(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, Oct. 25, 2017 /CNW/ - New Gold Inc. ("New
Gold") (TSX:NGD) (NYSE American:NGD) today announces its 2017 third
quarter results and provides an update on the start-up of the
company's Rainy River Mine.
As the company began a process for the sale of its Peak Mines
located in Australia, and expects
a sale of the asset within the next few months, Peak Mines has been
classified as a discontinued operation. The below operational and
financial results are disclosed on a continuing basis and thus
exclude Peak Mines (unless otherwise noted).
2017 Third Quarter Highlights
- Rainy River successfully
achieved start-up on September 14,
2017 with the first gold pour announced on October 6, 2017
- Commercial production successfully achieved in mid-October,
ahead of plan
- Amendment to Schedule 2 of the Metal Mining Effluent
Regulations required to close two small creeks and deposit
tailings, became effective on September 27,
2017
- Gold production of 82,027 ounces and copper production of 26.0
million pounds (includes Peak Mines)
- Operating expense from continuing operations of $601 per gold ounce and $1.30 per copper pound
- All-in sustaining costs(1) of $792 per ounce, including total cash
costs(2) of $339 per
ounce
- Cash generated from operations of $66
million, or $0.11 per
share
- Cash generated from operations before changes in non-cash
operating working capital(3) of $61 million
- Net earnings of $27 million, or
$0.05 per share
- Adjusted net earnings(4) of $4 million, or $0.01 per share
- September 30, 2017 cash and cash
equivalents of $207 million
- Entered into copper price option contracts covering
approximately 60 million pounds of 2018 production ensuring a
guaranteed floor price of $3.00 per
pound while providing continued exposure to increases in the copper
price up to $3.37 per pound
"We are pleased to report that we continued to deliver on our
priorities in the third quarter," stated Hannes Portmann, President and Chief Executive
Officer. "Rainy River began
processing ore in September and, since the end of the quarter, has
achieved commercial production, ahead of plan. At the same time,
our producing mines continued to deliver operationally which
enabled us to generate $66 million in
quarterly cash flow."
"We are proud that the Rainy River Mine has delivered on all of
the major development and start-up milestones that our team
established in January," added Mr. Portmann. "As Rainy River has now joined our portfolio of
operating mines, our team's focus shifts to operational execution
and optimization of both the near and long-term mine
plan."
Rainy River
As planned, New Gold's Rainy River Mine commenced processing ore
on September 14, 2017 and
subsequently announced its first gold pour on October 6, 2017. Commercial production was
achieved in mid-October. From an accounting perspective, the
company recognizes commercial production effective November 1, 2017. The capital cost estimate
remains in line with New Gold's updated plan announced on
January 30, 2017.
Rainy River – 2017 Third
Quarter Highlights
- Rainy River successfully
achieved start-up on September 14,
2017 with the first gold pour announced on October 6, 2017
- Commercial production achieved ahead of schedule in
mid-October
- Project spending during the third quarter totalled $130 million, with estimated remaining
development capital in 2017 of approximately $100 million, which includes project working
capital post commercial production
- Amendment to Schedule 2 of the Metal Mining Effluent
Regulations required to close two small creeks and deposit
tailings, became effective on September 27,
2017
- Mining rate during the quarter averaged approximately 130,000
tonnes per day
-
- Mining rate averaged approximately 135,000 tonnes per day in
the month of October
- Construction of the process plant is fully complete
- Overall earthworks substantially complete
Mining activities at Rainy
River progressed well during the third quarter. The
company's mining rate during the quarter averaged approximately
130,000 tonnes per day, which was in line with New Gold's plan.
This represents a 13% increase compared to the average mining rate
of 115,000 tonnes per day in the second quarter of 2017 and more
importantly, the mining rate in October averaged approximately
135,000 tonnes per day.
Installation of mechanical, piping, electrical and
instrumentation in processing facilities has been fully completed,
with start-up of the process plant successfully achieved on
September 14, 2017. All construction
related activity in the process plant is complete.
Overall earthworks are over 98% complete and are tracking in
line with New Gold's plan. The start-up cell of the tailings
management area has been fully completed. Based on its location and
scale, the start-up cell provides capacity for approximately six
months of production tailings with the mill operating at full
capacity.
The amendment to Schedule 2 of the Metal Mining Effluent
Regulations required to close two small creeks and deposit tailings
became effective on September 27,
2017. In addition, New Gold has finalized the engineering
design to construct the creek closures using sheet pile at the
centre of the portion of the dam which will cover the creeks. The
purpose of this approach is both to reduce the construction time
and, most importantly, to be able to complete the work regardless
of weather conditions. New Gold has met with the Ontario Ministry
of Natural Resources and Forestry to review the design and the
permit amendment and support of the design was received in the
third quarter of 2017.
Project spending at Rainy River
during the third quarter totalled $130
million with estimated remaining development capital of
approximately $100 million, which
includes project working capital post commercial production.
2017 Third Quarter and Year-to-Date Operational
Results
New Gold's third quarter gold production of 82,027 ounces
(including Peak Mines) was below 2016 as higher production from the
company's Mesquite Mine was offset by planned lower production at
New Afton, Peak Mines and Cerro San
Pedro. Cerro San Pedro's
production decreased as the mine transitioned into residual
leaching in June 2016. Quarterly
copper production of 26.0 million pounds and silver production of
0.3 million ounces both remained in line with the third quarter of
2016.
Third quarter operating expense per gold ounce of $601 increased relative to the prior-year quarter
due to a higher proportion of sales from Mesquite. The company
delivered third quarter all-in sustaining costs from continuing
operations of $610 per ounce,
including total cash costs from continuing operations of
$204 per ounce. All-in sustaining
costs from all operations were $792
per ounce, including total cash costs from all operations of
$339 per ounce. The increase in
all-in sustaining costs from all operations relative to the
prior-year quarter was attributable to a $4
million, or $121 per ounce,
increase in the company's consolidated sustaining costs, which
include New Gold's cumulative sustaining capital, exploration,
general and administrative, and amortization of reclamation
expenditures. This was partially offset by an $11 per ounce decrease in total cash costs from
all operations to $339 per ounce.
All-in sustaining costs from continuing operations were positively
impacted by the exclusion of Peak Mines.
For the nine-month period ended September
30, 2017, New Gold's gold production of 276,418 ounces
(including Peak Mines) was below 2016 as higher production from the
company's Mesquite Mine was offset by planned lower production from
New Afton, Peak Mines and Cerro San
Pedro. Year-to-date copper production and silver production
both remained in line with the prior-year period.
Year-to-date operating expense per gold ounce of $603 increased relative to the prior year due to
a higher proportion of sales from Mesquite. For the nine-month
period ended September 30, 2017, the
company delivered all-in sustaining costs from continuing
operations of $614 per ounce,
including total cash costs from continuing operations of
$245 per ounce. All-in sustaining
costs from all operations were $706
per ounce, including total cash costs from all operations of
$332 per ounce. All-in sustaining
costs from continuing operations were positively impacted by the
exclusion of Peak Mines.
As a result of the company's strong first nine-month operational
results, New Gold reiterates its guidance for full-year gold
production of 380,000 to 430,000 ounces (includes Peak Mines). As
Peak Mines has been classified as a discontinued operation, the
company's operating expense per gold ounce sold is projected to be
approximately $40 per ounce lower
than its original guidance range of $630 to
$670. The company expects an increase in gold production to
occur in the fourth quarter, as Rainy
River has transitioned into operation. Assuming current
commodity prices and foreign exchange rates, New Gold expects to
meet the high end of the previously lowered guidance range for
all-in sustaining costs of $760 to
$800 per ounce. Due to the reclassification of capital
expenditures related to the construction of the tailings management
area from non-sustaining to sustaining, and one-time share-based
payments related to the company's participation agreements with its
Indigenous partners, the company expects Rainy River's all-in sustaining cost guidance
for the fourth quarter operating period to increase by
approximately $200 per ounce.
