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New Gold Reports 2021 Second Quarter Results

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New Gold Reports 2021 Second Quarter Results

 

 

 

 

 

New Gold Inc. (TSX: NGD) (NYSE American: NGD) reports second quarter results for the Company as of June 30, 2021. For detailed information, please refer to the Company’s Second Quarter Management’s Discussion and Analysis and Financial Statements that are available on the Company’s website at www.newgold.com and on SEDAR at www.sedar.com. 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 and the MD&A for more information.

 

“The second quarter saw our operations perform well, and the Company remains on track to deliver an improved second half of the year,” stated Renaud Adams, President & CEO. “I am especially proud of the free cash flow generated in the quarter even at our planned lower grade. While Rainy River experienced challenges in July, the mine has reached an inflection point and I expect it to contribute meaningful free cash flow going forward.”  

 

“During the quarter we continued to advance several key catalysts for the Company’s future growth. Development of the decline towards the Intrepid underground ore zone at Rainy River continues to advance ahead of schedule, and C-Zone development at New Afton continues to advance on plan. We continue to seek ways to further optimize the performance at our operations and generate additional value for our shareholders,” added Mr. Adams.

 

Consolidated Second Quarter Highlights

 

  • Total production for the quarter was 105,705 gold equivalent1 ounces (66,989 ounces of gold, 240,029 ounces of silver and 18.2 million pounds of copper). For the six-month period ended June 30, 2021, production was 201,731 gold eq.1 ounces (133,639 ounces of gold, 427,253 ounces of silver and 32.0 million pounds of copper).
  • Revenues for the quarter were $198 million.
  • Operating expense for the quarter was $913 per gold eq. ounce.
  • Total cash costs2 for the quarter were $977 per gold eq. ounce.
  • All-in sustaining costs2 for the quarter were $1,551 per gold eq. ounce.
  • Average realized gold price2 of $1,817 per ounce and average realized copper price2 of $4.43 per pound.
  • Net loss for the quarter was $16 million ($0.02 per share).
  • Adjusted net earnings2 for the quarter were $27 million ($0.04 per share).
  • Cash generated from operations for the quarter was $110 million ($0.16 per share). Cash generated from operations for the quarter, before changes in non-cash operating working capital2, was $85 million ($0.12 per share).
  • Free cash flow2 generated for the quarter was $21 million.
  • At the end of the quarter, the Company had a cash position of $138 million and a strong liquidity position of $464 million.

 

2021 Operational Outlook

 

At Rainy River in the second half of the year, the mine returns to higher-grade areas of the pit (433, HS and ODM zones). However, in July 2021, production was primarily from the eastern area of the ODM zone (“East Lobe”) and realized gold grade from this area was below the expected gold grade in this period. East Lobe represents approximately 50% of planned production for the second half of 2021. If realized gold grade continues to track below expected gold grade, it would negatively impact the amount of ounces we expect to produce in the second half of 2021. The extent of the impact is not yet known but there is a risk that Rainy River may not achieve the lower end of its gold equivalent1 production guidance range of 275,000 to 295,000 ounces or the high end of its all-in sustaining costs2 guidance range of $1,125 per gold eq. ounce to $1,225 per gold eq. ounce. Management continues to assess the extent and impact of the lower gold grade from East Lobe, including additional reverse circulation drilling, and intend to provide updated information when available. The remaining high-grade areas that are planned to be mined during the second half of 2021, reconcile well with the resource block model, consistent with historical results.

 

At New Afton B3 production commenced in June following receipt of the Mines Act Permit on May 25, 2021, and will advance through the second half of the year. With the permit having been received later than anticipated, grades are expected to be lower in the second half of the year and New Afton is reviewing potential changes to its mine plan. As a result, New Afton’s gold production is expected to be at the lower end of the guidance range of 52,000 to 62,000 ounces and copper production is expected to be at the mid-point of the guidance range of 56 to 66 million pounds. New Afton is currently on track to meet its gold equivalent1 production guidance range of 165,000 to 195,000 ounces and all-in sustaining costs2 are expected to be at the higher end of the cost range of $1,225 per gold eq. ounce to $1,325 per gold eq. ounce. With current metal prices significantly above reserve pricing, New Afton is evaluating potential for additional short-term extraction opportunities below the current reserve cut-off grades.

