New Gold Reports 2021 Second Quarter Results
TSX - Toronto Stock Exchange
Canada NewsWire
Provides Update on 2021 Operational Outlook
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(All amounts are in U.S. dollars unless otherwise indicated)
TORONTO , Aug. 11, 2021 /CNW/ - New Gold Inc. ("New Gold" or the "Company") (TSX: NGD) (NYSE American: NGD) reports second quarter results for the Company as of June 30, 2021 . The Company will host a conference call and webcast today at 8:30 am Eastern Time to discuss the second quarter consolidated results and 2021 operational outlook (details are provided at the end of this news release). For detailed information, please refer to the Company's Second Quarter Management's Discussion and Analysis (MD&A) and Financial Statements that are available on the Company's website at www.newgold.com and on SEDAR at www.sedar.com . The Company uses certain non-GAAP financial performance measures throughout this news release. Please refer to the "Non-GAAP Financial Performance Measures" section of this news release and the MD&A for more information.
"The second quarter saw our operations perform well, and the Company remains on track to deliver an improved second half of the year," stated Renaud Adams , President & CEO. "I am especially proud of the free cash flow generated in the quarter even at our planned lower grade. While Rainy River experienced challenges in July, the mine has reached an inflection point and I expect it to contribute meaningful free cash flow going forward."
"During the quarter we continued to advance several key catalysts for the Company's future growth. Development of the decline towards the Intrepid underground ore zone at Rainy River continues to advance ahead of schedule, and C-Zone development at New Afton continues to advance on plan. We continue to seek ways to further optimize the performance at our operations and generate additional value for our shareholders," added Mr. Adams.
Consolidated Second Quarter Highlights
Total production for the quarter was 105,705 gold equivalent 1 ("gold eq.") ounces (66,989 ounces of gold, 240,029 ounces of silver and 18.2 million pounds of copper). For the six-month period ended June 30, 2021 , production was 201,731 gold eq. 1 ounces (133,639 ounces of gold, 427,253 ounces of silver and 32.0 million pounds of copper). Revenues for the quarter were $198 million . Operating expense for the quarter was $913 per gold eq. ounce. Total cash costs 2 for the quarter were $977 per gold eq. ounce. All-in sustaining costs 2 for the quarter were $1,551 per gold eq. ounce. Average realized gold price 2 of $1,817 per ounce and average realized copper price 2 of $4.43 per pound. Net loss for the quarter was $16 million ( $0.02 per share). Adjusted net earnings 2 for the quarter were $27 million ( $0.04 per share). Cash generated from operations for the quarter was $110 million ( $0.16 per share). Cash generated from operations for the quarter, before changes in non-cash operating working capital 2 , was $85 million ( $0.12 per share). Free cash flow 2 generated for the quarter was $21 million . At the end of the quarter, the Company had a cash position of $138 million and a strong liquidity position of $464 million .
2021 Operational Outlook
At Rainy River in the second half of the year, the mine returns to higher-grade areas of the pit (433, HS and ODM zones). However, in July 2021 , production was primarily from the eastern area of the ODM zone ("East Lobe") and realized gold grade from this area was below the expected gold grade in this period. East Lobe represents approximately 50% of planned production for the second half of 2021. If realized gold grade continues to track below expected gold grade, it would negatively impact the amount of ounces we expect to produce in the second half of 2021. The extent of the impact is not yet known but there is a risk that Rainy River may not achieve the lower end of its gold equivalent 1 production guidance range of 275,000 to 295,000 ounces or the high end of its all-in sustaining costs 2 guidance range of $1,125 per gold eq. ounce to $1,225 per gold eq. ounce. Management continues to assess the extent and impact of the lower gold grade from East Lobe, including additional reverse circulation drilling, and intend to provide updated information when available. The remaining high-grade areas that are planned to be mined during the second half of 2021, reconcile well with the resource block model, consistent with historical results.
