Repositioning New Gold for Long-Term
Success
TORONTO, Feb. 14, 2019 /CNW/ - New Gold Inc. ("New
Gold" or the "Company") (TSX and NYSE American:
NGD) announces 2019 guidance that includes an increase in
gold production from the Rainy River Mine and another year of solid
performance from the New Afton Mine. During the year the Company
will continue to advance its strategy of re-positioning the Company
for long-term success that will include: completion of all
remaining construction capital at the Rainy River Mine in order to
position the operation for efficient and sustainable mining;
optimizing the Rainy River life of mine plan with a clear focus on
lowering future capital requirements while delivering strong free
cash flow generation starting in 2020; re-launching an internally
funded development program for the New Afton C-zone and delivering
an optimized life of mine plan; and returning the Company's focus
to organic growth opportunities by launching strategic exploration
programs at both assets. (All amounts are in U.S. dollars unless
otherwise indicated).
New Gold Consolidated Operational Estimates
In 2019, the Company will report production on a gold equivalent
basis as well as on a per-metal basis. Operating expense per ounce
will be presented on a per-metal basis. Cash costs(i)
and all-in sustaining costs (AISC)(i) will be reported
on a per gold equivalent ounce basis. AISC and cash costs will also
be presented on a per gold ounce, by-product basis.
Material assumptions include: Spot prices
of $1,300 per gold ounce, and
$2.75 per copper pound, and a foreign
exchange rate of 1.30 Canadian
dollars to the US dollar.
Operational
Estimates
|
Rainy
River
|
New
Afton
|
2019
Consolidated
Guidance1
|
Gold Produced
(ounces)
|
245,000 –
270,000
|
55,000 –
65,000
|
300,000 –
335,000
|
Copper Produced
(Mlbs)
|
-
|
75 – 85
|
75 -
85
|
Gold Eq. Produced
(ounces)2
|
250,000 –
275,000
|
215,000 –
245,000
|
465,000 –
520,000
|
Operating Expense per
gold ounce
|
$870 -
$950
|
$480 -
$520
|
$690 -
$770
|
Operating Expense per
copper pound
|
-
|
$0.95 -
$1.15
|
-
|
Cash Costs per gold
ounce (with by-product credits)(i)
|
$870 -
$950
|
($1,350) –
($1,310)
|
$470 -
$540
|
Cash Costs per gold
eq. ounce (on a co-product basis)(i)
|
$870 -
$950
|
$600 -
$640
|
$740 -
$820
|
Corporate G&A per
gold eq. ounce
|
-
|
-
|
$30 -
$50
|
All-in Sustaining
Costs per gold ounce (with by-product
credits)(i)
|
$1,690 -
$1,790
|
($500) –
($420)
|
$1,370-
$1,470
|
All-in Sustaining
Costs per gold eq. ounce (on a co-product
basis)(i)
|
$1,690 -
$1,790
|
$810 -
$890
|
$1,330 -
$1,430
|
Capital Investment
& Exploration Expense Estimates
|
Rainy
River
|
New
Afton
|
2019
Consolidated
Guidance1
|
Sustaining Capital
($M) (i)
|
$210 -
$230
|
$45 - $55
|
$255 -
$285
|
Growth Capital ($M)
(i)
|
~$3
|
$40 - $45
|
$50 -
$553
|
Exploration
($M)
|
~$5
|
~$4
|
~$9
|
1.
All production and cost estimates exclude potential production from
Cerro San Pedro residual leaching.
2.
Gold equivalent ounces includes approximately 245,000 to 270,000
ounces of silver at Rainy River and approximately 255,000 to
265,000 ounces of silver at New Afton.
3.
Consolidated growth capital includes ~$7 for Blackwater
permitting.
|
"2019 is a pivotal year for the Company as we reposition New
Gold for long-term success. In 2019, we will work to establish
Rainy River as a profitable and
sustainable mining operation and renew our commitment to unlocking
the potential of the New Afton C-zone. We will return our focus to
advancing organic growth initiatives and launch strategic
exploration programs at both assets with a view of enhancing the
quality of our resource base and extending mine life," stated
Renaud Adams, President and CEO.
"Our available liquidity position secures the execution of our 2019
operational strategy that is focused on optimizing both operations
in order to deliver increased margins and positive future cash flow
streams that will drive long-term, sustainable shareholder
value."