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold (ounces)
(includes Peak Mines):
|
|
|
|
|
|
Produced
|
82,027
|
95,546
|
276,418
|
285,780
|
|
Sold
|
79,904
|
96,452
|
266,443
|
284,303
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
26.0
|
25.5
|
76.2
|
76.6
|
|
Sold
|
24.5
|
24.2
|
71.7
|
74.6
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.3
|
0.3
|
0.9
|
1.0
|
|
Sold
|
0.3
|
0.3
|
0.8
|
1.0
|
Revenue:
|
|
|
|
|
|
Gold
($/ounce)
|
1,250
|
1,283
|
1,245
|
1,217
|
|
Copper
($/pound)
|
2.53
|
1.99
|
2.40
|
1.96
|
|
Silver
($/ounce)
|
16.05
|
19.78
|
16.62
|
16.81
|
Average realized
price(5):
|
|
|
|
|
|
Gold
($/ounce)
|
1,286
|
1,325
|
1,280
|
1,258
|
|
Copper
($/pound)
|
2.78
|
2.18
|
2.64
|
2.15
|
|
Silver
($/ounce)
|
16.55
|
20.26
|
17.10
|
17.17
|
Operating expense
(excludes Peak Mines):
|
|
|
|
|
|
Gold
($/ounce)
|
601
|
586
|
603
|
566
|
|
Copper
($/pound)
|
1.30
|
0.96
|
1.24
|
0.97
|
|
Silver
($/ounce)
|
7.73
|
8.96
|
8.05
|
7.73
|
Total cash costs
from continuing
operations ($/ounce)
|
204
|
226
|
245
|
248
|
Total cash costs
($/ounce)
|
339
|
350
|
332
|
346
|
All-in sustaining
costs from continuing
operations ($/ounce)
|
610
|
718
|
614
|
710
|
All-in sustaining
costs ($/ounce)
|
792
|
682
|
706
|
718
|
New Afton
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
21,569
|
23,864
|
63,779
|
74,219
|
|
Sold
|
20,646
|
21,247
|
60,935
|
72,680
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
22.8
|
21.3
|
66.0
|
65.8
|
|
Sold
|
21.8
|
19.2
|
62.5
|
63.8
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
407
|
441
|
430
|
415
|
|
Copper
($/pound)
|
0.88
|
0.72
|
0.88
|
0.71
|
All-in sustaining
costs ($/ounce)
|
(643)
|
(211)
|
(505)
|
(202)
|
All-in sustaining
costs on a co-product basis:
|
|
Gold
($/ounce)
|
709
|
719
|
718
|
685
|
|
Copper
($/pound)
|
1.53
|
1.18
|
1.47
|
1.17
|
The decrease in gold production at New Afton relative to the
third quarter of 2016 was due to an expected decrease in gold grade
and gold recovery, partially offset by an increase in mill
throughput. Copper production was higher than the prior-year
quarter due to higher throughput and copper grade.
Third quarter operating expense per gold ounce decreased as
expenses were apportioned to each metal on a percentage of revenue
basis with gold revenue representing a lower portion of total sales
in the quarter versus the prior-year quarter. As a result, the
operating expense per copper pound increased. All-in sustaining
costs decreased as the benefit of higher by-product revenues was
only partially offset by higher sustaining costs. By-product
revenues benefitted from an increase in the realized copper price
and higher copper sales volumes. New Afton's quarterly sustaining
costs increased by $4 million to
$13 million when compared to the
third quarter of 2016.
For the nine-month period ended September
30, 2017, New Afton's gold production was below 2016 due to
an expected decrease in gold grade and gold recovery. Copper
production was in line with the prior-year period.
Operating expenses for the first nine months of the year
increased slightly when compared to the prior year due to higher
ore tonnes mined and processed at lower grades. All-in sustaining
costs decreased as the benefit of higher by-product revenues was
only partially offset by the increase in operating expenses and
sustaining costs. By-product revenues benefitted from an increase
in the realized copper price. New Afton's sustaining costs
increased by $4 million to
$33 million when compared to the
prior-year period.
Mesquite
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
38,133
|
18,835
|
116,720
|
71,770
|
|
Sold
|
38,573
|
19,434
|
114,188
|
75,477
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
750
|
624
|
717
|
612
|
All-in sustaining
costs ($/ounce)
|
866
|
1,202
|
809
|
1,085
|
The increase in gold production at Mesquite relative to the
third quarter of 2016 was due to higher ore tonnes mined and
placed, and an increase of process solution flow on the heap leach
pad which resulted in a drawdown of leach pad inventory.
Third quarter operating expenses increased when compared to the
prior-year quarter due to increased ore tonnes mined and processed,
no mining costs being capitalized, and higher process solution
flow. All-in sustaining costs during the quarter decreased due to a
$7 million, or $452 per ounce, decrease in sustaining costs
primarily due to no waste stripping being capitalized, the benefit
of which was only partially offset by higher operating
expenses.
For the nine-month period ended September
30, 2017, Mesquite's gold production increased by 63%
relative to the prior-year period due to increased ore tonnes mined
and placed, and an increase of process solution flow on the heap
leach pad.
Operating expenses for the first nine months of the year
increased when compared to the prior year due to higher ore tonnes
mined, no mining costs being capitalized, and higher process
solution flow. All-in sustaining costs for the first nine months of
2017 decreased due to a $24 million,
or $371 per ounce, decrease in
sustaining costs primarily due to no waste stripping being
capitalized, which was only partially offset by higher operating
expenses.
Cerro San Pedro
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
7,951
|
14,866
|
27,160
|
50,929
|
|
Sold
|
7,833
|
15,357
|
25,549
|
50,798
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.1
|
0.2
|
0.5
|
0.7
|
|
Sold
|
0.1
|
0.2
|
0.5
|
0.7
|
Operating
expense:
|
|
|
|
|
|
Gold
($/ounce)
|
1,388
|
976
|
1,260
|
977
|
|
Silver
($/ounce)
|
18.10
|
14.28
|
16.86
|
13.09
|
All-in sustaining
costs ($/ounce)
|
1,532
|
912
|
1,389
|
936
|
Cerro San Pedro finished active
mining late in the second quarter of 2016 and has transitioned to
residual leaching. As a result, and consistent with expectations,
the mine's third quarter and first nine-month gold and silver
production decreased compared to the prior year. Third quarter and
first nine-month operating expenses and all-in sustaining costs
increased when compared to the prior-year periods due to lower gold
sales volumes. As the company is drawing down leach pad inventory
during the residual leach period, $355 per ounce in the third quarter, and
$320 per ounce in the first nine
months, of the reported operating expense per gold ounce and all-in
sustaining costs are related to mining costs that were incurred in
prior periods.
Discontinued Operations
Peak Mines
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
|
|
|
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
14,374
|
37,981
|
68,760
|
88,862
|
|
Sold
|
12,852
|
40,414
|
65,771
|
85,347
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
3.2
|
4.2
|
10.2
|
10.8
|
|
Sold
|
2.7
|
5.0
|
9.1
|
10.7
|
All-in sustaining
costs ($/ounce)
|
1,739
|
632
|
988
|
736
|
The decrease in gold production at Peak Mines relative to the
third quarter of 2016 was due to an expected decrease in gold grade
and tonnes processed. Quarterly copper production decreased
compared to the third quarter of 2016 due to an expected decrease
in copper recoveries and tonnes processed.
