(All dollar figures are in US dollars unless otherwise
indicated)
TORONTO, Oct. 28, 2015 /PRNewswire/ - New Gold Inc.
("New Gold") (TSX:NGD) (NYSE MKT:NGD) today announces its 2015
third quarter operational and financial results.
2015 THIRD QUARTER HIGHLIGHTS
- Gold production increased by 31% to 122,580 ounces relative to
93,367 ounces in the prior-year quarter
- Copper production of 24.6 million pounds consistent with 25.6
million pounds in the prior-year quarter
- Silver production increased to 0.6 million ounces from 0.2
million ounces in the prior-year quarter
- All-in sustaining costs(1) of $788 per ounce, including total cash
costs(2) of $495 per
ounce
- Net cash generated from operations before changes in working
capital(3) of $58 million,
or $0.11 per share
- September 30, 2015 cash balance
of $385 million
- Construction at Rainy River
advancing on schedule – site earthworks over 50% complete and key
initial mining equipment successfully commissioned
- Strengthened balance sheet through two previously announced
transactions
- $175 million Rainy River streaming transaction with
Royal Gold – initial payment of
$100 million received in July 2015 with remaining $75 million expected by mid-2016
- El Morro transaction expected to close in the fourth quarter –
New Gold to receive approximately $60 million in cash
after-tax, a 4% gold stream on future gold production from El Morro
and have the company's $94 million
carried funding loan payable to Goldcorp cancelled
"New Gold moved from strength to strength during the third
quarter," stated Randall Oliphant,
Executive Chairman. "Our gold production increased significantly,
our costs decreased and we further strengthened our balance sheet.
When including the cash proceeds from the El Morro transaction and
the remaining stream deposit from Royal
Gold, our company has total pro forma liquidity of over
$750 million which exceeds the
remaining development capital estimate at Rainy River. In addition, with quarterly
all-in sustaining costs below $800
per ounce we continued to generate a robust margin. We now look
forward to finishing the year with another strong operational
quarter and further advancing the construction of Rainy River."
CONSOLIDATED YEAR-TO-DATE OPERATIONAL RESULTS AND 2015
GUIDANCE
Consistent with the company's February
2015 guidance for the year, production was planned to be
weighted to the second half of 2015 and New Gold's four operations
began to deliver this higher production in the third quarter. As
the company has produced over 300,000 ounces of gold through the
first nine months of the year and expects a strong fourth quarter,
full-year gold production continues to have the potential to be
toward the high end of the original guidance range of 390,000 to
430,000 ounces. Consolidated copper production is expected to be at
the low end of the guidance range of 100 to 112 million pounds and
consolidated silver production is expected to be in line with
guidance at 1.75 to 1.95 million ounces.
New Gold's 2015 all-in sustaining costs(1) guidance
of $745 to $785 per ounce, including
total cash costs(2) of $340 to
$380 per ounce was set in February of 2015. The company's
cost guidance was based on assumptions of $2.75 per pound of copper and $16.00 per ounce of silver and foreign exchange
rates for the Canadian dollar, Australian dollar and Mexican peso
of $1.25, $1.25 and $15.00 to
the U.S. dollar, respectively.
For the nine-month period ended September
30, 2015, New Gold's all-in sustaining costs(1)
were $895 per ounce, including total
cash costs(2) of $464 per
ounce. All-in sustaining costs(1) and total cash
costs(2) per ounce are tracking above guidance due to
the combined impact of by-product commodity prices being lower than
those assumed at the beginning of 2015, copper production being at
the low end of guidance and a higher percentage of the company's
gold production coming from Mesquite, which is expected to have an
above average cost year in 2015.
The company's fourth quarter all-in sustaining
costs(1) and total cash costs(2) are expected
to be lower than the year-to-date costs driven by the combined
benefit of higher gold and copper sales volumes. As a result, the
2015 full-year all-in sustaining costs(1) and total cash
costs(2) per ounce are expected to decrease relative to
those achieved through the first nine months of the year.
At the end of the second quarter, the company indicated that
based on spot commodity prices and foreign exchange rates at that
time, full-year costs were expected to be higher than the guidance
provided at the beginning of 2015. Since that time, copper prices
have decreased further, while foreign exchange rates have remained
in line. As a result, New Gold expects full-year all-in sustaining
costs(1) of $840 to $860
per ounce, including total cash costs(2) of $430 to $450 per ounce.
2015 THIRD QUARTER OPERATIONAL RESULTS
New Gold's third quarter gold production of 122,580 ounces
increased by 31% relative to the prior-year quarter. The
significant increase in quarterly gold production was a result of
higher production at each of New Afton, Mesquite and Cerro San
Pedro more than offsetting a decrease at the Peak Mines.
Consolidated copper production of 24.6 million pounds was in line
with the third quarter of 2014 and silver production increased to
0.6 million ounces.
New Gold's third quarter all-in sustaining costs(1)
of $788 per ounce decreased by
$60 per ounce relative to the
prior-year quarter. The decrease in all-in sustaining
costs(1) was attributable to the higher gold production
base as well as a $13 million, or
$244 per ounce, decrease in
cumulative sustaining capital, exploration, general and
administrative, and amortization of reclamation expenditures. The
decrease in all-in sustaining costs(1) was achieved
despite a $19 million, or
$368 per ounce, decrease in copper
and silver by-product revenue resulting from lower realized
prices(4). The company's third quarter total cash
costs(2) of $495 per
ounce, which are a component of all-in sustaining
costs(1), increased relative to the prior-year quarter
as the impact of lower by-product revenue was only partially offset
by the higher gold production and the depreciation of the Canadian
and Australian dollars relative to the U.S. dollar.
New Afton
Gold production at New Afton during the
third quarter of 26,986 ounces increased relative to the prior-year
quarter. The increase in quarterly production was driven by a 5%
increase in throughput to an average of over 15,300 tonnes per
operating day, with gold grade and recovery remaining consistent.
New Afton's quarterly operating performance continued to benefit
from the completion of the mill expansion in mid-2015. As a result
of the incremental grinding capacity added to the mill circuit,
gold recovery remained at 83% despite the increase in
throughput.
New Afton's quarterly copper production of 21.4 million pounds
was in line with the third quarter of 2014. The combination of the
5% increase in throughput and a 1% increase in copper recovery,
resulting from the successful mill expansion project, offset a
decrease in copper grade.
The increase in New Afton's total cash costs(2) to
($533) per ounce was primarily
attributable to an $18 million, or
$687 per ounce, decrease in copper
by-product revenue relative to the prior-year quarter driven by a
decrease in the realized price(4). The impact to costs
of the increase in ore tonnes mined and processed during the
quarter was offset by a 20% depreciation of the Canadian dollar
relative to the U.S. dollar. New Afton's sustaining capital
expenditures of $12 million remained
in line with the third quarter of 2014 resulting in all-in
sustaining costs(1) of ($20) per ounce in the quarter.
New Afton's third quarter co-product cash costs(2)
were $471 per ounce of gold and
$0.94 per pound of copper relative to
$383 per ounce and $1.04 per pound in the prior-year quarter as a
greater percentage of revenue was derived from gold relative to the
third quarter of 2014. The mine's third quarter co-product all-in
sustaining costs(1) of $671 per ounce of gold and $1.33 per pound of copper compared to
$560 per ounce and $1.44 per pound in the third quarter of 2014.
