share) for the year, an
increase in the net loss from the prior-year periods primarily due
to the loss on the revaluation of the Rainy River gold stream
obligation and the New Afton free cash flow obligation to the
Ontario Teacher's Pension Plan, partially offset by higher income
from operations. Other gains and losses for the year include a loss
of $30 million on the sale of the Blackwater project.
- Adjusted net earnings for the quarter were $28 million ($0.04
per share) and adjusted net loss of $19 million ($0.03 per share)
for the year, which is an increase in earnings over the prior-year
periods, primarily due to higher revenue, lower operating expenses
and lower depreciation and depletion.
Operational Highlights
Q4 2020
Q4 2019
2020
2019
2020 Revised Guidance
Gold eq. production (ounces)1
120,567
101,423
437,617
486,141
415,000 - 455,000
Gold production (ounces)
83,096
66,856
293,139
322,557
284,000 - 304,000
Copper production (Mlbs)
18.5
18.3
72.1
79.4
65 - 75
Average realized gold price, per
ounce2
1,623
1,366
1,559
1,337
-
Average realized copper price, per
pound2
3.34
2.69
2.86
2.71
-
Operating expense, per gold eq. ounce
799
1,007
794
762
$780 - $860
Total cash costs, per gold eq. ounce2
841
942
840
792
$830 - $910
Depreciation and depletion per gold eq.
ounce
419
621
454
495
$400 - $460
AISC, per gold eq. ounce2
1,491
1,862
1,389
1,310
$1,410 - $1,490
Sustaining capital and sustaining leases
($M)2
69.2
89.8
205.5
227.6
$207 - $232
Growth capital ($M)2
42.7
12.3
89.4
35.9
$82 - $102
1. Total gold eq. ounces include silver
and copper produced 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. 2. These are non-GAAP financial performance
measures with no standardized meaning under IFRS and therefore may
not be comparable to similar measures provided by other issuers.
For more information on these non-GAAP financial performance
measures, refer to the "Non-GAAP Financial Performance Measures"
section of this news release below.
Rainy River Mine Highlights
Rainy River Mine
Q4 2020
Q4 2019
2020
2019
2020 Revised Guidance
Gold eq. production (ounces)1
68,241
51,915
233,201
257,051
225,000 - 235,000
Gold eq. sold (ounces)
72,279
57,258
235,416
268,718
-
Gold production (ounces)
66,734
51,122
228,919
253,772
222,000 - 232,000
Gold sold (ounces)
70,675
56,390
231,112
265,359
-
Average realized gold price, per
ounce2
1,624
1,366
1,561
1,335
-
Operating expense, per gold eq. ounce2
864
1,278
906
962
$920 - $980
Total cash costs, per gold eq. ounce2
864
1,032
906
910
$920 - $980
Depreciation and depletion per gold eq.
ounce
523
512
600
349
$540 - $600
AISC, per gold eq. ounce2
1,494
2,429
1,562
1,630
$1,610 - $1,690
Sustaining capital and sustaining leases
($M)2
43.6
78.9
147.5
188.6
$145 - $160
Growth capital ($M)
2.9
0.1
3.1
6.8
$2 - $5
1. Gold eq. ounces for Rainy River in Q4
2020 includes 127,390 ounces of silver converted to a gold eq.
based on a ratio of $1,500 per gold ounce and $17.75 per silver
ounce.
2. These are non-GAAP financial
performance measures with no standardized meaning under IFRS and
therefore may not be comparable to similar measures provided by
other issuers. For more information on these non-GAAP financial
performance measures, refer to the "Non-GAAP Financial Performance
Measures" section of this news release below.
Rainy River Operating KPI's
Rainy River Mine
2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
2020
Tonnes mined per day (ore and waste)
118,404
127,684
126,512
145,701
158,638
139,702
Ore tonnes mined per day
18,712
26,012
23,101
36,515
42,918
32,178
Operating waste tonnes per day
73,702
75,596
72,575
62,818
73,921
71,212
Capitalized waste tonnes per day
25,990
26,077
30,836
46,368
41,799
36,313
Total waste tonnes per day
99,692
101,673
103,411
109,186
115,720
107,525
Strip ratio (waste:ore)
5.33
3.91
4.48
2.99
2.70
3.34
Tonnes milled per calendar day
21,980
18,441
23,880
26,998
26,999
24,096
Gold grade milled (g/t)
1.08
1.03
0.78
0.88
0.93
0.90
Gold recovery (%)
91
90
89
89
90
90
Mill availability (%)
88
91
90
90
94
91
Gold production (oz)
253,772
50,381
48,800
63,004
66,734
228,919
Gold eq. production1 (oz)
257,051
51,106
49,633
64,221
68,241
233,201
1. Gold eq. ounces for Rainy River in Q4
2020 includes 127,390 ounces of silver converted to a gold eq.
based on a ratio of $1,500 per gold ounce and $17.75 per silver
ounce.
