Blue Jay Gold Corp. press release

NEW GOLD OUTLINES SIGNIFICANT FREE CASH FLOW GENERATION PROFILE SUPPORTED BY IMPROVING PRODUCTION AND DECREASING COSTS OVER THE NEXT THREE YEARS

2024-02-08

TSXV - TSX Venture Exchange · Canada · Corporate Finance

Canada NewsWire

Provides Inaugural Three-Year Operational Outlook and Updated Mineral Reserves and Resources

(All amounts are in U.S. dollars unless otherwise indicated)

[](https://mma.prnewswire.com/media/2336456/New_Gold_IncNEW_GOLD_OUTLINES_SIGNIFICANT_FREE_CASH_FLOW_GENER.html)

TORONTO , Feb. 8, 2024 /CNW/ - New Gold Inc. ("New Gold" or the "Company") (TSX: NGD) (NYSE American: NGD) is pleased to provide its inaugural three-year operational outlook and updated Mineral Reserve and Mineral Resources statement for the Company as of December 31, 2023 . The Company will host a webcast today at 12:30 pm Eastern Time to discuss these items (details are provided at the end of this news release). The Company uses certain non-GAAP financial performance measures throughout this release. Please refer to the "Non-GAAP Financial Performance Measures" section of this news release for more information. Numbered note references throughout this news release are to endnotes which can be found at the end of this news release.

Increasing Production and Decreasing Costs Highlight Strong Free Cash Flow Generation Over the Next Three Years

"With our inaugural presentation of three-year guidance, the Company has clearly defined the path forward to significant free cash flow generation," stated Patrick Godin , President and CEO. "This is underpinned by the work completed in recent years to prepare our operations for meaningful production and cash flow increases, as costs and capital spend decrease."

Consolidated gold production is expected to increase by approximately 35% from 2023 to 410,000 to 460,000 ounces in 2026 driven by increasing production profiles at both Rainy River and New Afton as growth projects are completed in the near-term. Copper production is expected to increase by approximately 60% from 2023 to 71 to 81 million pounds in 2026 driven by the steady ramp-up of C-Zone. All-in sustaining costs (on a by-product basis) 1 are expected to decrease by over 50% compared to the 2023 midpoint of guidance to between $650 and $750 per ounce in 2026, driven by higher production at both operations, significant reduction in total capital, and lower operating costs as the C-Zone crusher and conveyor comes online, and Rainy River completes Phase 4 waste removal and commences mining from the underground Main Zone. The higher production, lower costs, and lower capital spend over the next three years are expected to drive significant free cash flow 2 for the Company.

2024 to See Realization of Growth Projects, With the Second Half to Highlight Free Cash Flow Generation Potential

"The Company is set to successfully complete a number of key catalysts in 2024, including reaching commercial production at New Afton's C-Zone, and first ore from Rainy River's underground Main Zone. Capital deployed in 2024, weighted to the first half of the year, will allow the Company to enter a sustained free cash flow generation period. In fact, at current commodity prices New Gold is expected to generate approximately $75 million in free cash flow in the second half of the year," added Mr. Godin.

2024 consolidated gold production is expected to be 310,000 to 350,000 ounces compared to 321,178 in 2023. Production is expected to strengthen in the second half of the year, with the second half of 2024 expected to represent approximately 60% of annual production as waste stripping at Rainy River is sequenced in the first half of the year. 2024 copper production is expected to be between 50 to 60 million pounds, approximately 16% higher than 2023 driven by increased contribution from C-Zone at New Afton. 2024 total cash costs (on a by-product basis) 1 are expected to decrease by approximately 7% compared to the 2023 midpoint of guidance to between $725 and $825 per ounce driven by increased production from both operations. 2024 all-in sustaining costs (on a by-product basis) 1 are expected to decrease by approximately 10% compared to the 2023 midpoint of guidance to between $1,240 and $1,340 per ounce driven by lower total cash costs, higher production from both operations and lower sustaining capital primarily related to waste stripping activities at Rainy River . 2024 total capital is expected to be in-line with the 2023 guidance range, as growth projects at both operations are brought online during the year.

Strategic Outlook Beyond 2026 Highlights Operational Sustainability and Longevity, with Minimal Capital Investment

"Looking beyond our three-year guidance, the Company has a strategic objective of targeting a sustainable production platform of approximately 600,000 gold equivalent ounces per year with a line of sight until at least 2030. Following the successful execution of operational stabilization initiatives and growth projects over the past two years, we are increasingly looking to unlock the long-term value of our operations. Based on Mineral Reserves alone, Rainy River and New Afton have mine lives to 2031 and 2030, respectively, and modest conversion of Mineral Resources to Mineral Reserves would not only extend mine lives but also improve the production profiles from 2027 to 2031 with minimal capital investment. The strategic outlook demonstrates our confidence in the sustainability of our operations" added Mr. Godin.

