New Gold Inc. (“New Gold” or the “Company”) (TSX and NYSE
American: NGD) reports third quarter and nine-month results for
the Company as of September 30, 2019 and reaffirms that the Company
remains on-track to achieve consolidated annual production and cost
guidance. (All amounts are in U.S. dollars unless otherwise
indicated). A conference call and webcast will follow to discuss
these results at 8:30 a.m. Eastern time (details are provided at
the end of this press release).
(For detailed information, please refer to the Company’s Third
Quarter Management’s Discussion and Analysis (MD&A) and
Financial Statements that are available on the Company’s website at
www.newgold.com and on SEDAR at www.sedar.com. The Company uses
certain non-GAAP financial performance measures throughout this
press release. Please refer to the “Non-GAAP Financial Performance
Measures” section of this press release and the MD&A.).
Third Quarter and Nine-Month Highlights
- Total production for the quarter (excluding production from the
Cerro San Pedro Mine) of 128,899 gold equivalent (gold eq.) ounces
(91,087 ounces of gold, 168,159 ounces of silver and 20.1 million
pounds of copper). For the nine-month period, production was
384,719 gold eq. ounces (255,701 ounces of gold, 455,977 ounces of
silver and 61.2 million pounds of copper). Production is on track
to meet annual guidance of 465,000 to 520,000 gold eq. ounces.
- Revenues for the quarter were $168 million and $491 million for
the nine-month period.
- Operating expense of $761 per gold eq. ounce1 for the quarter
and $695 per gold eq. ounce for the nine-month period.
- Total cash costs of $819 per gold eq. ounce1,2 for the quarter
and $751 per gold eq. ounce for the nine-month period. Total cash
costs are on track to meet annual guidance of $740 to $820 per gold
eq. ounce.
- All-in sustaining costs (AISC)1,2 of $1,318 per gold eq. ounce
for the quarter and $1,161 for the nine-month period. AISC for the
year are expected to achieve the low-end of the annual guidance of
$1,330 to $1,430 per gold eq. ounce as sustaining capital at Rainy
River is expected to be below annual guidance.
- Net loss from continuing operations for the quarter was $25
million ($0.04 per share) and $74 million ($0.13 per share) for the
nine-month period.
- Adjusted net loss2 from continuing operations for the quarter,
which excludes other gains and losses, was $10 million ($0.02 per
share) and $19 million ($0.03 per share) for the nine-month
period.
- Operating cash flow generated from continuing operations for
the quarter was $91 million ($0.15 per share) and $216 million
($0.37 per share) for the nine-month period. Operating cash flow
generated from continuing operations for the quarter, before
non-cash changes in working capital2, was $67 million ($0.11 per
share) and $199 million ($0.34 per share) for the nine-month
period.
- On August 30, the Company completed a bought deal financing for
gross proceeds of C$150 million, the net proceeds of which were
used primarily for debt repayment, with approximately $100 million
of the Company’s 2022 senior unsecured notes repurchased for
cancellation. Following this, the Company had available liquidity
of $421 million, including $135 million in cash and cash
equivalents.
“The Company has delivered another quarter of improving
operational and cost performance from both assets as we continue to
advance our short-term operational plan and reposition the company
for long-term success. The quarter over quarter improvement in our
performance has underpinned the completion of a strategic equity
financing during the quarter, which allowed us to reduce our debt
position by $100 million and strengthen our balance sheet.” stated
Renaud Adams, CEO. “We will maintain our diligent focus on
completing substantially all remaining construction projects at
Rainy River in order to reposition the asset for efficient and
sustainable mining, as we continue to advance C-zone development at
New Afton. We continue to advance our updated life of mine plans
for Rainy River and New Afton, which are expected to be released in
mid-first quarter of 2020 and provide a path forward that is
premised on maximizing profitability and shareholder value
creation.”
- “Operating expense per gold equivalent ounce” and “AISC per
gold equivalent ounce” are calculated using gold equivalent ounces
sold.
- Refer to the “Non-GAAP Performance Measures section of
this press release.
Financial Highlights (Continuing Operations1)
Q3 2019
Q3 2018
9M 2019
9M 2018
Revenues from mining operations
168.4
147.1
491.4
447.1
Net earnings (loss), per share
(0.04)
(0.00)
(0.13)
(0.59)
Adj. net earnings (loss)2 per share
(0.02)
(0.01)
(0.03)
(0.06)
Operating cash flow, per share
0.15
0.07
0.37
0.23
Adj. operating cash flow2, per share
0.11
0.12
0.34
0.33
- Continuing operations include the Rainy River, New Afton and
Cerro San Pedro Mines.
- Refer to the “Non-GAAP Performance Measures” section of this
press release.
- Revenues for the quarter from continuing operations were $168
million, an increase over the prior-year quarter due to an increase
in gold ounces sold and an increase in average realized price of
gold and silver, offset by a decrease in the average realized
copper price.