At New Afton B3 production commenced in June following receipt of the Mines Act Permit on May 25, 2021 , and will advance through the second half of the year. With the permit having been received later than anticipated, grades are expected to be lower in the second half of the year and New Afton is reviewing potential changes to its mine plan. As a result, New Afton's gold production is expected to be at the lower end of the guidance range of 52,000 to 62,000 ounces and copper production is expected to be at the mid-point of the guidance range of 56 to 66 million pounds. New Afton is currently on track to meet its gold equivalent 1 production guidance range of 165,000 to 195,000 ounces and all-in sustaining costs 2 are expected to be at the higher end of the cost range of $1,225 per gold eq. ounce to $1,325 per gold eq. ounce. With current metal prices significantly above reserve pricing, New Afton is evaluating potential for additional short-term extraction opportunities below the current reserve cut-off grades.
Based on current information, the Company is expecting to achieve the lower end of the annual consolidated gold equivalent 1 production guidance range of 440,000 to 490,000 ounces and consolidated all-in sustaining costs 2 are expected to be at the higher end of the range of $1,230 per gold eq. ounce to $1,330 per gold eq. ounce, although achieving these ranges may be impacted by the extent of the lower gold grade from Rainy River's East Lobe.
Consolidated Financial Highlights
| | Q2 2021 | Q2 2020 | H1 2021 | H2 2020 | | Revenue ($M) | 198.2 | 128.5 | 363.1 | 270.8 | | Net (loss) earnings, per share ($) | (0.02) | (0.07) | — | (0.11) | | Adj. net earnings (loss), per share ($) 2 | 0.04 | — | 0.05 | (0.03) | | Operating cash flow, per share ($) | 0.16 | 0.08 | 0.24 | 0.15 | | Adj. operating cash flow, per share ($) 2 | 0.12 | 0.08 | 0.22 | 0.15 |
Revenues for the quarter were $198 million and $363 million for the six-month period ended June 30, 2021 , an increase compared to the prior-year periods due to higher sales volumes and higher gold and copper prices. Operating expenses for the quarter and six-month period ended June 30, 2021 , were higher than the prior-year periods due to the strengthening of the Canadian dollar, costs related to the ramp-up of operations at New Afton in the first quarter, and the prior-year benefitting from the Canada Emergency Wage Subsidy. Net loss for the quarter was $16 million ( $0.02 per share) and net earnings were $1.0 million ($nil per share) for the six-month period ended June 30, 2021 , an improvement compared to the prior-year periods primarily due to higher revenue, partially offset by higher operating expenses, the loss on revaluation of the New Afton free cash flow interest obligation, and the loss on the revaluation of investments. Additionally, the prior-year period included an impairment loss on the reclassification of Blackwater as an asset held for sale. Adjusted net earnings 2 for the quarter were $27 million ( $0.04 per share) and $35 million ( $0.05 per share) for the six-month period ended June 30, 2021 , an increase compared to the prior-year periods primarily due to higher revenues partially offset by higher costs.
