VANCOUVER,
Aug. 1, 2012 /PRNewswire/ - New Gold
Inc. ("New Gold") (TSX and NYSE MKT:NGD) today announces financial
and operational results for the second quarter of 2012, with gold
production of 95,158 ounces at a total cash cost(1) per
ounce sold, net of by-product sales, of $472 per ounce. The company's solid gold
production, below average costs and the continued strength of gold
prices, led New Gold to another quarter of solid financial results,
including an average realized margin of over $1,000 per ounce. During the quarter, earnings
from mine operations were $76
million, net earnings were $24
million, or $0.05 per share,
and adjusted net earnings were $46
million, or $0.10 per share.
In key milestones, New Gold delivered on the targeted June
production start at its New Afton mine and today announces that the
mine has reached commercial production. The company also received a
ruling from the Ontario Superior Court of Justice in late June
confirming the company's partnership with Goldcorp Inc.
("Goldcorp") at the El Morro project. "Our company continued to
build momentum in the second quarter, realizing strong operational
and financial results and delivering on key objectives at our
development projects that position us well for the future," stated
Randall Oliphant, Executive
Chairman.
Second Quarter 2012 Highlights
- New Afton production started on June
28th with processing of ore from underground and
surface stockpile and achieved commercial production on
July 31st, ahead of
schedule
-
- Average daily milling rate in month of July of 7,428 tonnes per
day, or 68% of 11,000 tonne per day nameplate capacity
- Gold production increased by 8% to 95,158 ounces from 88,478
ounces in the same period of the prior year
- Total cash cost(1) per ounce sold, net of by-product
sales, of $472 per ounce, well below
industry average
- Earnings from mine operations of $76
million
- Adjusted net earnings of $46
million, or $0.10 per
share
- Ontario Superior Court of Justice's publicly released decision
on June 27, 2012 affirmed New Gold's
partnership at El Morro
- Blackwater - updated National Instrument 43-101 compliant
mineral resource estimate subsequent to end of quarter, which
includes:
-
- Indicated gold resource: 230 million tonnes at an average grade
of 0.96 grams per tonne containing 7.1 million ounces of gold at a
0.40 gold-equivalent gram per tonne cut-off grade
- Inferred gold resource: 98 million tonnes at an average grade
of 0.77 grams per tonne containing 2.5 million ounces of gold at a
0.40 gold-equivalent gram per tonne cut-off grade
- Closed a $300 million 7.0% senior
notes offering on April
5th
"I believe we may ultimately look back at the
second quarter of 2012 as one of the most important in the
company's history," added Mr. Oliphant. "We started New Afton on
time, we won the El Morro lawsuit, we increased our financial
flexibility and we found more gold at Blackwater. We are very proud
of these achievements as well as our continued track record of
delivering operationally."
Operations Overview |
New Gold 2012
Second Quarter Consolidated - Summary Operational Results
|
|
Three
months ended |
|
Six
months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
2012 |
2011 |
|
2012 |
2011 |
Gold Production (thousand ounces) |
|
|
|
|
|
|
Mesquite |
|
36.3 |
33.8 |
|
80.7 |
82.6 |
Cerro San Pedro |
|
36.9 |
39.7 |
|
70.9 |
75.3 |
Peak
Mines |
|
22.0 |
15.0 |
|
42.9 |
38.1 |
Total Gold Production |
|
95.2 |
88.5 |
|
194.4 |
196.1 |
|
|
|
|
|
|
|
Total Gold Sales |
|
96.9 |
95.0 |
|
190.6 |
199.3 |
Average realized gold price ($ per
ounce) |
|
$1,486 |
$1,417 |
|
$1,530 |
$1,365 |
|
|
|
|
|
|
|
Silver Production (thousand ounces) |
|
|
|
|
|
|
Cerro San Pedro |
|
592.3 |
520.4 |
|
1,048.9 |
1,155.7 |
|
|
|
|
|
|
|
Total Silver Sales |
|
574.7 |
602.3 |
|
1,013.8 |
1,188.1 |
Average realized silver price ($ per
ounce) |
|
$28.68 |
$38.85 |
|
$30.42 |
$35.78 |
|
|
|
|
|
|
|
Copper Production (million pounds) |
|
|
|
|
|
|
Peak Mines |
|
4.0 |
3.4 |
|
7.7 |
6.9 |
|
|
|
|
|
|
|
Total Copper Sales |
|
4.9 |
3.6 |
|
6.7 |
7.5 |
Average realized copper price ($ per
pound) |
|
$3.24 |
$4.05 |
|
$3.48 |
$4.12 |
|
|
|
|
|
|
|
Total Cash Cost(1) - net of
by-product sales ($ per ounce) |
|
|
|
|
|
|
Mesquite |
|
$657 |
$654 |
|
$641 |
$588 |
Cerro San Pedro |
|
$168 |
$26 |
|
$199 |
$18 |
Peak
Mines |
|
$645 |
$585 |
|
$759 |
$488 |
Total Cash Cost(1) - net of
by-product sales |
|
$472 |
$354 |
|
$507 |
$353 |
|
|
|
|
|
|
|
Average realized margin ($ per ounce) |
|
$1,014 |
$1,063 |
|
$1,023 |
$1,012 |
Gold Production and Sales
Consolidated gold production during the second
quarter increased by 8% over the same period of the prior year. The
increase was primarily driven by a 47% increase in gold production
at the Peak Mines, while an increase in production at Mesquite was
offset by a slight decrease at Cerro San Pedro.
