New Gold Reports Second Quarter Operational Results and Provides Update on 2022 Operational Outlook
TSX - Toronto Stock Exchange
Canada NewsWire
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Provides Notice of Release of Second Quarter Financial Results
(All amounts are in U.S. dollars unless otherwise indicated)
TORONTO , July 11, 2022 /CNW/ - New Gold Inc. ("New Gold" or the "Company") (TSX: NGD) (NYSE American: NGD) reports second quarter operational results for the Company as of June 30, 2022 , and provides an update to its 2022 operational outlook for the Rainy River Mine, the New Afton Mine, and the consolidated operational outlook. The Company is also providing notice that it will release its second quarter 2022 financial results before markets open on Thursday, August 4, 2022 .
During the second quarter, operations at the Rainy River Mine were adversely impacted by heavy rainfall and flooding around the Fort Frances area in northwestern Ontario . Total tonnes mined from the open pit in the quarter were below expectations as flooding in the pit due to the unfavorable weather impacted the mining rate, the mine sequencing, and access to higher grade ore planned for the second half of the year. The Rainy River Mine therefore utilized the low-grade ore material during the quarter, resulting in both lower grades processed and lower gold ounces produced. The lower tonnes mined (ore and waste) year-to-date has caused a change to the mine plan for the remainder of 2022. The Company's new Chief Operating Officer is incorporating these impacts on the mine plan, and together with newly hired operating expertise at the site, will focus on positioning the open pit operations to its optimal conditions. This change requires the operation to continue to process low-grade ore material in the second half of 2022. As a result, Rainy River's gold equivalent 1 production for 2022 is now expected to be between 230,000 to 250,000 ounces (previously 265,000 to 295,000 ounces). Primarily due to lower gold production, as well as, current inflationary cost pressures, operating expenses per gold eq. ounce are now expected to be between $960 to $1,040 per gold eq. ounce 2 (previously $730 to $810 per gold eq. ounce), and all-in sustaining costs are now expected to be between $1,620 to $1,720 per gold eq. ounce 3 (previously $1,270 to $1,370 per gold eq. ounce). Underground development continues to advance, with Intrepid on track for initial production in the fourth quarter. The mine continues to assess opportunities to offset the negative impact to both production and costs.
During the second quarter, New Afton focused on B3 and C-Zone development and closed the low grade-higher cost recovery level zone earlier than planned. As a result of the early shutdown, tonnes mined was lower than expected. To maintain mill feed, the operation utilized the low-grade stockpile during the quarter, resulting in lower grades and recoveries, and ultimately, lower production. Copper production guidance for 2022 is now expected to be between 25 to 35 million pounds (previously 35 to 45 million pounds). Gold production is expected to be at the low end of the annual production guidance range of 35,000 to 45,000 ounces. Due to the lower production, as well as, current inflationary cost pressures, operating expenses per gold eq. ounce are now expected to be between $1,485 to $1,565 per gold eq. ounce 2 (previously $1,100 to $1,180 per gold eq. ounce), and all-in sustaining costs are now expected to be between $2,210 to $2,310 per gold eq. ounce 3 (previously $1,695 to $1,795 per gold eq. ounce). Production ramp-up at the B3 zone continues to advance with development expected to be completed by September.
Due to the of the revisions at both Rainy River and New Afton, consolidated gold equivalent 1 production for 2022 is now expected to be between 325,000 and 365,000 ounces (previously 380,000 to 440,000 ounces), consisting of consolidated gold production guidance of 260,000 to 290,000 ounces (previously 295,000 to 335,000 ounces) and consolidated copper production guidance of 25 to 35 million pounds (previously 35 to 45 million pounds). New Gold expects its consolidated 2022 operating expenses per gold eq. ounce to be between $1,120 to $1,200 per gold eq. ounce 2 (previously $840 to $920 per gold eq. ounce), and all-in sustaining costs to be between $1,875 to $1,975 per gold eq. ounce 3 (previously $1,470 to $1,570 per gold eq. ounce). All other consolidated and mine site capital investment and exploration estimate guidance, including sustaining capital and sustaining leases and growth capital, remain unchanged.
" Rainy River experienced challenges during the quarter as the Fort Frances area saw extreme rainfall and flooding," stated Renaud Adams , President & CEO. "I remain confident about the increased production profile as outlined in Rainy River's latest updated Technical Report announced earlier this year. At New Afton, the planned closure of the Lift 1 cave, including the recovery level, is now complete. While we've announced revisions to New Afton's copper guidance for the year, the priority remains on the B3 ramp-up and advancing C-Zone development, which remains on time for first ore in the second half of 2023. With another solid quarter of development prioritizing long-term growth initiatives at both of our operations behind us, I remain confident both are on the cusp of increasing production profiles leading to strong free cash flow generation for our Company for multiple years to come. Concurrently, our exploration efforts have continued to focus on high priority targets with a planned exploration update expected in the third quarter. I believe there is additional value to unlock at our assets through substantial resource to reserve conversion and look forward to updating the market on our progress."