All-in sustaining costs increased during the quarter primarily
due to lower gold sales volumes.
For the nine-month period ended September
30, 2017, Peak Mines' gold production decreased relative to
the prior-year period due to an expected decrease in gold grade and
tonnes processed.
First nine-month all-in sustaining costs increased as higher
by-product revenues were more than offset by lower gold sales
volumes and higher sustaining costs.
2017 Third Quarter and Year-to-Date Financial Results
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of U.S.
dollars,
except per share
amounts)
|
2017
|
2016
|
2017
|
2016
|
CONTINUING
OPERATIONS
|
|
|
|
|
Revenues
|
$142.5
|
$115.2
|
$410.9
|
$382.1
|
Operating
margin(6)
|
72.2
|
61.5
|
206.9
|
200.8
|
Earnings from
continuing operations
|
29.2
|
0.8
|
77.9
|
14.9
|
Earnings from
continuing operations per
share (basic)
|
0.05
|
0.00
|
0.14
|
0.03
|
Adjusted earnings
from continuing
operations
|
5.1
|
10.0
|
15.1
|
18.1
|
Adjusted earnings per
share from continuing
operations
|
0.01
|
0.02
|
0.03
|
0.04
|
Cash generated from
continuing operations
|
65.5
|
54.0
|
183.9
|
176.1
|
Cash generated from
continuing operations
before changes in non-cash operating
working capital
|
59.2
|
61.5
|
169.4
|
180.9
|
|
|
|
|
|
TOTAL OPERATIONS
(includes Peak Mines)
|
|
|
|
|
Net
earnings
|
27.0
|
4.1
|
87.6
|
15.5
|
Net earnings per
share (basic)
|
0.05
|
0.01
|
0.16
|
0.03
|
Adjusted net
earnings
|
3.8
|
12.4
|
26.4
|
19.5
|
Adjusted net earnings
per share
|
0.01
|
0.02
|
0.05
|
0.04
|
Cash generated from
operations
|
66.0
|
89.6
|
223.4
|
230.5
|
Cash generated from
operations before
changes in non-cash operating working
capital
|
60.6
|
88.6
|
206.3
|
233.3
|
Continuing Operations
Third quarter revenues from continuing operations increased by
$27 million, or 24%, relative to the
prior-year quarter, due to higher metal sales volumes and higher
copper prices. Relative to the third quarter of 2016, gold sales
increased by 20%, mainly attributable to Mesquite's strong quarter.
Copper sales at New Afton increased by 14% and the average realized
copper price increased by $0.60 per
pound, or 38% compared to the prior-year quarter.
New Gold's third quarter operating margin increased by
$11 million relative to the
prior-year quarter driven by the higher gold and copper sales
volumes and higher copper prices, which were partially offset by
higher operating expenses.
The company reported earnings from continuing operations of
$29 million, or $0.05 per share, in the third quarter of 2017
relative to earnings from continuing operations of $1 million, or $nil per share, in the prior-year
quarter. Third quarter earnings from continuing operations included
a $31 million non-cash foreign
exchange gain, a $3 million gain on
the modification of long-term debt, and a $7 million pre-tax loss on the revaluation of
company's gold price option contracts and copper forward contracts,
while the prior-year quarter included an $11
million pre-tax foreign exchange loss, a non-cash pre-tax
loss of $9 million on the revaluation
of the gold stream obligation, partially offset by a non-cash
pre-tax gain of $2 million on the
revaluation of the company's gold price option contracts.
New Gold had adjusted net earnings from continuing operations of
$5 million, or $0.01 per share, in the third quarter of 2017
relative to $10 million, or
$0.02 per share, in the prior-year
quarter. Quarterly adjusted net earnings from continuing operations
were negatively impacted by a $5
million increase in adjusted income tax expense, and a
$3 million increase in exploration,
business development, and corporate general and administrative
expenses. This was partially offset by a $3
million increase in revenue less cost of goods sold.
The company's third quarter cash generated from continuing
operations before changes in non-cash operating working capital of
$59 million was consistent with the
prior-year quarter. Cash generated from continuing operations in
the third quarter of $66 million was
$12 million higher than the
prior-year quarter as a result of Cerro San
Pedro continuing to draw down its leach pad inventory.
For the nine-month period ended September
30, 2017, revenues increased by $29
million, or 8%, relative to the prior-year period, due to
higher metal prices. Relative to the prior-year period, the average
realized price increased by $22 per
ounce of gold, or 2%, and $0.49 per
pound of copper, or 23%.
New Gold's operating margin for the nine months ended
September 30, 2017 increased by
$6 million relative to the prior-year
period as the increase in revenues was only partially offset by a
$23 million increase in operating
expenses.
The company reported earnings from continuing operations of
$78 million, or $0.14 per share, for the nine months ended
September 30, 2017, relative to
$15 million, or $0.03 per share, in the prior-year period.
Current period net earnings included a $53
million non-cash foreign exchange gain, a $33 million pre-tax gain on the disposal of the
El Morro stream, a $19 million
pre-tax loss on the revaluation of company's gold price option
contracts and copper forward contracts, a $5 million pre-tax loss on the revaluation of the
company's gold stream obligation, and a $3
million gain on the modification of long-term debt. The
prior-year period included a $34
million pre-tax loss on the revaluation of the company's
gold stream obligation and a $17
million non-cash foreign exchange gain.
New Gold had adjusted earnings from continuing operations of
$15 million, or $0.03 per share, for the nine months ended
September 30, 2017, relative to
$18 million, or $0.04 per share, in the prior-year period.
Adjusted net earnings were negatively impacted by a $5 million increase in exploration, business
development, and corporate general and administrative expenses and
a $2 million increase in adjusted
income tax expense. This was offset by a $4
million decrease in finance costs as more interest has been
capitalized to Rainy River .
The company's cash generated from continuing operations before
changes in non-cash operating working capital for the nine months
ended September 30, 2017 of
$169 million was lower than the
prior-year period primarily due to higher income taxes paid only
being partially offset by the increase in operating margin. Cash
generated from continuing operations for the nine months ended
September 30, 2017 of $184 million was $8
million, or 4%, higher than the prior-year period, which
benefitted from the collection of a concentrate receivable
outstanding at December 31, 2016.
Total Operations (including Peak Mines)
The company reported net earnings of $27
million, or $0.05 per share,
in the third quarter of 2017. The decrease in net earnings relative
to earnings from continuing operations relates to a $2 million loss from discontinued operations
(Peak Mines).
New Gold had adjusted net earnings of $4
million, or $0.01 per share,
in the third quarter of 2017. The decrease in adjusted net earnings
relative to adjusted net earnings from continuing operations
relates to a $2 million loss from
discontinued operations (Peak Mines), partially offset by lower
income tax expense.
The company's third quarter 2017 cash generated from operations
before changes in non-cash operating working capital of
$61 million was lower than the prior
period due to lower sales volumes from Peak Mines and an increase
in income taxes paid. Cash generated from operations during the
third quarter was $66 million.
The company reported net earnings of $88
million, or $0.16 per share,
in the nine months ended September 30,
2017. The increase in net earnings relative to earnings from
continuing operations relates to a $10
million earnings from discontinued operations (Peak Mines)
in the nine-month period.
New Gold has adjusted net earnings of $26
million, or $0.05 per share,
in the nine months ended September 30,
2017. The increase in adjusted net earnings relative to
adjusted net earnings from continuing operations is due to a
$16 million earnings from
discontinued operations (Peak Mines), partially offset by a higher
income tax expense.