- Mesquite - 7% higher production as an increase in ore tonnes
placed on the leach pad was only partially offset by mining of
lower grades due to mine sequencing
- Cerro San Pedro - Minor decrease in production as mining of
higher grades, due to mining closer to reserve grade, was more than
offset by fewer ore tonnes being placed on the leach pad due to
planned waste mining
- Peak Mines - Increase in production from a combination of
higher grades, due to mining of areas closer to reserve grade, and
continued increases in mill recoveries
For the six months ended June 30, 2012, gold production at each of the
sites remained broadly consistent with that of the prior year
period, as small changes in tonnes mined, gold grades and
recoveries largely offset one another. The difference in gold sales
during both comparative periods is attributable to the timing of
gold sales and related inventory movements.
Silver Production and Sales
During the second quarter, silver production at
Cerro San Pedro increased by 14% when compared to the same period
of the prior year. This increase in production was attributable to
an 18% increase in the silver grade which was only partially offset
by fewer ore tonnes being placed on the leach pad during the
quarter.
For the six months ended June 30, 2012, silver production was below that
of the prior year period as the impact of fewer ore tonnes being
placed on the leach pad was only partially offset by the mining of
higher grade silver. The difference in silver sales during both
comparative periods is a result of timing of silver sales and
related inventory movements.
Copper Production and Sales
Copper production at the Peak Mines increased by
18% when compared to the same period of the prior year. The
increase was driven by improved copper grades and recoveries. The
even more significant increase in copper sales during the second
quarter was due to a combination of the above noted increase in
production as well as the sale of a significant portion of the
copper concentrate inventory that had built up at the end of the
first quarter of 2012.
For the six months ended June 30, 2012, copper production increased by 12%
when compared to the same period of the prior year, with the
increases attributable to higher copper grades and recoveries. The
company continues to have approximately one million pounds of
copper concentrate inventory, the sale of which should benefit
future quarters.
Total Cash Cost(1) per Ounce Sold -
Net of By-Product Sales
Total cash cost(1) per ounce sold,
net of by-product sales, remained well below the industry average
during the second quarter of 2012 at $472 per ounce. The company's total cash
cost(1) decreased by $71
per ounce sold when compared to the first quarter of 2012, however,
increased when compared to the same period of the prior year
primarily as a result of lower by-product revenues due to lower
realized silver and copper prices.
- Mesquite - Costs remained consistent through a combination of
lower diesel prices, a higher production base and the site team's
continued focus on cost control
- Cerro San Pedro - The combination of the lower realized silver
price and slightly lower silver sales volumes increased costs at
Cerro San Pedro when compared to the same period of the prior year.
This increase was partially offset by the depreciation of the
Mexican peso. Cerro San Pedro's total cash cost(1) per
ounce sold, net of by-product sales, continues to be among the
lowest in the industry, despite the increase over the exceptional
prior year quarter.
- Peak Mines - Total cash cost(1) per ounce sold, net
of by-product sales, decreased significantly from the first quarter
of 2012 and increased moderately when compared to the second
quarter of the prior year. The increase in costs at the Peak Mines
is attributable to the combination of continued cost pressures in
the Australian market and lower realized copper prices, which were
only partially offset by high copper sales volumes and the
depreciation of the Australian dollar.
After providing shareholders with an average
realized margin of over $1,000 per
ounce for the first time in 2011, New Gold is proud to have
maintained its margin above this level in both the first and second
quarter of 2012.
For the six months ended June 30, 2012, total cash cost(1) per
ounce sold, net of by-product sales, was $507 per ounce. The rise in costs when compared
to the same period of the prior year is largely driven by lower
by-product revenues from a combination of lower silver and copper
prices and sales volumes, respectively. Further, costs at Mesquite
in the first half of 2011 benefitted from mining in a significantly
higher grade area in the first quarter of 2011 due to mine
sequencing. The strong operating performance in the first half of
2012 leaves New Gold well positioned to achieve its cost guidance
for the year as the start of commercial production at New Afton
should drive the company's costs significantly lower in the second
half of the year.
"It is gratifying to see our mines perform well.
Our teams delivered solid production at low cash costs," stated
Robert Gallagher, President and
Chief Executive Officer. "The start of commercial production at New
Afton is particularly exciting. New Afton should increase our gold
production, lower costs and increase cash flow."
