New Gold Reports First Quarter Financial Results
TORONTO - New Gold Inc. CEO Renaud Adams said, “We are encouraged by the progress made at Rainy River, in Canada, during the first quarter as we re-position the operation for efficient and sustainable mining. Over the course of the year, we expect to drive further efficiencies throughout the operation with the objective of delivering free cash flow starting in late 2020. The New Afton Mine, in Canada, reported another strong quarter of operating results as the team further advanced the development of the C-zone. We are particularly encouraged with the organic growth potential of the D-zone with the first hole of the exploration drilling program intersecting 140 meters of mineralization located 360 meters below the C-zone and a second hole is currently underway.”
The Rainy River Mine reported in-line gold equivalent production of 62,278 ounces (61,557 ounces of gold and 60,383 ounces of silver) for the quarter. As previously disclosed, production during the quarter included planned lower grades as mining operations continued the transition to phase 2 of the mine plan. Operating expense per gold eq. ounce was $801 for the quarter, which is a 35% decrease over the prior-year quarter, driven by improved operational performance and increased metal production and sales volumes achieved in the current year quarter. All-in sustaining costs (AISC) per gold eq. ounce for the quarter were $1,330, which included $10 million of capitalized stripping costs ($140 per gold eq. ounce), and $27 million of other sustaining capital expenditure and lease payments. AISC per gold eq. ounce for the quarter declined by 45% over the prior-year quarter due to improved operational performance and an increase in metal production and sales volumes coupled with a decrease in sustaining capital. It is expected that sustaining capital will be higher in the second and third quarters when weather conditions are more favorable for infrastructure and tailings construction and will decline in the fourth quarter. During the quarter, approximately 1.4 million ore tonnes and 8.6 million waste tonnes (including 2.97 million capitalized waste tonnes) were mined at an operating strip ratio of 6.10:1. Mining operations in the quarter were primarily focused on waste stripping to expose ore for mining in future quarters. Additionally, 0.9 million tonnes of out-pit non-acid generating (NAG) material were mined in preparation for planned dam raises scheduled to begin during the second quarter. Mill throughput for the quarter averaged 19,725 tonnes per day, below the annual target of 22,000 to 24,000 tonnes per day. The lower average mill throughput was negatively impacted by the significant buildup of ice in the crushed ore stockpile above the apron feeders. Average mill throughput returned to target levels at the end of the quarter. Mill availability for the quarter was a record 89% (95% in March), despite the planned downtime to replace the ball mill trunnion and complete repairs. Gold recovery improved to average 90% for the quarter, a significant improvement over the 89% reported in the fourth quarter when considering the 16% lower average grade milled. Recoveries are expected to continue to improve throughout the year to an average of 90-92% for the year. During the first quarter of 2019, the Company launched a comprehensive optimization study that includes the review of alternative open pit and underground mining scenarios with the overall objective of reducing capital and improving the return on investment over the life of mine. An updated life of mine plan is anticipated to be completed in the fourth quarter. A strategic exploration drill program is expected to begin in the second quarter that will test near-mine targets in the Intrepid North area.
The New Afton mine produced 60,986 gold equivalent ounces for the quarter, including 17,841 ounces of gold, and 19.5 million pounds of copper, in line with plan. Operating expense per gold eq. ounce was $468 for the quarter, which is an increase from the prior-year quarter primarily due to a decrease in sales volume. All-in sustaining costs (AISC) per gold eq. ounce for the quarter was $714. AISC per gold ounce (net of by-product credits) for the quarter was ($673). All-in sustaining costs have increased over the prior-year quarter due to an increase in sustaining capital as well as a decrease in metal sales volume and revenue. Sustaining capital and sustaining lease payments for the quarter was $8.0 million, primarily related to tailings dam raises and equipment purchases and sustaining mine development. Growth capital for the quarter was $2.6 million, primarily related to the C-zone. The second phase of a planned mill upgrade to address supergene ore recovery advanced during the quarter with commissioning scheduled for the third quarter. Development of the B3-zone is currently underway, which will sustain ongoing production during the C-zone development period. Efforts during the quarter continued to focus on de-risking the execution of C-zone project, primarily on the finalization of the tailings disposal plan and advancing permitting efforts with the objective of updating the life of mine plan in the latter part of the year. During the quarter, exploration-heading development towards the C-zone commenced and advanced by approximately 50 meters. An underground drilling program is currently underway that will test the down plunge extension of the C-zone (the D-zone) that could increase the resource inventory and extend mine life beyond 2030. The first hole of the 10-hole program has been completed, which intersected C-zone style mineralization over an approximate 140-meter interval (from 662 meters to 802 meters depth) and ended at the planned target, 360 vertical meters below the C-zone (assays pending). A second drill hole is currently underway and the program is expected to be completed by the end of the third quarter.
The company’s address is 181 Bay Street, Suite 3510, Toronto, ON M5J 2T3, (416) 324-6000, www.newgold.com.