NEW GOLD SUMMARY
OPERATIONAL RESULTS
|
|
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Three months ended
September 30
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Nine months ended
September 30
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2015
|
2014
|
|
2015
|
2014
|
GOLD PRODUCTION
(thousand ounces)
|
|
|
|
|
|
New Afton
|
27.0
|
25.6
|
|
75.3
|
79.3
|
Mesquite
|
43.3
|
26.3
|
|
91.5
|
70.4
|
Peak Mines
|
20.7
|
28.3
|
|
55.1
|
77.1
|
Cerro San
Pedro
|
31.6
|
13.2
|
|
82.2
|
47.3
|
Total Gold
Production
|
122.6
|
93.4
|
|
304.0
|
274.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Gold Sales
(thousand ounces)
|
115.7
|
88.2
|
|
295.8
|
267.0
|
Average Realized Gold
Price per ounce(4)
|
$1,117
|
$1,236
|
|
$1,174
|
$1,283
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|
|
|
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COPPER PRODUCTION
(million pounds)
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|
|
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New Afton
|
21.4
|
21.1
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|
60.9
|
64.1
|
Peak Mines
|
3.2
|
4.6
|
|
10.3
|
12.9
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Total Copper
Production
|
24.6
|
25.6
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|
71.1
|
77.0
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|
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|
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Total Copper Sales
(million pounds)
|
21.6
|
22.7
|
|
67.4
|
72.2
|
Average Realized
Copper Price per pound(4)
|
$2.23
|
$3.11
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|
$2.52
|
$3.06
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|
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SILVER PRODUCTION
(thousand ounces)
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|
|
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New Afton
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70.9
|
59.8
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|
192.3
|
183.2
|
Peak Mines
|
26.3
|
32.6
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|
78.6
|
99.4
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Cerro San
Pedro
|
472.2
|
138.3
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|
1,107.8
|
783.0
|
Total Silver
Production
|
569.4
|
230.7
|
|
1,378.6
|
1,065.6
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|
|
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|
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|
|
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Total Silver Sales
(thousand ounces)
|
544.4
|
233.6
|
|
1,321.3
|
1,064.4
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Average Realized
Silver Price per ounce(4)
|
$14.72
|
$19.66
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|
$15.72
|
$19.90
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TOTAL CASH
COSTS(2)($ per ounce)
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|
|
|
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|
New Afton
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($533)
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($1,245)
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|
($769)
|
($1,264)
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Mesquite
|
718
|
951
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|
800
|
937
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Peak Mines
|
894
|
568
|
|
941
|
641
|
Cerro San
Pedro
|
731
|
1,604
|
|
852
|
1,185
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Total Cash
Costs(2)
|
$495
|
$311
|
|
$464
|
$272
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|
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|
|
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All-IN SUSTAINING
COSTS(1)($ per ounce)
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|
|
|
|
|
New Afton
|
($20)
|
($700)
|
|
($203)
|
($680)
|
Mesquite
|
892
|
1,625
|
|
1,300
|
1,354
|
Peak Mines
|
1,250
|
873
|
|
1,302
|
955
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Cerro San
Pedro
|
749
|
1,701
|
|
866
|
1,317
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All-in Sustaining
Costs(1)
|
$788
|
$848
|
|
$895
|
$754
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|
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|
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For the nine-month period ended September
30, 2015, gold production at New Afton of 75,256 ounces was
slightly below production of 79,288 ounces in the prior-year period
as the combination of lower gold grade and recovery was only
partially offset by higher throughput. As the mill expansion was
completed on schedule in mid-2015, gold recovery in the early part
of 2015 was lower than the prior year as throughput was increased.
Since the completion of the mill expansion, gold recovery has
increased by 3% relative to the first quarter of 2015.
New Afton's copper production of 60.9 million pounds in the
first nine months of 2015 was below prior-year period production of
64.1 million pounds for reasons consistent with those noted above
for gold production. Copper recovery in the third quarter was 4%
higher than the first quarter of 2015, demonstrating the benefits
of the mill expansion project.
New Afton's total cash costs(2) for the nine-month
period ended September 30, 2015 of
($769) per ounce were $495 per ounce higher than the prior-year period.
The increase in costs was primarily attributable to a $41 million, or $392 per ounce, decrease in copper by-product
revenue relative to the prior-year period driven by a combination
of the decrease in the realized price(4) and lower
copper sales volumes. New Afton's sustaining capital expenditures
in the first nine months of 2015 were approximately 10% below the
prior-year period, resulting in all-in sustaining
costs(1) of ($203) per
ounce.
New Afton's co-product cash costs(2) were
$476 per ounce of gold and
$1.01 per pound of copper in the
first nine months of 2015 relative to $413 per ounce and $0.99 per pound in the prior-year period and the
mine's co-product all-in sustaining costs(1) were
$682 per ounce of gold and
$1.44 per pound of copper compared to
$612 per ounce and $1.47 per pound in the prior-year period.
New Afton remains on track to finish the year in line with its
gold production guidance range of 105,000 to 115,000 ounces.
Full-year copper production is expected to be at the low end of the
guidance range of 85 to 95 million pounds. Though New Afton's gross
operating costs have been approximately 10% lower than the
company's plans due to the depreciation of the Canadian dollar
relative to the U.S. dollar, the mine's total cash
costs(2) and all-in sustaining costs(1) have
been impacted by lower than expected copper by-product revenue. The
year-to-date average realized copper price(4) of
$2.52 per pound has been below the
company's guidance assumption of $2.75 per pound which, when combined with copper
production being at the low end of guidance, will negatively impact
the mine's 2015 total cash costs(2) and all-in
sustaining costs(1) per ounce relative to guidance.
Based on the net impact of the decrease in the copper price, the
expected 2015 full-year copper production and the Canadian dollar
foreign exchange rate benefit, New Afton's all-in sustaining
costs(1) and total cash costs(2) should both
be approximately $350 per ounce above
the mine's guidance ranges of ($560) to
($520) per ounce and ($1,070) to
($1,030) per ounce, respectively.
Mesquite
Mesquite's third quarter gold production of
43,291 ounces increased by 65% relative to the prior-year quarter.
The third quarter delivered Mesquite's highest quarterly production
since the first quarter of 2012. The increase in production
relative to the third quarter of 2014 was driven by the combination
of a significant increase in the number of ore tonnes mined and
placed on the leach pad and faster process recoveries resulting
from the company's investment in the leach pad expansion. The
benefit of the increase in ore tonnes was partially offset as a
portion of the tonnes contained lower gold grade. Consistent with
the company's expectations, Mesquite had a strong third quarter and
with the significant number of ore tonnes placed on the pad, the
mine is well positioned for a solid finish to the year.
Mesquite's third quarter total cash costs(2) of
$718 per ounce were $233 per ounce below the prior-year quarter with
the decrease attributable to higher quarterly production and lower
diesel prices. Third quarter sustaining capital expenditures of
$6 million were $11 million lower than the prior-year quarter
thus positively impacting Mesquite's all-in sustaining
costs(1). Mesquite's third quarter all-in sustaining
costs(1) of $892 per ounce
were $733 per ounce below the
prior-year quarter.
For the nine-month period ended September
30, 2015, gold production of 91,479 ounces increased by 30%
relative to the same period of the prior year. The increase in
production was attributable to a 78% increase in ore tonnes mined
and placed on the leach pad which was partially offset by lower
gold grade.
Mesquite's total cash costs(2) of $800 per ounce for the nine-month period ended
September 30, 2015 were $137 per ounce below the same period of the prior
year while the mine's all-in sustaining costs(1) of
$1,300 per ounce were $54 per ounce lower. The increase in sustaining
capital expenditures at Mesquite in the first nine months of 2015,
resulting from the company's planned focus on waste stripping as
well as the leach pad expansion, was offset by higher gold
production.