Consolidated Financial Results
Overview |
|
New Gold 2012
Second Quarter Consolidated - Summary Financial Results |
|
Three months
ended |
|
Six months
ended |
Figures in US$ millions, except per share
amounts |
|
|
June 30, |
|
|
June 30, |
|
|
2012 |
2011 |
|
2012 |
2011 |
|
|
|
|
|
|
|
Revenue |
|
176.1 |
171.6 |
|
344.9 |
342.8 |
|
|
|
|
|
|
|
Earnings from Mine
Operations |
|
|
|
|
|
|
Mesquite |
|
18.1 |
15.2 |
|
45.5 |
44.0 |
Cerro San Pedro |
|
41.4 |
55.8 |
|
81.6 |
90.0 |
Peak
Mines |
|
16.8 |
12.6 |
|
27.0 |
30.0 |
Earnings from Mine Operations |
|
76.3 |
83.5 |
|
154.1 |
163.9 |
|
|
|
|
|
|
|
Net Earnings |
|
23.7 |
78.6 |
|
57.3 |
103.3 |
Net Earnings per Share |
|
0.05 |
0.19 |
|
0.12 |
0.25 |
Adjusted Net Earnings |
|
45.7 |
49.8 |
|
91.0 |
96.6 |
Adjusted Net Earnings per Share |
|
0.10 |
0.12 |
|
0.20 |
0.24 |
|
|
|
|
|
|
|
Pre-tax Cash Generated from
Operations |
|
72.1 |
87.5 |
|
138.2 |
148.7 |
Net Cash Generated from Operations |
|
46.2 |
43.9 |
|
82.9 |
93.9 |
The combination of the company's strong operational performance
and the continued strength of commodity prices led to solid
financial results. Revenue increased during the second quarter
while earnings from mine operations decreased slightly when
compared to the same period of the prior year as operating costs
and depreciation increased marginally.
Net earnings in the second quarter of 2012 were
$24 million, or $0.05 per share, and were negatively impacted by
a one-time, pre-tax $32 million loss
on the redemption of the company's 10% senior secured notes.
Adjusted net earnings were $46
million, or $0.10 per share.
Net earnings have been adjusted and tax effected for the group of
costs in "Other gains (losses)" on the condensed income statement.
See notes at the end of the news release for a reconciliation of
adjusted net earnings2.
Pre-tax cash generated from operations in the
second quarter was $72 million, which
included an $8 million working
capital use of cash. Net cash generated from operations increased
by 5% to $46 million from
$44 million in the same period of the
prior year, despite the $8 million
working capital use of cash. The increase in net cash generated
from operations is attributable to a combination of solid
operational performance and lower cash tax expense than the prior
year quarter.
For the six months ended June 30, 2012, revenue increased despite lower
realized silver and copper prices. Earnings from mine operations
were down slightly when compared to the same period of the prior
year as operating costs and depreciation increased by 6% and 9%,
respectively.
Net earnings in the first six months of 2012
were $57 million, or $0.12 per share. Adjusted net earnings were
$91 million, or $0.20 per share.
Pre-tax cash generated from operations and net
cash generated from operations in the first six months of 2012 were
$138 million and $83 million, respectively. With the start of
production at New Afton, the company anticipates that its cash flow
generation should increase meaningfully in the second half of
2012.
Balance Sheet
During the second quarter, New Gold successfully
completed a 7.0% $300 million senior
notes offering. The company used $198
million of the proceeds from the notes offering to redeem
its previous 10% senior secured notes, with the remaining proceeds
further increasing New Gold's cash position and financial
flexibility. The new senior notes reduce the interest rate on the
debt by 3.0%, extend the repayment date by three years from 2017 to
2020 and provide the company with the flexibility to pay dividends
in the future.
As at June 30,
2012, the key components of New Gold's consolidated
statements of financial position include:
- Cash and cash equivalents of $230
million
- Consolidated debt of $385
million, including:
-
- 7% senior notes of $292 million
due in 2020
- 5% convertible debenture of $47
million (face value of C$55
million) due in 2014 with a conversion price of C$9.35
- El Morro funding loans of $46
million
- Basic shares outstanding - 462 million
Development Update
New Afton Delivers On-time Production and
Successful Ramp-up to Commercial Production
The second quarter marked the official start of
production at New Afton as the first ore was processed through the
mill on June 28th. After
successfully commencing underground mining operations in the third
quarter of 2011, the team at New Afton met the scheduled June
production start and New Afton has now achieved commercial
production ahead of its August target. Commercial production is
defined as 30 days of operation at an average of 60% of the 11,000
tonne per day capacity, or 6,600 tonnes per day. The start-up has
been consistent with the company's expectations and daily milling
rates have steadily increased through the month of July. Daily mill
throughput has averaged 11,129 tonnes over the last five days. The
company looks forward to benefitting from New Afton's significant,
low-cost gold and copper production and resulting cash flow
generation.