(i) The Company uses certain non-GAAP financial performance
measures throughout this news release. Please refer to the
"Non-GAAP Financial Performance Measures" section of this news
release.
Rainy River Mine: 2019 Guidance Estimates
The Rainy River Mine is expected to deliver another year of
production growth that builds on the progress achieved in the final
four months of 2018. During 2019, the key objective will be on
optimizing open pit mining productivity and mill performance in
order to achieve targeted availability, throughput and recoveries.
During the year, the Company is fully committed to completing all
remaining construction in order to best position the operation for
efficient and sustainable mining and long-term success.
Rainy River 2019
Operational Guidance
|
2019
Estimates
|
Gold produced
(ounces)
|
245,000 –
270,000
|
Gold eq. ounces
produced1
|
250,000–
275,000
|
Operating Expense per
gold eq. ounce
|
$870 -
$950
|
Cash costs per gold
eq. ounce (on a co-product basis) (i)
|
$870 -
$950
|
All-in Sustaining
Costs per gold eq. ounce (on a co-product basis)
(i)
|
$1,690 -
$1,790
|
Sustaining
Capital, ARO Amort. & Other ($M)
|
2019
Estimates
|
Sustaining
Capital
|
$210 –
$230
|
Total construction
capital
|
$150 -
$165
|
- Tailings
facility (Stage 2)
|
$65 - $70
|
- Waste
Dump (Management & Stabilization/Wick Drains)
|
$45 - $50
|
- Water
treatment train
|
$5 - $10
|
-
Maintenance/Warehouse facility
|
~$20
|
- Mill
commissioning completion
|
~$5
|
- Camp
facility
|
~$10
|
Other sustaining
capital
|
$60-$65
|
- Machinery &
Equipment
|
$10-$13
|
- Mining
infrastructure
|
$6-$8
|
- Capital
Leases
|
~$9
|
- Mill
upgrades
|
~$2
|
- Capitalized Mining,
Sustaining Capital and Working Capital
|
~$33
|
ARO Amortization
and Other
|
~$2
|
Non-Sustaining and
Exploration Expense ($M)
|
2019
Estimates
|
Growth
Capital(i)
|
~$3
|
Expensed
exploration
|
~$5
|
1. Gold eq. production
includes approximately 245,000 to 270,000 ounces of
silver.
|
2019 Operational Key Performance Indicators
Rainy River
Operating KPIs
|
2019
Estimates
|
Ex-pit1
tonnes mined (ore and waste) Mt
|
~46.7
|
Ex-pit ore tonnes
mined Mt
|
~11.3
|
Ex-pit ore tonnes
mined per day
|
~31,000
|
Ex-pit Strip ratio
(waste:ore)
|
~3.1:1
|
Out pit2
tonnes mined Mt
|
~4.5
|
Out/in pit
re-handling Mt
|
~5.3
|
Total tonnes moved
Mt
|
~56.5
|
Tonnes milled per
calendar day
|
22,000 -
24,000
|
Gold grade milled
(g/t)
|
~1.10
|
Gold recovery
(%)
|
90 – 92%
|
Mill availability
(%)
|
85 –
88%
|
Unit Operating
Costs
|
2019
Estimates
|
Open pit mining costs
($/tonne moved)
|
$3.25 -
$3.75
|
Processing costs
($/per tonne milled)
|
$8.50-
$9.00
|
Site G&A ($/tonne
milled)
|
$3.75 -
$4.25
|
1. Ex-pit
tonnes are tonnes mined from the operating open pit.
2.
Non-acid generating (NAG) material mined outside the operating open
pit.
|
- Gold production in 2019 is expected to increase over the prior
year, driven by higher mill throughput and planned higher
recoveries, offset by planned lower grades as mining operations
transition between phase 1 and phase 2 of the mine plan.
- During the year, approximately 46.7M ex-pit tonnes will be mined at an increased
strip ratio (waste:ore) of approximately 3.1:1 as the mine
transitions to phase 2 of the mine plan. Approximately 11.3M of ore tonnes will be mined for the year
that will support continued segregation of approximately 3.8Mt of
lower grade ore for stockpiling. In 2019, the requirement for NAG
waste material will continue in order to support the construction
of the stage 2 tailings facility and, as a result, a total of
approximately 4.5Mt of out-pit NAG waste material will be mined
during the year. The Company has engaged an external open pit mine
consultant to improve performance driven, overall equipment
efficiencies (OEE) with the objective of optimizing open pit mining
productivity and unit cost performance.