- Operating expenses for the quarter were $95 million, an
increase over the prior-year quarter due to higher sales volume and
increased throughput at planned lower grades and an increase in
operating waste tonnes mined at Rainy River.
- Net loss for the quarter was $24.7 million ($0.04 per share),
an increase in loss over the prior year quarter due primarily to
unrealized losses on the revaluation of derivative
instruments.
- Adjusted net loss for the quarter was $10.3 million ($0.02 per
share), which is an increase in loss over the prior year quarter
due to an increase in depreciation and depletion associated with
higher sales volumes.
Operational Highlights
Continuing Operations1
Q3 2019
Q3 2018
9M 2019
9M 2018
2019 Guidance
Gold eq. production (ounces) 2
128,899
129,022
384,719
375,701
465,000 – 520,000
Gold production (ounces)
91,087
77,533
255,701
218,055
300,000 – 335,000
Copper production (Mlbs)
20.1
21.7
61.2
64.3
75 – 85
Average realized gold price, per
ounce3
1,383
1,205
1,329
1,275
-
Average realized copper price, per
pound3
2.62
2.93
2.72
3.08
-
Operating expense, per gold eq. ounce2
761
659
695
685
-
Total cash costs, per gold eq.
ounce2,3
819
643
751
720
740 – 820
AISC, per gold eq. ounce2,3
1,318
1,098
1,161
1,169
1,330 -1,430
Sustaining capital and sustaining leases
($M)3
56.3
52.4
138.1
144.1
255 - 285
Growth capital ($M)3
9.2
4.0
23.6
30.4
50 - 55
- Continuing operations include the Rainy River, New Afton and
Cerro San Pedro Mines. Comparative figures include Cerro San Pedro
Mine which transitioned to reclamation in Dec. 2018.
- Gold eq. ounces produced includes silver ounces and copper
pounds converted to a gold eq. based on a ratio of the average spot
market prices for the commodities for each period. The ratio for Q3
2019 was calculated based on average spot market prices of $1,474
per gold ounce, $17.02 per silver ounce and $2.63 per copper pound.
The ratio for Q3 2018 was calculated based on average spot market
prices of $1,213 per gold ounce, $14.99 per silver ounce and $2.77
per copper pound.
- Refer to the “Non-GAAP Performance Measures” section of this
press release.
Rainy River Highlights
Rainy River Mine
Q3 2019
Q3 2018
9M 2019
9M 2018
2019 Guidance
Gold eq. production (ounces)1
76,092
56,275
205,135
152,275
250,000 – 275,000
Gold eq. sold (ounces)1
71,165
56,731
211,460
150,892
-
Gold produced (ounces)
75,080
55,538
202,650
150,082
245,000 – 270,000
Gold sold (ounces)
70,233
55,968
208,970
148,680
-
Average realized gold price, per
ounce2
1,382
1,209
1,326
1,274
-
Operating expense, per gold eq. ounce
922
760
876
905
-
Total cash costs, per gold eq. ounce2
922
760
877
905
870 – 950
AISC, per gold eq. ounce2
1,593
1,541
1,413
1,694
1,690 – 1,790
Sustaining capital and sustaining
leases($M)2
46.3
43.2
110.0
116.5
210 - 230
Growth capital ($M)2
0.0
1.1
6.7
22.4
~3.0
- Gold eq. ounces for Rainy River includes silver ounces produced
or sold converted to a gold eq. based on a ratio of the average
spot market prices for the commodities for each period. The ratio
for Q3 2019 was calculated based on average spot market prices of
$1,474 per gold ounce and $17.02 per silver ounce and includes
87,705 ounces of silver. The ratio for Q3 2018 was calculated based
on average spot market prices of $1,213 per gold ounce, $14.99 per
silver ounce and includes 59,643 ounces of silver.
- Refer to the “Non-GAAP Performance Measures” section of this
press release.
Rainy River Mine
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Tonnes mined per day (ore and waste)
112,432
107,416
102,290
111,507
111,679
114,544
111,078
Ore tonnes mined per day
36,296
36,043
30,439
32,054
15,739
21,368
18,220
Operating waste tonnes per day
54,321
43,570
23,333
67,406
62,955
82,488
75,206
Capitalized waste tonnes per day
21,816
27,802
48,518
12,047
32,986
10,688
17,652
Total waste tonnes per day
76,137
71,372
71,851
79,453
95,941
93,176
92,858
Strip ratio (waste:ore)
2.1
1.98
2.36
2.48
6.10
4.36
5.10
Tonnes milled per calendar day
17,534
16,549
16,962
20,668
19,725
21,117
24,500
Gold grade milled (g/t)
1.08
1.24
1.21
1.42
1.19
1.15
1.14
Gold recovery
81%
87%
87%
89%
90%
93%
91%
Mill availability
77%
74%
76%
80%
89%
88%
88%
Gold production (oz)
39,325
55,219
55,538
77,202
61,557
66,013
75,080
Gold eq. production1 (oz)
40,016
55,984
56,275
78,074
62,278
66,765
76,092
- Gold eq. ounces for Rainy River include silver ounces produced
converted to a gold eq. based on a ratio of the average spot market
prices for the commodities for each period. The ratio for Q3 2019
was calculated based on average spot market prices of $1,474 per
gold ounce and $17.02 per silver ounce and includes 87,705 ounces
of silver.