 

Based on current information, the Company is expecting to achieve the lower end of the annual consolidated gold equivalent1 production guidance range of 440,000 to 490,000 ounces and consolidated all-in sustaining costs2 are expected to be at the higher end of the range of $1,230 per gold eq. ounce to $1,330 per gold eq. ounce, although achieving these ranges may be impacted by the extent of the lower gold grade from Rainy River’s East Lobe.

 

Consolidated Financial Highlights

 

Q2 2021 Q2 2020 H1 2021 H2 2020
Revenue ($M) 198.2 128.5 363.1 270.8
Net (loss) earnings, per share ($) (0.02) (0.07) (0.11)
Adj. net earnings (loss), per share ($)2 0.04 0.05 (0.03)
Operating cash flow, per share ($) 0.16 0.08 0.24 0.15
Adj. operating cash flow, per share ($)2 0.12 0.08 0.22 0.15

 

  • Revenues for the quarter were $198 million and $363 million for the six-month period ended June 30, 2021, an increase compared to the prior-year periods due to higher sales volumes and higher gold and copper prices.
  • Operating expenses for the quarter and six-month period ended June 30, 2021, were higher than the prior-year periods due to the strengthening of the Canadian dollar, costs related to the ramp-up of operations at New Afton in the first quarter, and the prior-year benefitting from the Canada Emergency Wage Subsidy.
  • Net loss for the quarter was $16 million ($0.02 per share) and net earnings were $1.0 million ($nil per share) for the six-month period ended June 30, 2021, an improvement compared to the prior-year periods primarily due to higher revenue, partially offset by higher operating expenses, the loss on revaluation of the New Afton free cash flow interest obligation, and the loss on the revaluation of investments. Additionally, the prior-year period included an impairment loss on the reclassification of Blackwater as an asset held for sale.
  • Adjusted net earnings2 for the quarter were $27 million ($0.04 per share) and $35 million ($0.05 per share) for the six-month period ended June 30, 2021, an increase compared to the prior-year periods primarily due to higher revenues partially offset by higher costs.

 

Consolidated Operational Highlights

 

Q2 2021 Q2 2020 H1 2021 H1 2020
Gold eq. production (ounces)1 105,705 98,079 201,731 201,514
Gold eq. sold (ounces)1 104,221 91,390 196,039 195,326
Gold production (ounces) 66,989 64,294 133,639 131,084
Gold sold (ounces) 68,184 60,853 131,723 129,626
Copper production (Mlbs) 18.2 16.9 32.0 35.4
Copper sold (Mlbs) 16.9 15.3 30.2 33.0
Average realized gold price, per ounce2 1,817 1,516 1,803 1,485
Average realized copper price, per pound2 4.43 2.51 4.17 2.54
Operating expense, per gold eq. ounce 913 726 964 799
Total cash costs, per gold eq. ounce2 977 773 1,019 849
Depreciation and depletion, per gold eq. ounce 495 445 496 478
All-in sustaining costs, per gold eq. ounce2 1,551 1,283 1,551 1,370
Sustaining capital and sustaining leases ($M)2 49.2 41.1 87.1 90.2
Growth capital ($M)2 33.2 11.4 51.8 30.4

 

Rainy River

 

Operational Highlights

 

Rainy River Mine Q2 2021 Q2 2020 H1 2021 H1 2020
Gold eq. production (ounces)1 55,163 49,633 111,676 100,739
Gold eq. sold (ounces)1 57,304 47,873 110,881 101,411
Gold production (ounces) 52,901 48,800 107,557 99,181
Gold sold (ounces) 55,062 47,064 106,857 99,846
Average realized gold price, per ounce2 1,817 1,514 1,802 1,483
Operating expense, per gold eq. ounce 974 890 989 980
Total cash costs, per gold eq. ounce2 974 890 989 980
Depreciation and depletion, per gold eq. ounce 670 646 653 654
All-in sustaining costs, per gold eq. ounce2 1,524 1,567 1,554 1,666
Sustaining capital and sustaining leases ($M)2 29.8 30.9 59.1 66.6
Growth capital ($M)2 3.7 0.1 5.0 0.2