New Afton 2012 Highlights
- Commercial production achieved on July
31st, ahead of August target
- Average daily milling rate over last five days of 11,129 tonnes
per day
-
- Average daily milling rate in month of July of 7,428 tonnes per
day
- First concentrate trucked to Vancouver wharves on July 5th
- Average daily underground mining rate now up to 5,700 tonnes
per day
-
- 33 drawbells currently completed to support the continued
increase in mining rate
- Ore stockpiled on surface at July 31,
2012 totaled 946,000 tonnes
- Gold and copper recoveries in the 80 to 85 percent range,
trending above expectation for the commissioning stage
The company's guidance for New Afton in the
second half of 2012 remains unchanged with expected production of
35,000 to 45,000 ounces of gold and 30 to 35 million pounds of
copper at total cash cost(1), net of by-product credits,
of ($1,200) to ($1,300) per ounce. On
a co-product basis, the total cash cost(1) is expected
to be $630 to $650 per ounce of gold
and $1.35 to $1.45 per pound of
copper, respectively. Both the by-product and co-product costs at
New Afton are expected to decline meaningfully in 2013 and beyond
as the mine hits its full capacity.
New Afton's production estimate includes gold
and copper produced between the June
28th mill start-up and yesterday's achievement of
commercial production. The revenue from this pre-commercial
production will be offset against capital costs. New Afton gold and
copper sales for 2012 from the point of commercial production
forward are expected to be 20,000 to 30,000 ounces and 20 to 25
million pounds, respectively.
Project spending at New Afton in the second
quarter of 2012 was $97 million,
excluding capitalized interest of $6
million, bringing the total capital spending for the six
months ended June 30, 2012 to
$172 million, excluding capitalized
interest of $13 million. The
year-to-date capital spending excludes the above noted revenue
offset as there were no sales at New Afton between the June 28th production start and the end
of the second quarter. The remaining project development capital
from the period of commercial production through the end of 2012 is
forecast to be approximately $40
million and includes the installation of the gyratory
crusher and the completion of the remaining ventilation raises.
Over its currently estimated 12 year mine life,
New Afton is expected to produce an average of 85,000 ounces of
gold and 75 million pounds of copper annually at a total cash
cost(1), net of by-product credits, of approximately
($1,750) per ounce. The total
co-product cash cost(1) is expected to be approximately
$525 per ounce of gold and
$1.15 per pound of copper.
As production has now started, New Gold's
exploration team has commenced drilling of the C-zone block of
mineralization that lies below and to the side of the New Afton
reserve block in an effort to add to the mine's base 12 year life.
The drill program was initiated immediately subsequent to the end
of the quarter on July
4th, with two drills exploring this zone of
mineralization. New Gold has budgeted $5
million for this exploration at New Afton in the second half
of 2012.
Robust Exploration Program at Blackwater Leads
to Further Increase in Gold Resources
Blackwater continued its rapid progression
during the second quarter of 2012. Both the exploration and project
development teams were successful in advancing the project, with a
focus on the near-term milestone of delivering a Preliminary
Economic Assessment ("PEA") in September of 2012. New Gold's July
mineral resource update at Blackwater will form the basis for the
upcoming PEA and the team is incorporating this additional geologic
information into its environmental, technical and financial
studies.
Blackwater 2012 Highlights
- 19 drills currently active on the Blackwater project
-
- 13 drills focused on further resource delineation and infill
drilling at the primary Blackwater deposit
- Three drills testing mineralization potential of proposed
infrastructure sites
- Two drills exploring potential to expand resource base of the
Capoose gold-silver deposit, located 25 kilometres northwest of
primary Blackwater deposit
- One drill completing geotechnical drilling
- On July 18th,
announced an updated National Instrument 43-101 compliant mineral
resource estimate at Blackwater, which includes:
-
- Indicated gold resource: 230 million tonnes at an average grade
of 0.96 grams per tonne containing 7.1 million ounces of gold at a
0.40 gold-equivalent gram per tonne cut-off grade
- Inferred gold resource: 98 million tonnes at an average grade
of 0.77 grams per tonne containing 2.5 million ounces of gold at a
0.40 gold-equivalent gram per tonne cut-off grade
- Regional exploration program, including mapping and geochemical
sampling, started on the company's broader 1,000 square kilometre
land position
- Opened regional office and sample preparation lab in
Vanderhoof
- PEA on schedule for September
2012
Total capital spending at Blackwater, including
exploration and infrastructure-related expenditures, in the second
quarter of 2012 was $30 million,
excluding capitalized interest of $2
million. The total capital spending for the six months ended
June 30, 2012 was $57 million.
The company looks forward to progressing
Blackwater through the remainder of 2012 and beyond. Driven by the
continued exploration success, New Gold is now targeting the
completion of over 250,000 metres of drilling in the Blackwater
area during 2012 versus the previous target of 210,000 metres. The
forecasted capital for 2012 at Blackwater has increased by
$20 million as a result of this more
robust exploration program. As the most recent July mineral
resource update incorporated 151 holes totaling 57,064 metres of
the total 2012 target, New Gold intends to provide further
exploration updates on the Blackwater project through the second
half of the year.