- The Rainy River Mine reported gold eq. production of 76,092
ounces (75,080 ounces of gold and 87,705 ounces of silver). Ore
production during the quarter included planned lower grade ore from
Phase 2 as well as remaining higher-grade ore from Phase 1, as
mining operation continued the transition from Phase 1 to Phase 2
of the mine plan. As the ore from Phase 1 is now mined out as
planned, grades mined in the fourth quarter are expected to decline
and average between 0.8 and 1.0 grams per tonne. For the nine-month
period, production was 205,135 gold eq. ounces (202,650 ounces of
gold and 214,245 ounces of silver).
- As previously reported, during the second half of the quarter
and into October, the operation experienced periods of significant
rainfall, causing an increase in water levels in the Tailings
Management Area (the “TMA”). In late October, the planned 2.5 metre
raise of the spillway was completed, which provides approximately 7
to 8 million cubic meters of additional TMA capacity. During the
month of October, the mill operated at lower capacity in order to
manage water levels in the TMA. Scheduled maintenance previously
planned for later in the fourth quarter was completed during this
time. In October, the mill facility averaged approximately 18,000
tonnes per day and is expected to operate at full capacity over the
balance of the year. As a result of lower throughput achieved in
October and lower grades planned for the fourth quarter, the mine
is on track to achieve the lower end of annual production guidance
of 250,000 to 275,000 gold eq. ounces.
- Operating expense per gold eq. ounce was $922 for the quarter,
a 21% increase over the prior year quarter, due to an increase in
operating waste tonnes mined and increased throughput at planned
lower grades. For the nine-month period, operating expense per gold
eq. ounce was $876, a decrease over the prior year period due to
increased gold ounces sold.
- Total cash costs per gold eq. ounce were $922 for the quarter
and $877 for the nine-month period, on-track to achieve annual
guidance of $870 to $950 per gold eq. ounce.
- Sustaining capital and sustaining lease payments for the
quarter were $46.3 million and $110.0 million for the nine-month
period. During the quarter, activities included the advancement of
the Stage 2 TMA dam construction, purchase and renovation of the
camp facility, installation of wick drains for stabilization of the
east waste dump as well as final commissioning of the water
treatment plant. Sustaining capital and sustaining lease payments
estimates for the year are expected to be $175 to $190 million,
which is below guidance estimates, due to cost reductions of
approximately $15 million related to the TMA and the rescoped
maintenance and warehouse facilities, as well as the deferral of
capital to 2020 of approximately $20 million.
- AISC per gold eq. ounce were $1,593 for the quarter, which
included $7 million of capitalized mining costs (approximately $92
per eq. ounce) and $39.3 million of other sustaining capital
expenditure and lease payments. AISC per gold eq. ounce for the
quarter increased by 3% over the prior year quarter due to an
increase in sustaining capital and leases coupled with an increase
in mining costs per ounce, offset by an increase in gold sales. For
the nine-month period, AISC per gold eq. ounce were $1,413. Due to
the lower than planned sustaining capital noted above, as well as
the lower gold equivalent production and sales expected in the
fourth quarter, AISC is expected to achieve the lower end or below
annual guidance of $1,690 to $1,790.
- During the quarter, approximately 1.7 million ore tonnes and
8.5 million waste tonnes (including 1.6 million capitalized waste
tonnes) were mined from the open pit at an average strip ratio of
5.10:1 as Phase 2 waste stripping continued to be prioritized
during the quarter. Additionally, 2.6 million tonnes of out-pit
material were mined during the quarter in preparation for planned
dam raises over the balance of the year.
- Mill throughput for the quarter averaged 24,500 tonnes per day,
the first full quarter the mill operated at the target range of
24,000 tonnes per day. Mill availability for the quarter averaged
88%, achieving target levels as all major mill upgrades are
substantially completed. As the mill has demonstrated consistent
operations at target levels, there remains potential for further
increases in mill throughput as mill availability improves over the
coming quarters.
- Gold recovery averaged 91% for the quarter, in-line with plan.
Efforts continue to focus on achieving additional circuit
optimizations as well as commissioning of the gravity circuit,
which could further improve recoveries.