Rainy River successfully added 201,000 ounces of open pit and underground gold Mineral Reserves, replacing 2023 depletion by 74%. Extension of open pit mining, with the inclusion of Phase 5, is expected to maintain mill throughput near full capacity until at least 2030. Following a detailed optimization of the Rainy River underground mining method, design and schedule, lateral development metres were reduced despite an increase in underground Mineral Reserves. As a result, the underground ramp-up period is de-risked and the steady-state underground production rate is expected to increase to 5,500 tpd beginning in 2027. Several high-quality open pit and underground exploration targets were identified in 2023, including the extension of existing zones and potential new zones. From 2017 to 2022, minimal exploration drilling was carried out at Rainy River , as the mine focused on ramping up production and stabilizing the operation. As such, several promising targets remain untested. In 2024, exploration at Rainy River will focus on drilling several of these targets from both surface and underground. On October 10, 2023 , the Company presented a strategic pipeline for increasing the production profile and extending mine life at New Afton, including the evaluation of three promising opportunities for conversion of Mineral Resources to Mineral Reserves: C-Zone Extension, East Extension, and D-Zone. As a result of infill drilling, a portion of Inferred Mineral Resources were converted to Measured and Indicated Resources at year-end. Additionally, the Company reported encouraging drill results from two potential new mining zones: K-Zone and AI-Southeast. Development of an exploration drift is now underway which is anticipated to provide better access to drill these zones, speeding up exploration efforts. The first drill bay is expected to be operational by the second quarter of 2024, with full completion of the drift scheduled in the third quarter. Following commissioning of the thickened and amended tailings plant and in-pit tailings storage project in late 2022, New Afton has sufficient tailings capacity to double the remaining mine life with minimal capital.

Three-Year Consolidated Operational Outlook

In 2024, the Company will report production on a gold and copper basis. Operating expense will be reported on a co-product basis. Consolidated total cash costs 1,4 and all-in sustaining costs 1,4 will be reported on a by product basis, net of by-product silver and copper sales. Given New Afton's significant copper contribution, the mine will also report cash costs and all-in sustaining costs on a co-product basis, which removes the impact of copper sales revenue and apportions cash costs and all-in sustaining costs to gold and copper activities, and subsequently divides the amount by the total gold ounces or pounds of copper sold, as the case may be, to arrive at per ounce or per pound figures. The Company has assumed $22.00 per silver ounce and $3.75 per copper pound, and a foreign exchange rate of $1.32 Canadian dollars to $1.00 US dollar in its three-year outlook.

| Operational Estimates | 2024 Guidance | 2025 Guidance | 2026 Guidance | | Gold production (ounces) 2 | 310,000 – 350,000 | 360,000 – 410,000 | 410,000 – 460,000 | | Copper production (M lbs) | 50 - 60 | 51 – 61 | 71– 81 | | Operating expenses ($/oz gold, co-product) | $965 - $1,065 | $850 - $950 | $750 - $850 | | Operating expenses ($/lb copper, co-product) | $1.90 – $2.40 | $1.85 – $2.35 | $1.50 – $2.00 | | Cash costs per gold ounce sold (by-product) 1 | $725 - $825 | $650 - $750 | $400 - $500 | | All-in sustaining costs per gold ounce sold (by-product) 1 | $1,240 - $1,340 | $975 - $1,075 | $650 - $750 | | Capital Investment & Exploration Estimates | 2024 Guidance | 2025 Guidance | 2026 Guidance | | Total capital ($M) | $290 - $330 | $190 - $220 | $85 - $105 | | Sustaining capital ($M) 1 | $115 - $130 | $75 - $90 | $55 - $70 | | Growth capital ($M) 1 | $175 - $200 | $115 - $130 | $30 - $35 |

2024 Consolidated Outlook

Gold production 2 is expected to be 310,000 to 350,000 ounces, approximately 3% higher than 2023 driven by increased underground production at Rainy River and the ongoing ramp-up of C-Zone at New Afton. Production is expected to strengthen in the second half of the year, with the second half of 2024 expected to represent approximately 60% of annual production as waste stripping at Rainy River is sequenced in the first half of the year. Copper production is expected to be between 50 to 60 million pounds, approximately 16% higher than 2023 driven by increased contribution from C-Zone at New Afton.