As Mesquite has produced over 90,000 ounces in the first nine
months of 2015, the mine's full-year gold production is expected to
exceed the high end of its guidance range of 110,000 to 120,000
ounces by approximately 10,000 ounces. Consistent with the
company's plans, Mesquite's third quarter costs were well below
those of the first half of the year thus positioning the mine to
deliver full-year costs below guidance. Mesquite's 2015 full-year
total cash costs(2) are expected to come in
significantly below the guidance range of $925 to $965 per ounce due to the combined
benefit of higher production and approximately $20 million of waste stripping costs being
capitalized. At the same time, Mesquite's all-in sustaining
costs(1) are expected to be $75
to $100 per ounce below the guidance range of $1,290 to $1,330 per ounce.
Peak Mines
Third quarter gold production at the Peak
Mines of 20,734 ounces increased relative to the second quarter as
planned, however was below that of the prior-year quarter. Gold
production decreased when compared to the third quarter of 2014 due
to the combined impact of an 11% decrease in tonnes processed and
lower gold grade. As previously disclosed, the main stoping area of
the Perseverance ore body experienced geotechnical challenges in
March of 2015. Since that time, there has been reduced
accessibility and a decrease in tonnes mined and processed from
this area as there was an increased focus on rehabilitation and
remediation.
Quarterly copper production of 3.2 million pounds was lower than
the 4.6 million pounds produced in the prior-year quarter. Copper
production decreased due to the combination of lower ore tonnes
processed, grade and recovery.
Total cash costs(2) at the Peak Mines of $894 per ounce increased relative to the
prior-year quarter due to the combined impact of a 19% decrease in
gold sales volumes, a $4 million, or
$99 per ounce, decrease in copper
by-product revenue and increased costs associated with the
rehabilitation of Perseverance. This increase was partially offset
by the 28% depreciation of the Australian dollar relative to the
U.S. dollar. Sustaining capital expenditures at the Peak Mines
remained consistent with the third quarter of 2014, however, all-in
sustaining costs(1) per ounce were similarly impacted by
the lower gold sales volumes.
For the nine-month period ended September
30, 2015, gold production at the Peak Mines of 55,054 ounces
was well below production of 77,141 ounces in the same period of
the prior year. The decrease in gold production was attributable to
a 12% decrease in throughput and lower gold grade, with both
primarily related to the geotechnical challenges at
Perseverance.
Copper production in the first nine months of 2015 of 10.3
million pounds was below the 12.9 million pounds produced in the
prior-year period primarily due to lower throughput and copper
recovery.
Total cash costs(2) of $941 per ounce and all-in sustaining
costs(1) of $1,302 per
ounce at the Peak Mines in the nine-month period ended September 30, 2015 increased relative to the
prior-year period primarily due to the lower gold sales volumes as
the impact of lower copper by-product revenue was offset by the
combined benefit of the depreciation of the Australian dollar
relative to the U.S. dollar and lower sustaining capital
expenditures.
As anticipated, third quarter gold production increased relative
to the second quarter and it is expected that the fourth quarter
will be the Peak Mines' strongest production quarter of the year.
With a strong finish to the year, full-year gold production at the
Peak Mines should be close to the low end of the guidance range of
85,000 to 95,000 ounces despite the geotechnical challenges
encountered earlier in the year. At the same time, copper
production is expected to be approximately one million pounds below
the guidance range of 15 to 17 million pounds. Total cash
costs(2) and all-in sustaining costs(1) per
ounce in the fourth quarter should benefit from higher gold
production, however, as a result of the Perseverance rehabilitation
costs and lower than planned copper production, full-year total
cash costs(2) at the Peak Mines are expected to be
approximately $150 per ounce above
the guidance of $660 to $700 per
ounce and approximately $200 per
ounce above the guidance range of $1,005 to
$1,045 per ounce for all-in sustaining
costs(1).
The Peak Mines also delivered further exploration success during
the third quarter. The team has continued to intercept encouraging
mineralization at a new ore lens named Chronos. The Chronos lens is
situated closer to surface, directly above the Perseverance ore
body which is currently in production and adjacent to the mill.
Thus far, the Chronos lens has been delineated over a vertical
height of 280 metres, a strike length of 40 to 50 metres and an
average true width that ranges from 10 to 25 metres. The
mineralized lens intersects the top of Perseverance at a vertical
depth of approximately 600 metres and remains open along strike to
the north and south and upward toward the surface. To date 47 holes
have been drilled into the Chronos lens, with 46 of the holes
intercepting significant lead-zinc mineralization and visible gold
observed in 15 of the holes. Additional exploration drilling to
test the limits of both Chronos and Great Cobar, where the company
had exploration success earlier in the year, is planned for the
fourth quarter of 2015.
Cerro San Pedro
Cerro San Pedro continued its strong
year with third quarter gold production of 31,569 ounces increasing
by 140% relative to the prior-year quarter. The increase in gold
production was driven by the combined benefit of a significant
increase in ore tonnes mined and placed on the leach pad and higher
gold grade.
Third quarter silver production at Cerro San Pedro of 0.5
million ounces also increased when compared to the prior-year
quarter. Quarterly silver production benefitted from the additional
ore tonnes placed on the leach pad in third quarter as well as
prior quarters as the leach recovery cycle for silver is longer
than for gold.
Cerro San Pedro's third quarter total cash costs(2)
of $731 per ounce and all-in
sustaining costs(1) of $749 per ounce were both over $850 per ounce below those of the prior-year
quarter. Cerro San Pedro's third quarter costs benefitted from the
combination of a higher gold production base, depreciation of the
Mexican peso relative to the U.S. dollar and lower sustaining
capital expenditures. These benefits were partially offset by a
decrease in silver by-product revenue resulting from the lower
realized silver price(4).
For the nine-month period ended September
30, 2015, Cerro San Pedro's gold production of 82,210 ounces
increased by 74% when compared to the same period of the prior
year. The drivers of the increase in gold production in the
nine-month period were consistent with those noted for the third
quarter.
Silver production in the first nine months of 2015 was 1.1
million ounces relative to 0.8 million ounces in the prior-year
period.
Cerro San Pedro's total cash costs(2) of $852 per ounce and all-in sustaining
costs(1) of $866 per ounce
in the nine-month period ended September 30,
2015 were well below those of the prior-year period for
reasons consistent with those noted for the third quarter. For the
nine-month period, the increase in silver sales volumes has more
than offset the decrease in the realized silver price(4)
thus resulting in higher silver by-product revenue.
As Cerro San Pedro has produced over 80,000 ounces of gold in
the first nine months of 2015, the mine is expected to reach the
high end of its guidance range of 90,000 to 100,000 ounces. Cerro
San Pedro's costs in the nine-month period ended September 30, 2015 are below the guidance for
total cash costs(2) of $955 to
$995 per ounce and all-in sustaining costs(1) of
$1,005 to $1,045 per ounce. As the
mine is expected to have a solid fourth quarter, Cerro San Pedro
should deliver full-year costs $100 to
$150 per ounce below the guidance range.
"I am proud of our operating team's execution in the third
quarter," stated David Schummer,
Executive Vice President and Chief Operating Officer. "Beyond
delivering higher production at lower costs we also continued to
focus on opportunities for further business improvement and cost
optimization at all of our sites."