- Building on the progress achieved in the final four months of
2018, mill throughput, availability and recoveries are expected to
improve throughout the year, as follows:
-
- Overall mill availability has been a key area of focus in
recent quarters, which will continue into the first quarter. The
replacement of the ball mill trunnion was recently completed and
several additional upgrades are expected to be completed during the
first quarter that are designed to correct and improve all
circuits, with a particular focus on grinding, stripping and carbon
regeneration. As such, availability is expected to remain lower
during the first quarter, with the objective of achieving an
average of 90% during the second half of the year.
- Following the replacement of the ball mill trunnion, efforts
will be directed on maximizing efficient use of the Semi-Autogenous
Grinding (SAG) and ball mills as well as on commissioning the
pebble crusher, with the overall objective of optimizing both
throughput and grind size. A finer grind size combined with
continued optimization of stripping and carbon regeneration will
result in a potential reduction of total gold losses in solids and
solutions. A targeted 90-92% recovery is planned for 2019, with
January averaging 91%. The Company is confident in reaching the
targeted average daily throughput rate of 24,000 tonnes per day
during the second half of the year, once the overall mill run-rate
and increased availability are achieved.
- Operating expense and cash costs on a per ounce basis are
expected to be higher in 2019 as compared to the fourth quarter of
2018 due to the higher planned strip ratio and lower planned grades
as described above, however overall unit costs will continue to
decrease throughout the year as mine and mill efficiencies improve,
and cost controls and procurement initiatives are implemented.
- Total sustaining capital is expected to be between $210 and $230
million for the year. Management has carefully reviewed the
capital requirements for the year with the objective of positioning
the operation for efficient and sustainable long-term success:
-
- Up to 72% ($150-$165 million) of sustaining capital requirements
for the year is to complete deferred mine construction, primarily
related to the tailings disposal facility, installation of wick
drains to implement the engineered stabilization of the waste
dumps, completion of the water treatment train, construction of a
maintenance and warehouse facility, mill modifications and
improvements that allow efficient operation of the gravity circuit,
pebble crusher, ore classification system and camp facility.
- Other sustaining capital of an estimated $60 to $65 million
includes additional mobile equipment requirements (purchase and
lease) to expand the mining fleet as well as the mill and surface
equipment fleet, mill upgrades to support achievement of targeted
throughput, availability and recoveries and additional pumping
capacity. Approximately $33 million
of other sustaining and working capital primarily consists of the
phase 2 capitalized stripping program of the mine plan and capital
projects that were not completed in 2018.
- AISC will increase in 2019 as compared to the fourth quarter of
2018 due to higher sustaining capital requirements as described
above. It is expected that sustaining capital requirements will
decrease significantly beginning in 2020 as all remaining
construction and mill upgrades are completed and the mining fleet
has been expanded to planned levels.
- Other non-sustaining expenses of between $5 and $8 million
is related to the decision to postpone the development of the
underground and includes demobilization costs as well as transfer
of ownership of underground infrastructure from the contractor to
the operation.
- Consistent with the Company's focus on organic growth
opportunities, an exploration program will be launched in 2019 that
will focus on the northeast trend and potential expansion of the
Intrepid zone.
- In 2019 the Company will re-examine several aspects of the life
of mine plan with the objective of updating the mine plan in the
latter part of the year, with a focus on:
-
- Open pit mining and processing of medium and high-grade ore
reserves (refer to the press release "New Gold Reports Fourth
Quarter and Year-end Financial Results" dated February 14, 2019) with the objective of
potentially delivering increased margins and positive free cash
flow starting in 2020.
- Optimization of the pit design in order to extract medium and
high-grade ore at the optimal strip ratio with a focus on
identifying alternative, on-site sources of NAG waste material that
is required for construction of additional tailings capacity, which
correspondingly contribute to overall optimization of open pit
execution and efficiency.
- Benchmarking of best industry practices in order to optimize
mining and milling operations while reducing costs.
