NEW GOLD REPORTS THIRD QUARTER 2024 RESULTS
Strong All-in Sustaining Costs Drive Increasing Margins and Record Free Cash Flow Generation, Provides 2024 Operational Outlook Update
(All amounts are in U.S. dollars unless otherwise indicated)
TORONTO, Oct. 29, 2024 /PRNewswire/ - New Gold Inc. ("New Gold" or the "Company") (TSX:NGD) (NYSE:NGD) reports third quarter results for the Company as of September 30, 2024. Third quarter 2024 production was 78,369 gold ounces and 12.6 million pounds of copper, at operating expenses of $1,021 per gold ounce sold (co-product basis)3 and all-in sustaining costs1 of $1,195 per gold ounce sold (by-product basis). The strong cost performance allows the Company to leverage higher metal prices, resulting in record cash flow from operations of $128 million and record free cash flow1 of $57 million.
Third Quarter Delivers Highest Production and Lowest Costs This Year, Trends Expected to Continue into the Fourth Quarter
"New Afton delivered a strong operating quarter and completed critical C-Zone milestones ahead of schedule, while Rainy River delivered costs as planned, with all-in sustaining costs 29% lower quarter-over-quarter," stated Patrick Godin, President and CEO. "The Company continues to expect the fourth quarter of 2024 to be its strongest quarter of the year, concluding a successful year that has seen New Gold reach its free cash flow inflection point and deliver on key project milestones in pursuit of our objective to target a sustainable production platform of approximately 600,000 gold equivalent ounces per year until at least 2030."
Third quarter consolidated production was 78,369 ounces of gold and 12.6 million pounds of copper at all-in sustaining costs1 of $1,195 per gold ounce sold (by-product basis).
New Afton third quarter production was 16,477 ounces of gold and 12.6 million pounds of copper at all-in sustaining costs1 of ($408) per gold ounce sold (by-product basis). The B3 cave continues to perform as planned, and C-Zone ore production is ramping up concurrently with construction of the cave footprint. Commercial production from C-Zone and crusher commissioning occurred early in the fourth quarter, two months ahead of schedule.
Rainy River third quarter production was 61,892 ounces of gold at all-in sustaining costs1 of $1,327 per gold ounce sold (by-product basis). Although Rainy River achieved the highest production quarter year-to-date, operations were impacted by a voluntary suspension following a fatality in July, after which open pit production gradually returned to full capacity.
New Gold Achieves Record Quarterly Free Cash Flow, Further Strengthening the Balance Sheet
"Financially, the third quarter was excellent for New Gold, highlighted by record quarterly free cash flow generation of $57 million," added Mr. Godin. "Similarly, financial discipline allowed the Company to maintain an excellent liquidity position and strong balance sheet while making the $43 million payment to Ontario Teachers and repaying $50 million on the credit facility."
The Company delivered record quarterly revenue of $252 million, record cash flow from operations of $128 million, and record free cash flow1 of $57 million, driven by higher metal prices, operational discipline and efficient capital management.
During the third quarter, the Company made a payment of $43 million to the Ontario Teachers' Pension Plan ("Ontario Teachers") as part of the minimum cash guarantee under the terms of the original 2020 New Afton strategic partnership. The Company also repaid $50 million of the $100 million drawn on its credit facility to fund the payment under the amending agreement with Ontario Teachers pursuant to which the strategic partnership was amended to reduce the free cash flow interest from 46.0% to 19.9% (the "Amending Agreement").
New Gold exits the third quarter with a strong financial position, with cash and cash equivalents of $133 million, and a liquidity position of $459 million as at September 30, 2024.
2024 Operational Outlook Update, Highlighted by Strong Cost Performance
"Although we expect consolidated gold production to be slightly below the original guidance range, copper production, cash costs, all-in sustaining costs and capital spending are all trending in-line with or better than the outlook presented at the beginning of this year," stated Mr. Godin. "On an asset basis, New Afton full-year gold production is expected to be at the top end of the guidance range and Rainy River gold production is expected to be lower than planned, mainly due to less high-grade tonnes on two open pit benches, and our decision to voluntarily suspend operations in July and gradually return to full production."