2015 THIRD QUARTER FINANCIAL RESULTS
NEW GOLD SUMMARY
FINANCIAL RESULTS
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
(in millions of
U.S. dollars, except where noted)
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
Revenues
|
177.3
|
169.3
|
|
513.9
|
537.9
|
|
|
|
|
|
|
Operating
Margin(6)
|
71.9
|
75.1
|
|
210.7
|
249.9
|
|
|
|
|
|
|
Adjusted Net
(Loss)/Earnings(5)
|
(8.5)
|
5.4
|
|
(13.9)
|
31.8
|
Adjusted Net
(Loss)/Earnings per Share(5)
|
(0.02)
|
0.01
|
|
(0.03)
|
0.06
|
|
|
|
|
|
|
Net
Earnings/(Loss)
|
(157.8)
|
(59.6)
|
|
(191.9)
|
(45.2)
|
Net Earnings/(Loss)
per Share
|
(0.31)
|
(0.12)
|
|
(0.38)
|
(0.09)
|
|
|
|
|
|
|
Net Cash Generated
from Operations before Changes in Working
Capital(3)
|
58.4
|
78.6
|
|
188.5
|
240.6
|
Net Cash Generated
from Operations
|
51.0
|
58.2
|
|
177.7
|
198.9
|
|
|
|
|
|
|
Third quarter revenues increased by $8
million, or 5%, relative to the prior-year quarter as higher
metal sales volumes offset the impact of lower realized metal
prices(4). The higher metal sales volumes increased
revenues by $37 million which was
partially offset by a $29 million
decrease resulting from lower commodity prices. When compared to
the prior-year quarter, the average realized price(4)
decreased by $119 per ounce of gold,
$0.88 per pound of copper and
$4.94 per ounce of silver. Revenues
in the third quarter of 2014 included a non-cash accounting charge
of $7 million related to the
company's monetization of its legacy hedge position in 2013. For
the nine-month period ended September 30,
2015, New Gold's revenues of $514
million were impacted by the combination of lower realized
prices(4) for all metals and the decrease in copper
sales volumes which was partially offset by higher gold and silver
sales volumes relative to the same period of the prior year. The
$24 million decrease in revenues in
the nine-month period was attributable to the net impact of a
$53 million decrease driven by lower
metal prices which was partially offset by a $29 million increase in metal sales volumes.
Revenues in the nine-month period ended September 30, 2015 included a non-cash accounting
charge of $21 million related to the
company's monetization of its legacy hedge position in 2013.
New Gold's third quarter operating margin(6) remained
in line with the prior-year quarter despite lower realized metal
prices(4). The combined benefit of increased metal sales
volumes and the depreciation of the Canadian and Australian dollars
relative to the U.S. dollar largely offset the company's higher
operating expenses associated with increased mining activity at
each of New Afton, Mesquite and the Peak Mines. The company's
operating margin(6) in the first nine months of 2015
decreased relative to the prior-year period as a result of lower
revenues and higher costs associated with increased mining
activity, which were partially offset by the depreciation of the
Canadian and Australian dollars relative to the U.S. dollar.
New Gold had an adjusted net loss(5) of $9 million, or $0.02 per share, in the third quarter of 2015.
The adjusted net loss(5) was attributable to the slight
decrease in operating margin(6) coupled with an increase
in depreciation and depletion associated with higher production and
higher finance costs as interest is no longer capitalized against
the Blackwater project. The impact
of these items was partially offset by lower corporate
administration and exploration and business development
expenditures. The company reported a net loss of $158 million, or $0.31 per share. The reported net loss included
the impact of a non-cash $100 million
after-tax loss associated with the announced sale of El Morro and a
$41 million pre-tax foreign exchange
loss.
The company's third quarter net cash generated from operations
before changes in working capital(3) of $58 million was $20
million lower than the prior-year period. The decrease in
net cash generated from operations before changes in working
capital(3) in the third quarter was driven by the
$3 million decrease in operating
margin(6), a $3 million
non-recurring provision for corporate office consolidation costs
and a $1 million cash tax payment.
These items were partially offset by a $3
million decrease in cumulative corporate administration,
exploration and business development expenditures. Net cash
generated from operations before changes in working
capital(3) in the prior-year quarter included
$7 million in cash proceeds from the
sale of gold associated with the accounting charge related to the
company's monetization of its legacy hedge position in 2013 and a
$4 million tax refund. Net cash
generated from operations was $51
million. For the nine-month period ended September 30, 2015, New Gold's net cash generated
from operations before changes in working capital(3) was
$189 million compared to $241 million in the prior-year period and cash
generated from operations was $178
million compared to $199
million in the prior-year period. The impact of the decrease
in operating margin(6) in the first nine months of 2015
was partially offset by a decrease in corporate administration and
exploration and business development expenditures.
FINANCIAL UPDATE
New Gold's cash and cash equivalents were $385 million as at September 30, 2015. In addition, the company
expects to receive an additional $135
million of cash resulting from two previously announced
transactions. As part of the company's $175
million streaming transaction with RGLD Gold AG, a
wholly-owned subsidiary of Royal Gold Inc. ("Royal Gold"),
announced in July 2015, the remaining
$75 million of the stream deposit is
scheduled to be paid when 60% of the estimated Rainy River project development capital has
been spent, which is expected to be by mid-2016, and other
customary conditions precedent have been met. Upon closing of the
El Morro transaction, which was announced in August 2015 and is expected to close in the
fourth quarter, the company will receive approximately $60 million in cash (net of withholding tax) from
Goldcorp Inc. ("Goldcorp"). New Gold also has a $300 million revolving credit facility of which
$62 million has been used, as at
September 30, 2015, to issue letters
of credit with the balance remaining undrawn. New Gold's
September 30, 2015 cash balance of
$385 million together with
Royal Gold's additional $75 million deposit, the $60 million after-tax cash proceeds from the El
Morro sale and the amount available for drawdown under New Gold's
revolving credit facility provide the company with approximately
$758 million of total liquidity which
exceeds Rainy River's remaining
project development capital of approximately $710 million.
At the end of the third quarter of 2015, the face value of the
company's long-term debt was $800
million (book value – $787
million). The components of the debt include: $300 million of 7.00% face value senior unsecured
notes due in April of 2020, $500
million of 6.25% face value senior unsecured notes due in
November of 2022. As at September 30,
2015, the $94 million in El
Morro funding loans was classified as a liability held for sale and
will be cancelled when the El Morro transaction closes, expected in
the fourth quarter of 2015. The company currently has approximately
509 million shares outstanding.
"Our cash balance, coupled with the remaining $135 million we are due to receive from Goldcorp
and Royal Gold as part of our two
transactions, provides us with solid financial flexibility," stated
Brian Penny, Executive Vice
President and Chief Financial Officer. "In addition to our strong
operational execution, our operating costs at New Afton, the Peak
Mines and Cerro San Pedro, and development costs at Rainy River, continue to benefit from the
depreciation of local currencies relative to the U.S. dollar,
leaving us well positioned as we continue to execute on our
plans."
PROJECTS UPDATE
RAINY RIVER
Development activity at New Gold's Rainy River project, located in northwestern
Ontario, has continued to advance
on schedule, with first production remaining on target for
mid-2017.
RAINY RIVER – THIRD QUARTER
2015 PROJECT UPDATES
- Detailed engineering completed
- Temporary accommodation facility completed
- Relocation of Highway 600 – over 45% complete and on schedule
for completion in December 2015
- Plant Site earthworks – over 50% complete
- Concrete placement – over 15% complete
- First structural steel erected on October 7th
- Assembly of initial mine fleet ongoing – commissioned two
218-tonne trucks, one hydraulic shovel, one loader, three dozers
and two blasthole drills
- No Lost Time Incidents since the company acquired the project
in 2013
Project capital expenditures at Rainy
River during the third quarter totalled $48 million, bringing the total project
development capital spending through September 30, 2015 to $168
million. Through the end of the third quarter of 2015, New
Gold has spent 19% of the total development capital estimate of
$877 million. Beyond the $168 million that has been spent, the company has
committed an additional $342 million
of the project development capital.