- During the quarter, the Company advanced a comprehensive mine
optimization study that includes the review of alternative open pit
and underground mining scenarios with the overall objective of
reducing capital and improving the return on investment over the
life of mine. Results are now scheduled for release during the
first quarter of 2020, but by no later than mid-February, in
conjunction with the Mineral Reserves and Resources update and the
Company’s 2020 guidance estimates.
- As operational performance has improved over the past four
quarters, the focus is now shifting from stabilizing operations to
optimizing operational and cost performance. To support that
initiative, the Company expects to engage an external consultant to
support improved overall equipment efficiencies with the objective
of optimizing open pit mining productivity and unit cost
performance.
- Exploration activities continued in the third quarter, which
included reconnaissance work in the northeastern portion of the
broader Rainy River land package with the objective of identifying
targets for follow up drilling in 2020.
New Afton Highlights
New Afton Mine
Q3 2019
Q3 2018
9M 2019
9M 2018
2019 Guidance
Gold eq. produced (ounces) 1
52,807
70,458
179,584
212,515
215,000 – 245,000
Gold eq. sold (ounces) 1
53,326
66,660
172,259
202,243
-
Gold produced (ounces)
16,007
19,916
53,051
58,551
55,000 – 65,000
Gold sold (ounces)
15,634
18,883
50,393
55,313
-
Copper produced (Mlbs)
20.1
21.7
61.2
64.3
75 - 85
Copper sold (Mlbs)
20.6
20.5
59.2
61.4
-
Average realized gold price, per
ounce2
1,390
1,194
1,343
1,276
-
Average realized copper price, per
pound2
2.62
2.93
2.72
3.08
-
Operating expense, per gold eq. ounce
545
359
473
395
-
Operating expense, per gold ounce
523
342
471
387
480 - 520
Operating expense, per copper pound
0.99
0.84
0.95
0.94
0.95 – 1.15
Total cash costs, per gold ounce (net of
by-product credits)2
(1,225)
(1,570)
(1,227)
(1,625)
(1,350) – (1,310)
Total cash costs, per gold eq. ounce2
682
473
596
509
600 - 640
AISC, per gold ounce (net of by-product
credits)2
(586)
(1,057)
(663)
(1,097)
(500) – (420)
AISC, per gold eq. ounce2
869
618
761
653
810 - 890
Sustaining capital and sustaining leases
($M)2
9.7
9.1
27.4
27.5
45 - 55
Growth capital ($M)2
8.2
1.2
13.6
2.3
40-45
- Gold eq. ounces for New Afton includes silver ounces and copper
pounds produced or sold converted to a gold eq. based on a ratio of
the average spot market prices for the commodities for each period.
The ratio for Q3 2019 was calculated based on average spot market
prices of $1,474 per gold ounce, $17.02 per silver ounce and $2.63
per copper pound and includes 80,454 ounces of silver. The ratio
for Q3 2018 was calculated based on average spot market prices of
$1,213 per gold ounce, $14.99 per silver ounce and $2.77 per copper
pound and includes 83,826 ounces of silver.
- Refer to the “Non-GAAP Performance Measures section of this
press release.
New Afton Mine
Q1 18
Q2 18
Q3 18
Q4 18
Q1 19
Q2 19
Q3 19
Tonnes mined per day (ore and waste)
16,751
13,654
17,105
17,099
15,824
16,357
15,773
Tonnes milled per calendar day
14,333
14,804
14,518
15,012
14,759
14,992
15,572
Gold grade milled (g/t)
0.57
0.50
0.55
0.51
0.50
0.53
0.43
Gold recovery
84.1%
85.5%
84.7%
83.5%
83.2%
83.3%
80.2%
Gold production (oz)
19,998
18,637
19,916
18,778
17,841
19,203
16,007
Copper grade milled
0.94%
0.82%
0.89%
0.82%
0.80%
0.86%
0.76%
Copper recovery
83.2%
83.8%
83.0%
83.0%
83.2%
83.1%
83.5%
Copper production (Mlbs)
22.2
20.4
21.7
20.8
19.5
21.6
20.1
Gold eq. production1 (oz)
73,717
68,340
70,416
67,191
60,986
65,791
52,807
- Gold eq. ounces for New Afton includes silver ounces and copper
pounds produced converted to a gold eq. based on a ratio of the
average spot market prices for the commodities for each period. The
ratio for Q3 2019 was calculated based on average spot market
prices of $1,474 per gold ounce, $17.02 per silver ounce and $2.63
per copper pound and includes 80,454 ounces of silver.
- The mine produced 52,807 gold eq. ounces for the quarter
(16,007 ounces of gold and 20.1 million pounds of copper) and
179,584 (53,051 ounces of gold and 61.2 million pounds of copper)
for the nine-month period. The mine is on track to achieve annual
production guidance of 215,000 to 245,000 gold eq. ounces.
