(All figures are in US dollars unless otherwise stated) VANCOUVER,
July 17 /PRNewswire-FirstCall/ -- New Gold Inc. ("New Gold") (TSX
and NYSE AMEX - NGD) today announces 2009 second quarter combined
gold sales of 68,627 ounces at a total cash cost(1) of $499 per
ounce, net of by-product sales. The production and total cash
cost(1) information provided are approximate figures and may differ
slightly from the second quarter earnings and include results for
the period prior to the close of the business combination with
Western Goldfields Inc. ("Western Goldfields") on June 1, 2009.
Second Quarter Highlights - Combined(2) gold sales of 68,627 ounces
at a total cash cost(1) of $499 per ounce sold - Combined gold
production of 72,677 ounces - Closed business combination with
Western Goldfields on June 1, 2009 The Cerro San Pedro and Peak
Mines performed as expected during the quarter and for the six
months ended June 30, 2009. The Mesquite mine has underperformed
which is largely due to equipment availability issues, fewer ounces
of gold than expected in an area of the Rainbow pit, and increased
consumption of cyanide and lime. The first two issues are in hand,
while the increased reagent consumption is necessary to achieve
optimum recovery. An additional factor in the increased total cash
cost(1) per gold ounce sold at Mesquite is due to a one-time charge
in May to convert the haulage fleet from bias ply tires to radial
tires. Mesquite will experience the operational and cost benefits
of the radial tires for the remainder of 2009 and going forward. In
order to catch-up on waste stripping and get the mine plan back on
schedule, a mining contractor has been temporarily retained to
augment the Mesquite mining fleet. Robert Gallagher, President and
Chief Executive Officer said: "With continued strong performance at
Cerro San Pedro and Peak, we are very pleased to see our production
increase and cash cost decrease compared to the second quarter of
2008. We continue to maintain our focus on operations, including
the current integration of Mesquite, where we have completed a full
review and are taking the necessary steps to best position New Gold
to achieve its strategic goals." 2009 Forecast Update For the
combined Company, previously announced 2009 guidance for gold
production of 330,000 to 360,000 ounces at a total cash cost(1) per
ounce of gold sold, net of by-product sales, of $490 to $510,
remains unchanged. For the period of New Gold ownership of
Mesquite, the 2009 guidance of the combined company represents gold
production of 270,000 to 300,000 ounces at a total cash cost(1) per
ounce of gold sold, net of by-product sales, of $470 to $490.
Operations Overview Mesquite Mine Gold production for the second
quarter at Mesquite was 26,085 ounces compared to 28,524 ounces in
the second quarter 2008. Gold production was lower in the second
quarter 2009 mainly due to equipment availability, fewer ounces of
gold than expected in an area of the Rainbow pit, and lower grades
in comparison to the same quarter the prior year. Gold grades were
well above the life of mine average in the second quarter 2008
resulting in the higher production, whereas second quarter 2009
gold grade is in-line with the life of mine plan. For the period of
New Gold ownership, from June 1-30, 2009, gold production was 9,041
ounces. For the six months ending June 30, 2009, gold production
was 59,745 ounces compared to 37,670 ounces produced in the same
period in 2008, during the initial ramp-up period. Total cash
cost(1) per ounce of gold sold for the second quarter of 2009 was
$647 compared to $548 in the second quarter of 2008. For the period
of New Gold ownership, total cash cost(1) per gold ounce sold was
$708 in June 2009. Total cash cost(1) increase in the second
quarter is mainly attributable to higher operating costs due to an
increase in total tonnes moved of 13.9 million versus 12.5 million,
and lower production. Total cash cost(1) per ounce of gold sold for
the six months ended June 30, 2009 was $607 compared to $667 in the
same period last year. The decrease in cash cost(1) year over year
is attributable to the production start-up phase at Mesquite in the
first half of 2008. 2009 gold production and total cash cost
guidance of 140,000 to 150,000 ounces at a total cash cost(1) per
ounce of gold sold between $530 and $540 remains unchanged. Cerro
San Pedro Mine Gold production for the second quarter at Cerro San
Pedro was 24,210 ounces compared to 20,653 ounces produced in the
second quarter of 2008. The increase in production was due to
higher tonnes placed on the pad and increased recovery rate,
partially offset by lower feed grade. For the six months ending
June 30, 2009, gold production was 44,793 ounces compared to 38,943
ounces produced in the same period in 2008. Silver production for
the second quarter was 414,038 ounces compared to 283,749 ounces
produced in the second quarter of 2008. For the six months ending
June 30, 2009, silver production was 841,477 ounces compared to
512,372 ounces produced in the same period in 2008. The increase in
silver production year over year is attributed to higher silver
grades mined during the first half of 2009. Total cash cost(1) per
ounce of gold sold, net of by-product sales, for the second quarter
was $429 compared to $375 in the second quarter of 2008. Total cash
cost(1) per ounce of gold sold, net of by-product sales, for the
six months ended June 30, 2009 was $483 compared to $426 in the
same period last year. The increase in cash cost(1) is due to lower
silver prices and higher consumables costs, which were partly
offset by higher silver production and the depreciation in the
Mexican Peso versus the US dollar. Second quarter gold production
and cash cost are consistent with the 2009 guidance of 90,000 to