As previously disclosed, in July
2015, New Gold entered into a streaming transaction with
Royal Gold. Under the terms of the
transaction, Royal Gold agreed to
provide New Gold with a deposit of $175
million in exchange for the delivery by New Gold of a
percentage of the future gold and silver production from the Rainy
River project. Royal Gold paid
$100 million of the deposit
concurrent with entering into the transaction and the remaining
$75 million will be paid when 60% of
the estimated project development capital has been spent and other
customary conditions precedent are met. Based on the currently
planned timing of development capital expenditures at Rainy River, it is estimated that 60% of the
project development costs will have been spent by mid-2016.
Upon the start of production at Rainy
River, New Gold will deliver 6.50% of the project's monthly
gold production and 60% of the monthly silver production to
Royal Gold until a total of 230,000
ounces of gold and 3.1 million ounces of silver have been delivered
(the "Ounce Thresholds"). Once each of the Ounce Thresholds has
been satisfied, the stream percentage for that metal will decrease
by 50% such that New Gold will thereafter be required to deliver
3.25% of the project's gold production and 30% of the silver
production. In addition to the $175
million deposit, Royal Gold
will be required to pay New Gold in cash 25% of the average spot
gold price and silver price at the time the stream ounces are
delivered. The streaming transaction enabled New Gold to secure 20%
of the development capital costs for less than 6% of the project's
estimated future revenues at current metal prices. The transaction
increases the project's rate of return for New Gold equity holders
by approximately 3% and, importantly, was structured to maximize
the company's exposure to both the continued exploration potential
of the Rainy River district and long-term gold and silver
prices.
Overall, the Rainy River project enhances New Gold's growth
pipeline through its manageable capital costs, significant
production scale at below current industry average costs and
exciting regional exploration potential in a great mining
jurisdiction. Over its first nine years of full production, the
21,000 tonne per day, combined open pit-underground operation is
expected to produce an average of 325,000 ounces of gold per year
at all-in sustaining costs(1) of approximately
$670 per ounce, including total cash
costs(2) of $570 per
ounce. The company looks forward to advancing the Rainy River
project and providing further updates on its development through
the remainder of 2015 and beyond.
BLACKWATER
The company's Blackwater
project, located in south-central British
Columbia, is expected to produce an average of 485,000
ounces of gold per year at below industry average costs. The
current focus at Blackwater is
attaining the approval of the Environmental Assessment. Work with
the Canadian Environmental Assessment Agency and the British
Columbia Environmental Assessment Office to advance the Federal and
Provincial Environmental Assessment continued during the third
quarter. Capital expenditures during the third quarter were
$2 million and were related to the
continued advancement of the environmental assessment process and
associated environmental and engineering studies. For the
nine-month period ended September 30,
2015, capital expenditures at Blackwater were $4
million.
During the third quarter, exploration activities at Blackwater included the completion of a 5,400
metre reconnaissance drilling program in the Blackwater South area
where a zone of strong porphyry-style mineralization was identified
in 2014. The results of this year's program provide further
confirmation of the strong potential for the discovery of
additional gold and silver resources in an area that extends up to
four kilometres south and west of the main Blackwater deposit. The results of the 2015
exploration program will be further evaluated during the fourth
quarter to support a decision regarding the company's plans for
additional exploration at Blackwater.
In the current commodity price environment, New Gold plans to
sequence the development of its projects with the near-term focus
being on the advancement of the lower capital cost Rainy River project. Thereafter, the timing of
Blackwater's development will be
driven by prevailing market conditions over the coming years.
EL MORRO
As previously disclosed, in August, New Gold announced that the
company had entered into an agreement with Goldcorp to sell New
Gold's 30% interest in the El Morro project in exchange for
$90 million in pre-tax cash
(approximately $60 million
after-tax), a 4% stream on gold production from the El Morro
property and the cancellation of New Gold's $94 million carried funding loan. The transaction
provides New Gold with increased financial flexibility, strengthens
the balance sheet and enables the company to maintain exposure to
El Morro's significant current gold reserves and its ongoing
exploration potential.
In August, Goldcorp and Teck Resources Limited ("Teck") also
announced that they plan to combine their respective El Morro and
Relincho projects into a 50/50 joint venture with the interim name
of Project Corridor. Based on the results of the Project Corridor
Preliminary Economic Assessment, when ore is sourced from El Morro,
gold production is expected to average over 400,000 ounces per year
which would enable New Gold to purchase over 16,000 ounces of gold
per year at $400 per ounce. The cash
purchase price for gold delivered under the stream is fixed at
$400 per ounce for the first 217,000
ounces of gold, where 217,000 ounces reflects 4% of El Morro's
currently estimated recoverable gold production. Thereafter, the
cash purchase price will be $400 per
ounce plus an annual 1% inflation adjustment calculated from
2016.
Goldcorp and Teck are expecting to commence a Pre-Feasibility
Study in early 2016 which should be completed 12 to 18 months
thereafter.
WEBCAST AND CONFERENCE CALL
A webcast and conference call to discuss these results will be
held on Thursday, October 29, 2015 at
9:00 a.m. Eastern time. Participants
may listen to the webcast by registering on our website at
www.newgold.com. You may also listen to the conference call by
calling toll free 1-888-231-8191, or 1-647-427-7450 outside of the
U.S. and Canada. A recorded
playback of the conference call will be available until
November 30, 2015 by calling toll
free 1-855-859-2056, or 1-416-849-0833 outside of the U.S. and
Canada, passcode 49135913. An
archived webcast will also be available until January 31, 2016 at www.newgold.com.
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 Mesquite Mine in the United States, the Peak Mines in
Australia and the Cerro San Pedro
Mine in Mexico, provide the
company with its current production base. In addition, New Gold
owns 100% of the Rainy River and Blackwater projects, both in Canada, as well as an interest in the El Morro
project located in Chile. New
Gold's objective is to be the leading intermediate gold producer,
focused on the environment and social responsibility. 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 are "forward looking". All statements in this
news release, other than statements of historical fact, which
address events, results, outcomes 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", "targeted", "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 of
such terms. Forward-looking statements in this news release
include, among others, the statements under the headings
"Consolidated Year-To-Date Operational Results and 2015 Guidance"
and "Financial Update" and statements with respect to: guidance for
production; total cash costs and all-in sustaining costs, and the
factors contributing to those expected results, as well as expected
capital expenditures; mineral reserve and mineral resource
estimates; grades expected to be mined at the Company's operations;
the expected production, costs, economics and operating parameters
of the Rainy River project; planned activities for 2015 and beyond
at the Company's operations and projects, as well as planned
exploration activities; expected production for the Blackwater project; targeting timing for
commissioning and full production (and other activities) related to
Rainy River and the sequencing of
Blackwater; statements with
respect to the ability of the parties to satisfy the conditions of
and complete the sale of New Gold's interest in the El Morro
property to Goldcorp Inc. ("El Morro sale"); the ability of Teck
Resources Limited and Goldcorp Inc. to satisfy the conditions of
and complete the El Morro – Relincho joint venture ("Project
Corridor"); and statements with respect to the payment of the
remaining $75 million from
Royal Gold.
