New Gold Reports 2023 First Quarter Results

2023-04-26

TSXV - TSX Venture Exchange · Scandium · Rare Earth Elements · Gold · Canada

Canada NewsWire

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

TORONTO , April 26, 2023 /CNW/ - New Gold Inc. ("New Gold" or the "Company") (TSX: NGD) (NYSE American: NGD) reports first quarter results for the Company as of March 31, 2023 . The Company will host a conference call and webcast tomorrow, April 27, 2023 at 8:30 am Eastern Time to discuss the first quarter consolidated results (details are provided at the end of this news release). For detailed information, please refer to the Company's Management's Discussion and Analysis ("MD&A") and financial statements for the quarter ended March 31, 2023 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. Numbered note references throughout this news release are to endnotes which can be found at the end of this news release.

Consolidated First Quarter Highlights

Gold equivalent 1 ("gold eq.") production for the quarter of 104,857 ounces (82,477 ounces of gold, 10.3 million pounds of copper and 137,698 ounces of silver) Operating expenses of $1,086 per gold eq. ounce All-in sustaining costs 2 of $1,486 per gold eq. ounce, including total cash costs 2 of $1,134 per gold eq. ounce Average realized gold price 2 of $1,890 per ounce and average realized copper price 2 of $4.10 per pound Cash generated from operations of $61 million , or $0.09 per share Cash generated from operations, before changes in non-cash operating working capital 2 of $76 million , or $0.11 per share Net loss of $32 million , or $0.05 per share Adjusted net earnings 2 of $18 million , or $0.03 per share During the quarter, the Company sold its shares in Artemis Gold Inc. for approximately C$31.5 million Cash and cash equivalents of $197 million as at March 31, 2023 Subsequent to the quarter, on April 26, 2023 , the Company amended its revolving credit facility, extending the maturity date to December 2026 from December 2025 Rob Chausse , New Gold's Chief Financial Officer, to retire at the end of 2023, and will assist with the planned transition of responsibilities through the remainder of the year

"The first quarter saw New Gold have one of its strongest and safest starts in recent years," stated Patrick Godin , President & CEO. "We delivered a 20% increase in gold equivalent production and lower all-in sustaining costs, significantly increasing our margins over the prior-year period. I am incredibly proud that our operations excelled without sacrificing the safety of our teams as both sites experienced no lost time injuries during the quarter. New Afton reached an impressive milestone of exceeding 1 million hours since their last lost time injury, and Rainy River surpassed 1.6 million hours. With our strong start to the year, we are well positioned to meet our guidance ranges set out earlier in the year."

"We maintained our focus on the longer-term strategy of New Gold and made meaningful advancements both operationally and financially. We strengthened our balance sheet and improved our financial flexibility with the sale of our Artemis Gold shares during the quarter and extending our credit facility term by one year. We continued to advance underground development at the Intrepid underground zone and underground optimization opportunities at Rainy River , as well as C-Zone development at New Afton. I am happy that we enhanced our team's bench strength by adding an experienced Chief Operating Officer in Yohann Bouchard as well as Luke Buchanan VP, Technical Services and Jean-François Ravenelle VP, Geology, to our technical team. They will be assets to the Company as we continue to pursue our mission of being a leading intermediate gold and copper producer," added Mr. Godin.

"I would also like to acknowledge Rob's retirement at the end of this year. Since joining the Company in 2018, Rob has been instrumental in transforming and strengthening the Company and our balance sheet to what it is today. On behalf of New Gold, we thank Rob for his contribution and his leadership over the past 5 years, and we are grateful to have his guidance during this transition phase. We wish Rob all the best in retirement," added Mr. Godin. "Concurrently, I am excited to announce Keith Murphy has been promoted to VP, Finance and will assume greater finance responsibilities going forward. Keith has been a key member of our finance team, working at New Gold for 10 years, with the last 5 years under Rob's guidance. I look forward to working with him closely in his new role."