 

Operating Key Performance Indicators

 

Rainy River Mine (Open Pit Mine only) Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021
Tonnes mined per day (ore and waste) 126,512 145,701 158,638 150,767 158,556
Ore tonnes mined per day 23,101 36,515 42,918 35,681 36,256
Operating waste tonnes per day 72,575 62,818 73,921 65,643 71,124
Capitalized waste tonnes per day 30,836 46,368 41,799 49,442 51,176
Total waste tonnes per day 103,411 109,186 115,720 115,085 122,300
Strip ratio (waste:ore) 4.48 2.99 2.70 3.23 3.37
Tonnes milled per calendar day 23,880 26,998 26,999 26,301 25,349
Gold grade milled (g/t) 0.78 0.88 0.93 0.80 0.82
Gold recovery (%) 89 89 90 89 87
Mill availability (%) 90 90 94 89 88
Gold production (ounces) 48,800 63,004 66,734 54,656 52,901
Gold eq. production (ounces)1 49,633 64,221 68,241 56,513 55,163

 

  • Second quarter gold eq.1 production was 55,163 ounces (52,901 ounces of gold and 162,879 ounces of silver). Lower gold grades were expected during the first half of the year as mining operations were focused on stripping to bring pit walls to the final pit limit. The 11% increase compared to the prior-year period is due to higher tonnes processed and higher gold grades. For the six-month period ended June 30, 2021, gold eq.1 production was 111,676 ounces (107,557 ounces of gold and 296,609 ounces of silver), an increase over the prior-year period due to higher tonnes processed, with the prior-year period including a two-week voluntary shutdown due to COVID-19.
  • Operating expense and total cash costs2 were $974 per gold eq. ounce for the quarter, an increase over the prior-year period due to the strengthening of the Canadian dollar and the prior-year period benefitting from the Canadian Wage Subsidy. These two items increased costs by approximately $200 per gold eq. ounce in the quarter and were partially offset by improved operational and cost performance, and higher sales volumes. For the six-month period ended June 30, 2021, operating expense and total cash costs2 were $989 per gold eq. ounce, an increase over the prior-year period due to the strengthening of the Canadian dollar, and the receipt of the Canadian Wage Subsidy in the prior-year period.
  • Sustaining capital and sustaining lease2 payments for the quarter were $30 million, including $14 million of capitalized mining costs. Sustaining capital spend during the quarter primarily included the advancement of the planned annual tailings dam raise and capital maintenance. For the six-month period ended June 30, 2021, sustaining capital and sustaining lease2 payments were $59 million, including $27 million of capitalized mining costs.
  • All-in sustaining costs2 were $1,524 per gold eq. ounce for the quarter, a decrease over the prior-year period primarily due to higher sales volumes partially offset by higher total cash costs. For the six-month period ended June 30, 2021, all-in sustaining costs2 were $1,554 per gold eq. ounce, a decrease over the prior-year period primarily due to higher sales volumes and lower sustaining capital spend.
  • Growth capital2 for the quarter was $4 million and $5 million for the six-month period ended June 30, 2021, relating to the development of the underground Intrepid zone. During the quarter, development of the decline towards the Intrepid underground ore zone advanced 616 metres.
  • The open pit mine achieved 158,556 tonnes mined per day during the quarter, a 5% increase over the prior quarter, and exceeding the 2021 target of ~151,000 tonnes per day. Approximately 3.3 million ore tonnes and 11.1 million waste tonnes (including 4.7 million capitalized waste tonnes) were mined from the open pit at an average strip ratio of 3.37:1. As planned, during the second half of the year, the strip ratio is expected to decrease.
  • The mill processed 25,349 tonnes per day for the quarter, lower than the prior period, due to unplanned maintenance activities performed at the mill during the quarter impacting mill availability and operating time. The mill is expected to operate at 27,000 tonnes per day in the second half of the year. The mill continued to process ore directly supplied by the open pit combined with ore from the medium grade stockpile and processed an average grade of 0.82 grams per tonne at a gold recovery of 87%. Mill availability for the quarter averaged 88%.
  • There are currently no active cases of COVID-19 at the Rainy River Mine. Rainy River has implemented measures to mitigate and limit the spread of COVID-19 to protect the well-being of its employees, contractors, their families, local communities, and other stakeholders. For more information see: http://newgold.com/covid-19/.