The company's cash generated from operations before changes in
non-cash operating working capital for the nine months ended
September 30, 2017 of $206 million was lower than the prior-year period
primarily due to lower gold sales volumes at Peak Mines. Cash
generated from operations for the nine months ended September 30, 2017 was $223 million.
Financial Update
New Gold's cash and cash equivalents as at September 30, 2017 were $207 million. During the quarter, the company
drew $100 million from its
$400 million revolving credit
facility. At September 30, 2017,
$200 million has been drawn and
$127 million has been used to issue
letters of credit for closure obligations at the company's
producing mines and development projects, leaving $73 million undrawn. As a result, the company's
liquidity totals $280 million (cash
and undrawn credit facility) plus its expected free cash flow
generation from its operating mines through the balance of
2017.
At September 30, 2017, the face
value of the company's long-term debt was $1
billion (book value – $977
million). The components of the long-term debt include:
$500 million of 6.25% face value
senior unsecured notes due in November of 2022; $300 million of 6.375% face value senior
unsecured notes due in May of 2025; and $200
million drawn from the revolving credit facility. The
company currently has approximately 578 million shares
outstanding.
On October 18, 2017, New Gold
entered into copper price option contracts covering approximately
60 million pounds of its 2018 production, with put options at a
strike price of $3.00 per pound and
call options at a strike price of $3.37 per pound, at a nominal cost to the
company.
Projects Update
Blackwater
Activities at the company's Blackwater project, located in
south-central British Columbia,
continued to focus on attaining the approval of the Environmental
Assessment ("EA"). The coordinated Federal and Provincial EA
technical review is in progress. Technical review comments have now
been received from the Federal government, Provincial agencies and
local Indigenous communities, and New Gold has responded to the
review comments. The company anticipates approval of the Blackwater
EA in the first half of 2018. Capital expenditures at Blackwater
during the third quarter and first nine months of 2017 were
$5 million and $9 million, respectively.
Webcast and Conference Call
A webcast and conference call to discuss these results will be
held on Thursday, October 26, 2017 at
9:00 a.m. Eastern time. Participants
may listen to the webcast by registering on our website at
www.newgold.com. You may also listen to the conference call by
calling toll free 1-888-231-8191, or 1-647-427-7450 outside of the
U.S. and Canada. A recorded
playback of the conference call will be available until
November 26, 2017 by calling toll
free 1-855-859-2056, or 1-416-849-0833 outside of the U.S. and
Canada, passcode 95227095. An
archived webcast will also be available until January 26, 2018 at
www.newgold.com.
About New Gold Inc.
New Gold is an intermediate gold mining company with a portfolio
of five producing assets in top-rated jurisdictions. The New Afton
and Rainy River Mines in Canada,
the Mesquite Mine in the United
States, the Peak Mines in Australia and the Cerro San Pedro Mine in
Mexico (which transitioned to
residual leaching in 2016), provide the company with its current
production base. In addition, New Gold owns 100% of the Blackwater
project located in Canada. New
Gold's objective is to be the leading intermediate gold producer,
focused on the environment and social responsibility. For further
information on the company, please 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
the statements made under "Projects Update", as well as other
statements elsewhere in this news release, including, among others,
statements with respect to: guidance for production, operating
expense and all-in sustaining costs, and the factors contributing
to those expected results, as well as expected capital and other
expenditures; planned development activities for 2017 at the Rainy
River Mine; the expected production, costs, economics, grade and
other operating parameters of the Rainy River Mine; the capacity of
the starter dam; and targeting timing for development and other
activities related to the Rainy River Mine.
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"), Annual Information Form and Technical Reports 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; (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, Australian dollar, Mexican peso
and U.S. dollar 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
Rainy River Mine being consistent with New Gold's current
expectations; (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) the results of the feasibility study for the Rainy
River Mine being realized; and (10) in the case of
production, cost and expenditure outlooks at the operating mines
for 2017, commodity prices and exchange rates being consistent with
those estimated for the purposes for 2017.
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, Australia and Mexico; discrepancies between actual and
estimated production, between actual and estimated mineral reserves
and mineral resources and between actual and estimated
metallurgical recoveries; fluctuation in treatment and refining
charges; changes in national and local government legislation in
Canada, the United States, Australia and 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; inherent uncertainties with cost
estimates at Rainy River as
contemplated; 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 including the feasibility studies for the Rainy
River Mine; 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. 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.
Cautionary Note to U.S. Readers Concerning Estimates of
Mineral Reserves and Mineral Resources
Information concerning the properties and operations of New Gold
has been prepared in accordance with Canadian standards under
applicable Canadian securities laws, and may not be comparable to
similar information for United
States companies. The terms "Mineral Resource", "Measured
Mineral Resource", "Indicated Mineral Resource" and "Inferred
Mineral Resource" used in this news release are Canadian mining
terms as defined in the Canadian Institute of Mining, Metallurgy
and Petroleum ("CIM") Definition Standards for Mineral Resources
and Mineral Reserves adopted by CIM Council on May 10, 2014 and incorporated by reference in
National Instrument 43-101. While the terms "Mineral
Resource", "Measured Mineral Resource", "Indicated Mineral
Resource" and "Inferred Mineral Resource" are recognized and
required by Canadian securities regulations, they are not defined
terms under standards of the United States Securities and Exchange
Commission. As such, certain information contained in this
news release concerning descriptions of mineralization and mineral
resources under Canadian standards is not comparable to similar
information made public by United
States companies subject to the reporting and disclosure
requirements of the United States Securities and Exchange
Commission.
An "Inferred Mineral Resource" has a great amount of uncertainty
as to its existence and as to its economic and legal
feasibility. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies. It cannot be assumed that all or any
part of an "Inferred Mineral Resource" will ever be upgraded to a
higher confidence category. Readers are cautioned not
to assume that all or any part of an "Inferred Mineral Resource"
exists or is economically or legally mineable.
Under United States standards,
mineralization may not be classified as a "Reserve" unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve estimation is made. Readers are cautioned not to
assume that all or any part of the measured or indicated mineral
resources will ever be converted into mineral reserves. In
addition, the definitions of "Proven Mineral Reserves" and
"Probable Mineral Reserves" under CIM standards differ in certain
respects from the standards of the United States Securities and
Exchange Commission.
Technical Information
The scientific and technical information relating to the
construction of and expected operations at New Gold's Rainy River project contained herein has been
reviewed and approved by Mr. Binsar
Sirait, Director, Mine
Engineering of New Gold. All other scientific and technical
information contained herein has been reviewed and approved by Mr.
Mark A. Petersen, Vice President,
Exploration of New Gold, except for the scientific and technical
information relating to the construction of and expected operations
at New Gold's Rainy River project,
which has been reviewed and approved by Mr. Sirait. Mr. Sirait is a
mining engineer and SME Registered Member. Mr. Petersen is a SME
Registered Member and AIPG Certified Professional Geologist. Mr.
Petersen and Mr. Sirait are "Qualified Persons" for the purposes of
Canadian NI 43-101.
For additional technical information on New Gold's material
properties, including a detailed breakdown of Mineral Reserves and
Mineral Resources by category, as well as key assumptions,
parameters and risks, refer to New Gold's Annual Information Form
for the year ended December 31, 2016
filed on www.sedar.com.