"Considering the performance to date, and after reviewing the open pit ore blocks planned at Rainy River in the fourth quarter, together with the excellent performance at New Afton, we are confident in our updated consolidated production forecasts to the end of this year and our previously provided 2025 and 2026 outlook. Furthermore, through operational discipline and capital management, we continue to successfully manage costs to generate significant free cash flow and offset the financial impact of lower production at Rainy River. Following the free cash flow inflection point, achieved in the middle of this year, and with the completion of key growth project milestones, the Company is well positioned to continue delivering on our targets and leverage the current metal price environment," added Mr. Godin.
Gold production is expected to be in the range of 300,000 to 310,000 ounces (previously 310,000 to 350,000 ounces). New Afton gold production is expected to be at the top end of the guidance range of 60,000 to 70,000 ounces. Rainy River gold production is expected to be in the range of 230,000 to 240,000 ounces (previously 250,000 to 280,000 ounces).
Copper production is expected to be at the mid-point of the guidance range of 50 to 60 million pounds.
Cash costs1 are trending in-line with the mid-point of the guidance range of $725 to $825 per gold ounce sold, on a by-product basis, despite the slightly lower gold production outlook and lower capitalized waste stripping, as a result of lower mining and processing costs, achieved through operational discipline at both operations, and higher by-product revenues from higher copper prices. Overall, the unit mining cost per tonne is lower than plan due to operational efficiency improvements and cost reduction initiatives.
All-in sustaining costs1 are expected to be at the low end of the guidance range of $1,240 to $1,340 per gold ounce sold, on a by-product basis, as a result of strong cash costs and lower sustaining capital spend. Rainy River's all-in sustaining costs are expected to be at the top end of its guidance range as lower mining and processing costs offset the lower expected production. All-in sustaining costs at New Afton are expected to be below the low end of its guidance range.
Operating expenses per gold ounce (co-product) are now tracking to the high end or slightly above the top end of the guidance range of $965 to $1,065 per gold ounce sold as a result of lower capitalized waste stripping and slightly lower gold production, which offset the impact of lower mining and processing costs. Operating expenses per copper pound (co-product) are trending in-line with the mid-point of the guidance range of $1.90 to $2.40 per copper pound sold.
Sustaining capital1 is tracking approximately $20 million below the low end of the guidance range of $115 million to $130 million, due to efficient capital management, savings related to execution of the Rainy River tailings dam raise, lower capitalized waste stripping and timing of capital spend at New Afton.
Growth capital1 is tracking to the low end of the guidance range of $175 million to $200 million, due to efficient capital management and early commissioning of the materials handling system at New Afton.
Notable Exploration Successes With a Focus on Near Mine Targets
"Our exploration strategy continued to advance during the third quarter, with positive exploration results released on both assets earlier in September. With the previously announced increased exploration budgets at both Rainy River and New Afton, the fourth quarter is expected to have the most metres drilled in 2024, as we work towards updating our Mineral Reserves and Resources early in 2025," stated Mr. Godin.
At Rainy River, exploration drilling continues to advance on underground targets. During the third quarter, the Company provided an update on the ongoing Rainy River exploration program (see September 11, 2024 news release), highlighting successful expansion of gold mineralized zones. These results are expected to have a positive impact on Rainy River's Mineral Resource estimate at year-end 2024 and form the basis of additional exploration opportunities in the coming years. Exploration drilling in the fourth quarter will continue testing the down-dip continuity of existing underground zones while exploring for potential new mining zones.
At New Afton, the Company continues to prioritize exploration drilling from the underground drift previously completed in the second quarter. During the third quarter, the Company provided an additional update on the ongoing exploration program at New Afton (see September 16, 2024 news release), highlighting positive exploration results in the eastern part of the mine where high-grade copper-gold porphyry mineralization was intersected. Exploration efforts during the fourth quarter will remain focused on potential near-mine copper-gold zones located above the C-Zone extraction level.
