(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, Jan. 16, 2018 /CNW/ - New Gold Inc. ("New
Gold" or the "Company") (TSX:NGD) (NYSE American:NGD) today
announces its 2017 fourth quarter and full-year production results,
provides 2018 guidance, and presents an update on the Company's
growth projects. The preliminary figures provided for 2017 fourth
quarter and full-year production and sales are approximate and may
differ from the final results in the 2017 annual audited
consolidated financial statements and management's discussion and
analysis.
As the Company expects the sale of Peak Mines to close in the
first quarter of 2018, Peak Mines has been classified as a
discontinued operation. The below results are disclosed on a total
basis and thus include Peak Mines for 2017 (unless otherwise
noted).
2017 Highlights
- Full-year gold production of 430,864 ounces was at the high end
of the guidance range of 380,000 to 430,000 ounces
- Copper production of 104 million pounds met the guidance range
of 100 to 110 million pounds
- All-in sustaining costs(1) for 2017 have not yet
been finalized, however, are expected to be below the Company's
previously lowered guidance range of $760 to $800 per
ounce
- Fourth quarter production of 154,446 ounces of gold and 28
million pounds of copper
- Rainy River achieved start-up
on September 14, 2017 and completed
first gold pour on
October 5, 2017
- Rainy River achieved
commercial production in mid-October, ahead of plan
- Year-end cash and cash equivalents of approximately
$216 million
2018 Guidance
- Gold production of 525,000 to 595,000 ounces, an increase of
30% relative to 2017 gold production
- Copper production of 75 to 85 million pounds, with the decrease
relative to 2017 primarily due to the sale of Peak Mines
- Operating expense of $555 to
$595 per gold ounce and $1.35 to $1.55 per
copper pound
- All-in sustaining costs of $860
to $900 per ounce, including total
cash costs(2) of $360 to
$400 per ounce
"We are proud that our team delivered on the Company's key
objectives in 2017," stated Hannes
Portmann, President and Chief Executive Officer.
"Rainy River successfully achieved
commercial production, the balance of our operating mines generated
very strong results and we simplified our portfolio with the sale
of Peak. I thank the teams at all of our operations and projects
for their dedication and contributions to these
accomplishments."
"As we look forward to 2018, New Gold is transitioning from a
period of investing in the Company's future to now benefitting from
Rainy River's first full year of
production," added Mr. Portmann. "With our solid production growth
and streamlined asset base, our focus will continue to be on
further optimizing the performance of all of our operations and
maximizing free cash flow to enhance our financial
flexibility."
2017 Fourth Quarter and Full Year Production Results
|
|
|
|
Three months ended Dec
31
|
Year ended Dec
31
|
|
2017
|
2016
|
2017
|
2016
|
Operating
information
|
Gold
(ounces):
|
|
Produced
|
154,446
|
95,883
|
430,864
|
381,663
|
|
Sold
|
143,644
|
93,996
|
410,086
|
378,239
|
Copper (millions
of pounds):
|
|
Produced
|
28.1
|
25.6
|
104.3
|
102.3
|
|
Sold
|
24.9
|
24.6
|
96.6
|
99.2
|
Silver (millions
of ounces):
|
|
Produced
|
0.3
|
0.3
|
1.2
|
1.3
|
|
Sold
|
0.3
|
0.3
|
1.1
|
1.3
|
In the fourth quarter of 2017, the Company delivered record
quarterly gold production of 154,446 ounces (including Peak Mines),
resulting in full-year gold production of 430,864 ounces. The
combination of Rainy River's
start-up, Mesquite's very strong year, and solid operating results
at New Afton and Peak Mines, enabled the Company to achieve its
guidance range of 380,000 to 430,000 ounces. Full-year production
was higher than 2016 primarily due to additional ounces from
Rainy River, which transitioned to
commercial production during the fourth quarter of 2017. From an
accounting perspective, the Company recognized commercial
production at Rainy River
effective November 1, 2017.