Court Decision Validates New Gold's Exercise of
Right of First Refusal and Partnership with Goldcorp at El
Morro
On June 27, 2012,
the Ontario Superior Court of Justice (the "Court") publicly
released its decision regarding the ownership interests in the El
Morro project in Chile. The
Court's decision confirmed that New Gold and Goldcorp will continue
as partners in the El Morro project. The Court dismissed Barrick
Gold Corporation's ("Barrick") attempt to claim it should have been
New Gold's partner. Based on the decision, the El Morro transaction
between New Gold and Goldcorp, which closed on February 16, 2010, will stand. The period in
which Barrick could have appealed this decision has now expired.
New Gold holds a fully carried 30 percent interest in the El Morro
project and Goldcorp, the project developer and operator, holds the
remaining 70 percent.
El Morro is an advanced stage, world-class
copper/gold project in northern Chile. Development activity at site during the
second quarter was limited due to the previously announced
temporary suspension of the project's environmental permit, pending
the resolution by the Chilean Environmental Permitting Authority
(the "Servicio de Evaluación Ambiental" or "SEA") of certain
deficiencies in the consultation with a group of indigenous people.
On June 22nd, SEA
initiated the administrative process to address the deficiencies
identified by the Chilean court. During the period of temporary
suspension, Goldcorp's focus is on project engineering and related
activities in order to maintain the current project schedule.
Detailed engineering of pipelines, power line towers and the
desalination plant are expected in the fourth quarter of 2012.
Equipment selection is also ongoing.
Once in production, New Gold's 30 percent share
of annual production is expected to be over 90,000 ounces of gold
and 85 million pounds of copper over an initial 17-year mine life.
Life-of-mine cash cost is expected to be approximately ($700) per ounce of gold on a by-product basis
and approximately $550 per ounce of
gold and $1.45 per pound of copper on
a co-product basis. Metals price assumptions used to calculate the
average life-of-mine El Morro cash cost are $1,200 per ounce of gold and $2.75 per pound of copper.
Under the terms of New Gold's agreement with
Goldcorp, Goldcorp is responsible for funding New Gold's 30% share
of capital costs. The carried funding will accrue interest at a
fixed rate of 4.58%. New Gold will repay its share of capital plus
accumulated interest out of 80% of its share of the project's cash
flow with New Gold retaining 20% of its share of cash flow from the
time production commences.
Corporate Update
New Gold is very pleased to announce the
addition of two individuals who will further strengthen the
company's Board of Directors and senior management team.
The Honourable David L. Emerson was appointed to
the company's Board of Directors effective July 1, 2012. Mr. Emerson has extensive
experience in Canada's public and
private sectors. With the Government of Canada, he has served as the Minister of
Foreign Affairs, Minister of International Trade, and Minister of
Industry. In the private sector, Mr. Emerson was the President and
Chief Executive Officer of Canfor Corporation, President and Chief
Executive Officer of the Vancouver
International Airport, and Chairman and Chief Executive Officer of
Canadian Western Bank. He currently serves on the Boards of Maple
Leaf Foods Inc. (Chairman), Finning International Inc., Stantec
Inc. and Postmedia Networks Inc. Mr. Emerson holds Bachelor and
Master Degrees in Economics from the University of Alberta and a Doctorate in Economics
from Queen's University.
On July 16, 2012,
Ernie Mast joined New Gold as Vice
President Operations. Mr. Mast brings a tremendous amount of
operating experience to the company. He will oversee the company's
four currently producing mines: Mesquite, Cerro San Pedro, Peak
Mines and New Afton and become a key member of the management team.
Mr. Mast is a Metallurgical Engineer with significant experience
with both operating and development-stage projects. Most recently,
he was a key member of Inmet Mining Corporation's management team,
leading the development of its Cobre Panama project. Prior to this,
he moved into progressively more senior roles over 20 years with
Xstrata Plc and certain predecessor companies including Noranda
Inc. and Falconbridge Limited.
Outlook for 2012
New Gold is pleased to reiterate its guidance
for 2012. The company forecasts gold production of 405,000 to
445,000 ounces at a total cash cost(1) per ounce sold,
net of by-product sales, of $410 to
$430 per ounce. As outlined in the company's February 2012 guidance news release, gold
production was anticipated to be steady in the first two quarters
of the year and then move higher with the benefit of production
from New Afton in the second half of 2012. A steady decline in
total cash cost(1) was also anticipated from the first
quarter through the end of the year as evidenced by the decrease in
costs from the first to second quarter. With New Afton having now
reached commercial production, this trend of declining costs should
only accelerate. Beyond the expectation of a strong operational
second half of 2012, the company looks forward to a number of other
important catalysts. Certain highlights in the second half of the
year should include: the Blackwater PEA, continued progress at El
Morro and exploration results from Blackwater and Capoose as well
as results from the New Afton exploration program. New Gold is
pleased that 2012 is off to such a strong start and is even more
excited about the potential of the second half of the year.