Consolidated Operational Highlights
| | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | Gold eq. production (ounces) 1 | 70,514 | 105,705 | 158,210 | 201,731 | | Gold eq. sold (ounces) 1 | 62,367 | 104,221 | 154,903 | 196,039 | | Gold production (ounces) | 52,431 | 66,989 | 120,532 | 133,639 | | Gold sold (ounces) | 51,223 | 68,184 | 121,786 | 131,723 | | Copper production (Mlbs) | 7.4 | 18.2 | 15.6 | 32.0 | | Copper sold (Mlbs) | 4.4 | 16.9 | 13.6 | 30.2 |
| Note: Concentrate sales in the quarter were impacted by timing of sales. As a result, approximately $12 million in sales will be deferred to the third quarter. |
Rainy River Mine
| Rainy River Mine (Open Pit Mine only) | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | Tonnes mined per day (ore and waste) | 110,153 | 158,556 | 114,381 | 154,683 | | Ore tonnes mined per day | 12,295 | 36,256 | 16,136 | 35,970 | | Operating waste tonnes per day | 19,560 | 71,124 | 27,337 | 68,399 | | Capitalized waste tonnes per day | 78,298 | 51,176 | 70,909 | 50,314 | | Total waste tonnes per day | 97,858 | 122,300 | 98,246 | 118,712 | | Strip ratio (waste:ore) | 7.96 | 3.37 | 6.09 | 3.30 | | Tonnes milled per calendar day | 23,302 | 25,349 | 23,807 | 25,822 | | Gold grade milled (g/t) | 0.69 | 0.82 | 0.80 | 0.81 | | Gold recovery (%) | 90 | 87 | 92 | 89 | | Gold eq. production (ounces) 1 | 43,759 | 55,163 | 103,654 | 111,676 | | Gold production (ounces) | 42,516 | 52,901 | 101,349 | 107,557 |
New Afton Mine
| New Afton Mine | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | Tonnes mined per day (ore and waste) | 6,477 | 15,104 | 6,751 | 13,259 | | Tonnes milled per calendar day | 11,472 | 13,795 | 10,889 | 13,680 | | Gold grade milled (g/t) | 0.37 | 0.43 | 0.37 | 0.41 | | Gold recovery (%) | 80 | 80 | 81 | 80 | | Copper grade milled (%) | 0.42 | 0.79 | 0.45 | 0.72 | | Copper recovery (%) | 78 | 83 | 79 | 82 | | Gold eq. production (ounces) 1 | 26,755 | 50,542 | 54,556 | 90,055 | | Gold production (ounces) | 9,916 | 14,088 | 19,183 | 26,082 | | Copper production (Mlbs) | 7.4 | 18.2 | 15.6 | 32.0 |
2022 Consolidated Operational Outlook
| Operational Estimates | Revised Guidance | Original Guidance | | Gold eq. production (ounces) 1 | 325,000 - 365,000 | 380,000 - 440,000 | | Gold production (ounces) | 260,000 - 290,000 | 295,000 - 335,000 | | Copper production (Mlbs) | 25 - 35 | 35 - 45 | | Operating expenses, per gold eq. ounce 2 | $1,120 - $1,200 | $840 - $920 | | All-in sustaining costs, per gold eq. ounce 3 | $1,875 - $1,975 | $1,470 - $1,570 |
2022 Rainy River Operational Outlook
| Operational Estimates | Revised Guidance | Original Guidance | | Gold eq. production (ounces) 1 | 230,000 - 250,000 | 265,000 - 295,000 | | Gold production (ounces) | 225,000 - 245,000 | 260,000 - 290,000 | | Operating expenses, per gold eq. ounce 2 | $960 - $1,040 | $730 - $810 | | All-in sustaining costs, per gold eq. ounce 3 | $1,620 - $1,720 | $1,270 - $1,370 |
2022 New Afton Operational Outlook
| Operational Estimates | Revised Guidance | Original Guidance | | Gold eq. production (ounces) 1 | 95,000 - 115,000 | 115,000 - 145,000 | | Gold production (ounces) | 35,000 - 45,000 | 35,000 - 45,000 | | Copper production (Mlbs) | 25 - 35 | 35 - 45 | | Operating expenses, per gold eq. ounce 2 | $1,485 - $1,565 | $1,100 - $1,180 | | All-in sustaining costs, per gold eq. ounce 3 | $2,210 - $2,310 | $1,695 - $1,795 |
Second Quarter 2022 Conference Call and Webcast
The Company will release its second quarter 2022 financial results before markets open on Thursday, August 4, 2022 . A conference call and webcast will follow at 8:30 am Eastern Time .
