April 15, 2020 – New Gold Inc. (“New Gold” or the “Company”)
(TSX and NYSE American: NGD) reports preliminary first quarter
operational results from the Rainy River and New Afton mines. (All
amounts are in US dollars unless otherwise indicated.) The Company
is also announcing that due to the rapidly changing and
unpredictable environment caused by the global COVID-19 pandemic,
the Company is withdrawing its 2020 operational guidance until any
impact is better understood.
During this unprecedented period, the health and safety of our
workforce and Indigenous and other communities remains our number
one concern. We will support all initiatives that align with that
objective and will remain vigilant in providing a safe working
environment for our workforce.
Consolidated First Quarter and Recent Highlights
- Total production for the first quarter was 103,435 gold
equivalent (gold eq.) ounces (66,790 ounces of gold, 131,417 ounces
of silver and 18.5 million pounds of copper).
- The Rainy River Mine produced 51,106 gold eq. ounces (50,381
ounces of gold and 61,265 ounces of silver) for the quarter,
including 12 days of the temporary 14-day suspension of operations
announced on March 20, 2020. Operations resumed on April 3, 2020
and will gradually be ramped up over the coming weeks. (refer to
the Company's April 3, 2020 news release for further
information)
- The New Afton Mine produced 52,329 gold eq. ounces (16,409
ounces of gold and 18.5 million pounds of copper) for the
quarter.
- The Company’s available liquidity has increased to
approximately $600 million following the completion of a strategic
partnership with Ontario Teachers’ Pension Plan (“OTPP”) whereby
OTPP has acquired a 46.0% free cash flow interest in the New Afton
mine for proceeds of $300 million. (refer to the Company's February
25 and March 31, 2020 news releases for further information)
- Given the rapidly changing and unpredictable environment caused
by the spread of the COVID-19 virus, the Company is withdrawing its
guidance for 2020.
- National Instrument 43-101 (“NI 43-101”) Technical Reports for
the Rainy River and New Afton mines were filed on SEDAR
(www.sedar.com) on March 27, 2020.
Consolidated First Quarter Operational Results
Q1 2020
Gold eq. production (ounces)1
103,435
Gold production (ounces)
66,790
Copper production (Mlbs)
18.5
Average realized gold price, per
ounce2
1,458
Average realized copper price, per
pound2
2.56
- Total gold equivalent ounces include silver and copper produced
(excluding production from the Cerro San Pedro Mine) converted to a
gold equivalent based on a ratio of $1,500 per gold ounce, $17.75
per silver ounce and $2.85 per copper pound. Throughout the year
the company will report gold equivalent ounces using a constant
ratio of those prices. All copper is produced by the New Afton
Mine.
- Refer to the “Non-GAAP Financial Performance Measures" section
of this press release.
“We are pleased to report New Gold's operational results for the
quarter, which are very encouraging when considering the 2-week
suspension at Rainy River in the latter part of March as well as
the enhanced COVID-19 safety protocols put in place at both
operations. At the end of the quarter, we closed a strategic $300
million transaction with the Ontario Teachers Pension Plan, which
strengthens our balance sheet and provides additional financial
flexibility and enhanced liquidity.” stated Renaud Adams, CEO.
“Throughout this challenging time, New Gold will continue to
prioritize the safety and well-being of our employees and local
communities and we will continue to work with our Indigenous and
community leaders to implement and coordinate actions to reduce the
risk of the spread of COVID-19.”
Rainy River Mine Highlights
Rainy River Mine
Q1 2020
Gold eq. production (ounces)1
51,106
Gold eq. sold (ounces)
53,538
Gold production (ounces)
50,381
Gold sold (ounces)
52,782
Average realized gold price, per
ounce2
1,455
- Gold equivalent ounces for Rainy River in Q1 2020 includes
61265 ounces of silver converted to a gold equivalent based on a
ratio of $1,500 per gold ounce and $17.75 per silver ounce.