Consolidated Financial Highlights

| | Q1 2023 | Q1 2022 | | Revenue ($M) | 201.6 | 174.7 | | Operating expenses ($M) | 117.2 | 95.2 | | Net (loss) earnings ($M) | (31.8) | (7.8) | | Net (loss) earnings, per share ($) | (0.05) | (0.01) | | Adj. net earnings ($M) 2 | 18.4 | 10.3 | | Adj. net earnings, per share ($) 2 | 0.03 | 0.02 | | Cash generated from operations ($M) | 60.6 | 67.8 | | Cash generated from operations, per share ($) | 0.09 | 0.10 | | Cash generated from operations, before changes in non-cash operating working capital ($M) 2 | 75.7 | 66.4 | | Cash generated from operations, before changes in non-cash operating working capital, per share ($) 2 | 0.11 | 0.10 |

Revenue increased over the prior-year period due to higher gold and copper sales volume, partially offset by lower gold and copper prices. Operating expenses increased over the prior-year period primarily due to higher operating tonnes mined at both sites. Net loss increased over the prior-year period primarily due to an unrealized loss on the revaluation of the Rainy River gold stream obligation and the New Afton free cash flow interest obligation. Adjusted net earnings 2 increased over the prior-year period due to higher revenue and lower exploration and business development costs, partially offset by higher operating expenses, and depreciation and depletion. Cash generated from operations for the quarter decreased over the prior-year period due to negative working capital movements, partially offset by higher revenue.

Consolidated Operational Highlights

| | Q1 2023 | Q1 2022 | | Gold eq. production (ounces) 1 | 104,857 | 87,696 | | Gold eq. sold (ounces) 1 | 107,931 | 92,536 | | Gold production (ounces) | 82,477 | 68,101 | | Gold sold (ounces) | 87,206 | 70,562 | | Copper production (Mlbs) | 10.3 | 8.2 | | Copper sold (MIbs) | 9.5 | 9.2 | | Gold revenue, per ounce ($) | 1,864 | 1,881 | | Copper revenue, per pound ($) | 3.79 | 4.26 | | Average realized gold price, per ounce ($) 2 | 1,890 | 1,897 | | Average realized copper price, per pound ($) 2 | 4.10 | 4.53 | | Operating expenses, per gold eq. ounce ($) | 1,086 | 1,029 | | Total cash costs, per gold eq. ounce ($) 2 | 1,134 | 1,069 | | Depreciation and depletion, per gold eq. ounce ($) | 514 | 529 | | All-in sustaining costs, per gold eq. ounce ($) 2 | 1,486 | 1,778 | | Sustaining capital ($M) 2 | 26.3 | 52.6 | | Growth capital ($M) 2 | 36.8 | 22.9 | | Total capital ($M) | 63.1 | 75.6 |

Rainy River Mine

Operational Highlights

| Rainy River Mine | Q1 2023 | Q1 2022 | | Gold eq. production (ounces) 1 | 67,596 | 59,895 | | Gold eq. sold (ounces) 1 | 73,412 | 61,684 | | Gold production (ounces) | 66,201 | 58,834 | | Gold sold (ounces) | 71,891 | 60,635 | | Gold revenue, per ounce ($) | 1,882 | 1,891 | | Average realized gold price, per ounce ($) 2 | 1,882 | 1,891 | | Operating expenses, per gold eq. ounce ($) | 1,014 | 948 | | Total cash costs, per gold eq. ounce ($) 2 | 1,014 | 948 | | Depreciation and depletion, per gold eq. ounce ($) | 541 | 628 | | All-in sustaining costs, per gold eq. ounce ($) 2 | 1,383 | 1,592 | | Sustaining capital ($M) 2 | 22.3 | 34.9 | | Growth capital ($M) 2 | 5.7 | 4.9 | | Total capital ($M) | 28.0 | 39.8 |

Operating Key Performance Indicators

| Rainy River Mine | Q1 2023 | Q1 2022 | | Tonnes mined per day (ore and waste) | 118,481 | 118,657 | | Ore tonnes mined per day | 36,380 | 20,019 | | Operating waste tonnes per day | 60,360 | 35,199 | | Capitalized waste tonnes per day | 21,741 | 63,438 | | Total waste tonnes per day | 82,101 | 98,637 | | Strip ratio (waste:ore) | 2.26 | 4.93 | | Tonnes milled per calendar day | 22,400 | 24,318 | | Gold grade milled (g/t) | 1.12 | 0.92 | | Gold recovery (%) | 91 | 91 |

