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New Gold Inc
Symbol NGD
Shares Issued 579,115,291
Close 2019-04-25 C$ 1.19
Recent Sedar Documents

New Gold loses $13.4-million (U.S.) from cont ops in Q1

2019-04-25 07:07 ET - News Release

Mr. Renaud Adams reports

NEW GOLD REPORTS FIRST QUARTER FINANCIAL RESULTS

New Gold Inc. has released first quarter results for the company as of March 31, 2019. 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 first quarter management's discussion and analysis (MD&A), and financial statements that are available on the company's website and on SEDAR.

First quarter highlights

Highlights for the first quarter include:

  • Total production of 123,263 gold equivalent ounces (79,398 ounces of gold, 136,513 ounces of silver and 19.5 million pounds of copper) at average realized gold and copper prices of $1,301 per ounce and $2.79 per pound, respectively; production on track to meet annual guidance of 465,000 to 520,000 gold equivalent ounces;
  • Revenues of $167.9-million;
  • Operating expense of $645 per gold equivalent ounce, on track to meet annual guidance of $690 to $790;
  • All-in sustaining costs (AISC) of $1,083 per gold equivalent ounce, on track to meet annual guidance of $1,330 to $1,430;
  • Net loss from continuing operations of $13.4-million (two cents per share);
  • Adjusted net loss from continuing operations, which excludes other gains and losses, was $1.8-million (nil per share);
  • Operating cash flow generated from continuing operations of $74.3-million (13 cents per share); operating cash flow generated from continuing operations, before changes in non-cash operating working capital, of $71.1-million (12 cents per share).

"We are encouraged by the progress made at Rainy River during the first quarter as we reposition the operation for efficient and sustainable mining. Over the course of the year, we expect to drive further efficiencies throughout the operation with the objective of delivering free cash flow starting in late 2020," stated Renaud Adams, chief executive officer. "The New Afton mine reported another strong quarter of operating results as the team further advanced the development of the C zone. We are particularly encouraged with the organic growth potential of the D zone with the first hole of the exploration drilling program intersecting 140 metres of mineralization located 360 metres below the C zone and a second hole is currently under way."

                FINANCIAL HIGHLIGHTS (CONTINUING OPERATIONS)
 
                                           First quarter 2019  First quarter 2018

Revenues from mining operations                        $167.9              $147.5
Net earnings (loss), per share                          (0.02)              (0.05)
Adj. net earnings (loss) per share                      (0.00)              (0.03)
Operating cash flow, per share                           0.13                0.07
Adj. operating cash flow, per share                      0.12                0.09

Revenues for the quarter from continuing operations were $167.9-million, an increase over the prior-year quarter due to an increase in gold ounces sold, offset by a decrease in average realized prices. Net loss for the quarter was $13.4-million, or two cents per share, and adjusted net loss was $1.8-million, or nil per share, which improved over the prior-year quarter due to the increase in revenue. The March 31, 2019, cash balance was $132.3-million.

                             OPERATIONAL HIGHLIGHTS (CONTINUING OPERATIONS)

                                                  First quarter 2019  First quarter 2018     Guidance 2019

Gold equivalent production (ounces)                          123,263             119,075   465,000-520,000
Gold production (ounces)                                      79,398              63,771   300,000-335,000
Copper production (mlb)                                         19.5                22.2             75-85
Average realized gold price, per ounce                         1,301               1,331                 -
Average realized copper price, per pound                        2.79                3.14                 -
Operating expense, per gold equivalent ounce                     645                 760                 -
Total cash costs, per gold equivalent ounce                      697                 828           740-820
AISC, per gold equivalent ounce                                1,083               1,373       1,330-1,430
Sustaining capital and sustaining leases ($M)                   44.7                55.5           255-285
Growth capital ($M)                                              7.8                12.7             50-55

Rainy River mine highlights
                                                  First quarter 2019  First quarter 2018     Guidance 2019

Gold equivalent production (ounces)                           62,278              40,016   250,000-275,000
Gold equivalent sold (ounces)                                 71,483              41,621                 -
Gold produced (ounces)                                        61,557              39,325   245,000-270,000
Gold sold (ounces)                                            70,695              40,880                 -
Average realized gold price, per ounce                         1,295               1,328                 -
Operating expense, per gold equivalent ounce                     801               1,240                 -
Total cash costs, per gold equivalent ounce                      801               1,240           870-950
AISC, per gold equivalent ounce                                1,330               2,427       1,690-1,790
Sustaining capital and sustaining leases ($M)                   36.6                48.9           210-230
Growth capital ($M)                                              3.8                10.2         about 3.0

(1) Gold equivalent ounces for Rainy River include silver ounces produced 
converted to a gold equivalent based on a ratio of the average spot market 
prices for the commodities for each period. The ratio for the first quarter of 2019 was 
calculated based on average spot market prices of $1,304 per gold ounce 
and $15.57 per silver ounce. The ratio for the first quarter of 2018 was calculated based 
on average spot market prices of $1,329 per gold ounce and $16.77 per silver ounce. 