- Potential reduction of overall sustaining capital with a focus
on optimizing sustaining capital requirements for mining,
processing and tailings disposal of the medium and high-grade grade
ore. The Company will work with external experts regarding the
optimization of the current tailings facility design with the
objective of reducing both capital requirements and total waste
material requirements for the construction of future stages.
- Development and execution of underground mining will be
optimized with the objective of further enhancing free cash flow
generation during the years of processing medium and high-grade
ore.
New Afton Mine: 2019 Guidance Estimates
The New Afton Mine is expected to deliver another year of solid
production and low costs that drive strong free cash flow streams.
The objective for 2019 is to reinvest in the long-term future of
this high-quality asset by re-launching a self-funded development
strategy for the C-zone, which will extend mine life to 2030 with
robust economics. A strategic exploration program will be launched
during the year that will follow-up on key targets located below
the C-zone as well as regional targets on the larger land
package.
New Afton 2019
Operational Guidance
|
2019
Estimates
|
Gold produced
(ounces)
|
55,000 –
65,000
|
Copper produced
(Mlbs)
|
75 - 85
|
Gold eq. ounces
produced1
|
215,000 –
245,000
|
Operating Expense per
gold ounce
|
$480 -
$520
|
Operating Expense per
copper pound
|
$0.95 -
$1.15
|
Cash Costs per gold
ounce (with by-product credits) (i)
|
($1,350) –
($1,310)
|
Cash Costs per gold
eq. ounce (i)
|
$600 -
$640
|
All-in Sustaining
Costs per gold ounce (with by-product credits)
(i)
|
($500) –
($420)
|
All-in Sustaining
Costs per gold eq. ounce (on a co-product basis)
(i)
|
$810 -
$890
|
Sustaining
Capital, ARO Amort. & Other ($M)
|
2019
Estimates
|
Sustaining
Capital
|
$45 –
$55
|
- Tailings
Facility Dam Raise
|
$17 - $20
|
- B3 Mine
Development and Equipment
|
$20 - $25
|
- Other
Sustaining Capital
|
$6 - $8
|
-
Capitalized Sustaining Exploration
|
~$2
|
ARO Amortization
and Other ($M)
|
~$1
|
Non-Sustaining
Capital and Exploration Expense ($M)
|
2019
Estimates
|
Growth
Capital(i) (C-zone mine development and
equipment)
|
$40 -
$45
|
Exploration
Expense
|
~$4
|
1.
Gold equivalent ounces for New Afton includes approximately 255,000
to 265,000 ounces of silver.
|
2019 Operational Key Performance Indicators
New Afton
Operating KPIs
|
2019
Estimates
|
Ore tonnes mined per
day
|
16,000 –
17,000
|
Tonnes milled per
calendar day
|
14,000 –
15,000
|
Gold grade milled
(g/t)
|
~0.45
|
Gold recovery
(%)
|
76 – 80%
|
Copper grade milled
(%)
|
~0.86%
|
Copper recovery
(%)
|
80 – 85%
|
Mill availability
(%)
|
92 – 96%
|
Unit Operating
Costs
|
2019
Estimates
|
Underground mining
costs ($/tonne mined)
|
$7.75 -
$8.25
|
Processing costs
($/per tonne milled)
|
$8.50 -
$9.25
|
Site G&A ($/tonne
milled)
|
$2.25 -
$2.75
|
- Gold and copper production for the year is expected to be lower
than the prior year, primarily related to planned lower gold and
copper grades, which is consistent with the current mine plan.
Production will continue to drive solid operating and cash cost
performance for the year.
- Mine productivity is expected to remain consistent with the
prior year levels. During the year, the excess tonnes mined over
tonnes milled will support New Afton's ore sorting initiative,
resulting in optimal mill grades being processed and lower grade
ore being stockpiled for future processing.
- A Phase 1 mill upgrade to maximize supergene ore recovery was
completed in 2018, on time and on budget. The Phase 2 portion of
the mill upgrade will be completed in the third quarter of 2019 as
supergene mill feed ore continues to increase throughout the
year.
- Operating expense and cash costs, on a per gold ounce and
copper pound basis, are expected to be slightly higher in 2019 as
compared to 2018, primarily due to lower planned grades, however,
unit costs are expected to remain consistent with the prior
year.
