(All figures are in US dollars unless otherwise indicated)
VANCOUVER, April 21 /PRNewswire-FirstCall/ - New Gold Inc.
("New Gold") (TSX and NYSE AMEX:NGD) today announces 2010 first
quarter gold sales of 80,020 ounces at a total cash cost(1) of
$472 per ounce, net of by-product
sales. The preliminary production, sales and total cash cost(1)
information provided are approximate figures and may differ
slightly from the first quarter earnings results. New Gold is also
pleased to reiterate its 2010 full year guidance of 330,000 to
360,000 ounces of gold production at a total cash cost(1) of
$445 to $465 per ounce sold, net of
by-product sales.
First Quarter Highlights
Results presented below are for the period of ownership for the Mesquite
Mine (June 1, 2009).
- Gold sales increased by 44% to 80,020 ounces from 55,397 ounces in
the same period in 2009
- Total cash cost(1) decreased 8% to $472 per ounce sold, net of by-
product sales, from $513 per ounce sold in the same period in 2009
- Gold production increased 41% to 77,215 ounces from 54,938 ounces in
the same period in 2009
- Cash balance increased by $72 million from year-end 2009 to $344
million at March 31, 2010
- Fully repaid the remaining $27 million of the Mesquite Term Loan
Facility
The Mesquite and Peak Mines had strong operating quarters
achieving their targeted gold production levels at lower than
forecasted total cash cost(1). In addition, in response to the
delay in renewal of the explosives permit at Cerro San Pedro,
operating parameters were adjusted to maximize the production of
gold and silver and contribute meaningfully to the consolidated
results in the first quarter of 2010. New Afton also continued its
strong progress with a fifth straight quarter of increased
underground advance since the beginning of 2009.
"We are very pleased with the operating performance and
continued enhancements at all of our mines," stated Robert Gallagher, President and Chief Executive
Officer. "Mesquite, Peak and New Afton all had an excellent start
to 2010 and the team at Cerro San Pedro effectively maximized
production from the heap leach pad despite the delayed receipt of
our explosives permit."
Operations Overview
Historical results presented below include gold production,
sales and total cash cost(1) for the first quarter of 2009 which
reflects a period prior to the acquisition of the Mesquite Mine
(June 1, 2009).
Mesquite Mine Successfully Increasing Production and Reducing
Costs
Gold sales in the first quarter at Mesquite increased by 51% to
49,502 ounces from 32,715 ounces sold in the first quarter 2009.
Gold production was 44,034 ounces compared to 33,660 ounces in the
same period in 2009. The increased gold sales and production at
Mesquite during the first quarter were primarily driven by mining
at reserve grade when compared to the lower grade ore mined in the
first quarter of 2009 as well as continued improvement in gold
recoveries.
Total cash cost(1) per ounce of gold sold for the first quarter
of 2010 was $550 compared to
$573 in the same quarter of 2009. The
total cash cost(1) decrease is a result of higher gold sales in the
quarter partially offset by higher consumable and labour costs when
compared to the first quarter of 2009.
The Mesquite Mine is forecast to produce 145,000 to 155,000
ounces of gold in 2010 at total cash cost(1) of $540 to $560 per ounce sold.
Cerro San Pedro Mine Maximizes Relative Contribution
As a result of a previously disclosed legal challenge that was
subsequently dismissed in mid-March, the renewal of the Mine's
explosives permit was delayed until March
18, 2010. Despite limited ore delivery in the first quarter,
the team focused on optimizing the processing of heap leach ore to
maximize the production of gold and silver during the quarter. Gold
sales in the first quarter at Cerro San Pedro were 13,124 ounces
compared to 18,314 ounces in the same period in 2009. Gold
production was 12,938 ounces compared to 20,583 ounces in the same
period in 2009. The decrease in production was a result of limited
delivery of ore to the leach pad due to the delayed granting of the
explosives permit. Silver sales in the first quarter were 193,506
ounces compared to 372,219 ounces in the first quarter of 2009.
