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New Gold Reports 2023 Third Quarter Results

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New Gold Reports 2023 Third Quarter Results

 

 

 

 

 

Strong Results Generate Positive Free Cash Flow, Consolidated 2023 Production Tracking to the Top End of Guidance with All-In Sustaining Cost Tracking to the Low End of Guidance

 

New Gold Inc. (TSX: NGD) (NYSE American: NGD) reports third quarter results for the Company as of September 30, 2023. Production totaled 111,204 gold equivalent1 ounces at all-in sustaining costs2 of $1,477 per gold eq. ounce. Due to the strong operational performance over the first nine months of the year, consolidated 2023 production is tracking to the top end of guidance and all-in sustaining costs are tracking to the low end of the guidance range. Solid production and low costs in the third quarter resulted in strong cash flow from operations of $100 million and free cash flow2 of $22 million, highlighting the cash generation profile as growth projects are completed in the coming years, which is expected to lead to production growth and tapering capital costs.

 

Strong Operational Performance Positions New Gold to Achieve Top End of 2023 Production Guidance and Low End of Cost Guidance

  • Third quarter consolidated gold eq.1 production of 111,204 ounces (82,986 ounces of gold, 13.2 million pounds of copper and 145,452 ounces of silver), the highest quarterly production since 2021 and a 22% increase over the prior-year period
  • All-in sustaining costs2 of $1,477 per gold eq. ounce, including total cash costs2 of $1,044 per gold eq. ounce
  • Standout quarter from New Afton, exceeding planned copper and gold production, mostly as a result of higher tonnes processed. B3 extraction rates continue to exceed plan. Production is tracking to the top end of 2023 guidance
  • Rainy River continues to deliver stable production quarter-over-quarter. Both the open pit and underground mines are well positioned to deliver fourth quarter mill feed and the processing plant is running well. Production is tracking to the top end of 2023 guidance
  • The Company is currently tracking to the top end of consolidated production guidance for gold, copper, and gold eq.1 production and all-in sustaining costs2 are tracking to the low end of the guidance range

 

Positive Free Cash Flow Achieved in the Quarter, Underscoring the Near-term Cash Generation Profile as Both Operations Execute on Growth Projects

  • Cash and cash equivalents of $179 million as at September 30, 2023, an increase of $5 million from the second quarter driven by free cash flow2 generated at both Rainy River and New Afton
  • Cash generated from operations of $100 million, or $0.15 per share, in the third quarter and cash generated from operations, before changes in non-cash operating working capital2, of $88 million, or $0.13 per share
  • Free cash flow2 of $22 million despite the Company currently being in an intensive capital spending period, including the New Afton C-Zone project and establishment of the Rainy River underground mine
  • Net loss of $3 million, or $0.00 per share and adjusted net earnings2 of $23 million, or $0.03 per share
  • Capital spending is expected to taper off significantly over the next few years upon completion of growth projects and a significant reduction in open pit waste stripping at Rainy River after 2024. Together with increasing production profiles at both operations and decreasing unit operating costs per tonne at New Afton with the return to higher throughput rates, free cash flow is expected to increase significantly
  • Subsequent to quarter end, the Company announced the achievement of two key milestones with the completion of the first draw bell at New Afton’s C-Zone and the commissioning of the final two of 29 dewatering wells at the New Afton Tailings Storage Facility (NATSF), as planned (refer to the Company’s October 2, 2023 news release for further information). Commercial production from C-Zone is on track for the second half of 2024. At Rainy River, development of the connection ramp from Intrepid to underground Main Zone is on track for first ore production from underground Main Zone in the second half of 2024

 

Strategic Pipeline to Extend New Afton Mine Life Beyond 2030 with Minimal Capital Investment

