(All figures are in US dollars unless otherwise indicated)
VANCOUVER,
Oct. 29, 2013 /CNW/ - New Gold Inc.
("New Gold") (TSX:NGD) and (NYSE MKT:NGD) today announces financial
and operational results for the third quarter of 2013. The company
previously released its quarterly operational results on
October 21, 2013.
Third Quarter 2013 Highlights
- All-in sustaining costs(1) of $779 per ounce
-
- Total cash costs(2) of $280 per ounce compared to $443 per ounce in the prior year period
- Gold production of 94,038 ounces compared to 104,577 ounces in
the third quarter of 2012
-
- Copper production increased by 67% to 23.7 million pounds from
14.2 million pounds
- Adjusted net earnings(4) of $20 million, or $0.04 per share
- Adjusted net cash generated from operations(3) of
$54 million
- New Afton reached targeted throughput increase to over 12,000
tonnes per day three months ahead of schedule
- Cash and cash equivalents of $429
million at September 30,
2013
- Completed take-over of Rainy River Resources Ltd. ("Rainy
River") on October 15, 2013
-
- Increased gold reserves per share by 44%
- El Morro's environmental permit reinstated on October 22, 2013
- Updated 2013 outlook: 390,000 to 400,000 ounces of gold
production at all-in sustaining costs(1) of
approximately $900 per ounce
- and total cash costs(2) of
approximately $375 per ounce
"The strong performance of New Afton, our
largest cash flow generator, and the successful acquisition of
Rainy River during the quarter
were very important milestones for our company," stated
Randall Oliphant, Executive
Chairman. "We are, however, disappointed that the operational
challenges at Cerro San Pedro and Mesquite led us to update our
outlook for the first time in the company's history. Importantly,
our foundation of low costs, a solid balance sheet, and organic
growth pipeline in favourable jurisdictions continues to be strong.
As originally scheduled, the fourth quarter should be our highest
production quarter of the year and we look forward to a strong
finish to 2013."
During the third quarter, the company produced
94,038 ounces of gold at all-in sustaining costs(1) of
$779 per ounce and total cash
costs(2) of $280 per
ounce, representing the lowest cost quarter in the company's
history on both measures. For the three month period ended
September 30, 2013, New Gold
generated revenue of $196 million,
earnings from mine operations of $51
million, net earnings of $12
million, or $0.02 per share,
and net cash generated from continuing operations of $36 million. Adjusted net earnings(4)
were $20 million, or $0.04 per share, and adjusted net cash generated
from continuing operations(3) was $54 million.
Financial Results Overview
New Gold 2013 Third Quarter
Summary Financial Results |
|
|
Three months ended |
|
Nine months ended |
(in millions of U.S. dollars,
except per share amounts) |
|
September 30, |
|
September 30, |
|
|
|
2013 |
2012 |
|
2013 |
2012 |
|
|
|
|
|
|
|
|
Revenues |
|
|
196.0 |
195.5 |
|
581.3 |
540.4 |
|
|
|
|
|
|
|
|
Earnings from Mine
Operations |
|
|
51.2 |
77.3 |
|
142.8 |
231.4 |
|
|
|
|
|
|
|
|
Net Earnings |
|
|
12.2 |
17.8 |
|
63.5 |
75.1 |
Net Earnings per Share |
|
|
0.02 |
0.04 |
|
0.13 |
0.16 |
Adjusted Net Earnings(4) |
|
|
20.0 |
42.6 |
|
44.6 |
133.5 |
Adjusted Net Earnings per
Share(4) |
|
|
0.04 |
0.09 |
|
0.09 |
0.29 |
|
|
|
|
|
|
|
|
Net Cash Generated from Operations |
|
|
36.2 |
46.7 |
|
72.2 |
129.6 |
Adjusted Net Cash
Generated from Operations(3) |
|
54.0 |
46.7 |
|
155.7 |
129.6 |
Revenue remained consistent with the prior year
quarter despite decreases in the average realized prices of each of
the three commodities the company produces. When compared to the
third quarter of 2012, the average realized gold price decreased by
13%, the copper price by 12% and the silver price by 29%. The
company was able to maintain its revenue as New Afton, its highest
revenue and cash flow generating mine, performed very well, thus
offsetting the combination of lower commodity prices and lower gold
production at Cerro San Pedro and Mesquite. Quarter-over-quarter,
the company increased its revenue by 7% compared to the second
quarter of 2013.
Earnings from mine operations in both the three
and nine month periods ended September 30,
2013 were impacted by lower earnings contributions from
Cerro San Pedro, Mesquite and the Peak Mines. The lower
contribution from these operations was due to a combination of
lower average realized commodity prices and lower gold production,
resulting from the previously disclosed operational challenges at
Cerro San Pedro and Mesquite. This was partially offset by New
Afton, which delivered a 406% increase in earnings from mine
operations when compared to the third quarter of 2012, its first
quarter in commercial production. Quarter-over-quarter, New Gold
increased its earnings from mine operations by 52%.