New Gold 2012
Production and Cost Guidance |
|
|
|
|
|
|
|
Gold |
|
Silver |
|
Copper |
|
|
|
(000 Ounces) |
|
(000 Ounces) |
|
(Million pounds) |
|
Total Cash Cost(1) |
|
|
|
|
|
|
|
|
Mesquite |
140-150 |
|
-- |
|
-- |
|
$710-$730 |
Cerro San Pedro |
140-150 |
|
1,900-2,100 |
|
-- |
|
$250-$270 |
Peak Mines |
90-100 |
|
-- |
|
12-14 |
|
$640-$660 |
New Afton |
35-45 |
|
-- |
|
30-35 |
|
($1,200)-($1,300) |
|
|
|
|
|
|
|
|
New Gold Total |
405-445 |
|
1,900-2,100 |
|
42-49 |
|
$410-$430 |
Note: New Afton production range includes gold and copper
produced between mill start-up and achievement of commercial
production. The revenue from this pre-commercial production will be
offset against capital costs. New Afton gold and copper sales from
the point of commercial production forward are expected to be
20,000 to 30,000 ounces and 20 to 25 million pounds,
respectively.
Assumptions used in the 2012 guidance include
gold, silver and copper prices of $1,600 per ounce, $30.00 per ounce and $3.50 per pound, respectively, and Canadian
dollar, Australian dollar and Mexican peso exchange rates of
$1.00, $1.00 and 13.00 to the U.S. dollar, respectively.
The diesel price assumed for 2012 is $3.30 per gallon.
About New Gold Inc.
New Gold is an intermediate gold mining company.
The company has a portfolio of four producing assets and two
significant development projects. New Gold's New Afton project met
its targeted June 2012 production
start and began commercial production ahead of schedule in
July 2012. Together with the Mesquite
Mine in the United States, the
Cerro San Pedro Mine in Mexico and
Peak Gold Mines in Australia, the
company is forecasting between 405,000 and 445,000 ounces of gold
production in 2012. In addition, New Gold owns 30% of the
world-class El Morro project located in Chile and 100% of the exciting Blackwater
project in Canada. 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 use of forward-looking
terminology such as "plans", "expects", "is expected", "budget",
"scheduled", "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. 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 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 international, 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 the Cerro San Pedro mine has a
history of ongoing legal challenges related to our EIS and
Chile where the courts have
temporarily suspended the approval of the environmental permit for
the El Morro project; 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 the company is or may become a
party to,; 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 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 Measured, Indicated and Inferred Mineral
Resources
Information concerning the properties and
operations discussed in this news release 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 accordance with NI
43-101 under guidelines set out in the Canadian Institute of
Mining, Metallurgy and Petroleum ("CIM") Standards on Mineral
Resources and Mineral Reserves adopted by the CIM Council on
December 11, 2005. While the terms
"Mineral Resource", "Measured Mineral Resource", "Indicated Mineral
Resource" and "Inferred Mineral Resource" are recognized and
required by Canadian regulations, they are not defined terms under
standards of the United States Securities and Exchange Commission.
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 calculation is made. As such, certain information contained
in this news release concerning descriptions of mineralization and
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. It cannot be assumed that all or any part of an
"Inferred Mineral Resource" will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or other economic
studies. Readers are cautioned not to assume that all or any part
of Measured or Indicated Resources will ever be converted into
Mineral Reserves. Readers are also cautioned not to assume that all
or any part of an "Inferred Mineral Resource" exists, or is
economically or legally mineable. 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 in this
news release has been reviewed by Mark
Petersen, a Qualified Person under National Instrument
43-101 and employee of 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-IFRS measure. Total cash cost presented does not have a
standardized meaning prescribed by IFRS 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 IFRS and is not necessarily
indicative of operating costs presented under IFRS. A
reconciliation will be provided in the MD&A accompanying the
quarterly financial statements.