100,000 ounces of gold and 1.1 million to 1.3 million ounces of
silver at a total cash cost(1) per ounce of gold sold, net of
by-product sales, between $550 and $570. The Cerro San Pedro
sulfide drilling program continued during the second quarter with
the completion of six holes totalling 3,576 meters. The drill
program is testing the resource potential of a zone of sulfide
mineralization that extends from immediately beneath the current
open pit mining operation to an area of historic underground mining
located approximately 500 meters to the southwest. Since the start
of drilling during the fourth quarter of 2008, twelve holes
totalling 7,216 meters have been completed. Based on the
encouraging results returned from these first twelve holes, a
second phase of drilling has been initiated to extend the drilling
coverage into the area of the current open pit. The second phase of
drilling will involve the completion of an additional 15 holes
totalling approximately 10,000 meters as well as, preliminary
metallurgical test work and preparation of an updated mineral
resource estimate by year-end. Peak Mines Gold production for the
second quarter at Peak Mines was 22,382 ounces compared to 21,114
ounces produced in the second quarter of 2008. The increase in gold
production was due to higher tonnes milled and higher recovery,
partially offset by lower grade. For the six months ending June 30,
2009, gold production was 43,011 ounces compared to 46,213 ounces
produced in the same period in 2008. Gold production in the first
half of 2009 was lower due to a reduction in grade as mining
sequenced from lower gold grade to higher copper grade ore bodies.
Copper production for the second quarter was 4.27 million pounds
compared to 1.24 million pounds produced in the second quarter
2008. For the six months ending June 30, 2009, copper production
was 8.08 million pounds compared to 3.41 million pounds produced in
the same period in 2008. The significant increase in copper
production year over year is attributed to the transition into the
Chesney ore body which contains high copper grades. Total cash
cost(1) per ounce of gold sold, net of by-product sales, for the
second quarter was $364 compared to $472 in the second quarter of
2008. Total cash cost(1) per ounce of gold sold, net of by-product
sales, for the six months ended June 30, 2009 was $349 compared to
$352 in the same period last year. The decrease in cash cost(1) is
primarily due to higher copper revenues, and a favourable
Australian dollar exchange rate, which was partially offset by
lower gold ounces sold due to increased inventory attributable to
the timing of concentrate shipments. Second quarter gold production
and cash cost are consistent with the 2009 guidance of 90,000 to
100,000 ounces of gold and 13 million to 15 million pounds of
copper at a total cash cost(1) per ounce of gold sold, net of
by-product sales, between $370 and $390. New Afton Project New
Afton is New Gold's primary development project expected to
commence production in the second half of 2012. The project will be
an underground block cave mine and concentrator, which will produce
an annual estimated average of 85,000 ounces of gold, and 75
million pounds of copper over a 12 year mine life. During the
second quarter of 2009, the New Afton underground development crews
advanced development by 424 metres compared to 195 metres advanced
during the first quarter of 2009. An innovative fibrecrete spraying
technique was used to fully line one of the vent raises with
shotcrete, which completed the support lining for all three
ventilation boreholes excavated to date. Planned surface
construction was completed in the second quarter as per the
schedule and is expected to resume in early 2011 once the
underground development has reached the bottom of the ore body. The
mill building was structurally completed and the grinding mill
shells were set on cradles during the quarter. Construction
activities were completed as planned and contractors have
demobilized. Engineering reached 92% completion and will remain at
this level until surface construction resumes in 2011. Second
Quarter Production and Cash Cost Overview Second quarter and year
to date results for 2009 are presented in the table below, for the
period of ownership for the Mesquite and Cerro San Pedro mines,
following the business combinations with Western Goldfields on June
1, 2009, and Metallica Resources Inc. and Peak Gold Ltd. on June
30, 2008, respectively.
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Q2-2009 Q2-2008 YTD 2009 YTD 2008
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Gold Production oz
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Mesquite 9,041 - 9,041 -
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Cerro San Pedro 24,210 - 44,793 -
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Peak Mines 22,382 21,114 43,011 46,213
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Amapari(3) - 20,938 13,726 39,139
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Total Gold Production oz 55,633 42,052 110,571 85,352
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Copper m lbs (Peak) 4.27 1.24 8.08 3.41
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Silver oz (Cerro San Pedro) 414,038 - 841,477 -
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Gold sales oz 52,890 40,540 108,287 92,240
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Total cash cost/oz $468 $742 $491 $566
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Second quarter and year to date results for 2009 are presented in
the table below on a combined basis, which include results for the
period prior to the business combinations with Western Goldfields
on June 1st, 2009 and with Metallica Resources and Peak Gold Ltd on
June 30, 2008.