Rainy River Sustainability and ESG
Our key focus areas at Rainy River are engagement with our
Indigenous partners, local procurement and economic development. We
take a collaborative approach to environmental monitoring through
the Environmental Monitoring Board, which is made up of Community
members and New Gold Rainy River staff. We understand our approach
to the environment is important to surrounding communities and
incorporate traditional knowledge into our monitoring as much as
possible to ensure we respect the shared knowledge of our partners.
We will continue to focus on local procurement and working with
local partners to provide business opportunities to more Indigenous
companies. Economic development for the surrounding area continues
to be a top priority, and we know that through business development
opportunities and increased employment, we can have a long-term
positive impact for our partners, building on our strong
relationships and creating more resilient communities.
Rainy River Operational Highlights
The Rainy River Mine has achieved the higher end of the revised
annual gold eq. production guidance. Operating expenses and cash
costs were below revised annual guidance, primarily due to lower
mining costs during the year as well as higher production and
sales. AISC were below the revised annual guidance due to lower
operating expenses and sustaining capital spend. Sustaining capital
achieved the lower end of the revised annual guidance estimates,
primarily due to realized savings related to Tailings Management
Area ("TMA") construction.
- Our COVID-19 response continued to be effective with the
implementation of rapid testing at Rainy River. The site had its
first employee COVID-19 case in January 2021. The team was able to
respond quickly utilizing on-site rapid testing. Contact tracing
was completed by the site team and through Public Health. The
individual was isolated immediately, and all other close contacts
tested negative. The case posed minimal risk to the operation.
There are currently no active cases of COVID-19 at the Rainy River
Mine. Further information on the Company’s response to COVID-19 is
available via the following link:
https://newgold.com/covid-19/.
- For the fourth quarter, gold eq. production was 68,241 ounces
(66,734 ounces of gold and 127,390 ounces of silver), at a grade of
0.93 grams per tonne, an increase over the prior two quarters. For
the year, gold eq. production was 233,201 ounces (228,919 ounces of
gold and 361,862 ounces of silver), achieving the higher end of
revised annual production guidance. For the fourth quarter
production increased when compared to the prior-year period
primarily due to higher grades. For the year production decreased
when compared to the prior year primarily due to planned lower
grades and a two-week voluntary shutdown due to COVID-19.
- During the fourth quarter, the open pit mine achieved
approximately 159,000 tonnes per day, a 9% increase over the prior
quarter and exceeding the 2021 target of 151,000 tonnes per day.
During the quarter, approximately 3.9 million ore tonnes and 10.6
million waste tonnes (including 3.8 million capitalized waste
tonnes) were mined from the open pit at an average strip ratio of
2.70:1.Capitalized waste remained elevated in the quarter as Phase
3 waste stripping continued to advance.
- For the second consecutive quarter, the mill processed
approximately 27,000 tonnes per day for the quarter, 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 0.93 grams per tonne at a gold recovery of 90%. Low grade
ore continues to be stockpiled for future processing as part of the
underground mine plan. With the mill operating consistently at its
maximum capacity, efforts will continue to focus on additional
optimization opportunities to increase recovery and unit cost
performance. Mill availability for the quarter averaged 94%,
exceeding plan.
- Operating expense and total cash costs were $864 per gold eq.
ounce for the quarter, a decrease over the prior year quarter
primarily due to higher production as a result of higher grade ore
tonnes mined and milled, as well as a non-cash inventory write down
included in the prior year period. For the year, operating expense
and total cash costs per gold eq. ounce were $906, a decrease over
the prior year due to a non-cash inventory write down included in
the prior year period.