Gold eq. 1 production was 67,596 ounces (66,201 ounces of gold and 110,976 ounces of silver), an increase over the prior-year period due to higher gold grade with the inclusion of higher grade underground tonnes, partially offset by lower tonnes processed. Production is expected to strengthen in the second half of the year and represent approximately 55% of the annual production. Operating expense per gold eq. ounce increased over the prior-year period as a result of higher costs associated with production from the Intrepid underground zone and increased costs associated with mill maintenance performed in the quarter, partially offset by higher sales volume. All-in sustaining costs 2 per gold eq. ounce decreased over the prior-year period due to lower sustaining capital spend and higher sales volume. Total capital decreased over the prior-year period due to lower sustaining capital, partially offset by higher growth capital. Sustaining capital 2 primarily related to capitalized waste, as well as capital maintenance, and the commencement of the annual tailings dam raise. Growth capital 2 primarily related to the development of the Intrepid underground zone, which advanced 388 metres during the quarter. Free cash flow 2 for the quarter was $15 million (net of an $8 million stream payment), which is consistent with the prior-year period.

New Afton Mine

Operational Highlights

| New Afton Mine | Q1 2023 | Q1 2022 | | Gold eq. production (ounces) 1 | 37,261 | 27,800 | | Gold eq. sold (ounces) 1 | 34,519 | 30,852 | | Gold production (ounces) | 16,276 | 9,267 | | Gold sold (ounces) | 15,316 | 9,927 | | Copper production (Mlbs) | 10.3 | 8.2 | | Copper sold (Mlbs) | 9.5 | 9.2 | | Gold revenue, per ounce ($) | 1,782 | 1,818 | | Copper revenue, per ounce ($) | 3.79 | 4.26 | | Average realized gold price, per ounce ($) 2 | 1,928 | 1,935 | | Average realized copper price, per pound ($) 2 | 4.10 | 4.53 | | Operating expenses, per gold eq. ounce ($) | 1,240 | 1,192 | | Total cash costs, per gold eq. ounce ($) 2 | 1,392 | 1,313 | | Depreciation and depletion, per gold eq. ounce ($) | 449 | 325 | | All-in sustaining costs, per gold eq. ounce ($) 2 | 1,526 | 1,913 | | Sustaining capital ($M) 2 | 4.0 | 17.7 | | Growth capital ($M) 2 | 31.1 | 18.0 | | Total capital ($M) | 35.0 | 35.7 |

Operating Key Performance Indicators

| New Afton Mine | Q1 2023 | Q1 2022 | | Tonnes mined per day (ore and waste) | 9,185 | 7,028 | | Tonnes milled per calendar day | 8,142 | 10,299 | | Gold grade milled (g/t) | 0.78 | 0.38 | | Gold recovery (%) | 89 | 83 | | Copper grade milled (%) | 0.70 | 0.49 | | Copper recovery (%) | 91 | 81 |

Gold eq. 1 production was 37,261 ounces (16,276 ounces of gold and 10.3 million pounds of copper), an increase over the prior-year period due to higher gold and copper grade and recovery, partially offset by lower tonnes processed. Operating expense per gold eq. ounce increased over the prior-year period primarily due to the inclusion of ore purchase costs from existing ore purchase agreements, partially offset by higher sales volume. All-in sustaining costs 2 per gold eq. ounce decreased over the prior-year period due to lower sustaining capital spend and higher sales volume. Total capital was in-line with the prior-year period, primarily due to lower sustaining capital spend offset by higher growth capital spend. Sustaining capital 2 primarily related to tailings management and stabilization activities. Growth capital 2 primarily related to C-Zone development, which advanced 1,172 metres in the quarter. Free cash flow 2 for the quarter was a net outflow of $19 million , an increase over the prior-year period as the prior-year period included a free cash flow interest payment to Ontario Teacher's Pension Plan.