- Refer to the “Non-GAAP Financial Performance Measures" section
of this press release.
Rainy River Operating KPI’s
Rainy River Mine
FY 2018
Q1 19
Q2 19
Q3 19
Q4 19
Q1 2020
Tonnes mined per day (ore and waste)
108,392
111,679
114,544
111,078
136,124
127,684
Ore tonnes mined per day
33,687
15,739
21,368
18,220
19,485
26,012
Operating waste tonnes per day
47,128
62,955
82,488
75,206
74,020
75,596
Capitalized waste tonnes per day
25,576
32,986
10,688
17,652
42,619
26,077
Total waste tonnes per day
74,705
95,941
93,176
92,858
116,639
101,673
Strip ratio (waste: ore)
2.22
6.10
4.36
5.10
5.99
3.91
Tonnes milled per calendar day
17,934
19,725
21,117
24,500
22,521
18,441
Gold grade milled (g/t)
1.25
1.19
1.15
1.14
0.85
1.03
Gold recovery (%)
86
90
93
91
91
90
Mill availability (%)
77
89
88
88
89
91
Gold production (oz)
227,284
61,557
66,013
75,080
51,122
50,381
Gold eq. production1 (oz)
230,349
62,278
66,765
76,092
51,915
51,106
- Gold equivalent ounces for Rainy River in Q1 2020 includes
61,265 ounces of silver converted to a gold equivalent based on a
ratio of $1,500 per gold ounce and $17.75 per silver ounce.
- The Rainy River mine completed a temporary two-week shutdown
from March 20 to April 2 that allowed the local workforce to follow
a 14-day period of self-isolation relating to travel outside of
Canada. On April 3, operations resumed with operations gradually
ramping up over the coming weeks. (refer to the Company's April 3,
2020 press release for further information)
- The mine is primarily utilizing its local workforce and will
steadily ramp-up operations over the coming weeks as we continue to
assess different scenarios to safely reintroduce the non-local
workforce into the daily operations to enhance our drilling and
maintenance capacity. The mine is currently averaging approximately
100,000 tonnes per day, which is approximately 70% of the
productivity achieved in the first quarter prior to the
shutdown.
- The mill facility is currently processing ore directly supplied
by the open pit mine combined with ore from the medium grade
stockpile and is operating at full capacity.
- For the first quarter, the mine reported gold eq. production of
51,106 ounces (50,381 ounces of gold and 61,265 ounces of silver),
including 12-days of downtime related to the suspension of
operations.
- During the quarter, approximately 2.4 million ore tonnes and
9.3 million waste tonnes (including 2.4 million capitalized waste
tonnes) were mined from the open pit at an average strip ratio of
3.91:1. Prior to the suspension of operations, the open pit was
mining an average of approximately 140,000 tonnes per day in the
first quarter.
- Mill throughput for the quarter averaged 18,441 tonnes per day,
including the 12-days of downtime related to the suspension of
operations in the quarter, as well as completion of maintenance
projects and adjustments related to the grinding circuit early in
the quarter. Adjustments to the grinding circuit, including the
commissioning of the pebble crusher, were required to process
harder ore feed, which contributed to lower run rates in January.
Mill productivity achieved first quarter target levels of 24,000
tonnes per day in February and early March (prior to the
suspension).
- Mill availability for the quarter averaged 91%, excluding the
12-days of downtime, in-line with plan.
- Gold recovery averaged 90% for the quarter, slightly above
planned levels.
- Exploration activities included exploration reconnaissance
target definition and drill campaign planning, aimed to commence
upon the receipt of the required permits.