- Sustaining capital is expected to increase over the prior year
and primarily includes:
-
- Development of the B3 zone in order to sustain ongoing
production during the C-zone development period. Capital
requirements for the B3 zone in 2020 are expected to be consistent
with 2019 with the remaining one-third of the capital requirements
for the B3 zone to be spread over the 2021 to 2024 period.
- A scheduled tailings dam raise, as per the current mine
plan.
- AISC is expected to increase in 2019 as compared to 2018, due
to higher sustaining capital requirements and higher cash costs, as
described above.
- As previously disclosed, an internally funded development
strategy (assuming spot prices of $1,300 per gold ounce and $2.75 per copper pound at a foreign exchange rate
of 1.30 Canadian dollars to
1 US dollar) for the New Afton C-zone
is underway, which will extend mine life to 2030 with robust
economics. Subsequently, growth capital for the year is expected to
increase significantly over 2018, primarily related to C-zone
development activities.
-
- Growth capital for 2019 is estimated to be between $40 and $45
million, which primarily consists of advancing an
exploration decline and the purchase of required mobile equipment
and infrastructure ($5 to 7.5
million).
- Growth capital in 2020 is expected to be consistent with 2019
and during those years the operation is expected to deliver a
strong positive cash flow stream. Growth capital is expected to
increase substantially during the period from 2021 to 2023, during
which time the operation is expected to remain cash flow neutral.
The operation is expected to return to positive cash flow status
beginning in 2024 as remaining capital requirements decline and are
spread over the years 2024 and 2025.
- In 2019, management will continue to de-risk the execution of
C-zone project, primarily focused on mine plan optimization,
reducing capital requirements, finalization of the tailings
disposal scenario and advancing permitting efforts, with the
objective of updating the life of mine plan in the latter part of
2019.
- During the year, the Company will launch a strategic
exploration program at New Afton that will focus on previously
identified exploration targets located below the C-zone as well as
regionally over the land package, which could further extend mine
life.
Cerro San Pedro Mine
- During the year closure activities will continue that primarily
focus on closing and reclaiming mine infrastructure while working
closely with local communities and governments in order to leave a
positive legacy.
- Residual leach will continue in 2019 with proceeds from metal
sales partially offsetting the cost of closing and reclaiming mine
infrastructure.
Blackwater Project
- The Company will continue to assess alternative project
scenarios that would consider lower initial capital requirements
and a higher-grade pit configuration that would generate positive
returns at current metals prices.
- Continue to work on receiving Environmental Assessment (EA)
approval in 2019, and actively working with First Nations to
complete Participation Agreements (PA).
- During 2019, the Company may consider other strategic
alternatives with respect to the Blackwater project.
New Gold 2019 Hedging Strategy
- In December 2018, New Gold has
entered into zero-cost collar gold and copper hedging programs for
2019 only. The upcoming year is a critical period for the company
as we complete construction at Rainy River Mine and relaunch the
development of the New Afton C-zone to support the long-term
success of the Company.
-
- Gold Hedge: 192,000 gold ounces (16,000 per month) at a
minimum gold price of $1,230 per
ounce and a maximum price of $1,300
per ounce).
- Copper Hedge: 47.6 million pounds of copper (approx. 4
million pounds per month) at a minimum copper price of $2.50 per pound and a maximum price of
$3.00 per pound.
About New Gold Inc.
New Gold is a Canadian-focused
intermediate gold mining company. The Company has a portfolio of
two core producing assets in top-rated jurisdictions, the Rainy
River and New Afton Mines in Canada. The Company also operates the Cerro
San Pedro Mine in Mexico (which
transitioned to residual leaching in 2016). In addition, New Gold
owns 100% of the Blackwater project located in Canada. New Gold's objective is to be a
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", "will" 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, statements made under the headings "New Gold
Consolidated Operational Estimates", "Rainy River Mine: Guidance
Estimates", "2019 Operational Key Performance Indicators", "New
Afton Mine: 2019 Guidance Estimates" as well as other statements
elsewhere in this news release, including, among others, statements
with respect to: guidance for production, operating expense, all-in
sustaining costs and total cash costs, and the factors contributing
to those expected results, including mill throughput and metal
recoveries, as well as expected capital and other expenditures;
planned development activities and timing for 2019 and future years
at the Rainy River Mine and New Afton Mine, including the
completion of construction capital and mill upgrades at
Rainy River and the development of
the New Afton C-Zone; launching of strategic exploration programs;
expectations with respect to repositioning Rainy River for profitable mining and the
potential of the New Afton C-Zone, targeted timing for permits,
including the Blackwater EA.