                                               Q1 2018   Q2 2018   Q3 2018   Q4 2018   Q1 2019

Tonnes ex-pit mined per day (ore and waste)    112,432   107,416   102,290   111,507   111,679
Ore tonnes mined per day                        36,296    36,043    30,439    32,054    15,739
Operating waste tonnes per day                  54,321    43,570    23,333    67,406    62,955
Capitalized waste tonnes per day                21,816    27,802    48,518    12,047    32,986
Strip ratio (waste:ore)                            2.1      1.98      2.36      2.48      6.10
Tonnes milled per calendar day                  17,534    16,549    16,962    20,668    19,725
Gold grade milled (g/t)                           1.08      1.24      1.21      1.42      1.19
Gold recovery (%)                                  81%       87%       87%       89%       90%
Mill availability (%)                              77%       74%       76%       80%       89%
Gold production (oz)                            39,325    55,219    55,538    77,202    61,557

 

  • The Rainy River mine reported in-line gold equivalent production of 62,278 ounces (61,557 ounces of gold and 60,383 ounces of silver) for the quarter. As previously disclosed, production during the quarter included planned lower grades as mining operations continued the transition to phase 2 of the mine plan.
  • Operating expense per gold equivalent ounce was $801 for the quarter, which is a 35-per-cent decrease over the prior-year quarter, driven by improved operational performance and increased metal production and sales volumes achieved in the current-year quarter.
  • All-in sustaining costs (AISC) per gold equivalent ounce for the quarter were $1,330, which included $10-million of capitalized stripping costs ($140 per gold equivalent ounce), and $27-million of other sustaining capital expenditure and lease payments. AISC per gold equivalent ounce for the quarter declined by 45 per cent over the prior-year quarter due to improved operational performance and an increase in metal production and sales volumes coupled with a decrease in sustaining capital. It is expected that sustaining capital will be higher in the second and third quarters when weather conditions are more favourable for infrastructure and tailings construction and will decline in the fourth quarter.
  • Growth capital for the quarter was $3.8-million, related to underground mine development, working capital payments and the transfer of infrastructure from the contractor.
  • During the quarter, approximately 1.4 million ore tonnes and 8.6 million waste tonnes (including 2.97 million capitalized waste tonnes) were mined at an operating strip ratio of 6.10:1. Mining operations in the quarter were primarily focused on waste stripping to expose ore for mining in future quarters. Additionally, 900,000 tonnes of out-pit non-acid-generating (NAG) material were mined in preparation for planned dam raises scheduled to begin during the second quarter.
  • Mill throughput for the quarter averaged 19,725 tonnes per day, below the annual target of 22,000 to 24,000 tonnes per day. The lower average mill throughput was negatively impacted by the significant buildup of ice in the crushed ore stockpile above the apron feeders. Average mill throughput returned to target levels at the end of the quarter.
  • Mill availability for the quarter was a record 89 per cent (95 per cent in March), despite the planned downtime to replace the ball mill trunnion and complete repairs.
  • Gold recovery improved to average 90 per cent for the quarter, a significant improvement over the 89 per cent reported in the fourth quarter when considering the 16 per cent lower average grade milled. Recoveries are expected to continue to improve throughout the year to an average of 90 to 92 per cent for the year.
  • During the first quarter of 2019, the company launched a comprehensive 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. An updated life-of-mine plan is anticipated to be completed in the fourth quarter.
  • A strategic exploration drill program is expected to begin in the second quarter that will test near-mine targets in the Intrepid North area.

                                    NEW AFTON MINE HIGHLIGHTS
 
                                               First quarter 2019  First quarter 2018    Guidance 2019

Gold equivalent produced (ounces)                          60,986              73,717  215,000-245,000
Gold equivalent sold (ounces)                              63,216              69,914                -
Gold produced (ounces)                                     17,841              19,998    55,000-65,000
Gold sold (ounces)                                         18,617              18,485                -
Copper produced (Mlb)                                        19.5                22.2            75-85
Copper sold (Mlb)                                            20.2                21.3                -
Average realized gold price, per ounce                      1,327               1,336                -
Average realized copper price, per pound                     2.79                3.14                -
Operating expense, per gold equivalent ounce                  468                 405                -
Operating expense, per gold ounce                             477                 408          480-520
Operating expense, per copper pound                          1.00                0.96        0.95-1.15
Total cash (costs), per gold
ounce (net of byproduct credits)                           (1,132)             (1,702)    (1,350-1,310)
Total cash costs, per gold equivalent ounce                   578                 523          600-640
AISC (loss), per gold ounce (net of
byproduct credits)                                           (673)             (1,313)        (500-420)
AISC, per gold equivalent ounce                               714                 626          810-890
Sustaining capital and
sustaining leases ($M)                                        8.0                 6.6            45-55
Growth capital ($M)                                           2.6                 0.5            40-45

(1) Gold equivalent ounces for New Afton includes silver ounces and copper 
pounds produced converted to a gold equivalent based on a ratio of the 
average spot market prices for the commodities for each period. The ratio 
for the first quarter of 2019 was calculated based on average spot market 
prices of $1,304 per gold ounce, $15.57 per silver ounce and $2.82 per 
copper pound. The ratio for the first quarter of 2018 was calculated based 
on average spot market prices of $1,329 per gold ounce, $16.77 per silver 
ounce and $3.16 per copper pound. 