Consolidated Operational Highlights
| | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | Gold eq. production (ounces) 1 | 105,705 | 98,079 | 201,731 | 201,514 | | Gold eq. sold (ounces) 1 | 104,221 | 91,390 | 196,039 | 195,326 | | Gold production (ounces) | 66,989 | 64,294 | 133,639 | 131,084 | | Gold sold (ounces) | 68,184 | 60,853 | 131,723 | 129,626 | | Copper production (Mlbs) | 18.2 | 16.9 | 32.0 | 35.4 | | Copper sold (Mlbs) | 16.9 | 15.3 | 30.2 | 33.0 | | Average realized gold price, per ounce 2 | 1,817 | 1,516 | 1,803 | 1,485 | | Average realized copper price, per pound 2 | 4.43 | 2.51 | 4.17 | 2.54 | | Operating expense, per gold eq. ounce | 913 | 726 | 964 | 799 | | Total cash costs, per gold eq. ounce 2 | 977 | 773 | 1,019 | 849 | | Depreciation and depletion, per gold eq. ounce | 495 | 445 | 496 | 478 | | All-in sustaining costs, per gold eq. ounce 2 | 1,551 | 1,283 | 1,551 | 1,370 | | Sustaining capital and sustaining leases ($M) 2 | 49.2 | 41.1 | 87.1 | 90.2 | | Growth capital ($M) 2 | 33.2 | 11.4 | 51.8 | 30.4 |
Rainy River
Operational Highlights
| Rainy River Mine | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | Gold eq. production (ounces) 1 | 55,163 | 49,633 | 111,676 | 100,739 | | Gold eq. sold (ounces) 1 | 57,304 | 47,873 | 110,881 | 101,411 | | Gold production (ounces) | 52,901 | 48,800 | 107,557 | 99,181 | | Gold sold (ounces) | 55,062 | 47,064 | 106,857 | 99,846 | | Average realized gold price, per ounce 2 | 1,817 | 1,514 | 1,802 | 1,483 | | Operating expense, per gold eq. ounce | 974 | 890 | 989 | 980 | | Total cash costs, per gold eq. ounce 2 | 974 | 890 | 989 | 980 | | Depreciation and depletion, per gold eq. ounce | 670 | 646 | 653 | 654 | | All-in sustaining costs, per gold eq. ounce 2 | 1,524 | 1,567 | 1,554 | 1,666 | | Sustaining capital and sustaining leases ($M) 2 | 29.8 | 30.9 | 59.1 | 66.6 | | Growth capital ($M) 2 | 3.7 | 0.1 | 5.0 | 0.2 |
Operating Key Performance Indicators
| Rainy River Mine (Open Pit Mine only) | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | | Tonnes mined per day (ore and waste) | 126,512 | 145,701 | 158,638 | 150,767 | 158,556 | | Ore tonnes mined per day | 23,101 | 36,515 | 42,918 | 35,681 | 36,256 | | Operating waste tonnes per day | 72,575 | 62,818 | 73,921 | 65,643 | 71,124 | | Capitalized waste tonnes per day | 30,836 | 46,368 | 41,799 | 49,442 | 51,176 | | Total waste tonnes per day | 103,411 | 109,186 | 115,720 | 115,085 | 122,300 | | Strip ratio (waste:ore) | 4.48 | 2.99 | 2.70 | 3.23 | 3.37 | | Tonnes milled per calendar day | 23,880 | 26,998 | 26,999 | 26,301 | 25,349 | | Gold grade milled (g/t) | 0.78 | 0.88 | 0.93 | 0.80 | 0.82 | | Gold recovery (%) | 89 | 89 | 90 | 89 | 87 | | Mill availability (%) | 90 | 90 | 94 | 89 | 88 | | Gold production (ounces) | 48,800 | 63,004 | 66,734 | 54,656 | 52,901 | | Gold eq. production (ounces) 1 | 49,633 | 64,221 | 68,241 | 56,513 | 55,163 |
Second quarter gold eq. 1 production was 55,163 ounces (52,901 ounces of gold and 162,879 ounces of silver). Lower gold grades were expected during the first half of the year as mining operations were focused on stripping to bring pit walls to the final pit limit. The 11% increase compared to the prior-year period is due to higher tonnes processed and higher gold grades. For the six-month period ended June 30, 2021 , gold eq. 1 production was 111,676 ounces (107,557 ounces of gold and 296,609 ounces of silver), an increase over the prior-year period due to higher tonnes processed, with the prior-year period including a two-week voluntary shutdown due to COVID-19. Operating expense and total cash costs 2 were $974 per gold eq. ounce for the quarter, an increase over the prior-year period due to the strengthening of the Canadian dollar and the prior-year period benefitting from the Canadian Wage Subsidy. These two items increased costs by approximately $200 per gold eq. ounce in the quarter and were partially offset by improved operational and cost performance, and higher sales volumes. For the six-month period ended June 30, 2021 , operating expense and total cash costs 2 were $989 per gold eq. ounce, an increase over the prior-year period due to the strengthening of the Canadian dollar, and the receipt of the Canadian Wage Subsidy in the prior-year period. Sustaining capital and sustaining lease 2 payments for the quarter were $30 million , including $14 million of capitalized mining costs. Sustaining capital spend during the quarter primarily included the advancement of the planned annual tailings dam raise and capital maintenance. For the six-month period ended June 30, 2021 , sustaining capital and sustaining lease 2 payments were $59 million , including $27 million of capitalized mining costs. All-in sustaining costs 2 were $1,524 per gold eq. ounce for the quarter, a decrease over the prior-year period primarily due to higher sales volumes partially offset by higher total cash costs. For the six-month period ended June 30, 2021 , all-in sustaining costs 2 were $1,554 per gold eq. ounce, a decrease over the prior-year period primarily due to higher sales volumes and lower sustaining capital spend. Growth capital 2 for the quarter was $4 million and $5 million for the six-month period ended June 30, 2021 , relating to the development of the underground Intrepid zone. During the quarter, development of the decline towards the Intrepid underground ore zone advanced 616 metres. The open pit mine achieved 158,556 tonnes mined per day during the quarter, a 5% increase over the prior quarter, and exceeding the 2021 target of ~151,000 tonnes per day. Approximately 3.3 million ore tonnes and 11.1 million waste tonnes (including 4.7 million capitalized waste tonnes) were mined from the open pit at an average strip ratio of 3.37:1. As planned, during the second half of the year, the strip ratio is expected to decrease. The mill processed 25,349 tonnes per day for the quarter, lower than the prior period, due to unplanned maintenance activities performed at the mill during the quarter impacting mill availability and operating time. The mill is expected to operate at 27,000 tonnes per day in the second half of the year. The mill continued to process ore directly supplied by the open pit combined with ore from the medium grade stockpile and processed an average grade of 0.82 grams per tonne at a gold recovery of 87%. Mill availability for the quarter averaged 88%. There are currently no active cases of COVID-19 at the Rainy River Mine. Rainy River has implemented measures to mitigate and limit the spread of COVID-19 to protect the well-being of its employees, contractors, their families, local communities, and other stakeholders. For more information see: http://newgold.com/covid-19/ .
New Afton Mine
Operational Highlights
| New Afton Mine | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | Gold eq. production (ounces) 1 | 50,542 | 48,446 | 90,055 | 100,775 | | Gold eq. sold (ounces) 1 | 46,917 | 43,517 | 85,157 | 93,915 | | Gold production (ounces) | 14,088 | 15,494 | 26,082 | 31,903 | | Gold sold (ounces) | 13,122 | 13,789 | 24,866 | 29,780 | | Copper production (Mlbs) | 18.2 | 16.9 | 32.0 | 35.4 | | Copper sold (Mlbs) | 16.9 | 15.3 | 30.2 | 33.0 | | Average realized gold price, per ounce 2 | 1,817 | 1,520 | 1,809 | 1,490 | | Average realized copper price, per pound 2 | 4.43 | 2.51 | 4.17 | 2.54 | | Operating expense, per gold eq. ounce | 840 | 545 | 932 | 604 | | Total cash costs, per gold eq. ounce 2 | 981 | 644 | 1,058 | 707 | | Depreciation and depletion, per gold eq. ounce | 274 | 217 | 284 | 280 | | All-in sustaining costs, per gold eq. ounce 2 | 1,402 | 881 | 1,396 | 962 | | Sustaining capital and sustaining leases ($M) 2 | 19.1 | 10.0 | 27.6 | 23.4 | | Growth capital ($M) 2 | 29.5 | 10.4 | 46.7 | 21.2 |
Operating Key Performance Indicators
| New Afton Mine | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | | Tonnes mined per day (ore and waste) | 15,358 | 17,249 | 17,259 | 11,395 | 15,104 | | Tonnes milled per calendar day | 14,240 | 15,483 | 15,358 | 13,564 | 13,795 | | Gold grade milled (g/t) | 0.46 | 0.44 | 0.46 | 0.39 | 0.43 | | Gold recovery (%) | 81 | 80 | 79 | 79 | 80 | | Gold production (ounces) | 15,494 | 15,955 | 16,362 | 11,994 | 14,088 | | Copper grade milled (%) | 0.72 | 0.71 | 0.73 | 0.64 | 0.79 | | Copper recovery (%) | 83 | 82 | 81 | 80 | 83 | | Copper production (Mlbs) | 16.9 | 18.2 | 18.5 | 13.8 | 18.2 | | Mill availability (%) | 92 | 98 | 99 | 96 | 98 | | Gold eq. production (ounces) 1 | 48,446 | 51,315 | 52,326 | 39,512 | 50,542 |