2024 total cash costs (on a by-product basis) 1 are expected to decrease by approximately 7% compared to the 2023 midpoint of guidance to between $725 and $825 per ounce driven by increased production from both operations. 2024 all-in sustaining costs (on a by-product basis) 1 are expected to decrease by approximately 11% compared to the 2023 midpoint of guidance to between $1,240 and $1,340 per ounce driven by lower total cash costs and higher production from both operations. Total cash costs (on a by-product basis) 1 and all-in sustaining costs (on a by-product basis) 1 are expected to decrease quarter-over-quarter throughout 2024 due to increasing production and a lower strip ratio at Rainy River in the second half of 2024.

Total capital is expected to be $290 to $330 million , of which, sustaining capital 1 is expected to be $115 to $130 million , and growth capital 1 is expected to be $175 to $200 million .

Sustaining capital 1 is expected to be generally in-line with the prior year, as 2023 sustaining capital spend was tracking to the low end of the guidance range through the first nine months, as previously stated. The sustaining capital 1 spend primarily relates to capital stripping activities at Rainy River and tailings dam raises and maintenance. Sustaining capital 1 is expected to trend lower through the second half of the year, as stripping activities at Rainy River are prioritized in the first half of the year. The second half of 2024 expected to represent approximately 40% of the sustaining capital spend. Growth capital 1 at New Afton relates to C-Zone development and commissioning of the crusher and conveyor and at Rainy River relates to advancing underground development at the Intrepid and underground Main Zones. Growth capital 1 is expected to be higher in the second half of the year as major projects near completion. The second half of 2024 is expected to represent approximately 55% of the growth capital spend.

Exploration expenditures are expected to be $17 to $22 million , an increase over the prior year, and are expected to focus on expanding the current Mineral Resources and Mineral Reserves and defining new mining zones within the existing footprint of the Company's operations. A portion of the exploration expenditures is also attributed to a regional program that targets the discovery of the next generation of porphyry copper-gold deposits in South-Central British Columbia.

Rainy River Operational Outlook

| Operational Estimates | 2024 Guidance | 2025 Guidance | 2026 Guidance | | Gold production (ounces) 2 | 250,000 – 280,000 | 295,000 – 335,000 | 315,000 – 355,000 | | Cash costs per gold ounce sold (by-product) 1 | $980 - $1,080 | $875 - $975 | $850 - $950 | | All-in sustaining costs per gold ounce sold (by-product) 1 | $1,425 - $1,525 | $1,150 - $1,250 | $1,000 - $1,100 | | Capital Investment & Exploration Estimates | 2024 Guidance | 2025 Guidance | 2026 Guidance | | Total capital ($M) | $145 - $165 | $105 - $120 | $75 - $90 | | Sustaining capital ($M) 1 | $100 - $110 | $70 - $80 | $45 - $55 | | Growth capital ($M) 1 | $45 - $55 | $35 - $40 | $30 - $35 |

2024 Rainy River Outlook

Gold production 2 is expected to be 250,000 to 280,000 ounces, an increase of 4% over the prior year due to a modest increase in gold grade as the underground mining rate is expected to increase. Production is expected to significantly strengthen in the second half of the year as waste stripping activities are sequenced in the first half. The second half of 2024 is expected to represent approximately 60% of the annual production, with the fourth quarter expected to represent approximately 35%. Initial production from the underground Main Zone remains on-track for the fourth quarter of 2024.

2024 total cash costs (on a by-product basis) 1 are expected to be in-line with 2023. All-in sustaining costs (on a by-product basis) 1 are expected to decrease by approximately 4% compared to the 2023 midpoint of guidance to $1,425 and $1,525 per ounce due higher production. Total cash costs (on a by-product basis) 1 and all-in sustaining costs (on a by-product basis) 1 are expected to decrease significantly on a quarterly basis throughout 2024 due to the processing of lower grades in the first half of the year while stripping activities are sequenced.

Total capital is expected to be $145 to $165 million . Sustaining capital 1 is expected to be $100 to $110 million , including approximately $50 million in capitalized waste ( $25 million of which was deferred from 2023), $25 million towards the annual tailings dam raise, $10 million in capital parts and components replacement programs and $20 million related to equipment and other general sustaining capital. Growth capital 1 is expected to be $45 to $55 million , related to the continued development of the Intrepid and underground Main Zones. Sustaining capital 1 is expected to be heavily first half weighted and will trend lower in the second half of the year, with the second half of 2024 expected to represent approximately 40% of the sustaining capital spend. Growth capital 1 is expected to be second half weighted, as underground mine development is increasing in the second half of the year. The second half of 2024 is expected to represent approximately 70% of the growth capital spend.

Waste stripping activities are expected to significantly decrease after the first half of 2024, priming Rainy River to enter a sustained free cash flow generating period.

