Provides Notice of Release of Second Quarter
Financial Results
July 14, 2020- New Gold Inc. (“New Gold” or the “Company”)
(TSX and NYSE American: NGD) reports preliminary second quarter
results from the Rainy River and New Afton mines. (All amounts are
in US dollars unless otherwise indicated.)
During this unprecedented COVID-19 period, the health and safety
of our workforce and Indigenous and other communities remains our
number one concern. We will support all initiatives that align with
that objective and will remain vigilant in providing a safe working
environment for our workforce.
Consolidated Second Quarter and Recent Highlights
- Total production for the second quarter was 98,079 gold
equivalent (gold eq.) ounces (64,294 ounces of gold, 134,282 ounces
of silver and 16.9 million pounds of copper).
- The Rainy River Mine produced 49,633 gold eq. ounces (48,800
ounces of gold and 70,394 ounces of silver) for the quarter.
Following a 12-day voluntary shutdown related to COVID-19 in the
first quarter, operations resumed on April 3.
- The New Afton Mine produced 48,446 gold eq. ounces (15,494
ounces of gold and 16.9 million pounds of copper) for the
quarter.
- During the quarter, the Company announced that it entered into
a definitive agreement with Artemis Gold Inc. to divest its
Blackwater Project for C$190 million in cash, an 8% gold stream and
a C$20 million equity stake in Artemis (refer to the Company's June
9, 2020 news release for further information).
- During the quarter, the Company completed a $400 million senior
notes offering yielding 7.50% due in 2027 that was used, along with
cash on hand, to fund the full redemption of its outstanding 6.25%
senior notes due in 2022 completed on July 10, 2020 (refer to the
Company's June 24, 2020 and July 10, 2020 news releases for further
information).
- On April 15, 2020 annual guidance was withdrawn until the
Company could better understand the impact of COVID-19. Updated
annual guidance is expected to be released along with the Company's
second quarter financial results on July 30, 2020.
Consolidated Second Quarter Operational
Results
Q2 2020
H1 2020
Gold eq. production (ounces)1
98,079
201,514
Gold production (ounces)
64,294
131,084
Copper production (Mlbs)
16.9
35.4
Average realized gold price, per
ounce2
1,516
1,485
Average realized copper price, per
pound2
2.55
2.56
1. 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. 2. Refer to the “Non-GAAP Financial
Performance Measures" section of this press release.
“Over the past number of quarters, the management team has
advanced a disciplined approach aimed at repositioning our
operations for profitability and free cash flow generation. As our
operational performance improved, we have been able to execute on
strategic opportunities to restructure our balance sheet and
improve our liquidity position as we enter the next phase of our
growth strategy.” said Renaud Adams, CEO. “As our operations return
to pre-COVID levels and we complete all non-recurring capital
projects at Rainy River, we can now take a longer-term perspective.
New Gold's future will be supported by profitable operations, a
stronger balance sheet, and as our current hedges expire at year
end, we will be fully exposed to the strengthened gold price. We
are excited to enter the next stage as we create a
Canadian-focused, diversified company that prioritizes
profitability and free cash flow generation. We also want to thank
the entire New Gold team and our partners for their dedication and
hard work during this challenging and unprecedented COVID-19 period
as we continue to ensure the safety and well-being of our employees
and all our stakeholders.”
Rainy River Mine Highlights
Rainy River Mine
Q2 2020
H1 2020
Gold eq. production (ounces)1
49,633
100,739
Gold eq. sold (ounces)
47,873
101,411
Gold production (ounces)
48,800
99,181
Gold sold (ounces)
47,064
99,846
Average realized gold price, per
ounce2
1,514
1,483
1. Gold equivalent ounces for Rainy River
in Q2 2020 includes 70,394 ounces of silver converted to a
gold equivalent based on a ratio of $1,500 per gold ounce and
$17.75 per silver ounce. 2. Refer to the “Non-GAAP Financial
Performance Measures" section of this press release.