Second quarter gold eq. 1 production was 50,542 ounces (14,088 ounces of gold and 18.2 million pounds of copper). The increase compared to the prior-year period is due to higher copper production as a result of higher copper grades. For the six-month period ended June 30, 2021 , gold eq. 1 production was 90,055 ounces (26,082 ounces of gold and 32 million pounds of copper), a decrease over the prior-year period due to lower grades and lower throughput. Operating expense and total cash costs 2 were $840 and $981 per gold eq. ounce for the quarter, an increase over the prior-year period due to planned higher costs, the strengthening of the Canadian dollar and the prior-year period benefitting from the Canadian Wage Subsidy. The strengthening of the Canadian dollar and the benefit from the Canadian Wage Subsidy increased costs by approximately $155 per gold eq. ounce in the quarter. For the six-month period ended June 30, 2021 , operating expense and total cash costs 2 were $932 and $1,058 per gold eq. ounce, an increase over the prior-year period due to the strengthening of the Canadian dollar, the receipt of the Canadian Wage Subsidy in the prior-year period, as well as costs associated with the ramp up of operations following the shutdown of operations in the first quarter of 2021 due to the tragic incident. Sustaining capital and sustaining lease 2 payments for the quarter were $19 million , primarily related to B3 mine development and the advancement of the planned tailings dam raise. For the six-month period ended June 30, 2021 , sustaining capital and sustaining lease 2 payments were $28 million . All-in sustaining costs 2 were $1,402 per gold eq. ounce for the quarter and $1,396 per gold eq. ounce for the six-month period ended June 30, 2021 . The increases over the prior-year periods were due to higher total cash costs and sustaining capital spend. Growth capital 2 was $30 million for the quarter, and $47 million for the six-month period ended June 30, 2021 , primarily related to C-Zone development and the thickened and amended tailings project. C-Zone development advanced by approximately 919 metres in the quarter and continues to advance on plan. The underground mine averaged 15,104 tonnes mined per day for the quarter, higher than the previous quarter, as the mine initiated a safe and secure ramp up of Lift 1, including the West Cave, East Cave and Pillar, to return to pre-incident mining rates. The mill averaged 13,795 tonnes per day, slightly below the prior-year period, but in-line with the plan to optimize metal recoveries while processing higher grade supergene ore. The mill processed gold grades of 0.43 grams per tonne and higher than expected copper grades of 0.79%, with gold and copper recoveries of 80% and 83%, respectively. There are currently two active cases of COVID-19 at the New Afton Mine. New Afton has implemented measures to mitigate and limit the spread of COVID-19 to protect the well-being of its employees, contractors, their families, local communities, and other stakeholders. For more information see: http://newgold.com/covid-19/ . The wildfire situation in British Columbia remains active. At this time there has been no impact to operations at New Afton or to the supply chain. New Afton has an active fire management plan in place, and a number of precautionary measures have been implemented in the event the risk to our employees, contractors, communities and infrastructure increases considerably. Our priority remains the health, safety, and wellbeing of our employees, contractors and communities. We will continue to monitor the situation closely and will follow protocols and procedures established by the B.C. Ministry of Public Safety and Solicitor General.