Non-GAAP Measures
(1) All-In Sustaining Costs
"All-in sustaining costs"
per ounce is a non-GAAP financial measure. Consistent with guidance
announced in 2013 by the World Gold Council, an association of
various gold mining companies from around the world of which New
Gold is a member, New Gold defines "all-in sustaining costs" per
ounce as the sum of total cash costs, capital expenditures that are
sustaining in nature, corporate general and administrative costs,
capitalized and expensed exploration that is sustaining in nature
and environmental reclamation costs, all divided by the ounces of
gold sold to arrive at a per ounce figure. New Gold believes this
non-GAAP financial measure provides further transparency into costs
associated with producing gold and assists analysts, investors and
other stakeholders of the company in assessing the company's
operating performance, its ability to generate free cash flow from
current operations and its overall value. This data is furnished to
provide additional information and is a non-GAAP financial measure.
All-in sustaining costs presented do not have a 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 and is not necessarily indicative of cash
flow from operations under IFRS or operating costs presented under
IFRS. Further details regarding historical all-in sustaining costs
and a reconciliation to the nearest IFRS measures are provided in
the MD&A accompanying New Gold's financial statements filed
from time to time on www.sedar.com.
"Sustaining costs" is a non-GAAP financial measure. New Gold
defines sustaining costs as the difference between all-in
sustaining costs and total cash costs, being the sum of net capital
expenditures that are sustaining in nature, corporate general and
administrative costs, capitalized and expensed exploration that is
sustaining in nature, and environmental reclamation costs.
Management uses sustaining costs to understand the aggregate net
result of the drivers of all-in sustaining costs other than total
cash costs. The line items between cash costs and all in
sustaining costs in the tables below break down the components of
sustaining costs. Sustaining costs 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.
(2) Total Cash Costs
"Total cash costs" per ounce is
a non-GAAP financial measure which is calculated in accordance with
a standard developed by The Gold Institute, a worldwide association
of suppliers of gold and gold products that ceased operations in
2002. Adoption of the standard is voluntary and the cost measures
presented may not be comparable to other similarly titled measures
of other companies. New Gold reports total cash costs on a sales
basis. The company believes that certain investors use this
information to evaluate the company's performance and ability to
generate liquidity through operating cash flow to fund future
capital expenditures and working capital needs. This measure,
along with sales, is considered to be a key indicator of the
company's ability to generate operating earnings and cash flow from
its mining operations. Total cash costs include mine site operating
costs such as mining, processing and administration costs,
royalties, production taxes, and realized gains and losses on fuel
contracts, but are exclusive of amortization, reclamation, capital
and exploration costs and net of by-product sales. Total cash costs
are then divided by ounces of gold sold to arrive at a per ounce
figure. Co-product cash costs remove the impact of other metal
sales that are produced as a by-product of gold production and
apportion the cash costs to each metal produced on a percentage of
revenue basis, and subsequently divides the amount by the total
ounces of gold or silver or pounds of copper sold, as the case may
be, to arrive at per ounce or per pound figures. Unless otherwise
indicated, all total cash cost information in this news release is
net of by-product sales. This data is furnished to provide
additional information and is a non-GAAP financial measure. Total
cash costs and co-product cash costs presented do not have a
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 and is not necessarily
indicative of cash flow from operations under IFRS or operating
costs presented under GAAP. Further details regarding historical
total cash costs and a reconciliation to the nearest IFRS measures
are provided in the MD&A accompanying New Gold's financial
statements filed from time to time on www.sedar.com.
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Three months ended
September 30, 2017
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
40.3
|
28.3
|
1.7
|
70.3
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
67,052
|
21.8
|
0.2
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
601
|
1.30
|
7.73
|
|
Operating
expenses(1)
|
40.3
|
28.3
|
1.7
|
70.3
|
Treatment and
refining charges on concentrate sales
|
2.4
|
5.4
|
0.1
|
7.9
|
Adjustments(2)
|
(0.2)
|
(0.1)
|
-
|
(0.3)
|
Total cash costs from
continuing operations
|
42.5
|
33.6
|
1.8
|
77.9
|
By-product silver and
copper sales from continuing operations
|
|
|
|
(64.3)
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
13.7
|
Units of metal sold
from continuing operations (ounces/millions of
pounds/millions of ounces)
|
67,052
|
21.8
|
0.2
|
|
Total cash costs on a
co-product basis from continuing operations(3)
($/ounce or pound)
|
634
|
1.54
|
8.19
|
|
Total cash costs per
gold ounce sold from continuing operations
($/ounce)
|
|
|
|
204
|
Total cash costs on a
co-product cash costs
|
56.9
|
42.6
|
2.4
|
|
Total cash costs net
of by-product revenue
|
|
|
|
27.1
|
Units of metal sold
(ounces/millions of pounds/millions of
ounces)(5)
|
79,904
|
24.5
|
0.3
|
|
Total cash costs on a
co-product basis ($/ounce of pound)
|
712
|
1.74
|
9.46
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
339
|
Total co-product cash
costs from continuing operations(5)
|
42.5
|
33.7
|
1.8
|
|
Total cash costs net
of by-product revenue from continuing
operations(5)
|
|
|
|
13.7
|
Sustaining capital
expenditures
|
8.9
|
6.3
|
0.4
|
15.6
|
Sustaining
exploration - expensed
|
0.6
|
0.4
|
-
|
1.0
|
Corporate G&A
including share-based compensation(4)
|
4.8
|
3.4
|
0.2
|
8.4
|
Reclamation
expenses
|
1.3
|
0.9
|
0.1
|
2.2
|
Total co-product
all-in sustaining costs from continuing
operations(5)
|
58.1
|
44.7
|
2.5
|
|
Total all-in
sustaining costs net of by-product revenue from continuing
operations(5)
|
|
|
|
40.9
|
All-in sustaining
costs on a co-product basis from continuing
operations(3)
($/ounce or pound)
|
866
|
2.05
|
11.18
|
|
All-in sustaining
costs per gold ounce sold from continuing operations
($/ounce)
|
|
|
|
610
|
Total co-product
all-in sustaining costs
|
78.1
|
56.7
|
3.3
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
63.3
|
All-in sustaining
costs on a co-product basis ($/ounce or pound)
|
977
|
2.31
|
12.88
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
792
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
non-cash items related to inventory write-down reversals and social
closure costs incurred at Cerro San Pedro that are included in
operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
(5)
|
Includes the impact
of Peak Mines, which has been classified as a discontinued
operation as at and for the three and nine months ended September
30, 2017.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Nine months ended
September 30, 2017
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
121.0
|
77.8
|
5.2
|
204.0
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
200,672
|
62.5
|
0.7
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
603
|
1.24
|
8.05
|
|
Operating
expenses(1)
|
121.0
|
77.8
|
5.2
|
204.0
|
Treatment and
refining charges on concentrate sales
|
7.1
|
14.9
|
0.3
|
22.3
|
Adjustments(2)
|
(0.5)
|
(0.4)
|
-
|
(0.9)
|
Total cash costs from
continuing operations
|
127.6
|
92.3
|
5.5
|
225.4
|
By-product silver and
copper sales from continuing operations
|
|
|
|
(176.3)
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
49.1
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
200,672
|
62.5
|
0.7
|
|
Total cash costs on a
co-product basis from continuing operations(3) ($/ounce
or pound)
|
635
|
1.48
|
8.49
|
|
Total cash costs per
gold ounce sold from continuing operations ($/ounce)
|
|
|
|
245
|
Total cash costs on a
co-product cash costs
|
177.9
|
111.7
|
7.0
|
|
Total cash costs net
of by-product revenue
|
|
|
|
88.6
|
Units of metal sold
(ounces/millions of pounds/millions of
ounces)(5)
|
266,443
|
71.7
|
0.8
|
|
Total cash costs on a
co-product basis ($/ounce of pound)
|
668
|
1.56
|
9.08
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
332
|
Total co-product cash
costs from continuing operations(5)
|
127.5
|
92.3
|
5.6
|
|
Total cash costs net
of by-product revenue from continuing
operations(5)
|
|
|
|
49.2
|
Sustaining capital
expenditures(6)
|
24.0
|
15.5
|
1.1
|
40.7
|
Sustaining
exploration - expensed
|
1.0
|
0.6
|
-
|
1.6
|
Corporate G&A
including share-based compensation(4)
|
15.0
|
9.7
|
0.7
|
25.3
|
Reclamation
expenses
|
3.8
|
2.5
|
0.2
|
6.5
|
Total co-product
all-in sustaining costs from continuing
operations(5)
|
171.3
|
120.6
|
7.6
|
|
Total all-in
sustaining costs net of by-product revenue from continuing
operations(5)
|
|
|
|
123.3
|
All-in sustaining
costs on a co-product basis from continuing
operations(3) ($/ounce or pound)
|
855
|
1.93
|
11.42
|
|
All-in sustaining
costs per gold ounce sold from continuing operations
($/ounce)
|
|
|
|
614
|
Total co-product
all-in sustaining costs
|
240.4
|
146.4
|
9.4
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
188.2
|
All-in sustaining
costs on a co-product basis ($/ounce or pound)
|
902
|
2.04
|
12.19
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
706
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
the amortization of Mesquite's Purchase Price Allocation associated
with royalties and social closure costs incurred at Cerro San Pedro
that are included in operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
(5)
|
Includes the impact
of Peak Mines, which has been classified as a discontinued
operation as at and for the three and nine months ended September
30, 2017.