New Afton Mine Operational Highlights
New Afton Mine
Q1 2020
Gold eq. production (ounces) 1
52,329
Gold eq. sold (ounces)
50,398
Gold production (ounces)
16,409
Gold sold (ounces)
15,991
Copper production (Mlbs)
18.5
Copper sold (Mlbs)
17.7
Average realized gold price, per
ounce2
1,464
Average realized copper price, per
pound2
2.56
- Gold equivalent ounces for New Afton in Q1 2020 includes 18.5
pounds of copper and 70,152 ounces of silver converted to a gold
equivalent based on a ratio of $1,500 per gold ounce, $2.85 per
copper pound and $17.75 per silver ounce.
- Refer to the “Non-GAAP Financial Performance Measures" section
of this press release.
New Afton Operating KPI’s
New Afton Mine
FY 2018
Q1 19
Q2 19
Q3 19
Q4 19
Q1 2020
Tonnes mined per day (ore and waste)
16,156
15,824
16,357
15,773
14,539
16,727
Tonnes milled per calendar day
14,668
14,759
14,992
15,572
15,861
15,377
Gold grade milled (g/t)
0.53
0.50
0.53
0.43
0.42
0.45
Gold recovery (%)
85
83
83
80
79
81
Gold production (oz)
77,329
17,841
19,203
16,007
15,734
16,409
Copper grade milled (%)
0.87
0.80
0.86
0.76
0.70
0.73
Copper recovery (%)
83
83
83
84
81
82
Copper production (Mlbs)
85.1
19.5
21.6
20.1
18.3
18.5
Gold eq. production1 (oz)
279,755
60,986
65,791
52,807
49,507
52,329
- Gold equivalent ounces for New Afton in Q1 2020 includes 18.5
pounds of copper and 70,152 ounces of silver converted to a gold
equivalent based on a ratio of $1,500 per gold ounce, $2.85 per
copper pound and $17.75 per silver ounce.
- The mine produced 52,329 gold eq. ounces for the quarter
(16,409 ounces of gold, and 18.5 million pounds of copper), gold
production is above plan, while copper production is below
plan.
- During the quarter, total development towards the B3 and C-zone
advanced by approximately 1,231 metres, in-line with plan. B3 and
C-zone development may be reduced in the coming weeks due to the
implementation of COVID-19 protocols, which will temporarily impact
productivity levels.
- The underground mine averaged 16,727 tonnes per day for the
quarter, in-line with plan.
- The mill averaged 15,377 tonnes per day for the quarter, at an
average gold and copper grade of 0.45 g/t gold and 0.73% copper,
respectively, with copper grade lower than plan, at gold and copper
recoveries of 81% and 82%, respectively. During the quarter, lower
than planned copper grades were mined in a portion of the Lift 1
east cave, primarily due to higher than expected dilution rates
that were encountered.
- Exploration activities in the quarter included underground
delineation drilling on the East Extension zone and refinement of
exploration targets for the planned drilling campaign within the
Cherry Creek Trend area.
2020 Guidance and Financial Liquidity
The Company continues to assess the potential impacts of the
COVID-19 pandemic on its 2020 production and cost structure during
this unprecedented period. While operations continue at both mines,
the Company believes it is prudent to temporarily withdraw our 2020
guidance as the global COVID-19 crisis continues to develop,
particularly given the significant risk related to the potential
for government laws, regulations or other measures that might be
required that could impact our ability to operate, business
disruptions in our supply chain, disruptions in the markets for our
products, commodity prices generally as well as global health and
economic impacts.
The Company has a strong liquidity position of approximately
$600 million, which management feels is more than adequate to fund
our business during this period. Additionally, as approximately
90-95% of our costs are denominated in Canadian dollars, the
Company benefits from favourable Canadian / U.S. foreign exchange
rates.
About New Gold Inc.