(2) RECONCILIATION OF ADJUSTED NET EARNINGS
New Gold 2012 Second Quarter Consolidated - Adjusted Net
Earnings Reconciliation |
|
Three months
ended |
|
Six months
ended |
Figures in US$ millions, except
per share amounts |
|
|
June 30, |
|
|
June 30, |
|
|
2012 |
2011 |
|
2012 |
2011 |
|
|
|
|
|
|
|
Net earnings |
|
23.7 |
78.6 |
|
57.3 |
103.3 |
Net earnings per share |
|
0.05 |
0.19 |
|
0.12 |
0.25 |
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on Redemption of Senior Secured
Notes |
|
31.8 |
- |
|
31.8 |
- |
|
Gain on FVTPL financial assets |
|
- |
- |
|
- |
(1.3) |
|
Ineffectiveness on hedging
instruments |
|
2.0 |
1.9 |
|
2.2 |
3.7 |
|
Fair value change of non-hedged
derivatives |
|
(11.1) |
(33.3) |
|
(2.5) |
(6.6) |
|
(Gain) Loss on foreign exchange |
|
(0.5) |
1.1 |
|
1.0 |
(2.0) |
|
Other |
|
(0.2) |
1.9 |
|
1.6 |
2.2 |
|
Tax impact of adjustments |
|
0.1 |
(0.4) |
|
(0.4) |
(2.7) |
|
|
22.1 |
(28.8) |
|
33.7 |
(6.7) |
|
|
|
|
|
|
|
Adjusted net earnings |
|
45.7 |
49.8 |
|
91.0 |
96.6 |
Adjusted net earnings per
share |
|
0.10 |
0.12 |
|
0.20 |
0.24 |
CONDENSED CONSOLIDATED INCOME
STATEMENTS |
THREE AND SIX MONTHS ENDED JUNE 30,
2012 |
(unaudited)
|
|
|
Three months ended |
Six months ended |
|
|
$ |
$ |
$ |
$ |
(In millions of U.S. dollars, except
per share amounts) |
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
176.1 |
171.6 |
344.9 |
342.8 |
Operating expenses |
|
78.0 |
70.9 |
150.3 |
141.7 |
Depreciation
and depletion |
|
21.8 |
17.2 |
40.5 |
37.2 |
Earnings from mine operations |
|
76.3 |
83.5 |
154.1 |
163.9 |
|
|
|
|
|
|
Corporate administration |
|
6.3 |
5.2 |
13.0 |
11.2 |
Share-based payment expenses |
|
2.9 |
2.6 |
5.3 |
5.4 |
Exploration
and business development |
|
4.5 |
4.0 |
7.3 |
6.3 |
Income from operations |
|
62.6 |
71.7 |
128.5 |
141.0 |
|
|
|
|
|
|
|
Finance income |
|
0.6 |
0.9 |
0.8 |
2.0 |
|
Finance costs |
|
(0.5) |
(1.5) |
(2.6) |
(2.7) |
|
Other (losses) and
gains |
|
(22.0) |
28.5 |
(34.1) |
4.0 |
|
|
|
|
|
|
Earnings before taxes |
|
40.7 |
99.6 |
92.6 |
144.3 |
Income tax
expense |
|
(17.0) |
(21.0) |
(35.3) |
(41.0) |
|
|
|
|
|
|
Net
earnings |
|
23.7 |
78.6 |
57.3 |
103.3 |
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
Basic |
|
0.05 |
0.19 |
0.12 |
0.25 |
|
Diluted |
|
0.05 |
0.16 |
0.11 |
0.25 |
|
|
|
|
|
|
Weighted average
number of shares outstanding (in millions) |
|
|
|
|
|
|
Basic |
|
461.8 |
416.4 |
461.6 |
407.9 |
|
Diluted |
|
472.8 |
428.8 |
473.5 |
420.1 |
CONDENSED CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION |
(unaudited)
|
|
|
|
|
$ |
$ |
|
|
|
|
June 30 |
December 31 |
(In millions of U.S. dollars) |
|
|
|
2012 |
2011 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
230.4 |
309.4 |
|
Trade and other receivables |
|
|
|
29.7 |
37.6 |
|
Inventories |
|
|
|
124.7 |
106.5 |
|
Prepaid expenses and
other |
|
|
|
4.9 |
7.9 |
Total current assets |
|
|
|
389.7 |
461.4 |
|
|
|
|
|
|
Investments |
|
|
|
0.9 |
1.8 |
Non-current inventories |
|
|
|
25.8 |
20.3 |
Mining interests |
|
|
|
2,938.0 |
2,695.3 |
Deferred tax assets |
|
|
|
13.0 |
8.9 |
Non-current non-hedged derivative
asset |
|
|
|
- |
18.8 |
Reclamation
deposits and other |
|
|
|
5.2 |
14.9 |
Total
assets |
|
|
|
3,372.6 |
3,221.4 |
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
|
|
103.5 |
100.4 |
|
Current tax liabilities |
|
|
|
10.6 |
20.5 |
|
Current derivative liabilities |
|
|
|
51.4 |
49.2 |
|
Current non-hedged
derivative liabilities |
|
|
|
54.2 |
53.3 |
Total current liabilities |
|
|
|
219.7 |
223.4 |
|
|
|
|
|
|
Reclamation and closure cost
obligations |
|
|
|
49.7 |
50.7 |
Provisions |
|
|
|
12.1 |
12.6 |
Non-current derivative
liabilities |
|
|
|
73.2 |
92.4 |
Non-current non-hedged derivative
liabilities |
|
|
|
107.2 |
114.3 |
Long-term debt |