New Gold's fourth quarter copper production of 28 million pounds
was slightly higher than the first three quarters of 2017 and the
prior-year quarter. Full-year copper production of 104 million
pounds was higher than prior-year production and achieved the
Company's 2017 guidance range of 100 to 110 million
pounds.
The Company's full-year all-in sustaining costs are expected to
be below the guidance range of $760
to $800 per ounce which had already
been lowered by $65 per ounce in the
second quarter of 2017.
Rainy River
|
|
|
|
Three months ended Dec
31
|
Year ended Dec
31
|
|
2017
|
2016
|
2017
|
2016
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
37,047
|
-
|
37,047
|
-
|
|
Sold
|
26,359
|
-
|
26,359
|
-
|
Note: Rainy River
gold production includes 8,538 ounces from the pre-commercial
production period.
Gold sales are only for the period post commercial
production.
|
The Rainy River Mine commenced processing ore on September 14, 2017 and completed its first gold
pour on October 5, 2017. Commercial
production was achieved ahead of plan in mid-October. From an
accounting perspective, the Company recognized commercial
production effective November 1,
2017.
Mining and milling activities at Rainy
River continued to progress well during the fourth quarter.
Rainy River produced 37,047 ounces
during the fourth quarter, with an additional 8,607 ounces of gold
inventory in circuit at the end of the period. The milling rate for
December averaged 21,000 tonnes per day, which is the nameplate
capacity for the facility. Gold production for 2017, including gold
inventory in circuit, totalled 45,654 ounces. This was
slightly lower than the guidance range of 50,000 to 60,000 ounces,
as the mill ramp-up began hitting nameplate throughput slightly
later in the fourth quarter than planned, resulting in lower total
tonnes milled. Consistent with the Company's plans, during the
two-month commercial production period, the gold grade averaged
approximately 1.0 gram per tonne with recoveries of 86%. With the
mill operating at nameplate capacity, Rainy River is well positioned to deliver
strong production in 2018.
Rainy River's 2017 all-in
sustaining costs are expected to be above the guidance range of
$1,400 to $1,440 per ounce due to lower gold sales
volumes.
Project spending at Rainy River
in October totalled $29 million.
Subsequent to the start of commercial production, the Company paid
$52 million in payables associated
with the project development in the fourth quarter, with
approximately $15 million in payables
remaining at the end of 2017, bringing the 2017 full-year
development capital spend to $511
million.
New Afton
|
|
|
|
Three months ended Dec
31
|
Year ended Dec
31
|
|
2017
|
2016
|
2017
|
2016
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
22,384
|
23,879
|
86,163
|
98,098
|
|
Sold
|
20,132
|
24,171
|
81,067
|
96,851
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
24.6
|
21.4
|
90.6
|
87.3
|
|
Sold
|
22.0
|
21.1
|
84.5
|
84.9
|
New Afton's gold production decreased relative to the fourth
quarter of 2016 due to an expected decrease in gold grade and gold
recovery. Copper production was higher than the prior-year quarter
due to higher copper grades.
Full-year 2017 gold production was below 2016 due to an expected
decrease in gold grade and gold recovery. New Afton's full-year
gold production exceeded the guidance range of 70,000 to 80,000
ounces by 8%.
Full-year 2017 copper production was higher than the prior year
due to higher throughput and higher copper grades. New Afton's
full-year copper production achieved the guidance range of 85 to 95
million pounds.
2017 all-in sustaining costs are expected to be below the
guidance range of ($520) to
($480) per ounce, primarily due to an
increase in the realized copper price relative to the assumption
used when setting 2017 guidance.
Mesquite
|
|
|
|
Three months ended Dec
31
|
Year ended Dec
31
|
|
2017
|
2016
|
2017
|
2016
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
52,170
|
39,353
|
168,889
|
111,123
|
|
Sold
|
54,612
|
38,366
|
168,800
|
113,843
|
Mesquite's very strong fourth quarter gold production relative
to the fourth quarter of 2016 was due to higher ore tonnes mined as
well as the accelerated drawdown of leach pad inventory due to the
increase of process solution flow on the leach pad.