New Gold is a Canadian-focused intermediate gold mining company
with a portfolio of two core producing assets in Canada, the Rainy
River and New Afton Mines as well as the 100% owned Blackwater
development project. The Company also operates the Cerro San Pedro
Mine in Mexico (in reclamation). New Gold’s vision is to build a
leading diversified intermediate gold company based in Canada that
is committed to environment and social responsibility. For further
information on the Company, visit www.newgold.com.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this news release, including
any information relating to New Gold’s future financial or
operating performance are “forward looking”. All statements in this
news release, other than statements of historical fact, which
address events, results, outcomes or developments that New Gold
expects to occur are “forward-looking statements”. Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the use of forward-looking
terminology such as “plans”, “expects”, “is expected”, “budget”,
“scheduled”, “targeted”, “estimates”, “forecasts”, “intends”,
“anticipates”, “projects”, “potential”, “believes” or variations of
such words and phrases or statements that certain actions, events
or results “may”, “could”, “would”, “should”, “might” or “will be
taken”, “occur” or “be achieved” or the negative connotation of
such terms. Forward-looking statements in this news release
include, among others, statements with respect to: the Company’s
anticipated course of action at the Rainy River mine and the
systematic ramp-up of operations; the Company’s ability to reduce
the risk of the spread of COVID-19; the timing of the Company’s
expected release of additional details of the ramp-up, an update on
our mid-term operational plans and our first quarter operational
update and the adequacy of the Company’s liquidity position.
All forward-looking statements in this news release are based on
the opinions and estimates of management as of the date such
statements are made and are subject to important risk factors and
uncertainties, many of which are beyond New Gold’s ability to
control or predict. Certain material assumptions regarding such
forward-looking statements are discussed in this news release, New
Gold’s latest annual management’s discussion and analysis
(“MD&A”), its most recent annual information form and technical
reports on the Rainy River Mine and New Afton Mine filed at
www.sedar.com and on EDGAR at www.sec.gov. In addition to, and
subject to, such assumptions discussed in more detail elsewhere,
the forward-looking statements in this news release are also
subject to the following assumptions: (1) there being no
significant disruptions affecting New Gold’s operations other than
as set out herein; (2) political and legal developments in
jurisdictions where New Gold operates, or may in the future
operate, being consistent with New Gold’s current expectations; (3)
the accuracy of New Gold’s current mineral reserve and mineral
resource estimates; (4) the exchange rate between the Canadian
dollar and U.S. dollar, and to a lesser extent, the Mexican Peso,
being approximately consistent with current levels; (5) prices for
diesel, natural gas, fuel oil, electricity and other key supplies
being approximately consistent with current levels; (6) equipment,
labour and materials costs increasing on a basis consistent with
New Gold’s current expectations; (7) arrangements with First
Nations and other Aboriginal groups in respect of the New Afton
Mine, Rainy River Mine and Blackwater project being consistent with
New Gold’s current expectations, particularly in the context of the
outbreak of COVID-19; (8) all required permits, licenses and
authorizations being obtained from the relevant governments and
other relevant stakeholders within the expected timelines and the
absence of material negative comments during the applicable
regulatory processes; (9) there being no new cases of COVID-19 in
the Company’s workforce at either the Rainy River or New Afton Mine
and the assumption that no additional members of the workforce are
expected to be required to self-isolate due to cross-border travel
to the United States or any other country; (10) the responses of
the relevant governments to the COVID-19 outbreak being sufficient
to contain the impact of the COVID-19 outbreak; (11) there being no
material disruption to the Company’s supply chains and workforce
that would interfere with the Company’s anticipated course of
action at the Rainy River mine and the systematic ramp-up of
operations; (12) the Company being able to release of additional
details of the ramp-up, an update on our mid-term operational plans
and our first quarter operational update on the timing described
herein; and (13) the long-term economic effects of the COVID-19
outbreak not having a material adverse impact on the Company’s
operations or liquidity position.