Consolidated Financial Highlights
Q3 2024
Q3 2023
9M 2024
9M 2023
Revenue ($M)
252.0
201.3
662.3
587.3
Operating expenses ($M)
107.6
107.5
323.9
329.6
Depreciation and depletion ($M)
58.3
58.8
190.8
168.2
Net earnings (loss) ($M)
37.9
(2.7)
47.5
(37.1)
Net earnings (loss), per share ($)
0.05
—
0.06
(0.05)
Adj. net earnings ($M)1
64.3
23.1
94.3
53.1
Adj. net earnings, per share ($)1
0.08
0.03
0.13
0.08
Cash generated from operations ($M)
127.9
100.1
283.2
217.0
Cash generated from operations, per share ($)
0.16
0.15
0.38
0.32
Cash generated from operations, before changes in non-cash operating working capital ($M)1
120.0
87.7
283.1
228.5
Cash generated from operations, before changes in non-cash operating working capital, per share ($)1
0.15
0.13
0.38
0.33
Free cash flow ($M)1
57.0
21.6
62.8
(17.3)
Revenue in the third quarter increased over the prior-year period primarily due to higher metal prices and gold sales volume, partially offset by lower copper sales volume. For the nine months ended September 30, 2024, the increase in revenue relative to the prior-year period was primarily due to higher metal prices, partially offset by lower gold sales volume.
Operating expenses in the third quarter and for the nine months ended September 30, 2024 were in-line with the prior year periods.
Depreciation expense in the third quarter was in-line compared to the prior-year period as the higher depreciable cost basis at Rainy River was offset by the lower depreciable cost basis at New Afton due to the disposition of mineral interest properties as a result of the accounting for the Amending Agreement with Ontario Teachers. For the nine months ended September 30, 2024, depreciation and depletion increased due to a higher depreciable cost basis when compared to the prior-year period, partially offset by an inventory write-up at Rainy River. Depreciation expense in the fourth quarter is expected to increase as C-Zone has reached commercial production and increases the depreciable cost basis.
Net earnings increased over the prior-year periods due to higher revenue. For the nine months ended September 30, 2024, the increase in net earnings was also attributable to a net gain on the derecognition of the New Afton free cash flow obligation.
Adjusted net earnings1 increased over the prior-year periods due to higher revenue, partially offset by higher depreciation in the nine months ended September 30, 2024.
Cash generated from operations and free cash flow1 increased over the prior-year periods primarily due to higher revenue, lower sustaining capital spend, and positive working capital movements. The Company delivered record quarterly free cash flow of $57 million.
September 30, 2024 cash and cash equivalents were $133 million.
Consolidated Operational Highlights
Q3 2024
Q3 2023
9M 2024
9M 2023
Gold production (ounces)2
78,369
82,986
217,865
241,991
Gold sold (ounces)2
81,791
79,821
219,565
241,247
Copper production (Mlbs)2
12.6
13.2
39.5
35.5
Copper sold (MIbs)2
11.0
13.0
36.4
32.5
Gold revenue, per ounce ($)3
2,485
1,900
2,297
1,902
Copper revenue, per pound ($)3
3.98
3.57
3.97
3.65
Average realized gold price, per ounce ($)1
2,507
1,924
2,324
1,926
Average realized copper price, per pound ($)1
4.18
3.78
4.19
3.89
Operating expenses per gold ounce sold ($/ounce, co-product)3
1,021
982
1,090
1,014
Operating expenses per copper pound sold ($/pound, co-product)3
2.18
2.24
2.33
2.61
Depreciation and depletion per gold ounce sold ($/ounce)
715
739
872
699
Cash costs per gold ounce sold (by-product basis) ($/ounce)1
741
749
783
858
All-in sustaining costs per gold ounce sold (by-product basis) ($/ounce)1
1,195
1,333
1,317
1,418
Sustaining capital ($M)1
19.8
35.6
77.2
97.5
Growth capital ($M)1
42.7
35.0
118.6
107.8
Total capital ($M)
62.5
70.6
195.8
205.3
Rainy River Mine
Operational Highlights
Rainy River Mine
Q3 2024
Q3 2023
9M 2024
9M 2023
Gold production (ounces)2
61,892
64,970
164,908
191,053
Gold sold (ounces)2
67,228
62,426
169,837
193,846
Gold revenue, per ounce ($)3
2,501
1,921
2,323
1,920
Average realized gold price, per ounce ($)1
2,501
1,921
2,323
1,920
Operating expenses per gold ounce sold ($/ounce)3
1,089
1,056
1,195
1,074
Depreciation and depletion per gold ounce sold ($/ounce)
681
641
809
613
Cash costs per gold ounce sold (by-product basis) ($/ounce)1
1,028
1,015
1,130
1,032
All-in sustaining costs per gold ounce sold (by-product basis) ($/ounce)1
1,327
1,535
1,582
1,532
Sustaining capital ($M)1
17.9
28.7
69.5
82.6
Growth capital ($M)1
14.0
3.3
31.8
13.5
Total capital ($M)
31.9
32.0
101.3
96.1
Operating Key Performance Indicators
Rainy River Mine
Q3 2024
Q3 2023
9M 2024
9M 2023
Open Pit Only
Tonnes mined per day (ore and waste)
81,619
121,011
97,352
123,336
Ore tonnes mined per day
24,374
36,177
19,527
35,567
Operating waste tonnes per day
52,080
44,393
53,299
55,458
Capitalized waste tonnes per day
5,164
40,442
24,526
32,311
Total waste tonnes per day
57,245
84,835
77,825
87,769
Strip ratio (waste:ore)
2.35
2.35
3.99
2.47
Underground Only
Ore tonnes mined per day
834
801
755
856
Waste tonnes mined per day
1,117
474
1,166
456
Lateral development (metres)
1,018
649
3,275
2,371
Open Pit and Underground
Tonnes milled per calendar day
24,528
25,308
25,204
23,664
Gold grade milled (g/t)
0.95
0.97
0.84
1.01
Gold recovery (%)
93
90
92
91
Third quarter gold production was 61,892 ounces. For the nine months ended September 30, 2024, gold production was 164,908 ounces. The decrease over the prior year periods was primarily due to increased mill feed from low-grade stockpiles.