Net earnings in the third quarter of 2013 were
$12 million, or $0.02 per share. Net earnings included: a
$7 million non-cash accounting charge
related to the reclassification of Other Comprehensive Income to
earnings as the loss incurred on the monetization of the company's
legacy hedge position in May of 2013 is realized into income over
the original term of the hedge contract, $5
million in non-recurring transaction costs related to the
Rainy River acquisition, a $7 million
pre-tax gain on foreign exchange, and a non-cash $2 million pre-tax gain on the mark to market of
the company's share purchase warrants. Adjusted net
earnings(4), including the related tax impact of the
above noted items, were $20 million,
or $0.04 per share.
Adjusted net cash generated from
operations(3) during the quarter was adjusted for
non-recurring cash expenditures related to the acquisition of
Rainy River. For the nine month
period ended September 30, 2013, an
additional adjustment was made for the one-time $66 million charge related to the settlement of
the company's legacy gold hedge position in May of 2013.
Quarter-over-quarter, adjusted net cash generated from
operations(3) increased by 25%.
2013 Outlook
As a result of the previously disclosed
operational challenges at the company's Cerro San Pedro and
Mesquite Mines, New Gold today provides an updated 2013
outlook.
Gold production at both New Afton, the company's
largest cash flow contributor, and the Peak Mines remains in line
with New Gold's original guidance, however, production at Mesquite
and Cerro San Pedro is now expected to be below the targets set in
early 2013.
Gold production at Mesquite is expected to be
between 110,000 and 115,000 ounces and at Cerro San Pedro it is
expected to be between 95,000 and 100,000 ounces. As a result, on a
consolidated basis, the company now expects to produce between
390,000 and 400,000 ounces of gold in 2013. At the same time,
consolidated copper production remains in line with the original
guidance range of 78 to 88 million pounds and the silver production
target at Cerro San Pedro is approximately 1.3 million ounces.
New Gold expects its consolidated 2013 all-in
sustaining costs(1) to be approximately $900 per ounce and its total cash
costs(2) to be approximately $375 per ounce. Both estimates have increased by
$25 per ounce, with this increase
largely attributable to the lower gold production expectation. For
the balance of the year, the cost targets include assumptions for
gold, silver and copper prices of $1,300 per ounce, $20.00 per ounce and $3.25 per pound and Canadian dollar, Australian
dollar and Mexican peso exchange rates of $1.00, $1.00 and
$13.00 to the U.S. dollar.
New Gold remains well positioned as one of the
lowest cost producers in the industry whether measured on an all-in
sustaining or total cash costs basis.
Production and Cost
Results |
New Gold 2013 Third Quarter
Summary Operational Results |
|
|
Three months
ended |
|
Nine months
ended |
|
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2013 |
2012 |
|
2013 |
2012 |
Gold Production (thousand ounces) |
|
|
|
|
|
|
|
|
New Afton |
|
|
|
25.2 |
14.0 |
|
62.0 |
14.0 |
Cerro San Pedro |
|
|
|
24.0 |
34.5 |
|
80.6 |
105.4 |
Mesquite |
|
|
|
20.8 |
32.2 |
|
72.1 |
112.8 |
Peak Mines |
|
|
|
23.9 |
23.9 |
|
76.5 |
66.7 |
Total Gold Production |
|
|
|
94.0 |
104.6 |
|
291.2 |
299.0 |
|
|
|
|
|
|
|
|
|
Total Gold Sales |
|
|
|
94.1 |
95.2 |
|
287.3 |
285.8 |
Average realized gold price ($ per
ounce) |
|
|
|
$1,359 |
$1,560 |
|
$1,375 |
$1,540 |
|
|
|
|
|
|
|
|
|
Silver Production (thousand ounces) |
|
|
|
|
|
|
|
|
Cerro San Pedro |
|
|
|
219.4 |
488.3 |
|
1,003.1 |
1,537.2 |
|
|
|
|
|
|
|
|
|
Total Silver Sales |
|
|
|
223.7 |
492.3 |
|
997.2 |
1,506.1 |
Average realized silver price ($ per
ounce) |
|
|
|
$21.31 |
$30.09 |
|
$24.59 |
$30.32 |
|
|
|
|
|
|
|
|
|
Copper Production (million pounds) |
|
|
|
|
|
|
|
|
New Afton |
|
|
|
20.9 |
11.1 |
|
51.4 |
11.1 |
Peak Mines |
|
|
|
2.8 |
3.1 |
|
9.9 |
10.8 |
Total Copper Production |
|
|
|
23.7 |
14.2 |
|
61.4 |
21.9 |
|
|
|
|
|
|
|
|
|
Total Copper Sales |
|
|
|
23.5 |
9.2 |
|
58.8 |
15.9 |
Average realized copper price ($ per
pound) |
|
|
|
$3.25 |
$3.69 |
|
$3.24 |
$3.60 |
|
|
|
|
|
|
|
|
|
Total Cash Costs(2) ($ per
ounce) |
|
|
|
|
|
|
|
|
New Afton |
|
|
|
($1,310) |
($955) |
|
($1,104) |
($955) |
Cerro San Pedro |
|
|
|
723 |
218 |
|
605 |
205 |
Mesquite |
|
|
|
1,017 |
722 |
|
936 |
664 |
Peak Mines |
|
|
|
856 |
796 |
|
874 |
772 |
Total Cash Costs(2) |
|
|
|
$280 |
$443 |
|
$399 |
$486 |
|
|
|
|
|
|
|
|
|
All-in Sustaining Costs(1) ($ per
ounce) |
|
|
|
|
|
|
|
|
New Afton |
|
|
|
($365) |
$1,001 |
|
($191) |
$1,023 |
Cerro San Pedro |
|
|
|
771 |
273 |
|
674 |
338 |
Mesquite |
|
|
|
1,098 |
822 |
|
1,162 |
728 |
Peak Mines |
|
|
|
1,332 |
1,478 |
|
1,405 |
1,381 |
All-in Sustaining
Costs(1) |
|
|
|
$779 |
$869 |
|
$905 |
$830 |
Gold Production
New Afton - New Afton's third quarter
gold production increased by 80% when compared to the same period
of the prior year. The increase in production was driven by higher
daily throughput, higher gold grades, which continue to reconcile
favourably to the company's plans, and higher gold recoveries. The
combination of these positive factors enabled New Afton to deliver
continued quarter-over-quarter improvement, with production
increasing by 16% over the second quarter of 2013. The third
quarter was the highest gold production quarter for New Afton since
it commenced production in mid-2012.
