(All figures are in US dollars unless otherwise indicated)
VANCOUVER, July 20 /PRNewswire-FirstCall/ - New Gold Inc.
("New Gold") (TSX and NYSE AMEX:NGD) today announces an update on
the second quarter performance of the company's three operating
assets with 2010 second quarter gold sales of 82,402 ounces at a
total cash cost(1) of $490 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 second quarter earnings results.
Second Quarter Highlights
Results presented below are for the period of ownership of the
Mesquite Mine (June 1, 2009).
- Gold production increased 62% to 89,919 ounces from 55,633 ounces in
the same period in 2009
- Gold sales increased by 56% to 82,402 ounces from 52,890 ounces in
the same period in 2009
- Cash balance increased by $32 million from the end of the first
quarter to $376 million at June 30, 2010
All three of the company's operating mines, Mesquite, Cerro San
Pedro and Peak, had strong production quarters with gold, silver
and copper production all contributing meaningfully to the
company's cash flow. Cerro San Pedro's results continue to
demonstrate the flexibility of the operation and the ability of the
mine to ramp-up production quickly and efficiently. The Cerro San
Pedro mine is currently fully operational and New Gold will
continue to pursue all avenues necessary such that the mine remains
in continuous operation for the benefit of our shareholders, the
mine's local employees and surrounding communities.
"We are very pleased with the operating performance at all of
our mines during the first half of 2010," stated Robert Gallagher, President and Chief Executive
Officer. "With further increases in gold production and decreases
in cash cost anticipated, we expect the second half of 2010 to be
an exciting one for New Gold."
Operations Overview
Historical figures presented below include gold production,
sales and total cash cost(1) for the first six months of 2009 which
includes results prior to the closure of the acquisition of Western
Goldfields Inc. and the Mesquite Mine on June 1, 2009.
Mesquite Mine Continues Strong Quarterly Production Growth
Gold sales in the second quarter at Mesquite increased by 42% to
38,786 ounces from 27,338 ounces sold in the second quarter of
2009. Gold production was 38,849 ounces compared to 26,085 ounces.
The increased gold sales and production at Mesquite during the
second quarter were primarily driven by a lower waste mining
requirement resulting in higher ore tonnes mined when compared to
the second quarter of 2009, as well as continued improvement in
gold recoveries. These benefits were partially offset by mining of
ore below reserve grade, as planned, in the second quarter of
2010.
Total cash cost(1) per ounce of gold sold for the second quarter
of 2010 was $634 compared to
$647 in the same quarter of 2009. The
total cash cost(1) decrease is attributable to certain costs
incurred in the second quarter of 2009, including those related to
the change-over of tires and other one-time maintenance costs,
which did not occur in the second quarter of 2010. This benefit was
partially offset by higher consumables cost in the second quarter
of 2010, primarily related to the increased price and consumption
of diesel, when compared to the same period in the prior year.
For the six months ended June 30,
2010, gold sales increased by 47% to 88,288 ounces from
60,053 ounces sold in the same period in 2009. Gold production was
82,883 ounces compared to 59,745 ounces. The increased gold sales
and production were attributable to higher ore tonnes mined,
increased recoveries and higher average grades mined in the first
six months of 2010 versus the same period in 2009.
Total cash cost(1) per ounce of gold sold for the six months
ended June 30, 2010 was $587 compared to $607 per ounce in the same period last year. The
drivers of the total cash cost(1) decrease during the first six
months of 2010 were consistent with those noted above regarding the
second quarter.
Cerro San Pedro Mine Demonstrates Operational Flexibility
After receiving the explosives permit in March 2010, the mining rate at the Cerro San
Pedro mine was quickly accelerated and, as a result, gold sales in
the second quarter increased by 6% to 24,833 ounces from 23,350
ounces in the same period in 2009. Gold production was 29,424
ounces compared to 24,210 ounces. The increased gold sales and
production were a result of higher ore tonnes mined and higher
grades during the second quarter of 2010. These benefits were
partially offset by lower recoveries as ore has not yet had
sufficient time under leach to reach expected recoveries after the
delayed receipt of the explosives permit in the first quarter of
2010. Silver sales in the second quarter were 505,350 ounces
compared to 422,713 ounces in the second quarter of 2009.