Operating expenses per gold ounce sold for the third quarter was in-line with the prior-year period. Operating expenses per gold ounce sold for the nine months ended September 30, 2024, increased over the prior-year period primarily due to lower sales volumes.
All-in sustaining costs1 per gold ounce sold (by-product basis) for the third quarter decreased over the prior-year period due to higher sales volumes and lower sustaining capital spend. All-in sustaining costs per gold ounce sold (by-product basis) for the nine months ended September 30, 2024, increased over the prior-year period due to lower sales volumes, partially offset by lower sustaining capital spend.
Total capital for the third quarter is in-line with the prior-year period, and higher for the nine months ended September 30, 2024. The increase over the prior-year period is due to higher growth capital spend, partially offset by lower sustaining capital spend. Sustaining capital1 is primarily related to capitalized waste, capital components, and tailings management. Growth capital1 is related to underground development as the Underground Main and Intrepid zones continue to advance.
Free cash flow for the third quarter and nine months ended September 30, 2024, was $44 million and $53 million (net of stream payments) respectively, an increase compared to the prior-year periods primarily due to an increase in revenue from higher gold prices, partially offset by higher growth capital spend.
At Rainy River, first development ore was mined from Underground Main in late September, ahead of schedule. Underground Main contains the majority of underground mineral reserves at Rainy River and will be an important source of higher-grade production in the coming years to supplement mill feed from the open pit and the Intrepid underground zone. Mining of first ore follows the completion of the main fresh air raise and in-pit portal in the third quarter. With these important milestones completed, the Underground Main project is on track to commence stoping in the first half of 2025 and ramp up to an underground production rate of approximately 5,500 tonnes per day by 2027.
New Afton Mine
Operational Highlights
New Afton Mine
Q3 2024
Q3 2023
9M 2024
9M 2023
Gold production (ounces)2
16,477
18,016
52,957
50,937
Gold sold (ounces)2
14,564
17,395
49,728
47,401
Copper production (Mlbs)2
12.6
13.2
39.5
35.5
Copper sold (Mlbs)2
11.0
13.0
36.4
32.5
Gold revenue, per ounce ($)3
2,413
1,823
2,208
1,827
Copper revenue, per ounce ($)3
3.98
3.57
3.97
3.65
Average realized gold price, per ounce ($)1
2,536
1,932
2,330
1,948
Average realized copper price, per pound ($)1
4.18
3.78
4.19
3.89
Operating expenses ($/oz gold, co-product)3
709
718
730
769
Operating expenses ($/lb copper, co-product)3
2.18
2.24
2.33
2.61
Depreciation and depletion ($/ounce)
864
1,077
1,078
1,042
Cash costs per gold ounce sold (by-product basis) ($/ounce)1
(583)
(206)
(401)
145
Cash costs per gold ounce sold ($/ounce,co-product)1
775
786
799
844
Cash costs per copper pound sold ($/pound, co-product)1
2.39
2.46
2.55
2.87
All-in sustaining costs per gold ounce sold (by-product basis) ($/ounce)1
(408)
223