Mesquite's full-year 2017 gold production increased by 52%
relative to the prior year due to increased ore tonnes mined and
accelerated inventory drawdown. Mesquite's full-year production
significantly exceeded the 2017 guidance range of 140,000 to
150,000 ounces.
Full-year 2017 all-in sustaining costs are expected to be within
the guidance range of $805 to
$845 per ounce.
Cerro San Pedro
|
|
|
|
Three months ended Dec
31
|
Year ended Dec
31
|
|
2017
|
2016
|
2017
|
2016
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
7,177
|
14,064
|
34,337
|
64,993
|
|
Sold
|
7,679
|
13,351
|
33,228
|
64,149
|
Silver (millions
of ounces):
|
|
|
|
|
|
Produced
|
0.1
|
0.2
|
0.6
|
0.9
|
|
Sold
|
0.1
|
0.2
|
0.6
|
0.9
|
Cerro San Pedro finished active
mining and transitioned to residual leaching late in the second
quarter of 2016. As a result, and consistent with expectations, the
mine's fourth quarter and full-year 2017 gold and silver production
decreased compared to the prior year. 2017 full-year gold
production was slightly below the guidance range of 35,000 to
45,000 ounces.
Cerro San Pedro's 2017 all-in
sustaining costs are expected to be above the guidance range of
$1,090 to $1,130 per ounce primarily due to lower gold and
silver sales and higher sustaining costs.
Discontinued Operations
Peak Mines
|
|
|
|
Three months ended Dec
31
|
Year ended Dec
31
|
|
2017
|
2016
|
2017
|
2016
|
Gold
(ounces):
|
|
|
|
|
|
Produced
|
35,668
|
18,587
|
104,428
|
107,449
|
|
Sold
|
34,861
|
18,049
|
100,632
|
103,396
|
Copper (millions
of pounds):
|
|
|
|
|
|
Produced
|
3.5
|
4.2
|
13.7
|
15.0
|
|
Sold
|
2.9
|
3.5
|
12.0
|
14.3
|
The significant increase in gold production at Peak Mines
relative to the fourth quarter of 2016 was due to an increase in
gold grade and gold recovery. Quarterly copper production decreased
compared to the fourth quarter of 2016 due to a decrease in copper
grade and tonnes processed.
Peak Mines' full-year gold production was in line with the prior
year. Full-year 2017 gold production exceeded the guidance range of
85,000 to 95,000 ounces and copper production was in line with the
guidance range of approximately 15 million pounds.
Peak Mines' 2017 all-in sustaining costs are expected to be
below the guidance range of $975 to
$1,015 per ounce.
As previously disclosed, New Gold entered into a binding
agreement with Aurelia Metals Limited ("Aurelia") to sell the Peak
Mines for cash consideration of $58
million. Aurelia intends to fund the transaction through a
combination of debt and proceeds from a recently completed equity
placement. New Gold continues to expect the transaction to close in
the first quarter of 2018.
Financial Update
New Gold's cash and cash equivalents as at December 31, 2017 were $216 million. During the quarter, the Company
drew an additional $30 million from
its $400 million revolving credit
facility. At December 31, 2017, a
total of $230 million had been drawn
and $139 million had been used to
issue letters of credit for closure obligations at the Company's
producing mines and development projects, leaving $31 million undrawn.
At December 31, 2017, the face
value of the Company's long-term debt was $1,030 million (book value – $1,008 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 $230 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, or 75% of its targeted 2018 copper production,
with put options at a strike price of $3.00 per pound and call options at a strike
price of $3.37 per pound.