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. Certain material assumptions regarding such
forward-looking statements are discussed in this news release, New
Gold's annual and quarterly management's discussion and analysis
("MD&A"), its Annual Information Form and its Technical Reports
filed at www.sedar.com. In addition to, and subject to, such
assumptions discussed in more detail elsewhere, the forward-looking
statements in this news release are also subject to the following
assumptions: (1) there being no significant disruptions affecting
New Gold's operations; (2) political and legal developments in
jurisdictions where New Gold operates, or may in the future
operate, being consistent with New Gold's current expectations; (3)
the accuracy of New Gold's current mineral reserve and resource
estimates; (4) the exchange rate between the Canadian dollar,
Australian dollar, Mexican peso and U.S. dollar being approximately
consistent with current levels; (5) prices for diesel, natural gas,
fuel oil, electricity and other key supplies being approximately
consistent with current levels; (6) equipment, labour and materials
costs increasing on a basis consistent with New Gold's current
expectations; (7) arrangements with First Nations and other
Aboriginal groups in respect of Rainy
River and Blackwater being
consistent with New Gold's current expectations; (8) all required
permits, licenses and authorizations being obtained from the
relevant governments and other relevant stakeholders within the
expected timelines; (9) the results of the feasibility studies for
the Rainy River and Blackwater
projects being realized; (10) commodity prices and exchange rates
being consistent with those estimated for purposes of 2015
guidance; (11) conditions of the El Morro sale, and the conditions
to closing of Project Corridor, being satisfied in a timely manner;
and (12) conditions to the payment of the remaining $75 million from Royal
Gold being satisfied mid-2016.
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 and the availability
and management of capital resources; additional funding
requirements; price volatility in the spot and forward markets for
metals and other 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
the Rainy River and Blackwater
projects; delay or failure to receive regulatory approvals or the
failure to satisfy other closing conditions to the El Morro sale or
Project Corridor; in Mexico, where
Cerro San Pedro has a history of ongoing legal challenges related
to our environmental authorization; and in Chile, where certain activities at El Morro
have been delayed due to litigation relating to its environmental
permit; 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; rising costs of labour, supplies, fuel and
equipment; actual results of current exploration or reclamation
activities; uncertainties inherent to mining economic studies
including the feasibility studies for Rainy River and Blackwater; the uncertainty with respect to
prevailing market conditions necessary for a positive development
decision at Blackwater; 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; unexpected delays and
costs inherent to consulting and accommodating rights of First
Nations and other Aboriginal groups; risks, uncertainties and
unanticipated delays associated with obtaining and maintaining
necessary licenses, permits and authorizations and complying with
permitting requirements, including those associated with the
environmental assessment process for Blackwater. 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
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
MINERAL RESERVES AND MINERAL RESOURCES
Information concerning the properties and operations of New Gold
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 the Canadian Institute of Mining, Metallurgy
and Petroleum ("CIM") Definition Standards for Mineral Resources
and Mineral Reserves adopted by CIM Council on May 10, 2014 and incorporated by reference in
National Instrument 43-101. While the terms "Mineral
Resource", "Measured Mineral Resource", "Indicated Mineral
Resource" and "Inferred Mineral Resource" are recognized and
required by Canadian securities regulations, they are not defined
terms under standards of the United States Securities and Exchange
Commission. As such, certain information contained in this
news release concerning descriptions of mineralization and mineral
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. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies. It cannot be assumed that all or any
part of an "Inferred Mineral Resource" will ever be upgraded to a
higher confidence category. Readers are cautioned not
to assume that all or any part of an "Inferred Mineral Resource"
exists or is economically or legally mineable.
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 estimation is made. Readers are cautioned not to
assume that all or any part of the measured or indicated mineral
resources will ever be converted into mineral reserves. 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 and approved by Mark A.
Petersen, Vice President, Exploration of New Gold. Mr.
Petersen is an AIPG Certified Professional Geologist and a
"Qualified Person" as defined under National Instrument 43-101.
For additional technical information on New Gold's material
properties, including a detailed breakdown of Mineral Reserves and
Mineral Resources by category, as well as key assumptions,
parameters and risks, refer to New Gold's Annual Information Form
for the year ended December 31,
2014.
NON-GAAP MEASURES
(1) ALL-IN SUSTAINING COSTS
"All-in sustaining costs" per ounce is a non-GAAP financial
measure. Consistent with guidance announced in 2013 by 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" per ounce as the sum of total cash costs,
capital expenditures that are sustaining in nature, corporate
general and administrative costs, capitalized and expensed
exploration that is sustaining in nature and environmental
reclamation costs, all divided by the ounces of gold sold to arrive
at a per ounce figure. New Gold believes this non-GAAP financial
measure provides further transparency into costs associated with
producing gold and assists analysts, investors and other
stakeholders of the company in assessing the company's operating
performance, its ability to generate free cash flow from current
operations and its overall value. This data is furnished to provide
additional information and is a non-GAAP financial measure.
All-in sustaining 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 or as a substitute for measures of performance prepared
in accordance with IFRS and is not necessarily indicative of cash
flow from operations under IFRS or operating costs presented under
IFRS. Further details regarding historical all-in sustaining costs
and a reconciliation to the nearest IFRS measures are provided
below and in the MD&A accompanying New Gold's financial
statements filed from time to time on www.sedar.com.
(2) TOTAL CASH COSTS
"Total cash costs" per ounce is a non-GAAP financial measure which
is calculated in accordance with a standard developed by The Gold
Institute, a worldwide association of suppliers of gold and gold
products that ceased operations in 2002. 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. The company believes
that certain investors use this information to evaluate the
company's performance and ability to generate liquidity through
operating cash flow to fund future capital expenditures and working
capital needs. This measure, along with sales, is considered
to be a key indicator of the company's ability to generate
operating earnings and cash flow from its mining operations. Total
cash costs include mine site operating costs such as mining,
processing and administration costs, royalties, production taxes,
and realized gains and losses on fuel contracts, but are exclusive
of amortization, reclamation, capital and exploration costs and net
of by-product sales. Total cash costs are then divided by ounces of
gold sold to arrive at a per ounce figure. Co-product cash costs
remove the impact of other metal sales that are produced as a
by-product of gold production and apportion the cash costs to each
metal produced on a percentage of revenue basis, and subsequently
divides the amount by the total ounces of gold or silver or pounds
of copper sold, as the case may be, to arrive at per ounce or per
pound figures. Unless otherwise indicated, all total cash cost
information in this news release is net of by-product sales. This
data is furnished to provide additional information and is a
non-GAAP financial measure. Total cash costs and co-product 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 or as a
substitute for measures of performance prepared in accordance with
IFRS and is not necessarily indicative of cash flow from operations
under IFRS or operating costs presented under GAAP. Further details
regarding historical total cash costs and a reconciliation to the
nearest IFRS measures are provided below and in the MD&A
accompanying New Gold's financial statements filed from time to
time on www.sedar.com.