- Depreciation and depletion was $523 per gold eq. ounce for the
quarter and $600 per gold eq. ounce for the year. Depreciation and
depletion increased over the prior year period 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 $43.6 million and $147.5 million for the year,
including $9.7 million and $32.9 million of capitalized mining
costs, respectively. All key capital projects were completed during
the quarter, including the Stage 2 tailings dam raise and wick
drain installation for stabilization of the east waste dump. As
previously disclosed, a small portion of the TMA construction as
well as other smaller projects that were originally scheduled for
completion in 2021 were completed in the quarter, thereby reducing
planned capital requirements for 2021.
- AISC were $1,494 per gold eq. ounce for the quarter and $1,562
per gold eq. ounce for the year, a decrease over the prior year
periods due primarily to lower sustaining capital spend in the
current year.
- At the end of the quarter, development of the decline towards
the Intrepid underground ore zone had advanced 590 metres,
exceeding the planned 550 metres for the year. The operation has
accessed the first ore level by the middle of the first quarter.
The focus in 2021 will be on the refinement of the long-hole mining
methodology and block model. Production from the Intrepid Zone is
expected to begin in late 2022.
- Late in the quarter, a drilling program was launched on the
North East Trend, located approximately 18 kilometres northeast of
the Rainy River Mine. A total of 1,298 metres of the 8,000 metres
were completed by the end of the year. The drilling program
continues to test the previously identified high priority
targets.
New Afton Mine Operational Highlights
New Afton Mine
Q4 2020
Q4 2019
2020
2019
2020 Revised Guidance
Gold eq. production (ounces) 1
52,326
49,507
204,416
229,091
190,000 - 220,000
Gold eq. sold (ounces)
49,860
47,188
192,953
219,447
-
Gold production (ounces)
16,362
15,734
64,220
68,785
62,000 - 72,000
Gold sold (ounces)
15,817
15,301
60,765
65,694
-
Copper production (Mlbs)
18.5
18.3
72.1
79.4
65 - 75
Copper sold (Mlbs)
17.5
17.3
68.0
76.4
-
Average realized gold price, per
ounce2
1,621
1,364
1,553
1,348
-
Average realized copper price, per
pound2
3.34
2.68
2.86
2.71
-
Operating expense, per gold eq. ounce
706
678
657
517
$630 - $710
Total cash costs, per gold eq. ounce2
808
833
759
647
$740 - $820
Depreciation and depletion per gold eq.
ounce
260
745
268
670
$240 - $300
AISC, per gold eq. ounce2
1,330
1,076
1,064
829
$1,080 - $1,160
Sustaining capital and sustaining leases
($M)2
25.5
10.7
57.4
38.0
$62 - $72
Growth capital ($M)2
39.9
10.5
77.1
24.1
$70 - $85
1. Gold eq. ounces for New Afton in Q4
2020 includes 18.5 million pounds of copper and 72,038 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.
2. These are non-GAAP financial
performance measures with no standardized meaning under IFRS and
therefore may not be comparable to similar measures provided by
other issuers. For more information on these non-GAAP financial
performance measures, refer to the "Non-GAAP Financial Performance
Measures" section of this news release below.
New Afton Operating KPI's
New Afton Mine
2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
2020
Tonnes mined per day (ore and waste)
15,620
16,727
15,358
17,249
17,259
16,652
Tonnes milled per calendar day
15,300
15,377
14,240
15,483
15,358
15,116
Gold grade milled (g/t)
0.47
0.45
0.46
0.44
0.46
0.45
Gold recovery (%)
82
81
81
80
79
80
Gold production (oz)
68,785
16,409
15,494
15,955
16,362
64,220
Copper grade milled (%)
0.78
0.73
0.72
0.71
0.73
0.72
Copper recovery (%)
83
82
83
82
81
82
Copper production (Mlbs)
79.4
18.5
16.9
18.2
18.5
72.1
Mill availability (%)
97
98
92
98
99
97
Gold eq. production1 (oz)
229,091
52,329
48,446
51,315
52,326
204,416
1. Gold eq. ounces for New Afton in Q4
2020 includes 18.5 million pounds of copper and 72,038 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.