Total cash cost(1) per ounce of gold sold, net of by-product
sales, for the second quarter was $288 compared to $429 in the second quarter of 2009. The decrease
in total cash cost(1) is due to optimized mine planning, coupled
with the benefit of higher by-product revenues driven by higher
silver volumes and higher realized silver prices during the second
quarter of 2010 when compared to the same period in the prior year.
The average realized silver price in the second quarter was
$18.38 per ounce compared to
$13.84 per ounce in the prior year.
These benefits were partially offset by the appreciation of the
Mexican Peso as well as higher consumables costs, incurred in an
effort to maximize production after delayed receipt of the
explosives permit, during the second quarter of 2010 when compared
to the same period in 2009.
For the six months ended June 30,
2010, gold sales were 37,957 ounces compared to 41,664
ounces sold in the same period in 2009. Gold production was 42,362
ounces compared to 44,793 ounces. The decreased gold sales and
production in the first half of 2010 were attributable to the
delayed receipt of the explosives permit in the first quarter of
2010. Silver sales for the six months ended June 30, 2010 were 698,856 ounces compared to
794,932 ounces sold in the same period in 2009.
Total cash cost(1) per ounce of gold sold, net of by-product
sales, for the six months ended June 30,
2010 was $403 compared to
$483 in the same period last year.
The decrease in total cash cost(1) is driven by a combination of
improved mine planning and higher by-product revenues in the first
six months of 2010, with the higher by-product sales resulting from
higher realized silver prices, partially offset by lower silver
sales volumes. The average realized silver price in the first six
months of 2010 was $18.02 per ounce
compared to $13.23 per ounce in the
prior year. These benefits were partially offset by: the fixed
operating costs being distributed over lower ore tonnes in the
first quarter of 2010, the appreciation of the Mexican Peso and
higher consumables costs during the first half of 2010 when
compared to the same period in 2009.
Cerro San Pedro Mine - Update on Recent Court Decision
As disclosed on July 7th, the
Fifth Auxiliary District Court in Mexico
City denied the company's appeal against the September 2009 ruling by the Federal Court of
Fiscal and Administrative Justice that ordered SEMARNAT, the
Mexican government's environmental regulatory agency, to cancel the
company's Environmental Impact Statement ("EIS") in November 2009.
The company has now submitted its appeal against the District
Court's recent decision to the Collegiate Appeals Court in
Mexico City. It is anticipated
that the Collegiate Appeals Court's evaluation of the appeal could
take between four and six months. Further avenues remain for the
matter to be advanced to the Supreme Court at a later date.
The Cerro San Pedro Mine is currently fully operational and New
Gold intends to pursue all available avenues to ensure the mine
continues to operate. Should a shutdown order be requested while
the appeal is pending, the company will immediately seek an
injunction against such an order. New Gold was previously
successful in obtaining such an injunction in late 2009.
The company remains steadfast in its view that the mine should
continue to be operated based on its enviable record of compliance
with Mexican and international environmental standards, as well as
the significant financial and socio-economic benefits it provides
to the city of San Luis Potosi,
the town of Cerro de San Pedro and
the surrounding villages.
New Gold continues to work with local and federal government
authorities in an effort to put in place an EIS that addresses the
ongoing challenges against the validity of the mine's previously
approved EIS.
Peak Mines Continues to Deliver with Strong Second Half
Expected
Gold sales in the second quarter at Peak Mines increased by 5%
to 18,783 ounces from 17,939 ounces sold in the second quarter of
2009. Gold production was 21,646 ounces compared to 22,382 ounces.
Gold production quarter-over-quarter remained relatively consistent
as ore milled, grade and recoveries were all comparable. Copper
sales increased in the second quarter to 3.0 million pounds from
2.6 million pounds in the same quarter of 2009. The increase in
copper sales over the same quarter in 2009 was primarily related to
timing of concentrate shipments.