  • Subsequent to quarter end, the Company provided an update on promising opportunities to extend the mine life at New Afton beyond 2030, and reported encouraging drill results and future exploration plans at the New Afton Mine (refer to the Company’s October 10, 2023 news release for further information)
  • As a priority, New Gold is looking to convert a portion of the existing underground mineral resource base to mineral reserves, including C-Zone Extension, East Extension, and D-Zone. Additionally, initial drilling results from K-Zone and AI-Southeast are encouraging
  • The Company will continue to employ a disciplined approach to capital allocation to sustain New Afton’s significant cash flow profile throughout the C-Zone period, from the second half of 2024 to 2030, by leveraging existing underground infrastructure and New Afton’s mill and tailings facilities

 

“The third quarter was an impressive one for New Gold,” stated Patrick Godin, President & CEO. “We delivered a 22% increase in gold equivalent production over the prior-year period with a meaningful decrease in all-in sustaining costs, leading to positive free cash flow during the quarter for the Company while continuing to invest in our growth projects. We have performed well through 2023 with a continued focus on operational discipline and safety, and I am pleased that we are tracking to the top end of our production guidance, and the low end of our all-in sustaining cost guidance.”

 

“We are entering a growth period and the third quarter saw our Company make big strides towards derisking and securing the future production at our operations. I want to reemphasize the two key milestones achieved at New Afton with the completion of the first draw bell at C-Zone and the final commissioning of all 29 dewatering wells at the NATSF. This is a pivotal moment for the New Afton mine with production growth and declining costs expected in the near term, and all major capital expenditures for the tailings stabilization completed. Rainy River continued to advance the connection ramp towards the underground Main Zone from Intrepid, allowing us to continue to take advantage of a number of efficiencies both underground and in the open pit,” added Mr. Godin.

 

2023 Operational Outlook Update

 

Operational Estimates Rainy River Mine New Afton Mine 2023 Consolidated Guidance
Gold eq. production (ounces)1 235,000 – 265,000 130,000 – 160,000 365,000 – 425,000
Gold production (ounces) 230,000 – 260,000 50,000 – 60,000 280,000 – 320,000
Copper production (Mlbs) 38 – 48 38 – 48
Operating expenses, per gold eq. ounce $905 – $985 $1,035 – $1,115 $950 – $1,030
All-in sustaining costs, per gold eq. ounce2 $1,475 – $1,575 $1,320 – $1,420 $1,505 – $1,605
Capital Investment & Exploration Estimates Rainy River Mine New Afton Mine 2023 Consolidated Guidance
Total capital ($M) $145 – $165 $145 – $185 $290 – $350
Sustaining capital ($M)2 $125 – $135 $15 – $35 $140 – $170
Growth capital ($M)2 $20 – $30 $130 – $150 $150 – $180

 

Through the first nine months of the year, both operations delivered solid production and cost performance. The Company is currently tracking to the top end of consolidated production guidance for gold, copper, and gold eq.1 production and all-in sustaining costs are tracking to the lower end of the guidance range.

 

Rainy River is tracking towards the top end of the gold eq.1 production range. Sustaining capital is expected to be at the low end of the guidance range primarily due to lower waste stripping year-to-date, resulting in lower capitalized mining costs, with those costs remaining in operating expenses. As a result of the lower capitalization of mining costs, operating expenses per gold eq. ounce are now tracking above the top end of the guidance range. All-in sustaining costs are tracking to the midpoint of the guidance range. Growth capital is expected to be within its guidance range.

 

At New Afton, copper, gold, and gold eq.1 production are tracking towards the top end of their respective production guidance ranges, with operating expenses per gold eq. ounce and all-in sustaining costs now tracking towards the low end of their respective cost guidance ranges. Sustaining and growth capital are both expected to be within their respective guidance ranges.