Total cash cost(1) per ounce of gold sold, net of by-product
sales, for the first quarter was $622
compared to $551 in the first quarter
of 2009. The increase in total cash cost(1) is due to the fixed
portion of operating costs at Cerro San Pedro being attributed to
fewer gold ounces sold as well as lower by-product credits
resulting from lower silver sales during the quarter. As the mine
uses contracted equipment, variable mining costs were reduced,
however, these were offset by increased processing costs to
maximize production from the ore that was previously placed on the
heap leach pad.
The company continues to work with federal and local levels of
government in Mexico to resolve
the ongoing legal challenges at Cerro San Pedro.
Since the receipt of the explosives permit the mine has been
fully operational and the forecast for Cerro San Pedro remains
unchanged with expected production of 95,000 to 105,000 ounces of
gold and 1.4 to 1.6 million ounces of silver in 2010. Total cash
cost(1) is forecast to be $390 to
$410 per ounce sold, net of by-product sales. The full year
total cash cost(1) assumption is based on a by-product silver price
of $15 per ounce.
Peak Mines Continues to Deliver with Record Low Cash Cost(1)
Gold sales in the first quarter at Peak Mines were 17,394 ounces
compared to 20,856 ounces sold in the first quarter of 2009. Gold
production was 20,243 ounces compared to 20,629 ounces in the same
period in 2009. Gold production quarter-over-quarter remained
consistent, with gold sales decreasing slightly due to timing of
concentrate shipments. Copper sales increased in the first quarter
to 4.1 million pounds from 2.8 million pounds in the same quarter
of 2009. The increase in copper production over the same quarter in
2009 was the result of higher copper grades and recoveries.
Total cash cost(1) per ounce of gold sold, net of by-product
sales, for the first quarter was $136
compared to $337 in the first quarter
of 2009. The decrease in total cash cost(1) is due to higher
by-product sales resulting from increased copper volumes and higher
average copper prices during the first quarter of 2010 compared to
2009. The first quarter cash cost further benefited from copper
sales of 4.1 million pounds being netted against 17,394 ounces of
gold sales. As gold sales are expected to increase in subsequent
quarters of 2010, with copper sales remaining consistent, the
relative by-product benefit should be lower than that recorded in
the first quarter. These cost reductions were partially offset by
an increase in the Australian dollar exchange rate when compared to
the first quarter of 2009.
Peak Mines remains on target to produce 90,000 to 100,000 ounces
of gold and 15 to 17 million pounds of copper in 2010. Total cash
cost(1) is forecast to be $360 to
$380 per ounce sold, net of by-product sales. The full year
total cash cost(1) assumption is based on a by-product copper price
of $2.75 per pound.
New Afton on Track to Contribute Significantly
New Gold's primary development project continued on schedule
during the first quarter and is expected to commence production in
the second half of 2012. The project will be an underground mine
and concentrator which will produce an annual estimated average of
85,000 ounces of gold, and 75 million pounds of copper.
The company looks forward to production commencing in just over
two years, as New Afton is expected to contribute significantly to
New Gold's current portfolio of operating assets. As a low-cost
operation, New Afton should meaningfully expand the company's
operating margin and cash flow generation. At current commodity
prices, the mine is expected to double the company's cash flow.
During the first quarter of 2010, the New Afton underground
development crews continued their track record of continuous
improvement advancing development 742 metres. This marks the fifth
consecutive quarter of increased development.
Activities were initiated during the quarter in preparation for
commencement of surface construction in May
2010, including: tendering of buried services contracts,
geotechnical drilling and site grading.
El Morro Project Update
New Gold's 70% joint venture partner on the El Morro Project,
Goldcorp Inc., continues to work through the permit review process
for the project with a target to begin construction in early 2011.
A project team has been assembled to advance exploration and
development at the site during 2010 and plans to further optimize
the existing feasibility study are underway.
First Quarter Production and Cash Cost(1) Overview
Results presented below are for the period of ownership for the
Mesquite Mine (June 1, 2009).