- Operating expense per gold eq. ounce was $545 for the quarter
and $473 for the nine-month period. Operating expense per gold eq.
ounce has increased as compared to the prior year period due to
decreased gold equivalent sales due to the lower copper price.
- Total cash costs per gold eq. ounce was $682 for the three
months ended September 30, 2019 and $596 per gold eq. ounce for the
nine months ended September 30, 2019. Total cash costs per gold eq.
ounce have increased as compared to the prior year period, driven
by the higher operating expense per gold eq. ounce. Total cash
costs are expected to achieve the higher end of annual guidance of
$600 to $640 per gold eq. ounce, primarily due to the lower gold
equivalent ounces from the lower copper price.
- Sustaining capital and sustaining lease payments for the
quarter were $9.7 million, and $27.4 for the nine-month period
primarily related to B3 mine development and a tailings dam raise.
Sustaining capital is expected to be slightly below annual guidance
of $45 to $55 million due to improved cost efficiencies realized on
development meters, as well as the deferral of other capital
projects to the fourth quarter with payment of these projects now
expected in the first quarter of 2020.
- AISC per gold eq. ounce for the three months ended September
30, 2019 were $869 and AISC per gold ounce (net of by-product
credits) were ($586). For the nine months ended September 30, 2019,
AISC per gold eq. ounce were $761 and AISC per gold ounce (net of
by-product credits) were ($663). Although sustaining capital spend
is expected to be slightly lower than the annual guidance range,
the impact is offset by the decrease in expected gold equivalent
sales due to the decrease in copper prices and as a result AISC
remains on track to achieve the annual guidance range of $810 to
$890 per eq. ounce.
- Growth capital was $8.2 million for the three months ended
September 30, 2019, $13.6 million for the nine months ended
September 30, 2019 primarily related to C-zone development. Growth
capital spend is expected to be slightly below annual guidance of
$40 to $45 million due to realized cost efficiencies in development
metres, as well as the impact of working capital as higher than
planned activity is expected in fourth quarter with payments now
expected in the first quarter of 2020.
- Mining and milling performance were in-line with planned levels
for the quarter, achieving 15,773 tonnes mined per day and 15,572
tonnes milled per day, at gold recovery of 80% and copper recovery
of 84%.
- The second phase of a planned mill upgrade to address supergene
ore recovery advanced during the quarter. Key equipment has been
installed and commissioning is expected during the fourth
quarter.
- Efforts during the quarter continued to focus on de-risking the
execution of the C-zone project, primarily focusing on the
finalization of the tailings disposal plan and advancing permitting
efforts. An updated life of mine plan is expected to be completed
in the first quarter of 2020. Sub-level cave (SLC) definition,
mining operability and sequencing will continue to be further
defined for potential incorporation of the SLC zone into the mine
plan. By the end of the quarter, exploration-heading development
towards the C-zone has been advanced by approximately 720
metres.
- The New Afton delineation and exploration programs are
currently underway and include three key initiatives: 1)
underground drilling to delineate and expand mineral resources
within the SLC Zone, located to the east of the planned B3 block
cave; 2) underground exploration drilling of the D-zone target to
test the potential for additional mineral resources down plunge of
the C-zone block cave mineral reserve; and 3) surface geochemical
surveys along the prospective Cherry Creek trend located within
three kilometres of the New Afton mill (see May 29, 2019 press
release). The regional exploration program advanced during the
quarter and focused on refining follow-up drilling targets in the
Cherry Creek trend area that could be included in the drilling
program, which is currently scheduled to begin in the fourth
quarter.
Upcoming News and Events
- Updated Life of Mine plans for New Afton and Rainy River (Q1
2020)
Conference Call and Webcast Information
The Company plans to release its third quarter 2019 financial
results before market open on Wednesday, November 6, 2019. A
conference call and webcast will follow at 8:30 a.m. Eastern time
to discuss these results.
- Participants may listen to the webcast by registering on our
website at www.newgold.com or via the following link
https://event.on24.com/wcc/r/2099950/645C5C8DEAA01AEC5FA8DE84F5C02D86
- Participants may also listen to the conference call by calling
toll free 1-866-211-3198, or 1-647-689-6603 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 9896765. An archived
webcast will also be available until December 6, 2019 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: guidance for production,
operating expenses per gold ounce sold, total cash costs and all-in
sustaining costs and the factors contributing to those expected
results, including throughput and grades expected to be mined;
expected capital expenditures; planned development and exploration
activities for 2019 and beyond at the Company’s operations; and the
expected timing of a revised life-of-mine plan for New Afton and
Rainy River.