 

Consolidated Financial Highlights

 

Q3 2023 Q3 2022 9M 2023 9M 2022
Revenue ($M) 201.3 151.2 587.3 441.6
Operating expenses ($M) 107.5 99.2 329.6 274.2
Net loss ($M) (2.7) (4.2) (37.1) (49.9)
Net loss, per share ($) (0.00) (0.01) (0.05) (0.07)
Adj. net earnings (loss) ($M)2 23.1 (13.4) 53.1 (19.8)
Adj. net earnings (loss), per share ($)2 0.03 (0.02) 0.08 (0.03)
Cash generated from operations ($M) 100.1 53.7 217.0 158.9
Cash generated from operations, per share ($) 0.15 0.08 0.32 0.23
Cash generated from operations, before changes in non-cash operating working capital ($M)2 87.7 43.6 228.5 137.4
Cash generated from operations, before changes in non-cash operating working capital, per share ($)2 0.13 0.06 0.33 0.20
  • Revenue increased over the prior-year periods due to higher gold prices and higher gold and copper sales volumes.
  • Operating expenses increased over the prior-year periods primarily due to higher production and sales at both sites.
  • Net loss decreased over the prior-year periods primarily due to an increase in revenues resulting from higher gold prices and higher gold and copper sales, partially offset by higher operating costs and higher unrealized losses on the revaluation of the Rainy River gold stream obligation and the New Afton free cash flow interest obligation.
  • Adjusted net earnings2 increased over the prior-year periods due to higher revenues and lower finance costs, partially offset by higher operating expenses, and depreciation and depletion.
  • Cash generated from operations increased over the prior-year periods primarily due to higher revenue.

 

Consolidated Operational Highlights

 

Q3 2023 Q3 2022 9M 2023 9M 2022
Gold eq. production (ounces)1 111,204 91,021 318,435 249,230
Gold eq. sold (ounces)1 107,562 92,634 311,677 247,678
Gold production (ounces) 82,986 70,147 241,991 190,679
Gold sold (ounces) 79,821 68,816 241,247 190,641
Copper production (Mlbs) 13.2 8.5 35.5 24.1
Copper sold (MIbs) 13.0 9.9 32.5 23.5
Gold revenue, per ounce ($) 1,900 1,703 1,902 1,814
Copper revenue, per pound ($) 3.57 3.17 3.65 3.75
Average realized gold price, per ounce ($)2 1,924 1,727 1,926 1,831
Average realized copper price, per pound ($)2 3.78 3.42 3.89 3.99
Operating expenses, per gold eq. ounce ($) 1,000 1,069 1,058 1,106
Total cash costs, per gold eq. ounce ($)2 1,044 1,114 1,102 1,143
Depreciation and depletion, per gold eq. ounce ($) 548 599 541 580
All-in sustaining costs, per gold eq. ounce ($)2 1,477 1,637 1,535 1,875
Sustaining capital ($M)2 35.6 39.6 97.5 149.5
Growth capital ($M)2 35.0 30.3 107.8 72.1
Total capital ($M) 70.6 69.9 205.3 221.6

 

Rainy River Mine
Operational Highlights

 

Rainy River Mine Q3 2023 Q3 2022 9M 2023 9M 2022
Gold eq. production (ounces)1 66,374 60,319 195,389 163,973
Gold eq. sold (ounces)1 63,790 56,932 198,247 165,396
Gold production (ounces) 64,970 58,719 191,053 160,069
Gold sold (ounces) 62,426 55,421 193,846 161,573
Gold revenue, per ounce ($) 1,921 1,729 1,920 1,832
Average realized gold price, per ounce ($)2 1,921 1,729 1,920 1,832
Operating expenses, per gold eq. ounce ($) 1,034 955 1,050 973
Total cash costs, per gold eq. ounce ($)2 1,034 955 1,050 973
Depreciation and depletion, per gold eq. ounce ($) 628 687 600 665
All-in sustaining costs, per gold eq. ounce ($)2 1,542 1,483 1,539 1,662
Sustaining capital ($M)2 28.7 25.9 82.6 100.9
Growth capital ($M)2 3.3 6.0 13.5 13.5
Total capital ($M) 32.0 31.9 96.1 114.4

 

Operating Key Performance Indicators

 

