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
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 |
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 |
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 |
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. |
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