First Quarter 2023 Conference Call and Webcast

The Company will host a webcast and conference call tomorrow, April 27, 2023 at 8:30 am Eastern Time to discuss the Company's first quarter consolidated results.

Participants may listen to the webcast by registering on our website at www.newgold.com or via the following link https://app.webinar.net/1WzxeYqeXnB 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 03648094 To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3lcb9RU to receive an instant automated call back A recorded playback of the conference call will be available until May 27, 2023 by calling North American toll free 1-888-390-0541, or 1-416-764-8677 outside of the U.S. and Canada , passcode 648094. 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 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 .

For further information, please contact:

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 Q1 2023 includes production of 110,976 ounces of silver (121,027 ounces sold) converted to a gold eq. based on a ratio of $1,750 per gold ounce and $22.00 per silver ounce used for 2023 guidance estimates. Gold eq. ounces for New Afton in Q1 2023 includes10.3 million pounds of copper produced (9.5 million pounds sold) and 26,722 ounces of silver produced (23,651 ounces of silver sold) converted to a gold eq. based on a ratio of $1,750 per gold ounce, $3.50 per copper pound and $22.00 per silver ounce used for 2023 guidance estimates. | | | | | 2. | "Total cash costs", "all-in sustaining costs", "adjusted net earnings/(loss)", "adjusted tax expense", "sustaining capital and sustaining leases", "growth capital", "cash generated from operations", "free cash flow", and "average realized gold/copper price per ounce/pound" 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 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

Total Cash Costs per Gold eq. Ounce

"Total cash costs per gold equivalent ounce" is a non-GAAP financial performance measure that is a common financial performance measure in the gold mining industry but does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold reports total cash costs on a sales basis and not on a production basis. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, this measure, along with sales, is a key indicator of the Company's ability to generate operating earnings and cash flow from its mining operations. This measure allows investors to better evaluate corporate performance and the Company's ability to generate liquidity through operating cash flow to fund future capital exploration and working capital needs.

Notwithstanding the impact of copper and silver sales, as the Company is focused on gold production, New Gold aims to assess the economic results of its operations in relation to gold, which is the primary driver of New Gold's business. New Gold believes this metric is of interest to its investors, who invest in the Company primarily as a gold mining business. To determine the relevant costs associated with gold equivalent ounces, New Gold believes it is appropriate to reflect all operating costs incurred in its operations.

All-In Sustaining Costs per Gold eq. Ounce

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 reconcile the above non-GAAP measures to the most directly comparable IFRS measure on an aggregate basis.

Consolidated OPEX, Cash Cost and All-in Sustaining Costs Reconciliation

| | Three months ended March 31 | | | (in millions of U.S. dollars, except where noted) | 2023 | 2022 | | CONSOLIDATED OPEX, CASH COST AND ALL-IN SUSTAINING COSTS RECONCILIATION | | | | Operating expenses | 117.2 | 95.2 | | Gold equivalent ounces sold 1 | 107,931 | 92,536 | | Operating expenses per gold equivalent ounce sold ($/ounce) | 1,086 | 1,029 | | Operating expenses | 117.2 | 95.2 | | Treatment and refining charges on concentrate sales | 5.2 | 3.7 | | Total cash costs | 122.4 | 99.0 | | Gold equivalent ounces sold 1 | 107,931 | 92,536 | | Total cash costs per gold equivalent ounce sold ($/ounce) 2 | 1,134 | 1,069 | | Sustaining capital expenditures 2 | 26.3 | 52.5 | | Sustaining exploration - expensed | 0.1 | 0.3 | | Sustaining leases 2 | 2.4 | 2.6 | | Corporate G&A including share-based compensation | 5.8 | 6.9 | | Reclamation expenses | 3.2 | 3.3 | | Total all-in sustaining costs | 160.3 | 164.6 | | Gold equivalent ounces sold 1 | 107,931 | 92,536 | | All-in sustaining costs per gold equivalent ounce sold ($/ounce) 2 | 1,486 | 1,778 |