New Afton Sustainability and ESG
Our key focus areas for New Afton include tailings management,
energy reduction plans and Indigenous relations. In 2020, we began
construction of our Thickened and Amended Tailings facility
("TAT"), which will support more efficient water management and
improve long-term environmental impacts. As part of the Company's
climate action plan, New Afton continues to explore options to
reduce energy use on site. In 2020, New Afton was able to achieve a
reduction in fossil fuel consumption and recently purchased an
electric boom truck, two electric haul trucks and one electric
scoop. The introduction of these vehicles is an important step in
our C-Zone development and greenhouse gas reduction targets. Our
relationships with surrounding Indigenous partners remain strong as
we actively collaborate to improve the benefits to the surrounding
areas based on mine expansion.
New Afton Operational Highlights
On February 2, 2021, a tragic mud-rush incident occurred at the
New Afton Mine with a contract driller fatally injured and two New
Afton employees receiving non-life-threatening injuries. The
mud-rush was localized underneath the Lift 1 cave in the isolated
recovery zone area, which does not interact with other areas of the
mine, including the B3 and C-Zone areas. Surface operations were
not impacted, and the mill facility is currently processing ore
from the live pile and the intermediate-grade surface stockpile.
Underground operations are ramping-up and B3 and C-Zone development
is advancing. Underground mining activities will be safely and
sequentially ramping-up as we maintain our focus on the health,
safety and wellbeing of our people. Annual operational estimates
for the New Afton Mine were released on February 18, 2021.
The New Afton Mine achieved the mid-range of the revised annual
gold eq. production guidance. Operating expense and cash costs
achieved the mid-range of the revised guidance. AISC was below the
revised annual guidance, primarily due to lower sustaining capital
spend. Sustaining capital was slightly below the revised annual
guidance and growth capital achieved the mid-range of revised
annual guidance.
- New Afton implemented wearable contact tracing technology and
is in the process of implementing rapid testing as outlined by the
Government of British Columbia. New Afton continues to take all
precautions against COVID-19 for employees and contractors. The
mine had two positive cases in January 2021, and both have
recovered. There are currently no active cases of COVID-19 at the
New Afton Mine. Further information on the Company’s response to
COVID-19 is available via the following link:
https://newgold.com/covid-19/.
- For the fourth quarter, New Afton produced 52,326 gold eq.
ounces (16,362 ounces of gold, and 18.5 million pounds of copper).
For the year, the mine produced 204,416 gold eq. ounces (64,220
ounces of gold, and 72.1 million pounds of copper), achieving the
mid-range of revised annual production guidance. For the fourth
quarter production increased when compared to the prior-year period
primarily due to higher grades. For the year production decreased
when compared to the prior year primarily due to lower grades.
- The underground mine averaged 17,259 tonnes per day for the
quarter, above original planned levels.
- During the quarter, the mill averaged 15,358 tonnes per day,
in-line with plan. The mill processed average gold and copper
grades of 0.46 grams per tonne gold and 0.73% copper, respectively,
with gold and copper recoveries of 79% and 81%, respectively. Mill
availability for the quarter averaged 99%, above plan.
- Operating expense per gold eq. ounce was $706 for the quarter
and $657 per gold eq. ounce for the year. Operating expense per
gold eq. ounce has increased as compared to the prior-year periods
due to higher tonnes mined at lower grades resulting in lower gold
and copper production and sales.
- Total cash costs were $808 per gold eq. ounce for the quarter
and $759 per gold eq. ounce for the year. Total cash costs per gold
eq. ounce for the quarter have decreased as compared to the prior
year quarter due to higher quarterly production and sales. Total
cash cost per gold eq. ounce for the year have increased as
compared to the prior year due to higher tonnes mined at lower
grades resulting in lower gold and copper production and sales in
the year.
- Depreciation and depletion was $260 per gold eq. ounce for the
quarter and $268 for the year. Depreciation and depletion decreased
from the prior-year periods as a result of the inclusion of C-zone
reserves in its depletion base and a longer mine life.
- Sustaining capital and sustaining lease payments for the
quarter were $25.5 million and $57.4 million for the year,
primarily related to B3 mine development and advancement of the
planned tailings dam raise. As a result of the delays in B3
development, there is a deferral of approximately $20 million of
sustaining capital to 2021, including the reclassification of $10
million of deferred growth capital to sustaining capital.
- AISC were $1,330 per gold eq. ounce for the quarter and $1,064
per gold eq. ounce for the year. AISC for the quarter and year have
increased over the prior year period due to higher sustaining
capital spend as well as lower gold equivalent sales.