Cerro San Pedro - Cerro San Pedro's
production was impacted by a combination of lower ore tonnes placed
on the leach pad and lower recoveries. The placement of lower ore
tonnes was primarily driven by the impact of the previously
announced pit wall movement. The area impacted by the pit wall
movement is now planned to be mined during the next phase of mining
through 2014 and 2015.
As previously disclosed, recoveries from the
leach pad during the quarter were below expectations. In response,
over the course of the quarter, the metallurgical team adjusted the
leach solution by increasing cyanide and sodium hydroxide levels as
well as adding more lime to the ore trucks. The goal of these
adjustments is to optimize the leach solution in an effort to
maximize the recoveries from the multiple ore types at Cerro San
Pedro over time. At the same time, as a result of the above noted
pit wall movement, the company had to shift its mining efforts
further towards the bottom of the open pit, where the ore has
yielded lower recoveries, earlier than planned. Mining is scheduled
to remain in this lower area through early 2014 after which the
next phase of mining will move back to the top of the ore body
where the material is more oxidized and should have recoveries more
consistent with historical levels.
Mesquite - Mesquite's production in both
the three and nine month periods ended September 30, 2013 was below that of the prior
year periods primarily due to mining of lower grade ore. The mining
of lower grade ore was further impacted by a negative variance
between realized and modelled grades in the area of the pit that
was mined during the third quarter. Per the mine plan, mining has
since moved to a different area of the mine and Mesquite is
expected to have its strongest quarter of the year in the fourth
quarter.
Peak Mines - Gold production at the Peak
Mines was in line with the prior year quarter. For the nine month
period ended September 30, 2013, all
of the key production drivers - tonnes processed, gold grades and
recoveries - increased, resulting in a 15% increase in gold
production when compared to the same period of the prior year.
Copper Production
Driven by New Afton's continued strong
performance, consolidated copper production increased by 67% when
compared to the third quarter of 2012. Copper production at New
Afton increased by 88% when compared to the prior year quarter
through a combination of higher throughput, higher copper grades
and higher recoveries.
At the Peak Mines, copper production was
consistent with the prior year periods as increased tonnes
processed largely offset the planned mining of lower copper
grades.
Silver Production
Silver production in both the three and nine
month periods ended September 30,
2013 was below that of the prior year periods for reasons
consistent with those noted above regarding Cerro San Pedro's gold
production.
All-in Sustaining Costs(1) and Total
Cash Costs(2)
On a consolidated basis, during the third
quarter, both all-in sustaining costs(1) and total cash
costs(2) were the lowest in New Gold's history. All-in
sustaining costs(1) decreased by $90 per ounce compared to the prior year quarter
and $152 per ounce when compared to
the second quarter of 2013. Total cash costs(2)
decreased by $163 per ounce compared
to the prior year quarter and $150
per ounce compared to the second quarter of 2013. The decreases in
both cost measures were attributable to the significant
contribution of the low cost New Afton Mine and the company's
dedicated focus on maintaining its position as one of the
industry's lowest cost producers.
New Afton - Costs decreased when compared
to the third quarter of 2012 as a result of the mine's strong
operating performance. The increase in copper production at New
Afton more than offset the decrease in the average realized copper
price when compared to the third quarter of the prior year. On a
co-product basis, New Afton's third quarter costs were $454 per ounce of gold and $1.05 per pound of copper, both down
significantly from the prior year quarter.
Cerro San Pedro - The increase in cash
costs when compared to the prior periods is attributable to a
combination of lower silver by-product revenue and the fixed
portion of the operation's costs being attributed to a lower gold
production base. Cerro San Pedro generated $10 million, or approximately $205 per ounce, less silver by-product revenue
when compared to the third quarter of the prior year. Cerro San
Pedro's all-in sustaining costs(1) of $771 per ounce continue to be well below the
industry average, despite the lower silver by-product revenue.
Mesquite - Costs at Mesquite were higher
than the prior year periods due to mining of lower grade ore,
resulting in a lower production base. The impact of the lower
production was partially offset by a decrease in the mine's gross
operating costs during both the three and nine month periods ended
September 30, 2013. Mesquite's all-in
sustaining costs(1) decreased by $272 per ounce when compared to the second
quarter of 2013 as the company spent less than $2 million on sustaining capital during the third
quarter.