Participants may listen to the webcast by registering on our website at www.newgold.com or via the following link https://produceredition.webcasts.com/starthere.jsp?ei=1556145&tp_key=026884e3d6 Participants may also listen to the conference call by calling North American toll free 1-888-664-6383, or 1-416-764-8650 outside of the U.S. and Canada , passcode 67678068 A recorded playback of the conference call will be available until September 4, 2022 by calling North American toll free 1-888-390-0541, or 1-416-764-8677 outside of the U.S. and Canada , passcode 678068. An archived webcast will also be available at www.newgold.com .
About New Gold
New Gold is a Canadian-focused intermediate mining Company with a portfolio of two core producing assets in Canada , the Rainy River gold mine and the New Afton copper-gold mine. The Company also holds a 5% equity stake in Artemis Gold Inc., and other Canadian-focused investments. New Gold's vision is to build a leading diversified intermediate gold company based in Canada that is committed to the environment and social responsibility. For further information on the Company, visit www.newgold.com .
Endnotes
1. Total gold eq. ounces include silver and copper produced/sold converted to a gold equivalent. All copper is produced/sold by the New Afton Mine. Gold eq. ounces for Rainy River in Q2 2022 includes production of 93,210 ounces of silver converted to a gold eq. based on a ratio of $1,800 per gold ounce and $24.00 per silver ounce used for 2022 guidance estimates. Gold eq. ounces for New Afton in Q2 2022 includes 7.4 million pounds of copper produced and 24,108 ounces of silver produced converted to a gold eq. based on a ratio of $1,800 per gold ounce, 4.00 per copper pound and $24.00 per silver ounce used for 2022 guidance estimates. 2. "Operating expenses per gold eq. ounce" is a supplementary financial measure which is calculated as total operating expenses divided by total gold equivalent ounces. 3. "All-in sustaining costs", "sustaining capital and sustaining leases", and "growth capital" are all non-GAAP financial performance measures that are used in this news release. These measures do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For more information about these measures, why they are used by the Company, and a reconciliation for Q1 2022 and Q1 2021 to the most directly comparable measure under IFRS, see the "Non-GAAP Financial Performance Measures" section of this news release.
Non-GAAP Financial Performance Measures
All-In Sustaining Costs per Gold eq. Ounce
"All-in sustaining costs per gold equivalent ounce" is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold calculates "all-in sustaining costs per gold equivalent ounce" based on guidance announced by the World Gold Council ("WGC") in September 2013 . The WGC is a non-profit association of the world's leading gold mining companies established in 1987 to promote the use of gold to industry, consumers and investors. The WGC is not a regulatory body and does not have the authority to develop accounting standards or disclosure requirements. The WGC has worked with its member companies to develop a measure that expands on IFRS measures to provide visibility into the economics of a gold mining company. Current IFRS measures used in the gold industry, such as operating expenses, do not capture all of the expenditures incurred to discover, develop and sustain gold production. New Gold believes that "all-in sustaining costs per gold equivalent ounce" provides further transparency into costs associated with producing gold and will assist analysts, investors, and other stakeholders of the Company in assessing its operating performance, its ability to generate free cash flow from current operations and its overall value. In addition, the Human Resources and Compensation Committee of the Board of Directors uses "all-in sustaining costs", together with other measures, in its Company scorecard to set incentive compensation goals and assess performance.
"All-in sustaining costs per gold equivalent ounce" is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.
New Gold defines "all-in sustaining costs per gold equivalent ounce" as the sum of total cash costs, net of capital expenditures that are sustaining in nature, corporate general and administrative costs, capitalized and expensed exploration that is sustaining in nature, lease payments that are sustaining in nature, and environmental reclamation costs, all divided by the total gold equivalent ounces sold to arrive at a per ounce figure. The definition of sustaining versus non-sustaining is similarly applied to capitalized and expensed exploration costs and lease payments. Exploration costs and lease payments to develop new operations or that relate to major projects at existing operations where these projects are expected to materially increase production are classified as non-sustaining and are excluded. Gold equivalent ounces of copper and silver produced or sold in a quarter are computed using a consistent ratio of copper and silver prices to the gold price and multiplying this ratio by the pounds of copper and silver ounces produced or sold during that quarter.
Costs excluded from all-in sustaining costs are non-sustaining capital expenditures, non-sustaining lease payments and exploration costs, financing costs, tax expense, and transaction costs associated with mergers, acquisitions and divestitures, and any items that are deducted for the purposes of adjusted earnings.