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Q2-2009 Q2-2008 YTD 2009 YTD 2008
-------------------------------------------------------------------------
Gold Production oz
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Mesquite 26,085 28,524 59,745 37,670
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Cerro San Pedro 24,210 20,653 44,793 38,943
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Peak Mines 22,382 21,114 43,011 46,213
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Amapari(3) - 20,938 13,726 39,139
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Total Gold Production oz 72,677 91,229 161,275 161,965
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Copper m lbs (Peak) 4.27 1.24 8.08 3.41
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Silver oz (Cerro San Pedro) 414,038 283,749 841,477 512,372
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Gold sales oz 68,627 85,490 156,739 163,072
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Total cash cost/oz $499 $595 $519 $553
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Conference Call-in Details The second quarter financial results
will be issued before market open on Thursday, August 6, 2009. New
Gold will hold a conference call to discuss these results at
10:00am Eastern on August 6th. Anyone may join the call by dialling
toll free 1-888-789-9572 or +1-416-695-7806 to access the call from
outside Canada or the U.S. Passcode 4424442. You can listen to a
recorded playback of the call after the event until September 18,
2009 by dialling 1-800-408-3053 or +1-416-695-5800 for calls
outside Canada and the U.S. Passcode # 7505820. About New Gold New
Gold is an intermediate gold mining company, headquartered in
Vancouver, British Columbia, Canada with three operating assets;
the Mesquite Mine in the United States, Cerro San Pedro Mine in
Mexico and Peak Mines in Australia. The Company is expected to
produce between 330,000 and 360,000 ounces of gold in 2009 on a
combined basis and between 270,000 and 300,000 ounces of gold in
2009 for the period of ownership, growing to over 400,000 ounces in
2012 and have significant reserves and resources with a strong
portfolio of mining, development and exploration assets in mining
friendly jurisdictions. For further information on New Gold, please
visit http://www.newgold.com/. CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS Certain information contained in this
press release, including any information relating to New Gold's
future financial or operating performance may be deemed "forward
looking". All statements in this press release, other than
statements of historical fact, that address events 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 words
"expects", "does not expect", "plans", "anticipates", "does not
anticipate", "believes", "intends", "estimates", "projects",
"potential", "scheduled", "forecast", "budget" and similar
expressions, or that events or conditions "will", "would", "may",
"could", "should" or "might" occur. All such forward looking
statements are subject to important risk factors and uncertainties,
many of which are beyond New Gold's ability to control or predict.
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 New Gold's 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: New Gold and Western Goldfields will be able to satisfy
the conditions in the business combination agreement, that the
required approvals (shareholder, third party regulatory and
governmental) will be obtained and all other conditions will be
satisfied or waived; the results of the preliminary assessment
assessing the viability of a new process facility at Amapari; New
Gold's operations are subject to significant capital requirements;
fluctuations in the international currency markets and in the rates
of exchange of the currencies of Canada, the United States,
Australia, Brazil, Mexico and Chile; price volatility in the spot
and forward markets for commodities; impact of any hedging
activities, including margin limits and margin calls; discrepancies
between actual and estimated production, between actual and
estimated reserves and resources and between actual and estimated
metallurgical recoveries; changes in national and local government
legislation in Canada, the United States, Australia, Brazil, Mexico
and Chile 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 necessary licenses and permits; diminishing quantities or
grades of reserves; competition; loss of key employees; additional
funding requirements; actual results of current exploration or
reclamation activities; 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. In addition, there are risks and hazards associated
with the business of mineral exploration, development and mining,
including environmental 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 "Risks
Factors" included in New Gold's Annual Information Form filed on
March 31, 2009 and management information circular filed on April
15, 2009, both available at http://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 press 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. TECHNICAL
INFORMATION The technical information contained in the press
release has been prepared under the supervision of a "qualified
person" as defined under NI 43-101, who is employed by New Gold.
(1) TOTAL CASH COST "Total cash cost" per ounce figures are
calculated in accordance with a standard developed by The Gold
Institute, which was a worldwide association of suppliers of gold
and gold products and included leading North American gold
producers. The Gold Institute ceased operations in 2002, but the
standard is widely accepted as the standard of reporting cash cost
of production in North America. 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 cost on a sales basis. Total cash cost includes
mine site operating costs such as mining, processing,
administration, royalties and production taxes, but is exclusive of
amortization, reclamation, capital and exploration costs. Total
cash cost is reduced by any by-product revenue and is then divided
by ounces sold to arrive at the total by-product cash cost of
sales. The measure, along with sales, is considered to be a key
indicator of a company's ability to generate operating earnings and
cash flow from its mining operations. This data is furnished to
provide additional information and is a non-GAAP measure. Total
cash cost presented do not have a standardized meaning under GAAP.
It should not be considered in isolation as a substitute for
measures of performance prepared in accordance with GAAP and is not
necessarily indicative of operating costs presented under GAAP. (2)
Includes gold production and sales for the full year of 2009 for
the Mesquite Mine which was acquired on June 1, 2009. (3) Amapari
was placed on care and maintenance on January 2, 2009. DATASOURCE:
New Gold Inc. CONTACT: M lanie Hennessey, Vice President Investor
Relations, New Gold Inc., Direct: (604) 639-0022, Toll-free: (888)
315-9715, Email: , Website: http://www.newgold.com/
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