Peak Mines - The change in total cash
costs(2) at the Peak Mines during the quarter and
year-to-date periods was attributable to a combination of lower
copper by-product revenue and increased mining costs from mining
deeper portions of the Peak ore bodies. This was partially offset
by the depreciation of the Australian dollar and the higher gold
production base. All-in sustaining costs(1) decreased by
$170 per ounce and total cash
costs(2) decreased by $92
per ounce when compared to the second quarter of 2013.
New Gold's third quarter all-in sustaining
costs(1) of $779 per ounce
demonstrated a steady and meaningful decrease from $1,004 per ounce in the first quarter of 2013 and
$931 per ounce in the second quarter.
The company is proud to have further established itself as one of
the lowest cost producers in the industry.
"Our team is very proud of New Gold's
operational track record, and the need to update our outlook is
disappointing to all of us," stated Robert
Gallagher, President and Chief Executive Officer. "Our focus
is on finishing the year strongly and ensuring we deliver in 2014
and beyond as we have previously done."
Project Updates
On August 8, 2013,
pursuant to the take-over bid that was formally initiated on
June 18, 2013, New Gold acquired
97.5% of the Rainy River shares outstanding. Subsequent to the end
of the quarter, on October 15, 2013,
New Gold completed the compulsory acquisition of the balance of the
Rainy River shares it did not already own. The company is now the
registered owner of 100% of Rainy
River.
During the third quarter, New Gold continued to
progress its review and update of the Rainy River feasibility study
as well as the Blackwater
feasibility study. The updated Rainy
River study is scheduled for completion in late 2013 or
early 2014 and the Blackwater
study is on schedule for completion in December 2013.
New Gold plans to make a decision regarding the
sequencing of the Rainy River and Blackwater projects in 2014. The company's
capital allocation decision will be based on, among other things,
prevailing market conditions, available capital resources and the
most up to date information regarding project economics and
permitting for both projects. Ahead of this sequencing decision,
the company is advancing the permitting process and managing its
activities and capital commitments to synchronize the project
timelines to the extent possible and to ensure that both projects
are in a position to commence construction promptly when a
construction decision is ultimately made.
Rainy River
The Rainy River project is an advanced-stage
gold project situated in Richardson
Township, approximately 65 kilometres northwest of
Fort Frances in Northwestern Ontario. The property has
excellent infrastructure, with year-round road access and
powerlines in close proximity.
New Gold does not plan to alter the scale of the
project and continues to contemplate a 21,000 tonne per day
processing rate from a combination of open pit, underground and
stockpiled ore. The project is expected to produce over 225,000
ounces of gold annually, at below industry average costs. New Gold
intends to pursue the opportunity to process higher grade ounces in
the project's early years, while stockpiling lower grades for
processing towards the end of the mine life, with the goal of
increasing cash flow and enhancing project economics.
Third Quarter 2013 Highlights
- Completed updated feasibility study block model incorporating
results of Intrepid zone
- Initiated updated open pit and underground mine designs to
incorporate Intrepid zone
- Submitted draft Environmental Assessment report to Aboriginal
groups, Provincial and Federal regulatory agencies and other local
stakeholders
- Signed Memorandum of Understanding with the Métis Nation of
Ontario
- Completed 30 holes totalling 10,724 metres of exploration
drilling on various prospective targets on the broader Rainy River property
Capital expenditures at Rainy River were $8
million during the third quarter.
Blackwater
Blackwater is a
bulk-tonnage gold project located approximately 160 kilometres
southwest of the city of Prince George,
British Columbia where New Gold already has an established
presence through its New Afton Mine. The project property position
covers over 1,000 square kilometres. Work on the Blackwater feasibility study continued to
progress during the third quarter. The study remains on track for
completion in December 2013. At the
same time, the regional exploration program that was initiated in
the second quarter continued apace.
Third Quarter 2013 Highlights
- Completed design and layouts for the mill and related
facilities, power line, access roads and airstrip
- Completed design and construction sequencing schedule for
tailings and water management facilities
- Completed metallurgical testwork program including variability
test repeats
- Progressed draft Environmental Assessment report for submission
in early 2014
- Over 4,000 metres of drilling at Capoose completed to test
potential to expand mineral resource laterally and at depth
- Over 18,000 metres of first pass reconnaissance drilling
completed on seven prospective areas within the broader
Blackwater property
Capital expenditures at Blackwater were $13
million during the third quarter.
El Morro
New Gold's share of the El Morro project
provides the company with a 30% fully-carried interest in an
advanced stage, world-class gold-copper project in north-central
Chile. Under the terms of New
Gold's agreement with Goldcorp Inc. ("Goldcorp"), Goldcorp is
responsible for funding New Gold's full 30% share of capital costs.
The carried funding accrues 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.
On October 22,
2013, the Environmental Assessment Commission of Atacama
analyzed a final report prepared by the Chilean environmental
permitting authority ("SEA") and unanimously decided on the
reinstatement of the environmental permit for the El Morro project
that had been suspended since April
2012. The permit had been suspended pending the definition
and implementation by SEA of a community consultation process to
correct certain deficiencies in that process identified by the
Antofogasta Court of Appeals. The project continues to progress
with community engagement, optimization of project economics, and
evaluation of alternatives for a long-term power supply.