2018 Guidance
|
|
|
|
|
|
|
Gold
Production
|
Copper
Production
|
Operating
Expense
|
Operating
Expense
|
All-in Sustaining
Costs
|
|
(thousand
ounces)
|
(million
pounds)
|
($ per gold
ounce)
|
($ per copper
pound)
|
($ per gold
ounce)
|
Rainy
River
|
310 - 350
|
--
|
$430 -
$470
|
--
|
$990 -
$1,090
|
New Afton
|
55 - 65
|
75 - 85
|
$455 -
$495
|
$1.10 -
$1.30
|
($1,020) -
($980)
|
Mesquite
|
140 - 150
|
--
|
$890 -
$930
|
--
|
$1,005 -
$1,045
|
Cerro San
Pedro
|
20 - 30
|
--
|
$1,255 -
$1,295
|
--
|
$1,330 -
$1,370
|
New Gold
Consolidated
|
525 -
595
|
75 -
85
|
$555 -
$595
|
$1.35 -
$1.55
|
$860 -
$900
|
Note: Estimated
consolidated silver production in 2018 approximately 0.9 million
ounces.
|
New Gold's 2018 consolidated gold production is expected to
increase by approximately 30% relative to the prior year due to the
benefit of the first full year of operations at Rainy River more than offsetting the planned
decreases in gold production at New Afton, Mesquite and
Cerro San Pedro, and the sale of
Peak Mines. 2018 consolidated copper production is expected to
decrease relative to the prior year primarily due to the sale of
Peak Mines and planned lower mill throughput at New Afton.
Consolidated silver production is scheduled to remain in line with
2017 at approximately 0.9 million ounces.
Consistent with previous years, New Gold's 2018 full-year gold
production is not scheduled to be evenly distributed across the
four quarters. Approximately 60% of the Company's consolidated gold
production is expected to occur evenly in the second and fourth
quarters.
New Gold's by-product pricing assumptions for 2018 are
$3.20 per copper pound, which is in
line with spot prices and approximates the mid-point of the
Company's copper collar pricing, and $17.00 per silver ounce which is in line with
spot prices. The 2018 assumptions for the Canadian dollar and
Mexican peso exchange rates of $1.25
and $18.00 to the U.S. dollar are
also in line with spot exchange rates.
The Company's operating expense per gold ounce is expected to
decrease in 2018 as a higher proportion of gold sales will be from
the lower operating expense per ounce Rainy River Mine. 2018
operating expense per copper pound is expected to increase relative
to the prior year due to lower mill throughput and copper grades at
New Afton.
New Gold's 2018 all-in sustaining costs are expected to increase
relative to the prior year. The Company's 2018 consolidated total
cash costs, which form a component of all-in sustaining costs, are
expected to be $360 to $400 per ounce. 2018 sustaining costs, including
sustaining capital, exploration, general and administrative and
amortization or reclamation expenditures, are expected to increase
by approximately $145 million
relative to the prior year primarily due to an increase in
sustaining capital expenditures during Rainy River's first full year of operation.
This increase is expected to be partially offset by lower capital
and exploration expenditures at New Afton, Mesquite and
Cerro San Pedro, as well as a
sustainable reduction in corporate general and administration
expenditures.
Rainy River
|
2017
Actuals
|
2018
Guidance
|
Gold production
(ounces)
|
37,047
|
310,000 -
350,000
|
Operating expense
($/ounce)
|
|
430 - 470
|
All-in sustaining
costs ($/ounce)
|
|
990 -
1,090
|
Sustaining capital
expenditures ($mm)
|
|
195
|
Growth capital
expenditures ($mm)
|
|
20
|
Note: 2017 Rainy
River gold production includes 8,538 ounces from the pre-commercial
production period.
|
As Rainy River enters its first
full year of operations, gold and silver production are expected to
increase significantly relative to the partial operating year in
2017. The focus for 2018 will be on optimizing throughput at the
mill, which has a 21,000 tonne per day nameplate capacity, as well
as advancing initiatives to potentially increase production.
2018 operating expenses and all-in sustaining costs are expected
to decrease relative to 2017 due to higher gold sales volumes. As
previously noted, Rainy River's
2018 sustaining capital expenditures will be higher than the life
of mine average as the mine completes construction of the full
tailings dam footprint. In addition, approximately $45 million of 2018 waste stripping is scheduled
to be capitalized. The remainder of the sustaining capital
expenditures are related to open pit sustaining costs as well as
property and equipment. The $20
million of growth capital expenditures are related to
underground development which is scheduled to begin in the second
half of 2018.