Total cash cost(1) per ounce of gold sold, net of by-product
sales, for the second quarter was $459 compared to $364 in the second quarter of 2009. The increase
in total cash cost(1) is attributable to the timing of concentrate
shipments and related inventory charges, an increase in salary
related costs and the appreciation of the Australian dollar in the
second quarter of 2010 when compared to the same period in the
prior year. These cost increases were partially offset by higher
by-product revenues from higher copper sales volumes and higher
realized copper prices in the second quarter of 2010 when compared
to the same period in the prior year. The average realized copper
price in the second quarter was $3.09
per pound compared to $2.07 per pound
in the prior year.
For the six months ended June 30,
2010, gold sales were 36,176 ounces compared to 38,795
ounces sold in the same period in 2009. Gold production was 41,889
ounces compared to 43,011 ounces. Gold production year to date was
relatively consistent to that of the prior year as ore milled,
grade and recoveries were all comparable. Copper sales for the six
months ended June 30, 2010 were 7.1
million pounds compared to 5.3 million pounds sold in the same
period in 2009.
Total cash cost(1) per ounce of gold sold, net of by-product
sales, for the six months ended June 30,
2010 was $304 compared to
$349 in the same period last year.
The decrease in total cash cost(1) is driven by higher by-product
revenues from higher copper sales volumes and higher realized
copper prices in the first six months of 2010 when compared to the
same period in the prior year. The average realized copper price in
the first six months of 2010 was $3.24 per pound compared to $1.88 per pound in the prior year. This benefit
was partially offset by an increase in salary related costs and the
appreciation of the Australian dollar in the first half of 2010
when compared to the same period in the prior year.
Second Quarter and Year to Date Production and Cash Cost(1)
Overview
Results presented below are for the period of ownership for the
Mesquite Mine (June 1, 2009).
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Q2 2010 Q2 2009 YTD 2010 YTD 2009
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Production
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Mesquite Gold (ounces) 38,849 9,041 82,883 9,041
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Cerro San Pedro
Gold (ounces) 29,424 24,210 42,362 44,793
Silver (ounces) 547,084 414,038 753,784 841,477
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Peak Mines
Gold (ounces) 21,646 22,382 41,889 43,011
Copper (million pounds) 4.0 4.3 8.0 8.1
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Amapari Gold (ounces) - - - 13,726
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Total Production
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Gold (ounces) 89,919 55,633 167,134 110,571
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Silver (ounces) 547,084 414,038 753,784 841,477
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Copper (million pounds) 4.0 4.3 8.0 8.1
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Gold sales (ounces) 82,402 52,890 162,422 108,287
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Total cash cost(1) ($ per ounce) $490 $468 $481 $491
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Note: As announced on April 13, 2010, the company has sold the Amapari
asset.
2010 Outlook
During the second quarter of 2010, New Gold continued its focus
on delivering operationally while also streamlining the asset
portfolio and enhancing the financial flexibility of the company.
Looking forward, production is anticipated to continue to grow in
the second half of the year coupled with declining cash cost(1).
Mesquite is expected to continue its strong production with a focus
on reducing costs. Cerro San Pedro has now reached its steady-state
mining rate and recoveries from the leach pad are expected to
continue to improve over the second half of the year. Per the mine
plan, Peak Mines should be entering higher gold grade zones which
will positively impact production and costs in the second half of
2010. New Gold reiterates 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.
Conference Call-in and Webcast
Please note that going forward, New Gold will no longer issue
preliminary Production and Cash Cost(1) news releases after each
quarter and will instead issue a Quarterly Results news release
that incorporates all operational and financial results for the
respective quarter.
New Gold will discuss second quarter earnings results during a
conference call and webcast on Friday,
August 6, 2010 at 10:00 am Eastern
Time. Anyone may join the conference by calling
1-416-695-7806 or toll-free 1-888-789-9572 in North America, and 800-6578-9818 toll-free
outside of North America. The
Passcode is 6463541. To listen to a recorded playback of the call
after the event, please call 1-416-695-5800 or toll-free in
North America 1-800-408-3053 -
Passcode 4104215.
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 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, 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, 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 "Risk 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.