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Q1 2010 Q1 2009
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Production
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Mesquite Gold (ounces) 44,034 -
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Cerro San Pedro
Gold (ounces) 12,938 20,583
Silver (ounces) 206,700 427,439
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Peak Mines
Gold (ounces) 20,243 20,629
Copper (million pounds) 4.0 3.8
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Amapari Gold (ounces) - 13,726
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Total Production
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Gold (ounces) 77,215 54,938
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Silver (ounces) 206,700 427,439
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Copper (million pounds) 4.0 3.8
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Gold sales (ounces) 80,020 55,397
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Total cash cost(1) ($ per ounce) $472 $513
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Note: As announced on April 13,
2010, the company has sold the Amapari asset.
Key Financial Information
At March 31, 2010, New Gold had a
cash balance of $344 million, an
increase of $72 million when compared
to the year-end 2009 balance. The net increase in the cash balance
during the first quarter of 2010 is summarized below:
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Cash Balance
(US$m)
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December 31, 2009 (including restricted cash) $272
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January sale of asset backed notes 47
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Net cash consideration as part of El Morro transaction 46
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Mesquite Term Loan Facility prepayment (27)
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Other 6
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March 31, 2010 $344
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During the quarter, the company's cash flow was in excess of the
New Afton development costs and sustaining capital expenditures at
New Gold's operations. Subsequent to the quarter end, the company
received an additional $37 million in
cash proceeds after the closing of the sale of the Amapari Mine.
The consolidated debt position of the company is $217.7 million which includes: $174.5 million of 10% senior secured notes
(C$187 million), $39.5 million of 5% convertible debentures (face
value of C$55 million) and
$3.7 million in El Morro funding
loans. The senior secured notes are due in 2017 and the convertible
debentures are due in 2014 and have a C$9.35 conversion price.
2010 Outlook
During the first quarter of 2010 New Gold continued to make
significant progress both from an operational and financial
perspective. With the Mesquite and Peak Mines performing well and
Cerro San Pedro now back to full operations, the company's
producing assets are well positioned to meet the 2010 guidance.
Through various corporate development initiatives including the new
El Morro partnership and sale of Amapari, New Gold has streamlined
its portfolio of assets, while simultaneously strengthening the
balance sheet and increasing the company's financial flexibility.
From this position, the company looks forward to the continued
development of its exciting New Afton project, which has the
potential to significantly enhance the cash flow generation of the
company, as well as the pursuit of other value enhancing
opportunities.
Conference Call-in and Webcast
New Gold will discuss full first quarter earnings results as
part of the company's Annual General Meeting of Shareholders
("AGM") on May 6, 2010 at
4:00 p.m. Eastern Time. New Gold will
also hold a conference call and webcast of its AGM. Anyone may join
the call by dialling toll free 1-866-696-5910 or 1-416-340-2217 to
access the call from outside Canada or the U.S. (Passcode 1174247). You can
listen to a recorded playback of the call after the event by
dialling 1-800-408-3053 or 1-416-695-5800 for calls outside
Canada and the U.S. (Passcode
7164763).
A live and archived webcast will also be available at
www.newgold.com.
About New Gold
New Gold is an intermediate gold mining company with the
Mesquite Mine in the United
States, the Cerro San Pedro Mine in Mexico and the Peak Gold Mines in Australia. The company is expected to produce
between 330,000 and 360,000 ounces of gold in 2010, growing to over
400,000 ounces in 2012. In addition, New Gold has a strong
portfolio of development and exploration assets in North and
South America. 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 may be deemed "forward looking". All
statements in this news 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 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. 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: 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 and maintaining the validity and
enforceability of the necessary licenses and permits and complying
with the permitting requirements of each jurisdiction that New Gold
operates, including, but not limited to, Mexico, where New Gold is involved with
ongoing challenges relating to its environmental impact statement
for the Cerro San Pedro Mine; the lack of certainty with respect to
the Mexican and other 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 the
company is or may become a party to, including the third party
claim related to the El Morro transaction with respect to New
Gold's exercise of its right of first refusal on the El Morro
copper-gold project in Chile and
its partnership with Goldcorp Inc., which transaction and third
party claim were announced by New Gold in January 2010; 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 26, 2010 and Management's Discussion and
Analysis for the year ended December 31,
2009, both 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.
(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 prescribed
by GAAP and may not be comparable to similar measures presented by
other mining companies. 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. A reconciliation will be provided in the
MD&A accompanying the quarterly financial statements.
SOURCE New Gold Inc.