As the mine is now fully operational, the Company is currently
completing an update of the life-of-mine plan for Rainy River. The update will incorporate the
insights and refinements in expectation gained from both the
successful commissioning and production experience over the first
few months of operation. Based on the Company's current estimates,
annual gold production for the first nine years of the mine life
(including 2018) should average between 275,000 to 375,000 ounces.
At the same time, based on current input cost estimates, silver
prices and foreign exchange rates, all-in sustaining costs over
Rainy River's first nine years of
operation (including 2018) are expected to average approximately
$875 per ounce. Costs are expected to
be higher than this average in the next three years as a result of
sustaining capital expenditures associated with completion of the
full tailings dam footprint in 2018 as well as the construction of
the first tailings lift later in 2018 into 2019.
New Gold currently estimates that approximately 21,500 ounces of
gold and 185,000 ounces of silver will be delivered to RGLD Gold AG
("Royal Gold") in 2018, in accordance with a streaming agreement,
and will be accounted for as financing activities in the Company's
cash flow statement. In mid-2015, New Gold entered into a streaming
agreement with Royal Gold that
provided New Gold with $175 million
in exchange for 6.5% of the project's annual gold production up to
a total of 230,000 ounces of gold and 60% of the project's annual
silver production up to a total of 3.1 million ounces of silver.
After these respective ounce thresholds are met, the percentages
drop to 3.25% of gold production and 30% of silver production. In
addition to the $175 million,
Royal Gold will pay 25% of the
average spot gold or silver price at the time each ounce of gold or
silver is delivered.
New Afton
|
2017
Actuals
|
2018
Guidance
|
Gold production
(ounces)
|
86,163
|
55,000 -
65,000
|
Copper production
(million pounds)
|
91
|
75 – 85
|
Operating
expenses:
|
|
Gold
($/ounce)
|
|
455 – 495
|
|
Copper
($/pound)
|
|
1.10 -
1.30
|
All-in sustaining
costs ($/ounce)
|
|
(1,020) -
(980)
|
Sustaining capital
expenditures ($mm)
|
|
40
|
Growth capital
expenditures ($mm)
|
|
5
|
Gold production at New Afton is expected to decrease relative to
2017 due to a scheduled decrease in gold grade, and a planned
decrease in mill throughput from approximately 16,400 tonnes per
day in 2017 to 14,400 tonnes per day in 2018. The Company had
previously increased the throughput rate at New Afton in order to
support the development of Rainy
River. New Gold has elected to decrease New Afton's
throughput from prior levels in order to achieve higher copper
recoveries. Copper production is expected to decrease as the impact
of lower throughput is only partially offset by higher
recoveries.
New Afton's 2018 operating expense per gold ounce is expected to
increase relative to 2017 due to lower grades. At the same
time, all-in sustaining costs are expected to
decrease due to an increase in by-product revenues resulting
from the 2018 copper price assumption of $3.20 per pound being higher than the 2017
realized price.
Consistent with the Company's commitment to maximizing free cash
flow, New Gold has elected to defer development of the C-zone in
2018. While the 2016 Feasibility Study for the project includes
solid project economics at spot prices, the Company intends to
defer the commencement of capital spending while evaluating
opportunities that have the potential to further optimize the
C-zone project. Some of the opportunities identified, and not
included in the original feasibility study, that are being
investigated include different tailings options (such as dry stack
or thickened/amended tailings), as well as mining approaches
based on operating experience in the B-zone (including reassessing
the amount of required underground development in the cave as well
as optimizing draw bell and pillar designs).
Mesquite
|
2017
Actuals
|
2018
Guidance
|
Gold production
(ounces)
|
168,889
|
140,000 -
150,000
|
Operating expense
($/ounce)
|
|
890 - 930
|
All-in sustaining
costs ($/ounce)
|
|
1,005 -
1,045
|
Sustaining capital
expenditures ($mm)
|
|
10
|
As planned, production at Mesquite is expected to decrease
relative to 2017 as the impact of lower ore tonnes mined and placed
is only partially offset by higher gold grade.
2018 operating expenses and all-in sustaining costs are expected
to increase relative to 2017 due to lower gold sales volumes.