TOTAL CASH COSTS
AND ALL-IN SUSTAINING COSTS RECONCILIATION
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
(in millions of
U.S. dollars, except where noted)
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
Operating
expenses
|
105.4
|
94.2
|
|
303.2
|
288.0
|
Treatment and
refining charges on concentrate sales
|
8.1
|
8.2
|
|
24.0
|
25.7
|
Adjustments
|
(0.1)
|
0.3
|
|
0.6
|
0.8
|
Total cash costs
before by-product revenue
|
113.4
|
102.7
|
|
327.8
|
314.5
|
By-product copper and
silver sales
|
(56.1)
|
(75.3)
|
|
(190.6)
|
(241.8)
|
Total cash costs net
of by-product revenue
|
57.3
|
27.4
|
|
137.2
|
72.7
|
Gold ounces
sold
|
115,695
|
88,168
|
|
295,847
|
266,956
|
Total cash costs per
gold ounce sold ($/ounce)
|
495
|
311
|
|
464
|
272
|
Total cash costs per
gold ounce sold on a co-product basis($/ounce)
|
662
|
666
|
|
693
|
668
|
Total cash costs net
of by-product revenue
|
57.3
|
27.4
|
|
137.2
|
72.7
|
Sustaining capital
expenditures
|
24.5
|
36.5
|
|
97.9
|
90.6
|
Sustaining
exploration - expensed & capitalized
|
1.4
|
2.3
|
|
4.5
|
8.6
|
Corporate G&A
including share-based compensation
|
6.8
|
7.2
|
|
21.9
|
25.5
|
Reclamation
expenses
|
1.2
|
1.3
|
|
3.2
|
4.0
|
Total all-in
sustaining costs
|
91.2
|
74.8
|
|
264.7
|
201.3
|
All-in sustaining
costs per gold ounce sold ($/ounce)
|
788
|
848
|
|
$895
|
$754
|
All-in sustaining
costs per gold ounce sold on a co-product basis($/ounce)
|
867
|
983
|
|
$972
|
$951
|
(3) NET CASH GENERATED FROM OPERATIONS BEFORE CHANGES IN WORKING
CAPITAL
"Net cash generated from operations before changes in working
capital" and "Net cash generated from operations before changes in
working capital per share" are non-GAAP financial measures with no
standard meaning under IFRS, which exclude changes in non-cash
operating working capital. Management uses this measure to evaluate
the Company's ability to generate cash from its operations before
temporary working capital changes.
NET CASH GENERATED
FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL
RECONCILIATION
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
(in millions of
U.S. dollars, except where noted)
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
Net cash (used)
generated from operations
|
51.0
|
58.2
|
|
$177.7
|
$198.9
|
Add back (deduct):
Change in non-cash operating working capital
|
7.4
|
20.4
|
|
10.8
|
41.7
|
Net cash generated
from operations before changes in non-cash working
capital
|
58.4
|
78.6
|
|
188.5
|
240.6
|
|
|
|
|
|
|
Weighted average
number of shares outstanding (in millions)
|
509.1
|
503.9
|
|
508.9
|
503.7
|
Net cash generated
from operations per share
|
0.10
|
0.12
|
|
0.35
|
0.39
|
Net cash generated
from operations before changes in working capital per
share
|
0.11
|
0.16
|
|
0.37
|
0.48
|
(4) AVERAGE REALIZED PRICE
"Average realized price per ounce or pound sold" is a non-GAAP
financial measure with no standard meaning under IFRS. Management
uses this measure to better understand the price realized in each
reporting period for gold, silver, and copper sales. Average
realized price includes realized gains and losses from gold hedge
settlements up until May 15, 2013 but
excludes from revenues unrealized gains and losses on non-hedged
derivative contracts and the revenue reduction related to the
non-cash accounting charge as the loss incurred on the monetization
of the company's legacy hedge position is realized into income over
the original term of the hedge contract. Average realized price is
intended to provide additional information only and does not have
any standardized definition under IFRS; it should not be considered
in isolation or as a substitute for measures of performance
prepared in accordance with IFRS. Other companies may calculate
this measure differently and this measure is unlikely to be
comparable to similar measures presented by other companies.
(5) ADJUSTED NET (LOSS)/EARNINGS
"Adjusted net (loss)/earnings" and "adjusted net (loss)/earnings
per share" are non-GAAP financial measures. Net (loss)/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 (loss)/earnings from continuing operations. The
company uses this measure for its own internal purposes.
Management's internal budgets and forecasts and public guidance do
not reflect fair value changes on senior notes and non-hedged
derivatives, foreign currency translation and fair value through
profit or loss and financial asset gains/losses. Consequently, the
presentation of adjusted net earnings and adjusted net earnings per
share 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 and adjusted net earnings
per share 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
(loss)/earnings and adjusted net (loss)/earnings per share are
intended to provide additional information only and do not have any
standardized meaning under IFRS and may not be comparable to
similar measures presented by other companies. 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 flows from
operations as determined under IFRS.
ADJUSTED NET
(LOSS)/EARNINGS RECONCILIATION
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
(in millions of
U.S. dollars, except where noted)
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
Net earnings (loss)
before taxes
|
(241.6)
|
(11.5)
|
|
(268.0)
|
11.0
|
|
Loss (gain) on
disposal of assets
|
182.0
|
0.1
|
|
182.7
|
(0.2)
|
|
Realized and
unrealized gain on non-hedged derivatives
|
1.7
|
(9.2)
|
|
(9.8)
|
(4.4)
|
|
(Gain) loss on
foreign exchange
|
40.8
|
23.1
|
|
72.6
|
26.1
|
|
Gold stream
transaction costs
|
2.6
|
0.0
|
|
2.6
|
0.0
|
|
Unrealized loss on
revaluation of gold stream obligation
|
3.2
|
0.0
|
|
3.2
|
0.0
|
|
Provision for office
consolidation
|
3.0
|
0.0
|
|
3.0
|
0.0
|
|
Loss on hedge
monetization over original term of hedge
|
0.0
|
6.8
|
|
0.0
|
20.5
|
|
Other
|
0.4
|
(0.2)
|
|
0.2
|
0.0
|
Adjusted net earnings
(loss) before tax
|
(7.9)
|
9.1
|
|
(13.5)
|
53.0
|
|
Income tax
expense
|
83.8
|
(48.1)
|
|
76.1
|
(56.2)
|
|
Income tax
adjustments
|
(84.4)
|
44.4
|
|
(76.5)
|
35.0
|
Adjusted income tax
expense
|
(0.6)
|
(3.7)
|
|
(0.4)
|
(21.2)
|
Adjusted net earnings
(loss)
|
(8.5)
|
5.4
|
|
(13.9)
|
31.8
|
Adjusted earnings
(loss) per share (basic)
|
(0.02)
|
0.01
|
|
(0.03)
|
0.06
|
Adjusted effective
tax rate
|
7%
|
(41%)
|
|
3%
|
(40%)
|
(6) OPERATING MARGIN
"Operating margin" is a non-GAAP financial measure with no standard
meaning under IFRS, which management uses to evaluate the Company's
aggregated and mine-by-mine contribution to net earnings before
non-cash depreciation and depletion charges.