- Growth capital was $39.9 million for the quarter and $77.1
million for the year. Growth capital in the quarter and year was
primarily related to C-Zone development and the TAT project. Short
term delays in thickener construction have been experienced by the
manufacturer due to COVID-19 and as a result, approximately $10
million of growth capital will be deferred to 2021.
- During the quarter, total development towards the B3 and C-Zone
advanced by approximately 1,705 metres, with B3 development
achieving 91% and the C-Zone achieving 110% of the planned levels
for the year. As of December 31, 2020, the execution of the overall
B3/C-Zone development project remained on schedule.
- The 2020 mine plan incorporated 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 level into the east cave recovery zone
that was completed in the third quarter was utilized with an
average extraction rate of 1,339 tonnes per day, including several
days over 3,000 tonnes per day in December.
- B3 permitting remains on schedule and the C-Zone permit
application process is expected to commence in the first quarter of
2021.
- Late in the quarter, a 10,000 metre exploration drilling
program was launched on the Cherry Creek trend with the initial
focus on testing the potential near surface epithermal and porphyry
style mineralization. Four drill rigs were mobilized and a total of
6,516 metres were completed by the end of the year.
Fourth Quarter Conference Call and Webcast
The Company will host an earnings call and webcast on February
19, 2021 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=EC31CA20-994F-44B2-B28E-DEFD260D3B52.
- 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 5989090. An archived
webcast will also be available until March 19, 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. The Company also holds an 8% gold stream
on the Artemis Gold Blackwater project located in British Columbia
and a 6% equity stake in Artemis. The Company also operates the
Cerro San Pedro Mine in Mexico (in reclamation). New Gold's vision
is to build a leading diversified intermediate gold Company based
in Canada that is committed to environment and social
responsibility. For further information on the Company, visit
www.newgold.com.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this news release, including
any information relating to New Gold’s future financial or
operating performance are “forward-looking”. All statements in this
news release, other than statements of historical fact, which
address events, results, outcomes or developments that New Gold
expects to occur are “forward-looking statements”. Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the use of forward-looking
terminology such as “plans”, “expects”, “is expected”, “budget”,
“scheduled”, “targeted”, “estimates”, “forecasts”, “intends”,
“anticipates”, “projects”, “potential”, “believes” or variations of
such words and phrases or statements that certain actions, events
or results “may”, “could”, “would”, “should”, “might” or “will be
taken”, “occur” or “be achieved” or the negative connotation of
such terms. Forward-looking statements in this news release
include, among others, statements with respect to: the Company’s
plans to grow production and generate free cash flow; the Company’s
production and sales; the Company’s plans to optimize operations
and costs at its assets; the potential for the Company to increase
resource inventory and extend the life of mine of the Rainy River
Mine and the New Afton Mine; the timing to achieve production from
the Intrepid Zone at the Rainy River Mine; the timing for
completion for capital projects at the Rainy River Mine and the New
Afton Mine; the focus on local procurement, and the impact expected
to be achieved for our partners; the timing and scope of
exploration drilling programs at the Rainy River Mine, the New
Afton 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 that, while considered
reasonable as at the date of this press release in light of
management’s experience and perception of current conditions and
expected developments, are inherently 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 MD&A are also subject to
the following assumptions: (1) there being no significant
disruptions affecting New Gold’s operations other than as set out
herein; (2) political and legal developments in jurisdictions where
New Gold operates, or may in the future operate, being consistent
with New Gold’s current expectations; (3) the accuracy of New
Gold’s current mineral reserve and mineral resource estimates; (4)
the exchange rate between the Canadian dollar and U.S. dollar, and
to a lesser extent, the Mexican Peso, being approximately
consistent with current levels; (5) prices for diesel, natural gas,
fuel oil, electricity and other key supplies being approximately
consistent with current levels; (6) equipment, labour and materials
costs increasing on a basis consistent with New Gold’s current
expectations; (7) arrangements with First Nations and other
Aboriginal groups in respect of the New Afton Mine and Rainy River
Mine being consistent with New Gold’s current expectations; (8) all
required permits, licenses and authorizations being obtained from
the relevant governments and other relevant stakeholders within the
expected timelines; (9) there being no significant disruptions to
the Company’s workforce at either the Rainy River or New Afton Mine
due to cases of COVID-19 or any required self-isolation
requirements (due, among other things, 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 long-term economic effects of the COVID-19
outbreak not having a material adverse impact on the Company’s
operations or liquidity position; and (13) Artemis Gold Inc. 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; disruptions to the Company’s workforce at
either the Rainy River Mine or the New Afton Mine, or both, due to
cases of COVID-19 or any required self-isolation (due to
cross-border travel, exposure to a case of COVID-19 or otherwise);
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 Gold Inc.