|
(6)
|
For the nine months
ended September 30, 2017 sustaining capital expenditures are net of
$0.3 million in proceeds from the disposal of assets
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Three months ended
September 30, 2016
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
32.9
|
18.5
|
2.3
|
53.7
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
56,038
|
19.2
|
0.3
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
586
|
0.96
|
8.96
|
|
Operating
expenses(1)
|
32.9
|
18.5
|
2.3
|
53.7
|
Treatment and
refining charges on concentrate sales
|
2.4
|
3.4
|
0.1
|
5.9
|
Total cash costs from
continuing operations
|
35.2
|
21.9
|
2.4
|
59.6
|
By-product silver and
copper sales from continuing operations
|
|
|
|
(46.9)
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
12.6
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
56,038
|
19.2
|
0.3
|
|
Total cash costs on a
co-product basis from continuing operations(2) ($/ounce
or pound)
|
628
|
1.14
|
9.43
|
|
Total cash costs per
gold ounce sold from continuing operations ($/ounce)
|
|
|
|
226
|
Total cash costs on a
co-product cash costs
|
61.6
|
27.6
|
2.9
|
|
Total cash costs net
of by-product revenue
|
|
|
|
33.9
|
Units of metal sold
(ounces/millions of pounds/millions of
ounces)(4)
|
96,452
|
24.2
|
0.3
|
|
Total cash costs on a
co-product basis ($/ounce of pound)
|
640
|
1.14
|
9.60
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
350
|
Total co-product cash
costs from continuing operations(4)
|
35.2
|
22.0
|
2.4
|
|
Total cash costs net
of by-product revenue from continuing
operations(4)
|
|
|
|
12.6
|
Sustaining capital
expenditures(5)
|
11.4
|
6.4
|
0.8
|
18.6
|
Sustaining
exploration - expensed
|
0.9
|
0.5
|
0.1
|
1.4
|
Corporate G&A
including share-based compensation(3)
|
4.2
|
2.4
|
0.3
|
6.8
|
Reclamation
expenses
|
0.4
|
0.2
|
-
|
0.7
|
Total co-product
all-in sustaining costs from continuing
operations(4)
|
52.1
|
31.5
|
3.6
|
|
Total all-in
sustaining costs net of by-product revenue from continuing
operations(4)
|
|
|
|
40.2
|
All-in sustaining
costs on a co-product basis from continuing
operations(2) ($/ounce or pound)
|
930
|
1.64
|
14.05
|
|
All-in sustaining
costs per gold ounce sold from continuing operations
($/ounce)
|
|
|
|
718
|
Total co-product
all-in sustaining costs
|
83.6
|
36.6
|
3.9
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
66.1
|
All-in sustaining
costs on a co-product basis ($/ounce or pound)
|
868
|
1.52
|
13.06
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
682
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(3)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
(4)
|
Includes the impact
of Peak Mines, which has been classified as a discontinued
operation as at and for the three and nine months ended September
30, 2017.
|
(5)
|
For the three months
ended September 30, 2016 sustaining capital expenditures are net of
$0.7 million in proceeds from the disposal of assets.
|
OPEX, Cash Cost and AISC Reconciliation
|
|
|
Nine months ended
September 30, 2016
|
(in millions of
U.S. dollars, except where noted)
|
Gold
|
Copper
|
Silver
|
Total
|
OPEX, Cash Cost
and AISC Reconciliation
|
|
|
|
|
Operating
expenses(1)
|
112.7
|
61.8
|
6.8
|
181.2
|
Units of metal sold
(ounces/millions of pounds/millions of ounces)
|
198,956
|
63.8
|
0.9
|
|
Operating expenses
per unit of metal sold ($/ounce or pound)
|
566
|
0.97
|
7.73
|
|
Operating
expenses(1)
|
112.7
|
61.8
|
6.8
|
181.2
|
Treatment and
refining charges on concentrate sales
|
8.1
|
12.1
|
0.3
|
20.5
|
Adjustments(2)
|
(0.1)
|
(0.1)
|
-
|
(0.2)
|
Total cash costs from
continuing operations
|
120.7
|
73.8
|
7.1
|
201.6
|
By-product silver and
copper sales from continuing operations
|
|
|
|
(152.3)
|
Total cash costs net
of by-product revenue from continuing operations
|
|
|
|
49.2
|
Units of metal sold
from continuing operations (ounces/millions of pounds/millions of
ounces)
|
198,956
|
63.8
|
0.9
|
|
Total cash costs on a
co-product basis from continuing operations(3) ($/ounce
or pound)
|
606
|
1.16
|
8.09
|
|
Total cash costs per
gold ounce sold from continuing operations ($/ounce)
|
|
|
|
248
|
Total cash costs on a
co-product cash costs
|
179.2
|
88.3
|
8.2
|
|
Total cash costs net
of by-product revenue
|
|
|
|
98.3
|
Units of metal sold
(ounces/millions of pounds/millions of
ounces)(5)
|
284,303
|
74.6
|
1.0
|
|
Total cash costs on a
co-product basis ($/ounce of pound)
|
630
|
1.18
|
8.43
|
|
Total cash costs per
gold ounce sold ($/ounce)
|
|
|
|
346
|
Total co-product cash
costs from continuing operations(5)
|
120.7
|
73.8
|
7.1
|
|
Total cash costs net
of by-product revenue from continuing
operations(5)
|
|
|
|
49.2
|
Sustaining capital
expenditures(6)
|
39.3
|
21.6
|
2.4
|
63.2
|
Sustaining
exploration - expensed
|
1.5
|
0.8
|
0.1
|
2.5
|
Corporate G&A
including share-based compensation(4)
|
14.9
|
8.2
|
0.9
|
23.9
|
Reclamation
expenses
|
1.4
|
0.8
|
0.1
|
2.3
|
Total co-product
all-in sustaining costs from continuing
operations(5)
|
177.8
|
105.2
|
10.6
|
|
Total all-in
sustaining costs net of by-product revenue from continuing
operations(5)
|
|
|
|
141.2
|
All-in sustaining
costs on a co-product basis from continuing
operations(3) ($/ounce or pound)
|
894
|
1.65
|
12.01
|
|
All-in sustaining
costs per gold ounce sold from continuing operations
($/ounce)
|
|
|
|
710
|
Total co-product
all-in sustaining costs
|
250.1
|
119.8
|
11.5
|
|
Total all-in
sustaining costs net of by-product revenue
|
|
|
|
204.1
|
All-in sustaining
costs on a co-product basis ($/ounce or pound)
|
879
|
1.61
|
11.82
|
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
|
|
|
718
|
(1)
|
Operating expenses
are apportioned to each metal produced on a percentage of revenue
basis.