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 latest annual management's discussion and analysis
("MD&A"), Annual Information Form and Technical Reports filed
at www.sedar.com and on EDGAR at www.sec.gov. 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 mineral resource estimates; (4) the exchange
rate between the Canadian dollar and U.S. dollar, and to a lesser
extent, the Mexican Peso, 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 the Rainy River mine and Blackwater
project being consistent with New Gold's current expectations; and
(8) all required permits, licenses and authorizations being
obtained from the relevant governments and other relevant
stakeholders within the expected timelines and the absence of
material negative comments during the applicable regulatory
processes , (9) the result of feasibility studies and other studies
being realized and (10) metals and other commodity prices and
exchange rates being consistent with those estimated for the
purposes of 2019 guidance.
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 and, to a lesser extent,
Mexico; discrepancies between
actual and estimated production, between actual and estimated
mineral reserves and mineral resources and between actual and
estimated metallurgical recoveries; risks related to early
production at the Rainy River Mine, including failure of equipment,
machinery, the process circuit or other processes to perform as
designed or intended; fluctuation in treatment and refining
charges; changes in national and local government legislation in
Canada, the United States and, to a lesser extent,
Mexico 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, 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 mineral reserves and
mineral 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; 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 Indigenous groups; risks, uncertainties and
unanticipated delays associated with obtaining and maintaining
necessary licenses, permits and authorizations and complying with
permitting requirements. 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 risks associated with a mine
with a relatively limited history of commercial production, such as
Rainy River, (and the risk of
inadequate insurance or inability to obtain insurance to cover
these risks) as well as "Risk Factors" included in New Gold's
Annual Information Form, MD&A and other disclosure documents
filed on and available at www.sedar.com and on EDGAR at
www.sec.gov. 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 contained herein has been reviewed and approved by
Eric Vinet, Vice President,
Technical Services of New Gold. Mr. Vinet is a Professional
Engineer and member of the Ordre des ingénieurs du Québec. He is a
"Qualified Person" for the purposes of NI 43-101.
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.
(i)
Non-GAAP Financial Performance Measures
Cash costs per gold
ounce, all-in sustaining costs (AISC) per gold ounce, sustaining
capital and growth capital are non-GAAP financial measures that 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. The
Company believes that these measures, together with measures
determined in accordance with IFRS, provide investors with an
improved ability to evaluate the underlying performance of the
Company. In addition, certain non-GAAP measures are utilized, along
with other measures, in the company scorecard to set incentive
compensation goals and assess performance of its executives.
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. Co-product all-in sustaining costs remove the impact of other
metal sales that are produced as a by-product of gold production
and apportion the all-in sustaining 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 or gold
equivalent ounces sold, as the case may be, to arrive at per ounce
or per pound figures. Gold equivalent ounces of copper and silver
produced will be computed as pounds of copper and silver ounces
produced multiplied by the ratio of the average realized copper and
silver price to the average realized gold price. Unless otherwise
indicated, all-in sustaining cost information in this news release
is net of by-product sales.
"Sustaining costs" is a non-GAAP financial measure. New Gold
defines sustaining costs as the difference between all-in
sustaining costs and total cash costs, being the sum of net 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. New Gold
terms non-sustaining capital costs to be "growth capital".
Management uses sustaining costs to understand the aggregate net
result of the drivers of all-in sustaining costs other than total
cash costs. The line items between cash costs and all-in
sustaining costs in the tables below break down the components of
sustaining costs. Sustaining costs is intended to provide
additional information only, does not have any 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.
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 or gold equivalent
ounces sold, as the case may be, to arrive at per ounce or per
pound figures. Gold equivalent ounces of copper and silver produced
will be computed as pounds of copper and silver ounces produced
multiplied by the ratio of the average realized copper and silver
price to the average realized gold price. 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.
For additional information with respect to the non-GAAP measures
used by the Company, including reconciliation to the nearest IFRS
measures, refer to the detailed Non-GAAP performance measure
disclosure in the Management's Discussion and Analysis for the year
ended December 31, 2018 filed at
www.sedar.com and on EDGAR at www.sec.gov.
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SOURCE New Gold Inc.