The El Morro and La
Fortuna deposits currently represent the two principal zones
of gold-copper mineralization. Future exploration efforts will also
test the potential for bulk-mineable gold and copper production
below the bottom of the La Fortuna
open pit. El Morro comprises a large, 36 square kilometre land
package with significant organic growth potential through
additional exploration.
Balance Sheet
At September 30,
2013, the key components of New Gold's consolidated
statements of financial position included $429 million in cash and cash equivalents and
$860 million in long-term debt. The
components of the long-term debt are: $300
million of 7.00% face value senior unsecured notes due in
April 2020; $500 million of 6.25% face value senior unsecured
notes due in November 2022; and
$76 million in El Morro funding
loans, repayable out of a portion of New Gold's share of El Morro
cash flow upon the start of production.
Webcast and Conference Call
New Gold will host a webcast and conference call
on October 29th at
9:00 a.m. Eastern Time to discuss the
results. Participants may listen to the webcast by registering on
our website at www.newgold.com. You may also listen to the
conference by calling toll-free 1-888-231-8191 or 1-647-427-7450
outside of Canada and the U.S. To
listen to a recorded playback of the call after the event, please
call toll-free 1-855-859-2056 or 1-416-849-0833 outside of
Canada and the U.S. - Passcode
87299582. An archived webcast will also be available at
www.newgold.com following the event.
About New Gold Inc.
New Gold is an intermediate gold mining company.
The company has a portfolio of four producing assets and three
significant development projects. The New Afton Mine in
Canada, the Cerro San Pedro Mine
in Mexico, the Mesquite Mine in
the United States and the Peak
Mines in Australia provide the
company with its current production base. In addition, New Gold
owns 100% of the Blackwater and
Rainy River projects, both in
Canada, as well as 30% of the El
Morro project located in Chile.
New Gold's objective is to continue to establish itself as a
leading intermediate gold producer, focused on the environment and
sustainability. 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 as well as information
respecting Rainy River and its
assets 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. Forward-looking statements
in this news release include those under the headings "2013
Outlook", and also include, among others, statements with respect
to: guidance for production, cash costs and all-in sustaining
costs; modifications to projects and operations and the expected
results of such modifications; timelines for mining in certain
areas of Cerro San Pedro and timelines for a sequencing decision
for the Rainy River and Blackwater
projects; the expected scale, processing rate, grades, production
and other attributes of the Rainy River project; planned drilling
activities and the goals and expected results of exploration
efforts; the estimation of mineral reserves and resources; the
timing of completion of feasibility studies or updates, reserve
updates and other technical work or reports; and the timing for
submission of the Blackwater Environmental Assessment report.
All forward-looking statements in this news
release are based on the opinions and estimates of management as of
the date such statements are made and are subject to important risk
factors and uncertainties, many of which are beyond New Gold's
ability to control or predict. Material assumptions regarding our
forward looking statements are discussed in this news release, the
annual MD&A, the AIF and our Technical Report. 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; price volatility in the spot and forward markets for
commodities; fluctuations in the international currency markets and
in the rates of exchange of the currencies of Canada, the United
States, Australia,
Mexico and Chile; 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 in which New
Gold operates, including, but not limited to: in Canada, obtaining the necessary permits for
Blackwater and the Rainy River
Gold Project; in Mexico, where
Cerro San Pedro has a history of ongoing legal challenges related
to our environmental authorization (EIS); and in Chile, where the courts had temporarily
suspended the approval of the environmental permit for El Morro;
the lack of certainty with respect to foreign legal systems, which
may not be immune from the influence of political pressure,
corruption or other factors that are inconsistent with the rule of
law; the uncertainties inherent to current and future legal
challenges New Gold is or may become a party to; diminishing
quantities or grades of reserves and resources; competition; loss
of key employees; additional funding requirements; rising costs of
labour, supplies, fuel and equipment; actual results of current
exploration or reclamation activities; uncertainties inherent to
mining economic studies including the PEA for Blackwater and the Feasibility Study for the
Rainy River Gold Project; 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; uncertainties with respect to the successful
integration of the business of Rainy
River within the business of New Gold; unexpected delays and
costs inherent to consulting and accommodating rights of First
Nations; and uncertainties with respect to obtaining all necessary
surface rights for the Rainy River Project. In addition, there are
risks and hazards associated with the business of mineral
exploration, development and mining, including environmental events
and hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion losses
(and the risk of inadequate insurance or inability to obtain
insurance to cover these risks) as well as "Risk Factors" included
in New Gold's (and, in respect to information related to the Rainy
River Gold Project, in Rainy
River'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.
Technical Information
The scientific and technical information in this
news release has been reviewed and approved by Mark Petersen, a Qualified Person under National
Instrument 43-101 and officer of New Gold.