OPERATING MARGIN
RECONCILIATION
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
(in millions of
U.S. dollars, except where noted)
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
Revenues
|
177.3
|
169.3
|
|
513.9
|
537.9
|
Less: Operating
expenses
|
(105.4)
|
(94.2)
|
|
(303.2)
|
(288.0)
|
Operating
margin
|
71.9
|
75.1
|
|
210.7
|
249.9
|
CONDENSED
CONSOLIDATED INCOME STATEMENTS (unaudited)
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
(in millions of
U.S. dollars, except per share amounts)
|
2015
|
2014
|
|
2015
|
2014
|
Revenues
|
177.3
|
169.3
|
|
513.9
|
537.9
|
Operating
expenses
|
105.4
|
94.2
|
|
303.2
|
288.0
|
Depreciation and
depletion
|
60.8
|
53.7
|
|
166.6
|
158.0
|
Earnings from mine
operations
|
11.1
|
21.4
|
|
44.1
|
91.9
|
|
|
|
|
|
|
Corporate
administration
|
5.2
|
6.0
|
|
16.7
|
20.2
|
Provision for office
consolidation
|
3.0
|
-
|
|
3.0
|
-
|
Share-based payment
expenses
|
1.7
|
1.5
|
|
5.7
|
6.0
|
Exploration and
business development
|
2.5
|
5.0
|
|
4.8
|
12.4
|
(Loss) earning from
operations
|
(1.3)
|
8.9
|
|
13.9
|
53.3
|
Finance
income
|
0.4
|
0.5
|
|
1.0
|
1.0
|
Finance
costs
|
(10.0)
|
(7.1)
|
|
(31.4)
|
(21.8)
|
Other
(losses)
|
(230.7)
|
(13.8)
|
|
(251.5)
|
(21.5)
|
(Loss) earning before
taxes
|
(241.6)
|
(11.5)
|
|
(268.0)
|
11.0
|
Income tax recovery
(expense)
|
83.8
|
(48.1)
|
|
76.1
|
(56.2)
|
Net
(loss)
|
(157.8)
|
(59.6)
|
|
(191.9)
|
(45.2)
|
(Loss) earnings per
share
|
|
|
|
|
|
Basic
|
(0.31)
|
(0.12)
|
|
(0.38)
|
(0.09)
|
Diluted
|
(0.31)
|
(0.12)
|
|
(0.38)
|
(0.09)
|
Weighted average
number of shares outstanding (in millions)
|
|
|
|
|
|
Basic
|
509.1
|
503.9
|
|
508.9
|
503.7
|
Diluted
|
509.1
|
503.9
|
|
508.9
|
503.7
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited)
|
|
|
|
|
|
|
|
As at September
30
|
|
As at December
31
|
(in millions of
U.S. dollars)
|
2015
|
|
2014
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
384.6
|
|
370.5
|
Trade and other
receivables
|
110.7
|
|
34.8
|
Inventories
|
160.4
|
|
187.5
|
Current income tax
receivable
|
23.8
|
|
31.1
|
Prepaid expenses and
other
|
4.3
|
|
10.6
|
Total current
assets
|
683.8
|
|
634.5
|
|
|
|
|
Assets held for
sale
|
259.4
|
|
-
|
|
|
|
|
Non-current
inventories
|
105.8
|
|
66.5
|
Mining
interests
|
2,710.5
|
|
3,008.7
|
Deferred tax
assets
|
157.1
|
|
168.3
|
Other
|
3.2
|
|
3.8
|
Total
assets
|
3,919.8
|
|
3,881.8
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities
|
|
|
|
Trade and other
payables
|
160.0
|
|
97.0
|
Current income tax
payable
|
4.8
|
|
7.9
|
Total current
liabilities
|
164.8
|
|
104.9
|
|
|
|
|
Liabilities held for
sale
|
140.4
|
|
-
|
|
|
|
|
Reclamation and
closure cost obligations
|
69.1
|
|
63.5
|
Provisions
|
12.7
|
|
9.4
|
Derivative
liabilities
|
5.9
|
|
16.9
|
Long-term
debt
|
787.1
|
|
874.3
|
Deferred tax
liabilities
|
470.4
|
|
494.9
|
Deferred
benefit
|
-
|
|
46.3
|
Other
|
0.3
|
|
0.4
|
Total
liabilities
|
1,813.9
|
|
1,610.6
|
Equity
|
|
|
|
Common
shares
|
2,840.1
|
|
2,820.9
|
Contributed
surplus
|
102.3
|
|
96.7
|
Other
reserves
|
0.3
|
|
(1.5)
|
Deficit
|
(836.8)
|
|
(644.9)
|
Total
equity
|
2,105.9
|
|
2,271.2
|
Total liabilities
and equity
|
3,919.8
|
|
3,881.8
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited)
|
|
|
|
|
|
|
|
Three months ended
September 30
|
|
Nine months ended
September 30
|
(in millions of
U.S. dollars)
|
2015
|
2014
|
|
2015
|
2014
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
Net loss
|
(157.8)
|
(59.6)
|
|
(191.9)
|
(45.2)
|
Adjustments
for:
|
|
|
|
|
|
Realized losses on
gold contracts
|
-
|
6.8
|
|
-
|
20.5
|
Foreign exchange
(gains) losses
|
40.8
|
23.1
|
|
72.6
|
26.1
|
Reclamation and
closure costs paid
|
(0.2)
|
(0.3)
|
|
(0.4)
|
(0.9)
|
Loss on disposal of
assets
|
-
|
0.1
|
|
0.7
|
(0.2)
|
Impairment loss on
reclassification of asset as held for sale
|
182.0
|
-
|
|
182.0
|
-
|
Depreciation and
depletion
|
60.9
|
54.1
|
|
166.4
|
157.8
|
Other non-cash
adjustments
|
1.9
|
(3.8)
|
|
(4.0)
|
3.5
|
Income tax (recovery)
expense
|
(83.8)
|
48.1
|
|
(76.1)
|
56.2
|
Finance
income
|
(0.4)
|
(0.5)
|
|
(1.0)
|
(1.0)
|
Finance
costs
|
10.0
|
7.1
|
|
31.4
|
21.8
|
Unrealized
(gain)/loss on gold stream liability
|
3.2
|
-
|
|
3.2
|
-
|
Financial instrument
transaction costs
|
2.6
|
-
|
|
2.6
|
-
|
|
59.2
|
75.1
|
|
185.5
|
238.6
|
Change in non-cash
operating working capital
|
(7.4)
|
(20.4)
|
|
(10.8)
|
(41.7)
|
Income taxes refunded
(paid)
|
(0.8)
|
3.5
|
|
3.0
|
2.0
|
Cash generated from
operations
|
51.0
|
58.2
|
|
177.7
|
198.9
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Mining
interests
|
(76.7)
|
(73.7)
|
|
(219.8)
|
(190.6)
|
Government grant
received
|
-
|
20.5
|
|
-
|
20.5
|
Proceeds from the
sale of assets
|
0.1
|
0.1
|
|
0.9
|
0.4
|
Interest
received
|
0.4
|
0.2
|
|
1.0
|
0.6
|
Cash used in
investing activities
|
(76.2)
|
(52.9)
|
|
(217.9)
|
(169.1)
|
FINANCING
ACTIVITY
|
|
|
|
|
|
Issuance of common
shares on exercise of options and warrants
|
0.1
|
0.4
|
|
0.2
|
1.4
|
Receipt of gold
stream funds
|
100.0
|
-
|
|
100.0
|
-
|
Financing initiation
costs
|
(2.6)
|
(2.2)
|
|
(2.6)
|
(2.2)
|
Interest
paid
|
-
|
(0.1)
|
|
(26.1)
|
(26.2)
|
Cash generated from
financing activities
|
97.5
|
(1.9)
|
|
71.5
|
(27.0)
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
(14.5)
|
(1.3)
|
|
(17.2)
|
(1.1)
|
Change in cash and
cash equivalents
|
57.8
|
2.1
|
|
14.1
|
1.7
|
Cash and cash
equivalents, beginning of period
|
326.8
|
414.0
|
|
370.5
|
414.4
|
Cash and cash
equivalents, end of period
|
384.6
|
416.1
|
|
384.6
|
416.1
|
Cash and cash
equivalents are comprised of:
|
|
|
|
|
|
Cash
|
272.6
|
251.1
|
|
272.6
|
251.1
|
Short-term money
market instruments
|
112.0
|
165.0
|
|
112.0
|
165.0
|
|
384.6
|
416.1
|
|
384.6
|
416.1
|
SOURCE New Gold Inc.