All forward-looking statements in this news release are based on
the opinions and estimates of management as of the date such
statements are made and are subject to important risk factors and
uncertainties, many of which are beyond New Gold's ability to
control or predict. Certain material assumptions regarding such
forward-looking statements are discussed in this news release, New
Gold's latest annual management's discussion and analysis
("MD&A"), Annual Information Form and Technical Reports filed
at www.sedar.com and on EDGAR at www.sec.gov. In addition to, and
subject to, such assumptions discussed in more detail elsewhere,
the forward-looking statements in this news release are also
subject to the following assumptions: (1) there being no
significant disruptions affecting New Gold's operations; (2)
political and legal developments in jurisdictions where New Gold
operates, or may in the future operate, being consistent with New
Gold's current expectations; (3) the accuracy of New Gold's current
mineral reserve and mineral resource estimates; (4) the exchange
rate between the Canadian dollar and U.S. dollar, and to a lesser
extent, the Mexican Peso, being approximately consistent with
current levels; (5) prices for diesel, natural gas, fuel oil,
electricity and other key supplies being approximately consistent
with current levels; (6) equipment, labour and materials costs
increasing on a basis consistent with New Gold's current
expectations; (7) arrangements with First Nations and other
Aboriginal groups in respect of the Rainy River, New Afton and
Blackwater being consistent with New Gold's current expectations;
(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; and (9) metals and other commodity prices and exchange
rates being consistent with those estimated for the purposes of
2019 guidance.
Forward-looking statements are necessarily based on estimates
and assumptions that are inherently subject to known and unknown
risks, uncertainties and other factors that may cause actual
results, level of activity, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. Such factors include, without
limitation: significant capital requirements and the availability
and management of capital resources; additional funding
requirements; price volatility in the spot and forward markets for
metals and other commodities; fluctuations in the international
currency markets and in the rates of exchange of the currencies of
Canada, the United States and, to a lesser extent, Mexico;
discrepancies between actual and estimated production, between
actual and estimated mineral reserves and mineral resources and
between actual and estimated metallurgical recoveries; risks
related to early production at the Rainy River Mine, including
failure of equipment, machinery, the process circuit or other
processes to perform as designed or intended; fluctuation in
treatment and refining charges; changes in national and local
government legislation in Canada, the United States and, to a
lesser extent, Mexico or any other country in which New Gold
currently or may in the future carry on business; taxation;
controls, regulations and political or economic developments in the
countries in which New Gold does or may carry on business; the
speculative nature of mineral exploration and development,
including the risks of obtaining and maintaining the validity and
enforceability of the necessary licenses and permits and complying
with the permitting requirements of each jurisdiction in which New
Gold operates, the lack of certainty with respect to foreign legal
systems, which may not be immune from the influence of political
pressure, corruption or other factors that are inconsistent with
the rule of law; the uncertainties inherent to current and future
legal challenges New Gold is or may become a party to; diminishing
quantities or grades of mineral reserves and mineral resources;
competition; loss of key employees; rising costs of labour,
supplies, fuel and equipment; actual results of current exploration
or reclamation activities; uncertainties inherent to mining
economic studies; changes in project parameters as plans continue
to be refined; accidents; labour disputes; defective title to
mineral claims or property or contests over claims to mineral
properties; unexpected delays and costs inherent to consulting and
accommodating rights of Indigenous groups; risks, uncertainties and
unanticipated delays associated with obtaining and maintaining
necessary licenses, permits and authorizations and complying with
permitting requirements. In addition, there are risks and hazards
associated with the business of mineral exploration, development
and mining, including environmental events and hazards, industrial
accidents, unusual or unexpected formations, pressures, cave-ins,
flooding and gold bullion losses and risks associated with a mine
with relatively limited history of commercial production, such as
Rainy River, (and the risk of inadequate insurance or inability to
obtain insurance to cover these risks) as well as "Risk Factors"
included in New Gold's Annual Information Form, MD&A and other
disclosure documents filed on and available at www.sedar.com and on
EDGAR at www.sec.gov. Forward-looking statements are not guarantees
of future performance, and actual results and future events could
materially differ from those anticipated in such statements. All of
the forward-looking statements contained in this news release are
qualified by these cautionary statements. New Gold expressly
disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
events or otherwise, except in accordance with applicable
securities laws.
Technical Information All scientific and technical
information in this news release has been reviewed and approved by
Mr. Eric Vinet, Vice President for the Company. Mr. Vinet is a
Professional Engineer and member of the Ordre des ingénieurs du
Québec. Mr. Vinet is a "Qualified Persons" for the purposes of NI
43-101.
Cautionary Note to U.S. Readers Concerning Estimates of
Mineral Reserves and Mineral Resources Information concerning
the properties and operations of New Gold has been prepared in
accordance with Canadian standards under applicable Canadian
securities laws and may not be comparable to similar information
for United States companies. The terms "Mineral Resource",
"Measured Mineral Resource", "Indicated Mineral Resource" and
"Inferred Mineral Resource" used in this news release are Canadian
mining terms as defined in the Canadian Institute of Mining,
Metallurgy and Petroleum ("CIM") Definition Standards for Mineral
Resources and Mineral Reserves adopted by CIM Council on May 10,
2014 and incorporated by reference in National Instrument 43-101.