not being able to make the remaining C$50 million cash payment due
in connection with its acquisition of the Blackwater Project 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 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
Cash Costs and Total Cash Costs
“Cash costs”, “cash costs per gold eq. ounce” and “total cash
costs” 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 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 equivalent ounces of copper and
silver produced or sold in a quarter are computed using a
consistent ratio of copper and silver prices to the gold price and
multiplying this ratio by the pounds of copper and silver ounces
produced or sold during that quarter. In the prior year, New Gold
calculated gold equivalent ounces of copper and silver produced or
sold in a quarter 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.
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.
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 equivalent ounces of copper and silver produced or sold in a
quarter are computed using a consistent ratio of copper and silver
prices to the gold price and multiplying this ratio by the pounds
of copper and silver ounces produced or sold during that quarter.
In the prior year, New Gold calculated gold equivalent ounces of
copper and silver produced or sold in a quarter 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. Notwithstanding the impact of copper and
silver sales, as a Company focused on gold production, New Gold
aims to assess the economic results of its operations in relation
to gold, which is the primary driver of New Gold’s business.
New Gold believes this non-GAAP financial measure provides
further transparency into costs associated with producing gold and
assists analysts, investors and other stakeholders of the Company
in assessing the Company's operating performance, its ability to
generate free cash flow from current operations and its overall
value. This data is furnished to provide additional information and
is a non-GAAP financial measure. All-in sustaining costs presented
do not have a standardized meaning under IFRS and may not be
comparable to similar measures presented by other mining companies.
It should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS and is not
necessarily indicative of cash flow from operations under IFRS or
operating costs presented under IFRS.
Sustaining Capital and Sustaining Lease
"Sustaining capital" and "sustaining lease" is a non-GAAP
financial measures. New Gold defines sustaining capital as net
capital expenditures that are intended to maintain operation of its
gold producing assets. A sustaining lease is similarly a 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 capital expenditures to develop new
operations or capital expenditures related to major projects at
existing operations where these projects will materially increase
production. Management uses sustaining capital and sustaining
lease, 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, do not have any standardized meanings 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 capital expenditures that are intended to
maintain operation of its gold producing assets. Management uses
growth capital to understand the cost to develop new operations or
related to major projects at existing operations where these
projects will materially increase production. 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. The following tables
reconcile these non-GAAP measures to the most directly comparable
IFRS measure on an aggregate basis.
The following tables reconcile these non-GAAP measures to the
most directly comparable IFRS measure on an aggregate basis.
Three months ended December
31
Year ended December 31
(in millions of U.S. dollars, except where
noted)
2020
2019
2020
2019
CONSOLIDATED OPEX, CASH COST AND AISC
RECONCILIATION
Operating expenses
97.3
105.2
339.9
371.9
Gold equivalent ounces sold(1)
122,139
104,446
428,370
488,165
Operating expenses per gold equivalent
ounce sold ($/ounce)
799
1,007
794
762
Operating expenses
97.3
105.2
339.9
371.9
Treatment and refining charges on
concentrate sales
5.1
7.3
19.7
28.6
Adjustments(5)
—
(14.1)
—
(14.1)
Total cash costs
102.4
98.4
359.6
386.4
Gold equivalent ounces sold(1)
122,139
104,446
428,370
488,165
Total cash costs per gold equivalent ounce
sold ($/ounce)
841
942
840
792
Sustaining capital expenditures(2)(4)
66.4
87.6
194.7
214.7
Sustaining exploration - expensed
0.2
—
0.2
0.3
Sustaining leases
2.7
2.2
10.8
12.9
Corporate G&A including share-based
compensation(3)
7.5
4.4
21.5
18.4
Reclamation expenses
2.5
1.8
8.4
6.6
Total all-in sustaining costs
182.0
194.4
595.2
639.3
Gold equivalent ounces sold(1)
122,139
104,446
428,370
488,165
All-in sustaining costs per gold
equivalent ounce sold ($/ounce)
1,491
1,862
1,389
1,310
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 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). The Company uses this
measure for its own internal purposes. Management's internal
budgets and forecasts and public guidance do not reflect items
which have been excluded from the determination of adjusted net
earnings. Consequently, the presentation of adjusted net earnings
enables shareholders 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 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 earnings are intended to provide additional
information only and does not have any standardized meaning under
IFRS and may not be comparable to similar measures presented by
other companies. It should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. The measure is not necessarily indicative of operating profit
or cash flows from operations as determined under IFRS. The
following table reconciles this non-GAAP measure to the most
directly comparable IFRS measure.