Forward-looking statements are necessarily based on estimates
and assumptions that are inherently subject to known and unknown
risks, uncertainties and other factors that may cause actual
results, level of activity, performance or achievements to be
materially different from those expressed or implied by such
forward-looking statements. Such factors include, without
limitation: significant capital requirements and the availability
and management of capital resources; additional funding
requirements; price volatility in the spot and forward markets for
metals and other commodities; fluctuations in the international
currency markets and in the rates of exchange of the currencies of
Canada, the United States and, to a lesser extent, Mexico;
discrepancies between actual and estimated production, between
actual and estimated mineral reserves and mineral resources and
between actual and estimated metallurgical recoveries; risks
related to early production at the Rainy River Mine, including
failure of equipment, machinery, the process circuit or other
processes to perform as designed or intended; fluctuation in
treatment and refining charges; changes in national and local
government legislation in Canada, the United States and, to a
lesser extent, Mexico or any other country in which New Gold
currently or may in the future carry on business; taxation;
controls, regulations and political or economic developments in the
countries in which New Gold does or may carry on business; the
speculative nature of mineral exploration and development,
including the risks of obtaining and maintaining the validity and
enforceability of the necessary licenses and permits and complying
with the permitting requirements of each jurisdiction in which New
Gold operates, the lack of certainty with respect to foreign legal
systems, which may not be immune from the influence of political
pressure, corruption or other factors that are inconsistent with
the rule of law; the uncertainties inherent to current and future
legal challenges New Gold is or may become a party to; diminishing
quantities or grades of mineral reserves and mineral resources;
competition; loss of key employees; rising costs of labour,
supplies, fuel and equipment; actual results of current exploration
or reclamation activities; uncertainties inherent to mining
economic studies; changes in project parameters as plans continue
to be refined; accidents; labour disputes; defective title to
mineral claims or property or contests over claims to mineral
properties; unexpected delays and costs inherent to consulting and
accommodating rights of Indigenous groups; risks, uncertainties and
unanticipated delays associated with obtaining and maintaining
necessary licenses, permits and authorizations and complying with
permitting requirements; there being cases of COVID-19 in the
Company’s workforce at either the Rainy River or New Afton Mine, or
both; the Company’s workforce at either the Rainy River Mine or the
New Afton Mine, or both, being required to self-isolate due to
cross-border travel to the United States or any other country; the
responses of the relevant governments to the COVID-19 outbreak not
being sufficient to contain the impact of the COVID-19 outbreak;
disruptions to the Company’s supply chain and workforce due to the
COVID-19 outbreak; an economic recession or downturn as a result of
the COVID-19 outbreak that materially adversely affects the
Company’s operations or liquidity position; the Company not being
able to release additional details of the ramp-up, an update on our
mid-term operational plans and our first quarter operational update
on the timing described herein or at all; difficulties in
demobilization or restart of operations due to various factors,
including lack of availability of manpower or equipment. In
addition, there are risks and hazards associated with the business
of mineral exploration, development and mining, including
environmental events and hazards, industrial accidents, unusual or
unexpected formations, pressures, cave-ins, flooding and gold
bullion losses and risks associated with the start of production of
a mine, 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.
Non-GAAP Financial Performance Measures
Average Realized Price
"Average realized price per ounce or pound sold" is a non-GAAP
financial measure with no standard meaning under IFRS. Management
uses this measure to better understand the price realized in each
reporting period for gold, silver, and copper sales. Average
realized price is intended to provide additional information only
and does not have any standardized definition under IFRS; it should
not be considered in isolation or as a substitute for measures of
performance prepared in accordance with newgold.com 12 IFRS. Other
companies may calculate this measure differently and this measure
is unlikely to be comparable to similar measures presented by other
companies.
Technical Information
The scientific and technical information contained herein has
been reviewed and approved by Eric Vinet, Vice President, Technical
Services of New Gold. Mr. Vinet is a Professional Engineer and
member of the Ordre des ingénieurs du Québec. He is a "Qualified
Person" for the purposes of NI 43-101.
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version on businesswire.com: https://www.businesswire.com/news/home/20200415005150/en/
Anne Day Vice President, Investor Relations Direct: +1
(416) 324-6003 Email: anne.day@newgold.com
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