While the terms "Mineral Resource", "Measured Mineral Resource",
"Indicated Mineral Resource" and "Inferred Mineral Resource" are
recognized and required by Canadian securities regulations, they
are not defined terms under standards of the United States
Securities and Exchange Commission. As such, certain information
contained in this news release concerning descriptions of
mineralization and mineral resources under Canadian standards is
not comparable to similar information made public by United States
companies subject to the reporting and disclosure requirements of
the United States Securities and Exchange Commission.
An "Inferred Mineral Resource" has a great amount of uncertainty
as to its existence and as to its economic and legal feasibility.
Under Canadian rules, estimates of inferred mineral resources may
not form the basis of feasibility or pre-feasibility studies. It
cannot be assumed that all or any part of an "Inferred Mineral
Resource" will ever be upgraded to a higher confidence category.
Readers are cautioned not to assume that all or any part of an
"Inferred Mineral Resource" exists or is economically or legally
mineable.
Under United States standards, mineralization may not be
classified as a "Reserve" unless the determination has been made
that the mineralization could be economically and legally produced
or extracted at the time the reserve estimation is made. Readers
are cautioned not to assume that all or any part of the measured or
indicated mineral resources will ever be converted into mineral
reserves. In addition, the definitions of "Proven Mineral Reserves"
and "Probable Mineral Reserves" under CIM standards differ in
certain respects from the standards of the United States Securities
and Exchange Commission.
Non-GAAP Financial Performance Measures All-in sustaining
costs (AISC) per gold eq. ounce, total cash costs per gold ounce
and per gold eq. ounce, sustaining capital, sustaining lease and
growth capital, Adjusted net earnings/(loss), operating cash flows
generated from operations, before changes in non-cash operating
working capital and average realized price and are non-GAAP
financial measures that do not have a standardized meaning under
IFRS and may not be comparable to similar measures presented by
other mining companies. It should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. The Company believes that these measures, together with
measures determined in accordance with IFRS, provide investors with
an improved ability to evaluate the underlying performance of the
Company. In addition, certain non-GAAP measures are utilized, along
with other measures, in the Company scorecard to set incentive
compensation goals and assess performance of its executives.
All-In Sustaining Costs per Gold eq.
Ounce "All-in sustaining costs per gold eq. ounce” is a non-GAAP
financial measure. Consistent with guidance announced in 2013 by
the World Gold Council, an association of various gold mining
companies from around the world New Gold defines "all-in sustaining
costs" per ounce as the sum of total cash costs, capital
expenditures that are sustaining in nature, corporate general and
administrative costs, capitalized and expensed exploration that is
sustaining in nature, lease payments that are sustaining in nature,
and environmental reclamation costs, all divided by the ounces of
gold eq. sold to arrive at a per ounce figure.
In addition to gold the Company produces copper and silver. Gold
eq. ounces of copper and silver produced or sold in a quarter are
computed by calculating the ratio of the average spot market copper
and silver prices to the average spot market gold price in a
quarter and multiplying this ratio by the pounds of copper and
silver ounces produced or sold during that quarter. Gold eq. ounces
produced or sold in a period longer than one quarter are calculated
by adding the number of gold eq. ounces in each quarter of that
period. Notwithstanding the impact of copper and silver sales, as a
Company focused on gold production, New Gold aims to assess the
economic results of its operations in relation to gold, which is
the primary driver of New Gold’s business.
New Gold believes this non-GAAP financial measure provides
further transparency into costs associated with producing gold and
assists analysts, investors and other stakeholders of the Company
in assessing the Company's operating performance, its ability to
generate free cash flow from current operations and its overall
value. This data is furnished to provide additional information and
is a non-GAAP financial measure. All-in sustaining costs presented
do not have a standardized meaning under IFRS and may not be
comparable to similar measures presented by other mining companies.
It should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS and is not
necessarily indicative of cash flow from operations under IFRS or
operating costs presented under IFRS.
Sustaining Capital
"Sustaining capital" is a non-GAAP financial measure as well as
“staining lease” and “growth capital”. New Gold defines sustaining
capital as net capital expenditures that are intended to maintain
operation of its gold producing assets. A sustaining lease is
similarly a capital lease payment that is sustaining in nature. New
Gold terms non-sustaining capital costs to be “growth capital”,
which are capital expenditures to develop new operations or capital
expenditures related to major projects at existing operations where
these projects will materially increase production. To determine
sustaining capital expenditures, New Gold uses cash flow related to
mining interests from its statement of cash flows and deducts any
expenditures that are non-sustaining or growth capital. Management
uses sustaining capital and other sustaining costs, to understand
the aggregate net result of the drivers of all-in sustaining costs
other than total cash costs. Sustaining capital, sustaining lease
and growth capital are intended to provide additional information
only, does not have any standardized meaning under IFRS, and may
not be comparable to similar measures presented by other mining
companies. It should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS.