Rainy River Mine Q3 2023 Q3 2022 9M 2023 9M 2022
Open Pit Only
Tonnes mined per day (ore and waste) 121,011 112,055 123,336 113,597
Ore tonnes mined per day 36,177 24,701 35,567 19,022
Operating waste tonnes per day 44,393 44,469 55,458 33,110
Capitalized waste tonnes per day 40,442 42,885 32,311 61,465
Total waste tonnes per day 84,835 87,354 87,769 94,575
Strip ratio (waste:ore) 2.35 3.54 2.47 4.97
Open Pit and Underground
Tonnes milled per calendar day 25,308 24,439 23,664 24,020
Gold grade milled (g/t) 0.97 0.89 1.01 0.83
Gold recovery (%) 90 91 91 91
  • Third quarter gold eq.1 production was 66,374 ounces (64,970 ounces of gold and 111,694 ounces of silver). For the nine months ended September 30, 2023, gold eq.1 production was 195,389 ounces (191,053 ounces of gold and 344,880 ounces of silver). The increase over the prior-year periods is primarily due to higher gold grade.
  • Operating expense per gold eq. ounce increased over the prior-year periods due to lower capitalized tonnes, increased costs associated with mill maintenance, partially offset by higher sales volume.
  • All-in sustaining costs2 per gold eq. ounce increased over the prior-year period due to higher sustaining capital spend and operating expenses partially offset by higher sales volume. For the nine months ended September 30, 2023, all-in sustaining costs per gold eq. ounce decreased over the prior-year period due to lower sustaining capital spend and higher sales volume.
  • Total capital increased over the prior-year period due to higher sustaining capital, partially offset by lower growth capital. For the nine months ended September 30, 2023, total capital decreased over the prior-year period due to lower sustaining capital. Sustaining capital2 related primarily to the tailings dam raise, capitalized waste and capital maintenance. Growth capital2 related to the development of the Intrepid underground and underground Main Zones, which advanced 565 metres during the quarter.
  • Free cash flow2 for the quarter and nine months ended September 30, 2023, was $15 million and $31 million (net of $7 million and $21 million stream payments, respectively), an improvement over the prior-year periods primarily due to an increase in revenues.

 

New Afton Mine
Operational Highlights

 

New Afton Mine Q3 2023 Q3 2022 9M 2023 9M 2022
Gold eq. production (ounces)1 44,830 30,701 123,046 85,257
Gold eq. sold (ounces)1 43,772 35,702 113,430 82,282
Gold production (ounces)3 18,016 11,427 50,937 30,610
Gold sold (ounces) 17,395 13,395 47,401 29,068
Copper production (Mlbs) 13.2 8.5 35.5 24.1
Copper sold (Mlbs) 13.0 9.9 32.5 23.5
Gold revenue, per ounce ($) 1,823 1,595 1,827 1,712
Copper revenue, per ounce ($) 3.57 3.17 3.65 3.75
Average realized gold price, per ounce ($)2 1,932 1,721 1,948 1,825
Average realized copper price, per pound ($)2 3.78 3.42 3.89 3.99
Operating expenses, per gold eq. ounce ($) 951 1,250 1,071 1,374
Total cash costs, per gold eq. ounce ($)2 1,058 1,367 1,192 1,485
Depreciation and depletion, per gold eq. ounce ($) 428 455 436 403
All-in sustaining costs, per gold eq. ounce ($)2 1,229 1,769 1,341 2,101
Sustaining capital ($M)2 6.7 13.8 14.8 48.6
Growth capital ($M)2 31.7 24.3 94.3 58.6
Total capital ($M) 38.4 38.1 109.1 107.2

 

Operating Key Performance Indicators

 