Rainy River Operating KPI’s
Rainy River Mine
FY 2018
Q1 19
Q2 19
Q3 19
Q4 19
Q1 2020
Q2 2020
Tonnes mined per day (ore and waste)
108,392
111,679
114,544
111,078
136,124
127,684
126,512
Ore tonnes mined per day
33,687
15,739
21,368
18,220
19,485
26,012
23,101
Operating waste tonnes per day
47,128
62,955
82,488
75,206
74,020
75,596
72,575
Capitalized waste tonnes per day
25,576
32,986
10,688
17,652
42,619
26,077
30,836
Total waste tonnes per day
74,705
95,941
93,176
92,858
116,639
101,673
103,411
Strip ratio (waste: ore)
2.22
6.10
4.36
5.10
5.99
3.91
4.48
Tonnes milled per calendar day
17,934
19,725
21,117
24,500
22,521
18,441
23,880
Gold grade milled (g/t)
1.25
1.19
1.15
1.14
0.85
1.03
0.78
Gold recovery (%)
86
90
93
91
91
90
89
Mill availability (%)
77
89
88
88
89
91
90
Gold production (oz)
227,284
61,557
66,013
75,080
51,122
50,381
48,800
Gold eq. production1 (oz)
230,349
62,278
66,765
76,092
51,915
51,106
49,633
1. Gold equivalent ounces for
Rainy River in Q2 2020 includes 70,394 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 resumed operations on April 3, following a
temporary two-week shutdown that allowed the workforce to follow a
14-day period of self-isolation relating to travel outside of
Canada related to COVID-19. Following the recent approval by Health
Canada, three rapid testing devices were procured and will be
rolled out for use in July and August, with the third device
exclusively for community use. These devices will initially test
for the virus and provide results within three hours of testing,
adding another level of protection against the transmission of
COVID-19 as we continue to prioritize the safety and well-being of
our employees and our local and Indigenous communities.
- Early in the second quarter, the mine utilized its local
workforce and gradually began to safely reintroduce a portion of
the non-local workforce to advance the ramp-up of operations.
During the quarter, the open pit averaged approximately 125,000
tonnes per day. Mining productivity increased during the quarter
from approximately 100,000 tonnes per day in early April to
approximately 140,000 tonnes per day in June, achieving
pre-suspension productivity levels. Most of the non-local workforce
has now been reintegrated and it is expected that the mine will
complete the ramp-up to full capacity early in the third
quarter.
- For the second quarter, gold eq. production was 49,633 ounces
(48,800 ounces of gold and 70,394 ounces of silver), which was
lower than plan. Production was impacted by reduced mine
productivity as described above, resulting in the processing of a
higher than planned proportion of the medium grade ore from
stockpile and pit rehandling. The averaged grade processed for the
quarter was 0.78 grams per tonne at gold recovery of 89%.
- During the quarter, approximately 2.1 million ore tonnes and
9.4 million waste tonnes (including 2.8 million capitalized waste
tonnes) were mined from the open pit at an average strip ratio of
4.48:1.
- Since the April 3 restart, the mill has ramped up to full
capacity, achieving an average run rate of approximately 24,700
tonnes per day, including downtime during the quarter, primarily to
complete a liner change as well as other maintenance related to the
SAG mill. Mill availability for the quarter averaged 90%, in line
with plan.
- During the quarter, key capital projects were advanced
including a planned tailings dam raise, wick drain installation for
stabilization of the east waste dump, final stage construction of
the maintenance and warehouse facilities, as well as the
commissioning of a bio-chemical reactor (BCR2) to allow clean water
discharge. It is expected that all key construction projects will
be substantially completed by the end of the third quarter with all
planned capital projects expected to be completed by year end. A
small portion of the Tailings Management Area (TMA) construction
that was originally scheduled for completion in 2021 is now planned
for completion in 2020, thereby reducing planned capital
requirements for 2021.
New Afton Mine Operational
Highlights
New Afton Mine
Q2 2020
H1 2020
Gold eq. production (ounces) 1
48,446
100,775
Gold eq. sold (ounces)
43,517
93,915
Gold production (ounces)
15,494
31,903
Gold sold (ounces)
13,789
29,780
Copper production (Mlbs)
16.9
35.4
Copper sold (Mlbs)
15.3
33.0
Average realized gold price, per
ounce2
1,520
1,490
Average realized copper price, per
pound2
2.55
2.56
1. Gold equivalent ounces for New Afton in
Q2 2020 includes 16.9 million pounds of copper and 63,889 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. 2. Refer to the “Non-GAAP Financial Performance Measures"
section of this press release.