 

New Afton Mine

 

Operational Highlights

 

New Afton Mine Q2 2021 Q2 2020 H1 2021 H1 2020
Gold eq. production (ounces)1 50,542 48,446 90,055 100,775
Gold eq. sold (ounces)1 46,917 43,517 85,157 93,915
Gold production (ounces) 14,088 15,494 26,082 31,903
Gold sold (ounces) 13,122 13,789 24,866 29,780
Copper production (Mlbs) 18.2 16.9 32.0 35.4
Copper sold (Mlbs) 16.9 15.3 30.2 33.0
Average realized gold price, per ounce2 1,817 1,520 1,809 1,490
Average realized copper price, per pound2 4.43 2.51 4.17 2.54
Operating expense, per gold eq. ounce 840 545 932 604
Total cash costs, per gold eq. ounce2 981 644 1,058 707
Depreciation and depletion, per gold eq. ounce 274 217 284 280
All-in sustaining costs, per gold eq. ounce2 1,402 881 1,396 962
Sustaining capital and sustaining leases ($M)2 19.1 10.0 27.6 23.4
Growth capital ($M)2 29.5 10.4 46.7 21.2

 

Operating Key Performance Indicators

 

New Afton Mine Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021
Tonnes mined per day (ore and waste) 15,358 17,249 17,259 11,395 15,104
Tonnes milled per calendar day 14,240 15,483 15,358 13,564 13,795
Gold grade milled (g/t) 0.46 0.44 0.46 0.39 0.43
Gold recovery (%) 81 80 79 79 80
Gold production (ounces) 15,494 15,955 16,362 11,994 14,088
Copper grade milled (%) 0.72 0.71 0.73 0.64 0.79
Copper recovery (%) 83 82 81 80 83
Copper production (Mlbs) 16.9 18.2 18.5 13.8 18.2
Mill availability (%) 92 98 99 96 98
Gold eq. production (ounces)1 48,446 51,315 52,326 39,512 50,542

 