New Afton Mine Q3 2023 Q3 2022 9M 2023 9M 2022
New Afton Mine Only
Tonnes mined per day (ore and waste) 9,790 6,523 9,716 6,674
Tonnes milled per calendar day 8,651 7,7643 8,326 9,8363
Gold grade milled (g/t) 0.72 0.593 0.69 0.433
Gold recovery (%) 90 853 89 833
Copper grade milled (%) 0.80 0.64 0.77 0.50
Copper recovery (%) 91 85 91 81
Gold eq. production (ounces)1 44,069 30,158 118,803 83,077
Gold production (ounces) 17,255 10,884 46,694 28,430
Copper production (Mlbs) 13.2 8.5 35.5 24.1
Ore Purchase Agreements3
Gold production (ounces) 761 543 4,243 2,180
  • Third quarter gold eq.1 production was 44,830 ounces (18,016 ounces of gold and 13.2 million pounds of copper). For the nine months ended September 30, 2023, gold eq.1 production was 123,046 ounces (50,937 ounces of gold and 35.5 million pounds of copper). The increase over the prior-year periods is due to higher grades and recovery.
  • Operating expense per gold eq. ounce decreased over the prior-year periods primarily due to higher sales volume.
  • All-in sustaining costs2 per gold eq. ounce decreased over the prior-year periods due to lower sustaining capital spend and higher sales volume.
  • Total capital increased over the prior-year periods, primarily due to higher growth capital spend partially offset by lower sustaining capital spend. Sustaining capital2 primarily related to tailings management and stabilization activities. Growth capital2 primarily related to C-Zone development.
  • Free cash flow2 for the quarter and nine months ended September 30, 2023, was a net inflow of $5 million and a net outflow of $33 million, respectively, an improvement over the prior-year periods primarily due to higher revenue partially offset by an increase in growth capital.
  • During the quarter, C-Zone advanced 1,193 metres. The first draw bell at C-Zone was completed in the quarter, and the Company completed the commissioning of the final two of 29 dewatering wells at the NATSF. C-Zone has now transitioned to the production ramp-up phase and remains on-track to achieve commercial production in the second half of 2024.
  • During the quarter, the Company continued to advance three of the most promising resource zones for potential conversion to Mineral Reserves and advance exploration initiatives in South-Central British Columbia, with a plan to strategically leverage New Afton’s mill and tailings facilities to further extend the mine life. The Company completed 2,392 metres of diamond drilling in eight drill holes from underground. Of these, 1,121 metres were completed in three holes to explore for potential mineralization on the K-Zone target area, and the remaining 1,271 metres were completed in five drill holes to assess the true width and continuity of mineralization defined on the D-Zone target area. Drilling was also conducted from surface, where 1,433 metres in three drill holes targeted geophysical anomalies within the Mine Lease.

 

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 other Canadian-focused investments. New Gold’s vision is to build a leading diversified intermediate gold company based in Canada that is committed to the environment and social responsibility.

 

Endnotes
1. Total gold eq. ounces include silver and copper produced/sold converted to a gold equivalent. All copper is produced/sold by the New Afton Mine. Gold eq. ounces for Rainy River in Q3 2023 includes production of 111,694 ounces of silver (108,530 ounces sold) converted to a gold eq. based on a ratio of $1,750 per gold ounce and $22.00 per silver ounce used for 2023 guidance estimates. Gold eq. ounces for New Afton in Q3 2023 includes 13.2 million pounds of copper produced (13.0 million pounds sold) and 33,758 ounces of silver produced (31,061 ounces of silver sold) converted to a gold eq. based on a ratio of $1,750 per gold ounce, $3.50 per copper pound and $22.00 per silver ounce used for 2023 guidance estimates.
2. “Total cash costs”, “all-in sustaining costs”, “adjusted net earnings/(loss)”, “adjusted tax expense”, “sustaining capital and sustaining leases”, “growth capital”, “cash generated from operations before changes in non-cash operating working capital”, “free cash flow”, and “average realized gold/copper price per ounce/pound” are all non-GAAP financial performance measures that are used in this news 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.
3. Key performance indicator data is inclusive of ounces from ore purchase agreements for New Afton. The New Afton Mine purchases small amounts of ore from local operations, subject to certain grade and other criteria. These ounces represented approximately 4% of total gold ounces produced at New Afton during the quarter, and 9% for the nine months ended September 30, 2023, using New Afton’s excess mill capacity. All other ounces are mined and produced at New Afton.
4. Figures in some tables may not add due to rounding.

 

Posted October 26, 2023

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