Sustaining Capital and Sustaining Leases
"Sustaining capital" and "sustaining lease" are non-GAAP financial performance measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold defines "sustaining capital" as net capital expenditures that are intended to maintain operation of its gold producing assets. Similarly, a "sustaining lease" is a lease payment that is sustaining in nature. To determine "sustaining capital" expenditures, New Gold uses cash flow related to mining interests from its consolidated statement of cash flows and deducts any expenditures that are capital expenditures to develop new operations or capital expenditures related to major projects at existing operations where these projects will materially increase production. Management uses "sustaining capital" and "sustaining lease", to understand the aggregate net result of the drivers of all-in sustaining costs other than total cash costs. These measures are intended to provide additional information only and should not be considered in isolation or as substitutes for measures of performance prepared in accordance with IFRS.
Growth Capital
"Growth capital" is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold considers non-sustaining capital costs to be "growth capital", which are capital expenditures to develop new operations or capital expenditures related to major projects at existing operations where these projects will materially increase production. To determine "growth capital" expenditures, New Gold uses cash flow related to mining interests from its consolidated statement of cash flows and deducts any expenditures that are capital expenditures that are intended to maintain operation of its gold producing assets. Management uses "growth capital" to understand the cost to develop new operations or related to major projects at existing operations where these projects will materially increase production. This measure is intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
The following tables, which are specifically included for regulatory compliance purposes, reconcile the non-GAAP measures to the most directly comparable IFRS measure for the periods of Q1 2022 and Q1 2021.
| | Three months ended March 31 | | | (in millions of U.S. dollars, except where noted) | 2022 | 2021 | | CONSOLIDATED OPEX, CASH COST AND ALL-IN SUSTAINING COSTS RECONCILIATION | | | | Operating expenses | 95.2 | 93.9 | | Gold equivalent ounces sold a | 92,536 | 91,818 | | Operating expenses per gold equivalent ounce sold ($/ounce) | 1,029 | 1,022 | | Operating expenses | 95.2 | 93.9 | | Treatment and refining charges on concentrate sales | 3.7 | 4.1 | | Total cash costs | 99.0 | 98.0 | | Gold equivalent ounces sold a | 92,536 | 91,818 | | Total cash costs per gold equivalent ounce sold ($/ounce) b | 1,069 | 1,067 | | Sustaining capital expenditures b | 52.5 | 35.1 | | Sustaining exploration – expensed | 0.3 | 0.3 | | Sustaining leases b | 2.6 | 2.7 | | Corporate G&A including share-based compensation | 6.9 | 3.8 | | Reclamation expenses | 3.3 | 2.3 | | Total all-in sustaining costs | 164.6 | 142.3 | | Gold equivalent ounces sold a | 92,536 | 91,818 | | All-in sustaining costs per gold equivalent ounce sold ($/ounce) b | 1,778 | 1,550 |
| | Three months ended March 31 | | | (in millions of U.S. dollars, except where noted) | 2022 | 2021 | | RAINY RIVER OPEX, CASH COSTS AND AISC RECONCILIATION | | | | Operating expenses | 58.4 | 53.9 | | Gold equivalent ounces sold a | 61,684 | 53,577 | | Operating expenses per unit of gold sold ($/ounce) | 948 | 1,006 | | Operating expenses | 58.4 | 53.9 | | Total cash costs | 58.5 | 53.9 | | Gold equivalent ounces sold a | 61,684 | 53,577 | | Total cash costs per gold equivalent ounce sold ($/ounce) b | 948 | 1,006 | | Sustaining capital expenditures b | 34.8 | 26.8 | | Sustaining leases b | 2.3 | 2.5 | | Reclamation expenses | 2.6 | 1.8 | | Total all-in sustaining costs | 98.2 | 85.0 | | Gold equivalent ounces sold a | 61,684 | 53,577 | | All-in sustaining costs per gold equivalent ounce sold ($/ounce) b | 1,592 | 1,586 |
| | Three months ended March 31 | | | (in millions of U.S. dollars, except where noted) | 2022 | 2021 | | NEW AFTON OPEX, CASH COSTS AND AISC RECONCILIATION | | | | Operating expenses | 36.8 | 40.0 | | Gold equivalent ounces sold a | 30,852 | 38,241 | | Operating expenses per unit of gold sold ($/ounce) | 1,192 | 1,046 | | Operating expenses | 36.8 | 40.0 | | Treatment and refining charges on concentrate sales | 3.7 | 4.1 | | Total cash costs | 40.5 | 44.1 | | Gold equivalent ounces sold a | 30,852 | 38,241 | | Total cash costs per gold equivalent ounce sold ($/ounce) b | 1,313 | 1,153 | | Sustaining capital expenditures b | 17.7 | 8.3 | | Sustaining leases b | 0.1 | 0.1 | | Reclamation expenses | 0.7 | 0.5 | | Total all-in sustaining costs | 59.0 | 53.1 | | Gold equivalent ounces sold a | 30,852 | 38,241 | | All-in sustaining costs per gold equivalent ounce sold ($/ounce) b | 1,913 | 1,388 |