                                    Q1 2018    Q2 2018    Q3 2018    Q4 2018    Q1 2019

Total ore tonnes mined per day       16,108     13,654     17,105     17,099     15,352
Gold grade milled (g/t)                0.57       0.50       0.55       0.51       0.50
Gold recovery (%)                      84.1       85.5       84.7       83.5       83.2
Gold production (oz)                 19,998     18,637     19,916     18,778     17,841
Copper grade milled (%)                0.94       0.82       0.89       0.82       0.80
Copper recovery (%)                    83.2       83.8       83.0       83.0      83.20
Copper production (Mlb)                22.2       20.4       21.7       20.8      19.53

 

  • The New Afton mine produced 60,986 gold equivalent ounces for the quarter, including 17,841 ounces of gold, and 19.5 million pounds of copper, in line with plan.
  • Operating expense per gold equivalent ounce was $468 for the quarter, which is an increase from the prior-year quarter primarily due to a decrease in sales volume.
  • All-in sustaining costs (AISC) per gold equivalent ounce for the quarter were $714. AISC per gold ounce (net of byproduct credits) for the quarter was ($673). All-in sustaining costs have increased over the prior-year quarter due to an increase in sustaining capital as well as a decrease in metal sales volume and revenue.
  • Sustaining capital and sustaining lease payments for the quarter were $8.0-million, primarily related to tailings dam raises and equipment purchases and sustaining mine development.
  • Growth capital for the quarter was $2.6-million, primarily related to the C zone.
  • The second phase of a planned mill upgrade to address supergene ore recovery advanced during the quarter with commissioning scheduled for the third quarter.
  • Development of the B3 zone is currently under way, which will sustain ongoing production during the C zone development period.
  • Efforts during the quarter continued to focus on derisking the execution of C zone project, primarily on the finalization of the tailings disposal plan and advancing permitting efforts with the objective of updating the life-of-mine plan in the latter part of the year. During the quarter, exploration-heading development toward the C zone commenced and advanced by approximately 50 metres.
  • An underground drilling program is currently under way that will test the down-plunge extension of the C zone (the D zone) that could increase the resource inventory and extend mine life beyond 2030. The first hole of the 10-hole program has been completed, which intersected C zone style mineralization over an approximate 140-metre interval (from 662 m to 802 m depth) and ended at the planned target, 360 vertical metres below the C zone (assays pending). A second drill hole is currently under way and the program is expected to be completed by the end of the third quarter.

Blackwater project highlights:

  • On April 15, 2019, the federal Minister of Environment and Climate Change issued a positive decision statement regarding the Blackwater project's environmental assessment, which is a very significant milestone for the project. The company expects a decision from the Province of British Columbia on the environmental assessment by the end of 2019.
  • On April 18, 2019, the company entered into a trilateral participation agreement with the Lhoosk'uz Dene Nation and Ulkatcho First Nation, the two indigenous groups whose traditional territories overlap the project's mine site. Engagement and negotiations with other first nations continue.

Conference call and webcast information

The company will host a webcast and conference call on Thursday, April 25, 2019, at 8:30 a.m. Eastern Daylight Time to discuss the company's first quarter financial and operating results:

Via telephone:  please dial 1-647-427-2311 or toll-free 1-866-521-4909

Replay archive:   please dial 1-416-621-4642 or toll-free 1-800-585-8367, access code 3885697

The recorded playback of the conference call will be available until May 25, 2019. An archived webcast will be available until July 25, 2019.

About New Gold Inc.

New Gold is a Canada-focused intermediate gold mining company. The company has a portfolio of two core producing assets in top-rated jurisdictions, the Rainy River and New Afton mines in Canada. The company also operates the Cerro San Pedro mine in Mexico (which transitioned to residual leaching in 2016). In addition, New Gold owns 100 per cent of the Blackwater project located in Canada.

Technical information

The scientific and technical information relating to the mineral reserves contained herein has been reviewed and approved by Nicholas Kwong, director of technical services for the company. The scientific and technical information relating to the mineral resources contained herein has been reviewed and approved by Mark A. Petersen, a consultant to New Gold and its former vice-president, exploration. All other scientific and technical information in this news release has been reviewed and approved by Eric Vinet, vice-president, technical services, for the company. Mr. Kwong is a professional engineer and a member of the Association of Professional Engineers and Geoscientists of British Columbia. Mr. Petersen is a professional geoscientist (PGeo) and practising member of the Association of Professional Geoscientists of Ontario, an SME-registered member and an AIPG-certified professional geologist. Mr. Vinet is a professional engineer and member of the Ordre des ingenieurs du Quebec. Mr. Kwong, Mr. Petersen and Mr. Vinet are qualified persons for the purposes of NI 43-101.

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