Total Cash Costs "Total cash costs
per ounce” and total cash costs per gold eq. ounce are non-GAAP
financial measures which are calculated in accordance with a
standard developed by The Gold Institute, a worldwide association
of suppliers of gold and gold products that ceased operations in
2002. Adoption of the standard is voluntary and the cost measures
presented may not be comparable to other similarly titled measures
of other companies. New Gold reports total cash costs on a sales
basis. The Company believes that certain investors use this
information to evaluate the Company's performance and ability to
generate liquidity through operating cash flow to fund future
capital expenditures and working capital needs. This measure, along
with sales, is considered to be a key indicator of the Company's
ability to generate operating earnings and cash flow from its
mining operations. Total cash costs include mine site operating
costs such as mining, processing and administration costs,
royalties, production taxes, but are exclusive of amortization,
reclamation, capital and exploration costs. Total cash costs per
gold ounce are net of by-product sales and are divided by gold
ounces sold to arrive at a per ounce figure. Total cash costs per
gold eq. ounce are divided by gold eq. ounces sold to arrive at a
per ounce figure.
Unless otherwise indicated, all total cash cost information in
this news release is on a gold eq. ounce basis. Gold eq. ounces of
copper and silver produced in a quarter are computed by calculating
the ratio of the average spot market copper and silver prices to
the average spot market gold price in a quarter and multiplying
this ratio by the pounds of copper and silver ounces produced
during that quarter. Gold eq. ounces produced in a period longer
than one quarter are calculated by adding the number of gold eq.
ounces in each quarter of that period. This data is furnished to
provide additional information and is a non-GAAP financial measure.
Total cash costs presented do not have a standardized meaning under
IFRS and may not be comparable to similar measures presented by
other mining companies. It should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS and is not necessarily indicative of cash flow from
operations under IFRS or operating costs presented under GAAP.
Adjusted Net Earnings/(Loss)
"Adjusted net earnings/(loss)" and "adjusted net earnings/(loss)
per share" are non-GAAP financial measures. Net earnings/(loss)
have been adjusted and tax affected for the group of costs in
"Other gains and losses" on the condensed consolidated income
statement and other non-recurring items. The adjusted entries are
also impacted for tax to the extent that the underlying entries are
impacted for tax in the unadjusted net earnings/(loss) from
continuing operations. The Company uses this measure for its own
internal purposes. Management's internal budgets and forecasts and
public guidance do not reflect items which are included in other
gains and losses. Consequently, the presentation of adjusted net
earnings and adjusted net earnings per share enables investors and
analysts to better understand the underlying operating performance
of our core mining business through the eyes of management.
Management periodically evaluates the components of adjusted net
earnings and adjusted net earnings per share based on an internal
assessment of performance measures that are useful for evaluating
the operating performance of our business and a review of the
non-GAAP measures used by mining industry analysts and other mining
companies. Adjusted net (loss)/earnings and adjusted net
(loss)/earnings per share are intended to provide additional
information only and do not have any standardized meaning under
IFRS and may not be comparable to similar measures presented by
other companies. They should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. The measures are not necessarily indicative of operating
profit or cash flows from operations as determined under IFRS.
Operating Cash Flows Generated from Operations, before
Changes in Non-Cash Operating Working Capital “Operating cash
flows generated from operations, before changes in non-cash
operating working capital” is a non-GAAP financial measure with no
standard meaning under IFRS, which excludes changes in non-cash
operating working capital. Management uses this measure to evaluate
the Company’s ability to generate cash from its operations before
temporary working capital changes.
Operating cash flows generated from operations, before non-cash
changes in working capital is intended to provide additional
information only and does not have any standardized meaning under
IFRS; it should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with IFRS. Other
companies may calculate this measure differently and this measure
is unlikely to be comparable to similar measures presented by other
companies.
Average Realized Price "Average
realized price per ounce or pound sold" is a non-GAAP financial
measure with no standard meaning under IFRS.
Management uses this measure to better understand the price
realized in each reporting period for gold, silver, and copper
sales. Average realized price is intended to provide additional
information only and does not have any standardized definition
under IFRS; it should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. Other companies may calculate this measure differently and
this measure is unlikely to be comparable to similar measures
presented by other companies.
For additional information with respect to the non-GAAP measures
used by the Company, including reconciliation to the nearest IFRS
measures, refer to the detailed Non-GAAP performance measure
disclosure in the Management’s Discussion and Analysis for the year
ended December 31, 2018 filed at www.sedar.com and on EDGAR at
www.sec.gov.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106005220/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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