Cerro San Pedro
|
2017
Actuals
|
2018
Guidance
|
Gold production
(ounces)
|
34,337
|
20,000 -
30,000
|
Operating expense
($/ounce)
|
|
1,255 –
1,295
|
All-in sustaining
costs ($/ounce)
|
|
1,330 –
1,370
|
Sustaining capital
expenditures ($mm)
|
|
--
|
As Cerro San Pedro enters its
second full year of residual leaching in 2018, gold and silver
production are expected to decline while costs should remain in
line with 2017. As the Company is drawing down leach pad inventory
during the residual leach period, approximately $380 per ounce of the estimated all-in sustaining
costs for 2018 are related to mining costs that were incurred in
prior periods.
Blackwater
Activities at the Company's Blackwater project, located in
south-central British Columbia,
continued to focus on obtaining 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 mid-2018.
The Company is currently working on internal trade-off studies
for the Blackwater project. The objective of these studies is to
further enhance project economics and maximize free cash flow by
reducing the project strip ratio, maximizing the feed grade and
lowering both development capital and operating costs. Aspects of
the project being evaluated include the scale of the operation, ore
sorting and flowsheet configurations. The internal studies are
expected to be completed in the second half of 2018.
Blackwater's 2018 non-sustaining capital expenditures are
expected to be approximately $10
million and relate to the continued advancement of the
Environmental Assessment process and completion of the internal
trade-off studies.
New Gold 2018 All-In Sustaining Costs Key
Sensitivities
Sensitivities to silver price and the Mexican peso are not shown
as the sensitivities are limited.
Category
|
Copper
Price
|
CDN/USD
|
Base
Assumption
|
$3.20
|
$1.25
|
Sensitivity
|
+/- $0.10
|
+/- $0.05
|
Cost per ounce
impact
|
Rainy
River
|
--
|
$40
|
New Afton
|
$135
|
$100
|
Mesquite
|
--
|
--
|
Cerro San
Pedro
|
--
|
--
|
New Gold
Consolidated
|
$15
|
$30
|
In light of previously noted copper collars, at prices above
$3.37 per pound, or below
$3.00 per pound, only approximately
20 million pounds of the Company's estimated copper production
would be impacted by further copper price movements, thus
significantly reducing the impact on New Afton and
consolidated all-in sustaining costs.
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 "2018 Guidance", as well as other
statements elsewhere in this news release, including, among others,
statements with respect to: guidance for production, operating
expense, all-in sustaining costs and total cash costs, and the
factors contributing to those expected results, including mill
throughput and metal recoveries, as well as expected capital and
other expenditures; planned development activities and timing for
2018 and future years at the Rainy River Mine, including the
completion of the full tailings damn footprint and the construction
of the first tailings lift, the waste stripping program and
underground development; the expected production and costs of the
Rainy River Mine over its first nine years of operation; targeted
timing for permits, including the Blackwater EA; expected timing
for Blackwater development activities, including the completion of
internal trade-off studies; and expecting timing for closing of the
Peak Mines sale transaction.
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 annual and quarterly management's discussion and analysis
("MD&A"), its Annual Information Form and its Technical Reports
filed at www.sedar.com. 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, 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 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 (8) in the case of
production, cost and expenditure outlooks at the operating mines
for 2018 and future years, commodity prices and exchange rates
being consistent with those estimated for the purposes for
2018.
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 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 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; 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; 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 the risk of inadequate
insurance or inability to obtain insurance to cover these risks) as
well as "Risk Factors" included in New Gold's disclosure documents
filed on and available at www.sedar.com. 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
operation of New Gold's operating mines contained herein has been
reviewed and approved by Mr. Nicholas
Kwong, Director, Business Improvement 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. Mr. Kwong
is a Professional Engineer and a member of the Association of
Professional Engineers and Geoscientists of British Columbia. Mr. Petersen is a SME
Registered Member and AIPG Certified Professional Geologist. Mr.
Kwong and Mr. Petersen and 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 (as presented in
the cash flow statement), 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.
SOURCE New Gold Inc.