Non-GAAP Measures
(1) ALL-IN SUSTAINING COSTS
Consistent with the guidance announced earlier
in 2013 from the World Gold Council, an association of various gold
mining companies from around the world of which New Gold is a
member, New Gold defines "all-in sustaining costs" as the sum of
total cash costs, sustaining capital expenditures, corporate
general & administrative costs, capitalized and expensed
exploration that is sustaining in nature and environmental
reclamation costs. New Gold believes this non-GAAP measure provides
further transparency into costs associated with producing gold and
will assist analysts, investors and other stakeholders of the
company in assessing its operating performance, its ability to
generate free cash flow from current operations and its overall
value. All-in sustaining costs constitute a non-GAAP measure and
are intended to provide additional information only and do not have
any standardized meaning under IFRS. They should not be considered
in isolation or as a substitute for measures of performance
prepared in accordance with IFRS. Other companies may calculate
these measures differently. A reconciliation to the nearest IFRS
measure will be provided in the MD&A accompanying the quarterly
financial statements.
(2) TOTAL CASH COSTS
"Total cash costs" per ounce figures are
non-GAAP measures which 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 costs 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 costs on a sales basis. Total cash costs include
mine site operating costs such as mining, processing,
administration, royalties and production taxes, but are exclusive
of amortization, reclamation, capital and exploration costs. Total
cash costs are 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 costs presented do not have a standardized meaning under IFRS
and may not be comparable to similar measures presented by other
mining companies. It should not be considered in isolation 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 to the nearest IFRS measure will be
provided in the MD&A accompanying the quarterly financial
statements.
(3) ADJUSTED NET CASH GENERATED FROM
OPERATIONS
"Adjusted net cash generated from operations" is
a non-GAAP financial measure. Net cash generated from operations
has been adjusted for one-time expenses related to the company's
acquisition of Rainy River in the
third quarter and a one-time charge incurred in the second quarter
related to the settlement of the company's legacy gold hedge
position. The company believes the presentation of adjusted net
cash generated from operations enables investors and analysts to
better understand the underlying operating performance of our core
mining business. Adjusted net cash generated from operations is
intended to provide additional information only and does not have
any standardized meaning under IFRS. It should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
New Gold 2013 Third Quarter Net
Cash Generated from Operations Reconciliation |
|
|
Three months ended |
|
Nine months ended |
(in millions of U.S. dollars) |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2013 |
2012 |
|
2013 |
2012 |
|
|
|
|
|
|
|
|
|
Net cash (used) generated from
operations |
|
|
|
36.2 |
46.7 |
|
72.2 |
129.6 |
New Gold's Rainy River transaction
costs |
|
|
|
4.9 |
- |
|
4.9 |
- |
Payment of Rainy River acquisition
expenses |
|
|
|
12.9 |
- |
|
12.9 |
- |
Settlement payment of gold hedge
contracts |
|
|
|
- |
- |
|
65.7 |
- |
|
|
|
|
|
|
|
|
|
Adjusted net cash generated from
operations |
|
|
|
54.0 |
46.7 |
|
155.7 |
129.6 |
(4) RECONCILIATION OF ADJUSTED NET EARNINGS
"Adjusted net earnings" and "adjusted net
earnings per share" are non-GAAP financial measures. Net earnings
have been adjusted and tax affected for the group of costs in
"Other gains and losses" on the condensed consolidated income
statement. The adjusted entries are also impacted for tax to the
extent that the underlying entries are impacted for tax in the
unadjusted net earnings from continuing operations. The company
uses this measure for its own internal purposes and believes the
presentation of adjusted net earnings enables investors and
analysts to better understand the underlying operating performance
of our core mining business through the eyes of management.
Management periodically evaluates the components of adjusted net
earnings based on an internal assessment of performance measures
that are useful for evaluating the operating performance of our
business and a review of the non-GAAP measures used by mining
industry analysts and other mining companies. Adjusted net earnings
and adjusted net earnings per share are intended to provide
additional information only and do not have any standardized
meaning under IFRS. They should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. The measures are not necessarily indicative of operating
profit or cash flow from operations as determined under IFRS. Other
companies may calculate these measures differently.
