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New Gold Inc
Symbol NGD
Shares Issued 672,865,291
Close 2019-10-09 C$ 1.34
Recent Sedar Documents

New Gold produces 128,899 oz AuEq in Q3

2019-10-10 06:54 ET - News Release

Mr. Renaud Adams reports

NEW GOLD REPORTS STRONG THIRD QUARTER PRODUCTION AND REAFFIRMS ANNUAL PRODUCTION GUIDANCE

New Gold Inc. has released in-line third quarter operating results from the Rainy River and New Afton mines, which position the company to achieve annual production guidance. All amounts are in U.S. dollars unless otherwise indicated. The company also announces that it will release its third quarter 2019 financial results before market open on Wednesday, Nov. 6, 2019. A conference call and webcast will follow at 8:30 a.m. Eastern Time to discuss these results (details are provided at the end of this press release).

Third quarter and recent highlights:

  • Total production (excluding production from the Cerro San Pedro mine) for the third quarter was 128,899 gold equivalent 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 equivalent 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 equivalent ounces.
  • The Rainy River mine reported gold equivalent production of 76,092 ounces (75,080 ounces of gold and 87,705 ounces of silver) for the quarter. For the nine-month period, production was 205,135 gold equivalent ounces (202,650 ounces of gold and 214,245 ounces of silver). Production is on track to meet annual guidance of between 250,000 and 275,000 gold equivalent ounces.
  • The New Afton mine delivered gold equivalent production of 52,807 ounces (16,007 ounces of gold and 20.1 million pounds of copper). For the nine-month period, production was 179,584 gold equivalent ounces (53,051 ounces of gold and 61.2 million pounds of copper). Production is on track to meet guidance of between 215,000 and 245,000 gold equivalent ounces.
  • On Aug. 30, the company completed a bought-deal financing for gross proceeds of $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 purchased. Following the purchase, the company had available liquidity of approximately $420-million, including $135-million in cash and cash equivalents.
  • Ankit Shah was promoted to vice-president, strategy and business development, effective Sept. 9, 2019. Mr. Shah joined the company in 2010 and brings more than 15 years of experience in strategy, corporate development, capital allocation and investor relations, primarily within the mining industry.

"The company has delivered another quarter of strong operational performance from both assets, which positions the company to achieve its annual production guidance. I would like to congratulate the Rainy River team on delivering the fourth consecutive quarter of improved performance as we reposition the mine for long-term success. The New Afton team reported another solid quarter of in-line results as we continue to advance the development of the C zone and unlock the long-term potential of that asset. As we enter the final quarter of this pivotal year, we have made significant progress at both operations, strengthened our balance sheet as we reposition the company for long-term success and shareholder value creation," stated Renaud Adams, chief executive officer. "I am also very pleased to announce the promotion of Ankit Shah to vice-president, strategy and business development. I am looking forward to continuing to work with Ankit as part of the senior leadership team as we advance our corporate strategy."

                              THIRD QUARTER PRODUCTION HIGHLIGHTS

Gold equivalent produced (1) (oz)         Q3 2019        9M 2019               2019 guidance

Rainy River                                76,092        205,135             250,000-275,000
New Afton                                  52,807        179,584             215,000-245,000
Total production                          128,899        384,719             465,000-520,000

Gold produced (oz)                        Q3 2019        9M 2019

Rainy River                                75,080        202,650             245,000-270,000
New Afton                                  16,007         53,051               55,000-65,000
Total production                           91,087        255,701             300,000-335,000

Copper produced (mlb)                     Q3 2019        9M 2019

New Afton copper produced (mlb)              20.1           61.2                       75-85

(1) Gold equivalent ounces include silver and copper ounces produced converted to a gold 
equivalent based on a ratio of the average spot market prices for the commodities for each 
period. All copper is produced by the New Afton mine. 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 2019 guidance was calculated based on spot price 
assumptions of $1,300 per gold ounce, $16 per silver ounce and $2.75 per copper pound, 
and a foreign exchange rate of $1.30 (Canadian) to the U.S. dollar.

                            RAINY RIVER MINE OPERATIONAL HIGHLIGHTS
 
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
AuEq production (oz)                    40,016   55,984   56,275   78,074   62,278   66,765   76,092

(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 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 mine reported gold equivalent production of 76,092 ounces (75,080 ounces of gold and 87,705 ounces of silver) for the quarter and is well positioned to achieve annual production guidance of between 250,000 to 275,000 gold equivalent ounces. 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 operations 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 gram per tonne.
  • 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 5.1:1 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 for use in the 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 per cent, 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 per cent for the quarter, in line with plan. Efforts continue to focus on achieving additional circuit optimizations as well as the commissioning of the gravity circuit, which could further improve recoveries.
  • Construction activities continued during the quarter, which included the advancement of the stage 2 tailings management area (TMA) dam construction, renovation of the recently purchased camp facility, installation of wick drains for stabilization of the east waste dump as well as final commissioning of the water treatment plant. The maintenance and warehouse facilities have been rescoped to a smaller-scale project and construction works are currently under way.
  • During the second half of the quarter, the operation experienced periods of significant rainfall, averaging more than 60 per cent above the 30-year average for Q3, causing an increase in the water levels in the TMA. Over the next few weeks and until construction of stage 2 of the TMA is completed in late October, the mine will prioritize management of the water levels in the TMA, which may cause sporadic interruptions of the processing facilities and/or reduced throughput. Water is currently being transferred from the TMA to the water management pond via the recently commissioned water treatment plant. Rainwater is also being diverted from site where possible.
  • During the quarter, the company continued to advance a comprehensive mine optimization study that includes a 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 the 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 MINE OPERATIONAL HIGHLIGHTS
 
New Afton mine                         Q1 2018  Q2 2018  Q3 2018  Q4 2018  Q1 2019  Q2 2019  Q3 2019

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       86       85       84       83       83       80
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       83       83       83       83       83       84
Copper production (Mlb)                   22.2     20.4     21.7     20.8     19.5     21.6     20.1
Gold equivalent production (oz)         73,717   68,340   70,416   67,191   60,986   65,791   52,807

(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 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 equivalent ounces for the quarter (16,007 ounces of gold and 20.1 million pounds of copper). The mine is on track to achieve production guidance of between 215,000 and 245,000 gold equivalent ounces. The lower-than-planned copper grades realized for the quarter are expected to continue into the fourth quarter.
  • Mining and milling performance was 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 per cent and copper recovery of 84 per cent.
  • 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 derisking 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. Sublevel cave (SLC) definition, mining operability and sequencing will continue to be further defined for potential incorporation of the SLC zone into the mine plan. During the quarter, exploration heading development toward the C zone commenced and advanced by approximately 720 metres.
  • The New Afton delineation and exploration programs are currently under way 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 geophysical and 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:

  • Q3 financial results (before market Nov. 6);
  • Updated life-of-mine plans for Rainy River and New Afton (Q1 2020).

Third quarter conference call and webcast information

The company plans to release its third quarter 2019 financial results before market open on Wednesday, Nov. 6, 2019. A conference call and webcast will follow at 8:30 a.m. Eastern Time to discuss these results.

Participants may also listen to the conference call by calling toll-free 1-866-211-3198, or 1-647-689-6603 outside of the United States 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, pass code 9896765. An archived webcast will also be available until Dec. 6, 2019, at the company's website.

About New Gold Inc.

New Gold is a Canadian-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.

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 ingenieurs du Quebec. He is a qualified person for the purposes of NI 43-101.

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