|
|
|
384.7 |
251.7 |
Deferred tax liabilities |
|
|
|
130.3 |
146.9 |
Deferred benefit |
|
|
|
46.3 |
46.3 |
Other |
|
|
|
0.6 |
0.7 |
Total
liabilities |
|
|
|
1,023.8 |
939.0 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Common shares |
|
|
|
2,470.8 |
2,464.0 |
Contributed surplus |
|
|
|
82.7 |
80.4 |
Other reserves |
|
|
|
(86.4) |
(86.4) |
Deficit |
|
|
|
(118.3) |
(175.6) |
Total
equity |
|
|
|
2,348.8 |
2,282.4 |
Total
liabilities and equity |
|
|
|
3,372.6 |
3,221.4 |
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS |
THREE AND SIX MONTHS ENDED JUNE 30,
2012 |
(unaudited)
|
|
|
Three months ended |
Six months ended |
|
|
$ |
$ |
$ |
$ |
(In millions of U.S. dollars) |
|
2012 |
2011 |
2012 |
2011 |
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
Net earnings |
|
23.7 |
78.6 |
57.3 |
103.3 |
Adjustments for: |
|
|
|
|
|
|
Realized gain on gold contracts |
|
(2.4) |
(2.2) |
(4.8) |
(4.2) |
|
Realized and unrealized foreign exchange loss
(gain) |
|
(0.5) |
1.1 |
1.0 |
(2.0) |
|
Realized and unrealized gain on investments |
|
- |
- |
- |
(1.3) |
|
Realized and unrealized gain on non-hedged
derivatives |
|
(11.1) |
(33.3) |
(2.5) |
(6.6) |
|
Reclamation and closure costs paid |
|
(4.5) |
- |
(4.5) |
- |
|
Loss on redemption of senior secured notes |
|
31.8 |
- |
31.8 |
- |
|
Loss on disposal of assets |
|
0.3 |
0.1 |
0.6 |
0.3 |
|
Depreciation and depletion |
|
21.7 |
17.2 |
40.1 |
36.9 |
|
Equity-settled share-based payment expense |
|
2.3 |
1.9 |
4.3 |
3.7 |
|
Unrealized loss on cash flow hedging items |
|
2.0 |
1.9 |
2.2 |
3.7 |
|
Income tax expense |
|
17.0 |
21.0 |
35.3 |
41.0 |
|
Finance income |
|
(0.6) |
(0.9) |
(0.8) |
(2.0) |
|
Finance costs |
|
0.5 |
1.5 |
2.6 |
2.7 |
|
|
80.2 |
86.9 |
162.6 |
175.5 |
|
Change in non-cash
operating working capital |
|
(8.1) |
0.6 |
(24.4) |
(26.8) |
Cash generated from operations |
|
72.1 |
87.5 |
138.2 |
148.7 |
|
Income taxes paid |
|
(25.9) |
(43.6) |
(55.3) |
(54.8) |
Net cash
generated from operations |
|
46.2 |
43.9 |
82.9 |
93.9 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
Mining interests |
|
(145.3) |
(85.9) |
(255.4) |
(143.1) |
|
Purchase of additional Blackwater mining
claims |
|
- |
- |
(6.0) |
- |
|
Recovery of reclamation deposits |
|
8.9 |
- |
8.9 |
8.1 |
|
Cash acquired in asset acquisition, net
transaction costs |
|
|
18.6 |
- |
18.6 |
|
Proceeds from sale of investments |
|
- |
- |
- |
8.9 |
|
Interest received |
|
0.4 |
0.4 |
0.6 |
1.5 |
|
Proceeds from disposal
of assets |
|
- |
0.1 |
- |
0.2 |
Cash used in
investing activities |
|
(136.0) |
(66.8) |
(251.9) |
(105.8) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Exercise of options to purchase common stock |
|
1.5 |
1.4 |
4.6 |
12.6 |
|
Exercise of warrants to purchase common stock |
|
- |
- |
0.2 |
- |
|
Redemption of senior secured notes |
|
(197.6) |
- |
(197.6) |
- |
|
Proceeds from issuance of senior notes |
|
300.0 |
- |
300.0 |
- |
|
Financing initiation costs |
|
(6.4) |
(0.3) |
(8.0) |
(0.8) |
|
Interest paid |
|
(7.6) |
(11.2) |
(7.6) |
(11.5) |
Cash
generated by financing activities |
|
89.9 |
(10.1) |
91.6 |
0.3 |
Cash
generated from (used in) discontinued operations |
|
- |
- |
- |
- |
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
(5.4) |
3.2 |
(1.6) |
11.2 |
|
|
|
|
|
|
Decrease in cash and cash
equivalents |
|
(5.3) |
(29.8) |
(79.0) |
(0.4) |
Cash and
cash equivalents, beginning of period |
|
235.7 |
520.2 |
309.4 |
490.8 |
Cash
and cash equivalents, end of period |
|
230.4 |
490.4 |
230.4 |
490.4 |
|
|
|
|
|
|
Cash and cash equivalents are
comprised of: |
|
|
|
|
|
|
Cash |
|
152.6 |
269.2 |
152.6 |
269.2 |
|
Short-term money market
instruments |
|
77.8 |
221.2 |
77.8 |
221.2 |
|
|
230.4 |
490.4 |
230.4 |
490.4 |
SOURCE New Gold Inc.