New Gold 2013 Third Quarter
Adjusted Net Earnings Reconciliation |
|
|
Three months ended |
|
Nine months ended |
(in millions of U.S. dollars,
except per share amounts) |
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2013 |
2012 |
|
2013 |
2012 |
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
12.2 |
17.8 |
|
63.5 |
75.1 |
Net earnings per share |
|
|
|
0.02 |
0.04 |
|
0.13 |
0.16 |
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ineffectiveness on hedging instruments |
|
|
|
- |
(0.6) |
|
(9.5) |
1.6 |
|
Realized and unrealized gain on non-hedged
derivatives |
|
|
|
(1.6) |
11.6 |
|
(44.8) |
9.1 |
|
(Gain) Loss on foreign exchange |
|
|
|
(6.7) |
3.7 |
|
11.8 |
4.7 |
|
Loss on disposal of assets |
|
|
|
0.5 |
0.7 |
|
1.7 |
1.3 |
|
Add back to revenue for hedge OCI
reclassification |
|
|
|
7.0 |
- |
|
11.7 |
- |
|
Rainy River transaction expenses |
|
|
|
4.9 |
- |
|
4.9 |
- |
|
Loss on Redemption of Senior Secured
Notes |
|
|
|
- |
- |
|
- |
31.8 |
|
Other |
|
|
|
1.9 |
0.2 |
|
1.7 |
1.2 |
|
Tax impact of adjustments |
|
|
|
1.8 |
9.2 |
|
3.6 |
8.7 |
|
|
|
|
7.8 |
24.8 |
|
(18.9) |
58.4 |
|
|
|
|
|
|
|
|
|
Adjusted net earnings |
|
|
|
20.0 |
42.6 |
|
44.6 |
133.5 |
Adjusted net earnings per
share |
|
|
|
0.04 |
0.09 |
|
0.09 |
0.29 |
CONDENSED CONSOLIDATED INCOME
STATEMENTS |
|
|
|
|
|
|
THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2013 |
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
Three
months ended |
|
Nine months ended |
|
$ |
|
$ |
|
$ |
|
$ |
(In millions of U.S. dollars, except
per share amounts) |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
196.0 |
|
195.5 |
|
581.3 |
|
540.4 |
Operating expenses |
102.1 |
|
88.8 |
|
313.8 |
|
239.1 |
Depreciation and depletion |
42.7 |
|
29.4 |
|
124.7 |
|
69.9 |
Earnings from mine operations |
51.2 |
|
77.3 |
|
142.8 |
|
231.4 |
|
|
|
|
|
|
|
|
Corporate administration |
6.5 |
|
3.2 |
|
21.1 |
|
16.2 |
Share-based payment expenses |
2.2 |
|
3.3 |
|
6.5 |
|
8.6 |
Exploration and business
development |
12.5 |
|
4.7 |
|
28.4 |
|
12.0 |
Income from operations |
30.0 |
|
66.1 |
|
86.8 |
|
194.6 |
|
|
|
|
|
|
|
|
|
Finance income |
0.6 |
|
0.2 |
|
1.2 |
|
1.0 |
|
Finance costs |
(9.1) |
|
(2.3) |
|
(32.0) |
|
(4.9) |
|
Rainy River acquisition costs |
(4.9) |
|
- |
|
(4.9) |
|
- |
|
Other gains (losses) |
5.9 |
|
(15.6) |
|
39.1 |
|
(49.7) |
|
|
|
|
|
|
|
|
Earnings before taxes |
22.5 |
|
48.4 |
|
90.2 |
|
141.0 |
Income tax expense |
(10.3) |
|
(30.6) |
|
(26.7) |
|
(65.9) |
|
|
|
|
|
|
|
|
Net earnings |
12.2 |
|
17.8 |
|
63.5 |
|
75.1 |
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Equity holders of New Gold
Inc. |
12.2 |
|
17.8 |
|
63.5 |
|
75.1 |
Non-controlling interests |
- |
|
- |
|
- |
|
- |
|
12.2 |
|
17.8 |
|
63.5 |
|
75.1 |
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
Basic |
0.02 |
|
0.04 |
|
0.13 |
|
0.16 |
|
Diluted |
0.02 |
|
0.03 |
|
0.13 |
|
0.16 |
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding (in millions) |
|
|
|
|
|
|
|
|
Basic |
495.3 |
|
462.2 |
|
482.9 |
|
461.8 |
|
Diluted |
497.9 |
|
468.6 |
|
486.0 |
|
473.6 |
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
September 30 |
|
December 31 |
|
|
|
|
$ |
|
$ |
(In millions of U.S. dollars) |
|
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
428.8 |
|
687.8 |
|
Trade and other receivables |
|
|
|
19.7 |
|
46.9 |
|
Inventories |
|
|
|
189.6 |
|
163.3 |
|
Current income tax receivable |
|
|
|
29.8 |
|
6.6 |
|
Prepaid expenses and other |
|
|
|
7.5 |
|
12.9 |
Total current assets |
|
|
|
675.4 |
|
917.5 |
|
|
|
|
|
|
|
Investments |
|
|
|
0.7 |
|
1.0 |
Non-current inventories |
|
|
|
36.7 |
|
32.4 |
Mining interests |
|
|
|
3,588.8 |
|
3,134.9 |
Deferred tax assets |
|
|
|
192.5 |
|
194.1 |
Other |
|
|
|
2.7 |
|
3.8 |
Total assets |
|
|
|
4,496.8 |
|
4,283.7 |
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
111.6 |
|
120.7 |
|
Current derivative liabilities |
|
|
|
- |
|
56.4 |
Total current liabilities |
|
|
|
111.6 |
|
177.1 |
|
|
|
|
|
|
|
Reclamation and closure cost
obligations |
|
|
60.8 |
|
68.5 |
Provisions |
|
|
|
12.1 |
|
9.5 |
Non-current derivative
liabilities |
|
|
- |
|
54.1 |
Non-current non-hedged derivative
liabilities |
|
33.4 |
|
80.3 |
Long-term debt |
|
|
|
859.7 |
|