Three months ended December
31
Year ended December 31
(in millions of U.S. dollars, except where
noted)
2020
2019
2020
2019
2018
ADJUSTED NET LOSS
RECONCILIATION
Loss before taxes
(16.0)
(6.3)
(75.0)
(73.9)
(1,096.0)
Other losses (gains)(1)
26.5
(45.0)
78.3
5.6
(18.1)
Loss on repayment of long term debt
16.8
0.6
23.3
1.2
—
Asset impairment
—
—
—
—
1,054.8
Inventory write-down
—
19.8
—
19.8
16.9
Corporate restructuring
—
1.1
—
1.1
4.1
Adjusted net earnings (loss) before
taxes
27.3
(29.8)
26.6
(46.2)
(38.3)
Income tax (expense) recovery
(5.1)
6.6
(4.3)
0.4
10.4
Income tax adjustments
5.7
(4.8)
(3.1)
(1.4)
2.5
Adjusted income tax recovery (expense)
0.6
1.8
(7.4)
(1.0)
12.9
Adjusted net earnings (loss)
27.9
(28.0)
19.2
(47.2)
(25.4)
Adjusted earnings (loss) per share (basic
and diluted)
0.04
(0.04)
0.03
(0.08)
(0.04)
Operating Cash Flows Generated from Operations, before Changes
in Non-Cash Operating Working Capital
“Operating cash flows generated from operations, before changes
in non-cash operating working capital” is a non-GAAP financial
measure with no standard meaning under IFRS, and excludes changes
in non-cash operating working capital. Management uses this measure
to evaluate the Company’s ability to generate cash from its
operations before temporary working capital changes.
Operating cash flows generated from operations, before non-cash
changes in working capital is intended to provide additional
information only and does not have any standardized meaning under
IFRS. It should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with IFRS. Other
companies may calculate this measure differently and this measure
is unlikely to be comparable to similar measures presented by other
companies.
Three months ended December
31
Year ended December 31
(in millions of U.S. dollars)
2020
2019
2020
2019
2018
CASH RECONCILIATION
Cash generated from operations
98.4
47.9
294.8
263.5
193.0
Add back (deduct): Change in non-cash
operating working capital
(3.5)
(9.1)
(16.2)
(25.9)
71.6
Cash generated from operations before
changes in non-cash operating working capital
94.9
38.8
278.6
237.6
264.6
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. The
following tables reconcile this non-GAAP measure to the most
directly comparable IFRS measure on an aggregate and mine-by-mine
basis.
Three months ended December
31
Year ended December 31
(in millions of U.S. dollars, except where
noted)
2020
2019
2020
2019
TOTAL AVERAGE REALIZED PRICE
Revenue from gold sales
138.8
95.8
449.3
434.4
Treatment and refining charges on gold
concentrate sales
1.5
2.1
6.3
8.3
Gross revenue from gold sales
140.3
97.9
455.6
442.7
Gold ounces sold
86,491
71,691
291,877
331,053
Total average realized price per gold
ounce sold ($/ounce)
1,623
1,366
1,559
1,337
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, 2020 filed at www.sedar.com and on EDGAR at
www.sec.gov.
Technical Information
The scientific and technical information contained herein has
been reviewed and approved by Eric Vinet, Senior Vice President,
Operations of New Gold. Mr. Vinet is a Professional Engineer and
member of the Ordre des ingénieurs du Québec. He is a "Qualified
Person" for the purposes of National Instrument 43-101 – Standards
of Disclosure for Mineral Projects.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210218006070/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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