New Afton Operating KPI’s
New Afton Mine
FY 2018
Q1 19
Q2 19
Q3 19
Q4 19
Q1 2020
Q2 2020
Tonnes mined per day (ore and waste)
16,156
15,824
16,357
15,773
14,539
16,727
15,358
Tonnes milled per calendar day
14,668
14,759
14,992
15,572
15,861
15,377
14,240
Gold grade milled (g/t)
0.53
0.50
0.53
0.43
0.42
0.45
0.46
Gold recovery (%)
85
83
83
80
79
81
81
Gold production (oz)
77,329
17,841
19,203
16,007
15,734
16,409
15,494
Copper grade milled (%)
0.87
0.80
0.86
0.76
0.70
0.73
0.72
Copper recovery (%)
83
83
83
84
81
82
83
Copper production (Mlbs)
85.1
19.5
21.6
20.1
18.3
18.5
16.9
Mill availability (%)
98
98
97
96
98
98
92
Gold eq. production1 (oz)
279,755
60,986
65,791
52,807
49,507
52,329
48,446
1. Gold equivalent ounces for New
Afton in Q2 2020 includes 16.9 million pounds of copper and 63,889
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 New Afton Mine reached a significant safety milestone,
achieving 3 million person-hours lost-time injury-free.
- The mine produced 48,446 gold eq. ounces for the quarter
(15,494 ounces of gold, and 16.9 million pounds of copper), below
plan primarily due to lower copper and gold grades. During the
quarter, scheduled mine and mill shutdowns were completed for
maintenance, including the replacement of 2 kilometers of
underground conveyor belts and replacement of SAG mill liners, with
the original completion date extended due to COVID-19 safety
protocols. There are no further planned major shutdowns expected
over the balance of the year.
- During the quarter, total development towards the B3 and C-zone
advanced by approximately 1,253 metres, achieving 95% of planned
levels year to date.
- The underground mine averaged 15,358 tonnes per day for the
quarter, the lower production was primarily due to a planned
maintenance shutdown.
- The mill averaged 14,240 tonnes per day for the quarter,
including the maintenance shutdowns as described above, at an
average gold and copper grade of 0.46 grams per tonne gold and
0.72% copper, respectively, with gold and copper recoveries of 81%
and 83%, respectively, in-line with plan.
- During the quarter, the mill continued to process lower than
planned copper and gold grades as the mine continued to experience
lower grades mined during the quarter. The 2020 and 2021 mine plans
incorporate multiple sources of mined ore, including depletion of
the east and west caves and rehabilitation and pillar recoveries of
medium-high grade zones. In the first and second quarters of 2020,
higher than expected dilution was experienced in portions of the
east and west caves. Additionally, the rehabilitation and pillar
recovery productivities were lower than planned contributing to the
lower grades mined in the first half of the year. Management
continues to work on optimization scenarios, but based on current
information, lower grades are expected to continue over the balance
of the year and potentially into 2021 as we complete mining in
these areas. It is not expected that the lower grades currently
being experienced in the east and west cave zones will be
encountered in the SLC, B3 and C-zones. Ore extraction from the B3
cave is expected to begin in second half of 2021.
- During the quarter, key capital projects were advanced
including the development of the C-zone as well as detailed
engineering and earthworks related to the thickened and amended
tailings (TAT) plant.
- 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.
Second Quarter Conference Call and Webcast The Company
will host an earnings call and webcast on Thursday, July 30, 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=760E8780-16EE-4E71-A923-6C796959BE5A
- Participants may also listen to the conference call by calling
toll free 1-833-502-0493, or 1-778-560-2562 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 3546224. An archived
webcast will also be available until August 30, 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 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
timing for release of updated annual guidance; the Company’s
anticipated course of action at the Rainy River mine and the timing
of ramp-up to full capacity; the Company’s expectation that there
will be no further shutdowns of the Rainy River Mine, the New Afton
Mine or their respective processing equipment; the timing of
completion of construction projects at the Rainy River Mine; the
expected grades of ore at the New Afton Mine; and the Company’s
plans for exploration activities at the New Afton Mine (including
Cherry Creek).
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; and (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.
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; the Company not being
able to release updated annual guidance on the timing described
herein or at all; 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 on the timing
described herein or at all; difficulties in ramp-up of operations
at Rainy River 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 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/20200714005311/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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