2024 Rainy River Exploration Outlook

2024 exploration expenditures at Rainy River are expected to be approximately $5 million . The program is expected to focus on converting Mineral Resources to Mineral Reserves, expanding current ore zones and exploring for new mining zones within the Rainy River footprint.

Following the successful conversion of Phase 5 and its addition to the open pit Mineral Reserves in 2023, the Company intends to continue testing other near-surface opportunities for open pit extraction, including high-quality targets that were previously de-prioritized during the construction and production ramp-up period. These targets include the Western Zone, North Target, 280 Zone, and ODM East. Further extension of open pit mining could sustain operating the processing plant at full capacity beyond 2030.

The Company also intends to grow the underground Mineral Resources and Mineral Reserves by targeting the down-plunge extension of current ore zones which remain open at depth, including ODM Main and 17 East. Exploration is expected to be accelerated once underground development is operational and drilling from underground can commence. Concurrently, the Company intends to utilize the new, underground connection drift to continue to explore for potential new zones, such as the Gap zone located between the Intrepid and underground Main Zones.

Looking beyond the existing operational footprint, the Company intends to follow up on the compilation of geochemical and geophysical data that was completed in 2023 to generate exploration targets over the extensive Rainy River property. In 2024, soil and till geochemistry work will be carried out to generate targets, a proven method that led to the discovery of the Rainy River deposit.

New Afton Operational Outlook

| Operational Estimates | 2024 Guidance | 2025 Guidance | 2026 Guidance | | Gold production (ounces) 2,3 | 60,000 – 70,000 | 65,000 – 75,000 | 95,000 – 105,000 | | Copper production (Mlbs) | 50 – 60 | 51 – 61 | 71 – 81 | | Cash costs per gold ounce sold (by-product) 1 | ($300) – ($200) | ($400) – ($300) | ($1,050) – ($950) | | Cash costs per gold ounce sold (co-product) 1 | $800 - $900 | $725 - $825 | $500 - $600 | | Cash costs per copper pound sold (co-product) 1 | $2.15 - $2.65 | $2.00 - $2.50 | $1.35 - $1.85 | | All-in sustaining costs per gold ounce sold (by-product) 1 | $25 - $125 | ($275) – ($175) | ($900) – ($800) | | All-in sustaining costs per gold ounce sold (co-product) 1 | $895 - $995 | $775 - $875 | $550 - $650 | | All-in sustaining costs per copper pound sold (co-product) 1 | $2.40 - $2.90 | $2.10 - $2.60 | $1.65 - $2.15 | | Capital Investment & Exploration Estimates | 2024 Guidance | 2025 Guidance | 2026 Guidance | | Total capital ($M) | $145 - $165 | $85 - $100 | $10 - $15 | | Sustaining capital ($M) 1 | $15 - $20 | $5 - $10 | $10 - $15 | | Growth capital ($M) 1 | $130 - $145 | $80 - $90 | $0 |

2024 New Afton Outlook

Gold production 2,3 is expected to be 60,000 to 70,000 ounces, approximately 3% higher than 2023 (excluding gold produced from ore purchase agreements). Copper production is expected to be 50 to 60 million pounds, approximately 16% higher than 2023. The increase in gold and copper production are a result of ongoing steady-state production above design at B3, and the ramp-up of mining at C-Zone through the year. B3 is expected to average approximately 8,300 tpd in 2024. C-Zone commercial production remains on-track for the second half of 2024, and with a modest ramp-up through 2024 mill throughput is expected to average 12,000 tpd by year-end. Gold and copper production is expected to be relatively constant on a quarterly basis as a reduction in grade through the year is offset by increasing throughput as C-Zone ramps up.

Total cash costs (on a by-product basis) 1 are expected to decrease compared to the 2023 midpoint of guidance to between ($300) and ($200) per ounce due to higher production. All-in sustaining costs (on a by-product basis) 1 are expected to decrease compared to the 2023 midpoint of guidance to between $25 and $125 per ounce due to lower total cash costs and higher production. Total cash costs 1 and all-in sustaining costs 1 are expected to decrease on a quarterly basis throughout 2024 as throughput increases as C-Zone ramps up.

Total capital is expected to be $145 to $165 million . Sustaining capital 1 is expected to be $15 to $20 million , including approximately $5 million related to tailings management and $5 million related to equipment and the remainder related to other general sustaining capital. Growth capital 1 is expected to be $130 to $145 million related to the continued advancement of the C-Zone project, primarily focused on mine development, commissioning of the crusher and conveyor and other infrastructure installation, and continued progress on stabilization. Growth capital 1 is expected to be generally consistent throughout the year.