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.
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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