  • Second quarter gold eq.1 production was 50,542 ounces (14,088 ounces of gold and 18.2 million pounds of copper). The increase compared to the prior-year period is due to higher copper production as a result of higher copper grades. For the six-month period ended June 30, 2021, gold eq.1 production was 90,055 ounces (26,082 ounces of gold and 32 million pounds of copper), a decrease over the prior-year period due to lower grades and lower throughput.
  • Operating expense and total cash costs2 were $840 and $981 per gold eq. ounce for the quarter, an increase over the prior-year period due to planned higher costs, the strengthening of the Canadian dollar and the prior-year period benefitting from the Canadian Wage Subsidy. The strengthening of the Canadian dollar and the benefit from the Canadian Wage Subsidy increased costs by approximately $155 per gold eq. ounce in the quarter. For the six-month period ended June 30, 2021, operating expense and total cash costs2 were $932 and $1,058 per gold eq. ounce, an increase over the prior-year period due to the strengthening of the Canadian dollar, the receipt of the Canadian Wage Subsidy in the prior-year period, as well as costs associated with the ramp up of operations following the shutdown of operations in the first quarter of 2021 due to the tragic incident.
  • Sustaining capital and sustaining lease2 payments for the quarter were $19 million, primarily related to B3 mine development and the advancement of the planned tailings dam raise. For the six-month period ended June 30, 2021, sustaining capital and sustaining lease2 payments were $28 million.
  • All-in sustaining costs2 were $1,402 per gold eq. ounce for the quarter and $1,396 per gold eq. ounce for the six-month period ended June 30, 2021. The increases over the prior-year periods were due to higher total cash costs and sustaining capital spend.
  • Growth capital2 was $30 million for the quarter, and $47 million for the six-month period ended June 30, 2021, primarily related to C-Zone development and the thickened and amended tailings project.
  • C-Zone development advanced by approximately 919 metres in the quarter and continues to advance on plan.
  • The underground mine averaged 15,104 tonnes mined per day for the quarter, higher than the previous quarter, as the mine initiated a safe and secure ramp up of Lift 1, including the West Cave, East Cave and Pillar, to return to pre-incident mining rates.
  • The mill averaged 13,795 tonnes per day, slightly below the prior-year period, but in-line with the plan to optimize metal recoveries while processing higher grade supergene ore. The mill processed gold grades of 0.43 grams per tonne and higher than expected copper grades of 0.79%, with gold and copper recoveries of 80% and 83%, respectively.
  • There are currently two active cases of COVID-19 at the New Afton Mine. New Afton has implemented measures to mitigate and limit the spread of COVID-19 to protect the well-being of its employees, contractors, their families, local communities, and other stakeholders. For more information see: http://newgold.com/covid-19/.
  • The wildfire situation in British Columbia remains active. At this time there has been no impact to operations at New Afton or to the supply chain. New Afton has an active fire management plan in place, and a number of precautionary measures have been implemented in the event the risk to our employees, contractors, communities and infrastructure increases considerably. Our priority remains the health, safety, and wellbeing of our employees, contractors and communities. We will continue to monitor the situation closely and will follow protocols and procedures established by the B.C. Ministry of Public Safety and Solicitor General.

 

Sustainability and ESG

 

New Gold has four sustainability focus areas: Indigenous Peoples, Tailings Management, Water and Climate. New Gold has adapted its sustainability efforts to align with the most pressing ESG issues facing the Company and the mining industry. As such, our ESG approach continues to prioritize the health, safety, and well-being of our people and the people in the communities in which we operate. The protection of our people is central to our success as we believe people are our greatest asset. New Gold is committed to providing training, opportunities, and progression paths for our teams, and we actively seek to ensure that we promote diversity within our teams at all levels of the organization. We have adopted an approach to execute on our sustainability strategy that aligns with ESG reporting standards.

 

About New Gold

New Gold is a Canadian-focused intermediate mining Company with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine. The Company also holds an 8% gold stream on the Artemis Gold Blackwater project located in Canada, a 6% equity stake in Artemis Gold Inc., and other Canadian-focused investments. New Gold’s vision is to build a leading diversified intermediate gold company based in Canada that is committed to environment and social responsibility.

 

Endnotes

1.  Total gold eq. ounces include silver and copper produced/sold converted to a gold eq. based on a ratio of $1,800 per gold ounce, $25.00 per silver ounce and $3.50 per copper pound used for 2021 guidance estimates. All copper is produced/sold by the New Afton Mine. Gold eq. ounces for Rainy River in Q2 2021 includes production of 162,879 ounces of silver (161,472 ounces sold) converted to a gold eq. based on a ratio of $1,800 per gold ounce and $25.00 per silver ounce used for 2021 guidance estimates. Gold eq. ounces for New Afton in Q2 2021 includes 18.2 million pounds of copper produced (16.9 million pounds sold) and 77,150 ounces of silver produced 67,888 ounces of silver sold) converted to a gold eq. based on a ratio of $1,800 per gold ounce, 3.50 per copper pound and $25.00 per silver ounce used for 2021 guidance estimates.
2.  “Total cash costs”, “all-in sustaining costs”, “adjusted net earnings/(loss)”, “sustaining capital and sustaining leases”, “growth capital”, “cash generated from operations”, “free cash flow” and “average realized gold/copper price per ounce/pound” are all non-GAAP financial performance measures that are used in this press release. These measures do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For more information about these measures, why they are used by the Company, and a reconciliation to the most directly comparable measure under IFRS, see the “Non-GAAP Financial Performance Measures” section of this news release.

 

 

 

Posted August 11, 2021

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