847.8 |
Deferred tax liabilities |
|
|
|
402.0 |
|
322.9 |
Deferred benefit |
|
|
|
46.3 |
|
46.3 |
Other |
|
|
|
0.6 |
|
0.7 |
Total liabilities |
|
|
|
1,526.5 |
|
1,607.2 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common shares |
|
|
|
2,810.6 |
|
2,618.4 |
Contributed surplus |
|
|
|
88.2 |
|
85.2 |
Other reserves |
|
|
|
(24.9) |
|
(50.5) |
Retained earnings |
|
|
|
86.9 |
|
23.4 |
Total equity attributable to New Gold
Inc. shareholders |
|
2,960.8 |
|
2,676.5 |
Non-controlling interests |
|
|
|
9.5 |
|
- |
Total equity |
|
|
|
2,970.3 |
|
2,676.5 |
Total liabilities and equity |
|
|
|
4,496.8 |
|
4,283.7 |
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS |
|
|
|
|
|
|
THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2013 |
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
Three
months ended |
|
Nine months ended |
|
$ |
|
$ |
|
$ |
|
$ |
(In millions of U.S. dollars) |
2013 |
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
Net earnings |
12.2 |
|
17.8 |
|
63.5 |
|
75.1 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
Realized gains (losses) on gold contracts |
7.0 |
|
(2.5) |
|
8.2 |
|
(7.3) |
|
|
Realized and unrealized foreign exchange losses
(gains) |
(6.7) |
|
3.7 |
|
11.8 |
|
4.7 |
|
|
Realized and unrealized (gains) losses on
non-hedged derivatives |
(1.6) |
|
11.6 |
|
(44.8) |
|
9.1 |
|
|
Unrealized (gains ) losses on concentrate
contracts |
0.3 |
|
(1.0) |
|
1.3 |
|
(1.0) |
|
|
Settlement payment of gold hedge contracts |
- |
|
- |
|
(65.7) |
|
- |
|
|
Payment of Rainy River acquistion expenses |
(12.9) |
|
- |
|
(12.9) |
|
- |
|
|
Loss on redemption of senior secured notes |
- |
|
- |
|
- |
|
31.8 |
|
|
Reclamation and closure costs paid |
(0.4) |
|
(3.4) |
|
(1.4) |
|
(7.9) |
|
|
Loss on disposal of assets |
0.5 |
|
0.7 |
|
1.7 |
|
1.3 |
|
|
Depreciation and depletion |
42.8 |
|
29.4 |
|
125.1 |
|
69.5 |
|
|
Equity-settled share-based payment expense |
1.9 |
|
2.2 |
|
6.1 |
|
6.5 |
|
|
Realized and unrealized (gains) losses on cash
flow hedging items |
- |
|
(0.6) |
|
(9.5) |
|
1.6 |
|
|
Income tax expense |
10.3 |
|
30.6 |
|
26.7 |
|
65.9 |
|
|
Finance income |
(0.6) |
|
(0.2) |
|
(1.2) |
|
(1.0) |
|
|
Finance costs |
9.1 |
|
2.3 |
|
32.0 |
|
4.9 |
|
61.9 |
|
90.6 |
|
140.9 |
|
253.2 |
|
Change in non-cash operating working
capital |
(14.0) |
|
(23.5) |
|
(31.1) |
|
(47.9) |
Cash generated from
operations |
47.9 |
|
67.1 |
|
109.8 |
|
205.3 |
|
Income taxes paid |
(11.7) |
|
(20.4) |
|
(37.6) |
|
(75.7) |
Net cash generated from
operations |
36.2 |
|
46.7 |
|
72.2 |
|
129.6 |
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
Mining interests |
(63.7) |
|
(142.6) |
|
(201.1) |
|
(398.0) |
|
Proceeds received from sale of
pre-commercial production inventory |
|
|
7.6 |
|
|
|
7.6 |
|
Purchase of additional Blackwater
mining claims |
- |
|
- |
|
- |
|
(6.0) |
|
Acquisition of Rainy River (net of
cash received) |
(107.2) |
|
- |
|
(107.2) |
|
- |
|
Recovery of reclamation deposits |
- |
|
- |
|
- |
|
8.9 |
|
Interest received |
0.4 |
|
0.2 |
|
0.8 |
|
0.8 |
Cash used in investing activities |
(170.5) |
|
(134.8) |
|
(307.5) |
|
(386.7) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Issuance of common shares on exercise
of options and warrants |
0.8 |
|
2.9 |
|
5.2 |
|
7.7 |
|
Redemption of senior secured
notes |
- |
|
- |
|
- |
|
(197.6) |
|
Proceeds from issuance of senior
notes |
- |
|
- |
|
- |
|
300.0 |
|
Financing initiation costs |
- |
|
- |
|
(0.3) |
|
(8.0) |
|
Interest paid |
- |
|
- |
|
(26.3) |
|
(7.6) |
Cash generated (used) by financing
activities |
0.8 |
|
2.9 |
|
(21.4) |
|
94.5 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash and cash equivalents |
(0.2) |
|
2.4 |
|
(2.3) |
|
0.8 |
|
|
|
|
|
|
|
|
Decrease in cash and cash
equivalents |
(133.7) |
|
(82.8) |
|
(259.0) |
|
(161.8) |
Cash and cash equivalents, beginning
of the period |
562.5 |
|
230.4 |
|
687.8 |
|
309.4 |
Cash and cash equivalents, end of
the period |
428.8 |
|
147.6 |
|
428.8 |
|
147.6 |
|
|
|
|
|
|
|
|
Cash and cash equivalents are
comprised of: |
|
|
|
|
|
|
|
|
Cash |
267.5 |
|
48.2 |
|
267.5 |
|
48.2 |
|
Short-term money market
instruments |
161.3 |
|
99.4 |
|
161.3 |
|
99.4 |
|
428.8 |
|
147.6 |
|
428.8 |
|
147.6 |
SOURCE New Gold Inc.