|
(2)
|
Adjustments include
the amortization of Mesquite's Purchase Price Allocation associated
with royalties and social closure costs incurred at Cerro San Pedro
that are included in operating expenses.
|
(3)
|
Amounts presented on
a co-product basis remove the impact of other metal sales that are
produced as a by-product of our gold production and apportions the
cash costs to each metal produced on a percentage of revenue
basis.
|
(4)
|
Includes the sum of
corporate administration costs and share-based payment expense per
the income statement, net of any non-cash depreciation within those
figures.
|
(5)
|
Includes the impact
of Peak Mines, which has been classified as a discontinued
operation as at and for the three and nine months ended September
30, 2017.
|
(6)
|
For the nine months
ended September 30, 2016 sustaining capital expenditures are net of
$0.7 million in proceeds from the disposal of assets.
|
(3) Cash Generated from Operations before Changes in Working
Capital
"Cash generated from operations before changes in working
capital" is a non-GAAP financial measures with no standard meaning
under IFRS, excludes changes in non-cash operating working capital.
Management uses this measure to evaluate the company's ability to
generate cash from its operations before working capital changes.
Further details regarding cash generated from operations before
changes in working capital and a reconciliation to the nearest IFRS
measure is provided in the MD&A accompanying New Gold's
financial statements filed from time to time on www.sedar.com.
Cash Generated from Operations before Changes in Working
Capital Reconciliation
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Operating cash
generated from continuing
operations
|
$65.5
|
$54.0
|
$183.9
|
$176.1
|
Add back (deduct):
Change in non-cash
operating working capital from continuing
operations
|
(6.3)
|
7.5
|
(14.5)
|
4.8
|
Operating cash
generated from operations
before changes in non-cash working capital
|
59.2
|
61.5
|
169.4
|
180.9
|
Operating cash
generated from discontinued
operations
|
0.5
|
35.6
|
39.5
|
54.4
|
Add back (deduct):
Change in non-cash
operating working capital from discontinued
operations
|
0.9
|
(8.5)
|
(2.6)
|
(2.0)
|
Cash generated from
operations before
changes in non-cash working capital
|
60.6
|
88.6
|
206.3
|
233.3
|
(4) Adjusted Net Earnings/(Loss)
"Adjusted net earnings/(loss)" and "adjusted net earnings/(loss)
per share" are non-GAAP financial measures. Net earnings/(loss)
have been adjusted and tax affected for the group of costs in
"Other gains and losses" on the condensed consolidated income
statement. The adjusted entries are also impacted for tax to the
extent that the underlying entries are impacted for tax in the
unadjusted net earnings/(loss) from continuing operations. The
company uses this measure for its own internal purposes.
Management's internal budgets and forecasts and public guidance do
not reflect fair value changes on senior notes and non-hedged
derivatives, foreign currency translation and fair value through
profit or loss and financial asset gains/losses.
Consequently, the presentation of adjusted net earnings and
adjusted net earnings per share enables investors and analysts to
better understand the underlying operating performance of our core
mining business through the eyes of management. Management
periodically evaluates the components of adjusted net earnings and
adjusted net earnings per share based on an internal assessment of
performance measures that are useful for evaluating the operating
performance of our business and a review of the non-GAAP measures
used by mining industry analysts and other mining companies.
Adjusted net (loss)/earnings and adjusted net (loss)/earnings per
share are intended to provide additional information only and do
not have any standardized meaning under IFRS and may not be
comparable to similar measures presented by other companies. They
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. The
measures are not necessarily indicative of operating profit or cash
flows from operations as determined under IFRS.
Adjusted Net Earnings Reconciliation
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Earnings (loss)
before taxes from continuing operations
|
$37.1
|
($7.6)
|
$90.9
|
$5.9
|
Earnings (loss)
before taxes from discontinued operations
|
(2.9)
|
5.1
|
13.5
|
2.2
|
Other (gains)
losses
|
(23.8)
|
17.5
|
(64.2)
|
18.3
|
Other (gains) losses
from discontinued operations
|
0.7
|
(1.7)
|
1.6
|
(1.5)
|
Inventory
write-down
|
0.3
|
-
|
(0.2)
|
-
|
Gain on modification
of long term debt
|
(3.3)
|
-
|
(3.3)
|
-
|
Adjusted net earnings
before tax
|
8.1
|
13.3
|
38.3
|
24.9
|
Income tax (expense)
recovery
|
(7.1)
|
6.6
|
(16.7)
|
7.4
|
Income tax
adjustments
|
2.8
|
(7.5)
|
4.8
|
(12.8)
|
Adjusted income tax
expense
|
(4.3)
|
(0.9)
|
(11.9)
|
(5.4)
|
Adjusted net
earnings
|
3.8
|
12.4
|
26.4
|
19.5
|
Adjusted earnings per
share (basic and diluted)
|
0.01
|
0.02
|
0.05
|
0.04
|
Adjusted effective
tax rate
|
53%
|
7%
|
31%
|
22%
|
(5) 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 IFRS. Other companies may
calculate this measure differently and this measure is unlikely to
be comparable to similar measures presented by other companies.
Further details regarding average realized price and a
reconciliation to the nearest IFRS measure is provided in the
MD&A accompanying New Gold's financial statements filed from
time to time on www.sedar.com.
(6) Operating Margin
"Operating margin" is a non-GAAP financial measure with no
standard meaning under IFRS, which management uses to evaluate the
company's aggregated and mine-by-mine contribution to net earnings
before non-cash depreciation and depletion charges.
Operating Margin Reconciliation
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
$142.5
|
$115.2
|
$410.9
|
$382.1
|
Less: Operating
expenses
|
(70.3)
|
(53.7)
|
(204.0)
|
(181.3)
|
Operating
margin
|
72.2
|
61.5
|
206.9
|
200.8
|
Consolidated Income Statements (unaudited)
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
Revenues
|
$142.5
|
$115.2
|
$410.9
|
$382.1
|
Operating
expenses
|
70.3
|
53.7
|
204.0
|
181.3
|
Depreciation and
depletion
|
50.7
|
43.3
|
149.8
|
143.0
|
Revenue less cost of
goods sold
|
21.5
|
18.2
|
57.1
|
57.8
|
Corporate
administration
|
5.4
|
4.9
|
18.8
|
16.5
|
Share-based payment
expenses
|
3.1
|
2.0
|
6.9
|
7.8
|
Exploration and
business development
|
1.9
|
0.6
|
5.1
|
1.6
|
Earnings from
operations
|
11.1
|
10.7
|
26.3
|
31.9
|
Finance
income
|
0.3
|
0.2
|
0.9
|
0.7
|
Finance
costs
|
1.9
|
(1.0)
|
(0.5)
|
(8.4)
|
Other gains
(losses)
|
23.8
|
(17.5)
|
64.2
|
(18.3)
|
Earnings/(loss)
before taxes
|
37.1
|
(7.6)
|
90.9
|
5.9
|
Income tax (expense)
recovery
|
(7.9)
|
8.4
|
(13.0)
|
9.0
|
Earnings from
continuing operations
|
29.2
|
0.8
|
77.9
|
14.9
|
(Loss) earnings from
discontinued operations, net of tax
|
(2.2)
|
3.3
|
9.7
|
0.6
|
Net
earnings
|
27.0
|
4.1
|
87.6
|
15.5
|
Earnings from
continuing operations per share
|
|
|
|
Basic
|
0.05
|
-
|
0.14
|
0.03
|
Diluted
|
0.05
|
-
|
0.14
|
0.03
|
Earnings per
share
|
|
|
|
|
Basic
|
0.05
|
0.01
|
0.16
|
0.03
|
Diluted
|
0.05
|
0.01
|
0.16
|
0.03
|
Weighted average
number of shares outstanding (in millions)
|
Basic
|
576.2
|
513.0
|
560.2
|
511.3
|
Diluted
|
577.0
|
515.8
|
560.9
|
513.1
|
(1) Prior-year period
comparatives have been revised. Please refer to Note 2 of the
unaudited condensed consolidated interim financial statements for
further information.
|
Consolidated Statements of Financial Position
(unaudited)
|
|
|
|
As at September
30
|
As at December
31
|
(in millions of
U.S. dollars)
|
2017
|
2016
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$207.1
|
$185.9
|
Trade and other
receivables
|
28.9
|
37.1
|
Inventories
|
160.0
|
150.4
|
Current income tax
receivable
|
5.6
|
12.5
|
Derivative
assets
|
0.3
|
18.0
|
Prepaid expenses and
other
|
3.9
|
6.1
|
Total current
assets
|
405.8
|
410.0
|
|
|
|
Non-current
inventories
|
92.6
|
103.3
|
Mining
interests
|
3,421.8
|
3,191.3
|
Deferred tax
assets
|
252.2
|
224.9
|
Other
|
3.1
|
3.5
|
|
4,175.5
|
3,933.0
|
Assets held for
sale
|
145.7
|
-
|
Total
assets
|
4,321.2
|
3,933.0
|
LIABILITIES AND
EQUITY
|
|
|
Current
liabilities
|
|
|
Trade and other
payables
|
175.3
|
169.2
|
Current income tax
payable
|
2.6
|
6.2
|
Total current
liabilities
|
177.9
|
175.4
|
|
|
|
Reclamation and
closure cost obligations
|
115.3
|
81.0
|
Gold stream
obligation
|
236.0
|
246.5
|
Provisions
|
6.4
|
12.0
|
Long-term
debt
|
977.0
|
889.5
|
Deferred tax
liabilities
|
404.0
|
455.2
|
Other
|
2.0
|
0.2
|
|
1,918.6
|
1,859.8
|
Liabilities held for
sale
|
69.1
|
-
|
Total
liabilities
|
1,987.7
|
1,859.8
|
Equity
|
|
|
Common
shares
|
3,032.6
|
2,859.0
|
Contributed
surplus
|
103.6
|
100.5
|
Other
reserves
|
(37.0)
|
(33.0)
|
Deficit
|
(765.7)
|
(853.3)
|
Total
equity
|
2,333.5
|
2,073.2
|
Total liabilities
and equity
|
4,321.2
|
3,933.0
|
(1) Prior-year period
comparatives have been revised. Please refer to Note 2 of the
unaudited condensed consolidated interim financial statements for
further information.
|
Consolidated Statements of Cash Flow
(unaudited)
|
|
|
|
Three months ended
September 30
|
Nine months ended
September 30
|
(in millions of
U.S. dollars,
except per share amounts)
|
2017
|
2016
|
2017
|
2016
|
OPERATING
ACTIVITIES
|
|
|
|
|
Earnings from
continuing operations
|
$29.2
|
$0.8
|
$77.9
|
$14.9
|
Adjustments
for:
|
|
|
|
|
Foreign exchange
(gains) losses
|
(30.6)
|
11.3
|
(52.6)
|
(17.1)
|
Reclamation and
closure costs paid
|
(0.3)
|
(0.4)
|
(0.8)
|
(1.3)
|
Gain on disposal of
El Morro
|
-
|
-
|
(33.0)
|
-
|
Depreciation and
depletion
|
51.0
|
42.7
|
150.0
|
143.0
|
Other non-cash
adjustments
|
12.1
|
10.4
|
28.7
|
39.9
|
Income tax expense
(recovery)
|
7.9
|
(8.4)
|
13.0
|
(9.0)
|
Finance
income
|
(0.3)
|
(0.2)
|
(0.9)
|
(0.7)
|
Finance
costs
|
(1.9)
|
1.0
|
0.5
|
8.4
|
|
67.1
|
57.2
|
182.8
|
178.1
|
Change in non-cash
operating working capital
|
6.3
|
(7.5)
|
14.5
|
(4.8)
|
Income taxes
(paid)
|
(7.9)
|
4.3
|
(13.4)
|
2.8
|
Operating cash flows
generated from continuing operations
|
65.5
|
54.0
|
183.9
|
176.1
|
Operating cash flows
generated from discontinued operations
|
0.5
|
35.6
|
39.5
|
54.4
|
Cash generated from
operations
|
66.0
|
89.6
|
223.4
|
230.5
|
INVESTING
ACTIVITIES
|
|
|
|
|
Mining
interests
|
(150.6)
|
(153.5)
|
(468.5)
|
(394.2)
|
Gold price option
contract investment costs
|
-
|
(1.0)
|
(0.9)
|
(3.1)
|
Proceeds from the
sale of assets
|
-
|
-
|
65.3
|
0.6
|
Interest
received
|
0.3
|
0.1
|
0.7
|
0.6
|
Investing cash flows
used by continuing operations
|
(150.3)
|
(154.4)
|
(403.4)
|
(396.1)
|
Investing cash flows
used by discontinued operations
|
(7.7)
|
(3.1)
|
(21.6)
|
(7.7)
|
Cash used by
investing activities
|
(158.0)
|
(157.5)
|
(425.0)
|
(403.8)
|
FINANCING
ACTIVITY
|
|
|
|
|
Proceeds received
from exercise of options
|
-
|
1.3
|
0.6
|
8.5
|
Net proceeds received
from issuances of common shares
|
-
|
-
|
164.7
|
-
|
Financing initiation
costs
|
-
|
-
|
-
|
(0.3)
|
Issuance of senior
unsecured notes, net of transaction costs
|
-
|
-
|
295.1
|
-
|
Repayment of senior
unsecured notes
|
-
|
-
|
(305.3)
|
-
|
Drawdown of credit
facility
|
100.0
|
-
|
100.0
|
-
|
Interest
paid
|
(2.5)
|
(0.8)
|
(35.3)
|
(28.3)
|
Cash generated from
(used by) financing activities
|
97.5
|
0.5
|
219.8
|
(20.1)
|
Effect of exchange
rate changes on cash and cash equivalents
|
2.8
|
(0.9)
|
3.0
|
9.1
|
Change in cash and
cash equivalents
|
8.3
|
(68.3)
|
21.2
|
(184.3)
|
Cash and cash
equivalents, beginning of period
|
198.8
|
219.5
|
185.9
|
335.5
|
Cash and cash
equivalents, end of period
|
207.1
|
151.2
|
207.1
|
151.2
|
Cash and cash
equivalents are comprised of:
|
Cash
|
134.2
|
105.0
|
134.2
|
105.0
|
Short-term money
market instruments
|
72.9
|
46.2
|
72.9
|
46.2
|
|
207.1
|
151.2
|
207.1
|
151.2
|
(1) Prior-year period
comparatives have been revised. Please refer to Note 2 of the
unaudited condensed consolidated interim financial statements for
further information.
|
SOURCE New Gold Inc.