New Gold Inc.
New Gold Reports Second Quarter Operational Results
TORONTO - (BUSINESS WIRE)-- New Gold Inc. (“New Gold” or the “Company”) (TSX and NYSE American: NGD) reports preliminary second quarter results from the Rainy River and New Afton mines. (All amounts are in US dollars unless otherwise indicated.)
During this unprecedented COVID-19 period, the health and safety of our workforce and Indigenous and other communities remains our number one concern. We will support all initiatives that align with that objective and will remain vigilant in providing a safe working environment for our workforce.
Consolidated Second Quarter and Recent Highlights
- Total production for the second quarter was 98,079 gold equivalent (gold eq.) ounces (64,294 ounces of gold, 134,282 ounces of silver and 16.9 million pounds of copper).
- The Rainy River Mine produced 49,633 gold eq. ounces (48,800 ounces of gold and 70,394 ounces of silver) for the quarter. Following a 12-day voluntary shutdown related to COVID-19 in the first quarter, operations resumed on April 3.
- The New Afton Mine produced 48,446 gold eq. ounces (15,494 ounces of gold and 16.9 million pounds of copper) for the quarter.
- During the quarter, the Company announced that it entered into a definitive agreement with Artemis Gold Inc. to divest its Blackwater Project for C$190 million in cash, an 8% gold stream and a C$20 million equity stake in Artemis (refer to the Company's June 9, 2020 news release for further information).
- During the quarter, the Company completed a $400 million senior notes offering yielding 7.50% due in 2027 that was used, along with cash on hand, to fund the full redemption of its outstanding 6.25% senior notes due in 2022 completed on July 10, 2020 (refer to the Company's June 24, 2020 and July 10, 2020 news releases for further information).
- On April 15, 2020 annual guidance was withdrawn until the Company could better understand the impact of COVID-19. Updated annual guidance is expected to be released along with the Company's second quarter financial results on July 30, 2020.
Consolidated Second Quarter Operational Results
“Over the past number of quarters, the management team has advanced a disciplined approach aimed at repositioning our operations for profitability and free cash flow generation. As our operational performance improved, we have been able to execute on strategic opportunities to restructure our balance sheet and improve our liquidity position as we enter the next phase of our growth strategy.” said Renaud Adams, CEO. “As our operations return to pre-COVID levels and we complete all non-recurring capital projects at Rainy River, we can now take a longer-term perspective. New Gold's future will be supported by profitable operations, a stronger balance sheet, and as our current hedges expire at year end, we will be fully exposed to the strengthened gold price. We are excited to enter the next stage as we create a Canadian-focused, diversified company that prioritizes profitability and free cash flow generation. We also want to thank the entire New Gold team and our partners for their dedication and hard work during this challenging and unprecedented COVID-19 period as we continue to ensure the safety and well-being of our employees and all our stakeholders.”
Rainy River Mine Highlights
- The Rainy River mine resumed operations on April 3, following a temporary two-week shutdown that allowed the workforce to follow a 14-day period of self-isolation relating to travel outside of Canada related to COVID-19. Following the recent approval by Health Canada, three rapid testing devices were procured and will be rolled out for use in July and August, with the third device exclusively for community use. These devices will initially test for the virus and provide results within three hours of testing, adding another level of protection against the transmission of COVID-19 as we continue to prioritize the safety and well-being of our employees and our local and Indigenous communities.
- Early in the second quarter, the mine utilized its local workforce and gradually began to safely reintroduce a portion of the non-local workforce to advance the ramp-up of operations. During the quarter, the open pit averaged approximately 125,000 tonnes per day. Mining productivity increased during the quarter from approximately 100,000 tonnes per day in early April to approximately 140,000 tonnes per day in June, achieving pre-suspension productivity levels. Most of the non-local workforce has now been reintegrated and it is expected that the mine will complete the ramp-up to full capacity early in the third quarter.
- For the second quarter, gold eq. production was 49,633 ounces (48,800 ounces of gold and 70,394 ounces of silver), which was lower than plan. Production was impacted by reduced mine productivity as described above, resulting in the processing of a higher than planned proportion of the medium grade ore from stockpile and pit rehandling. The averaged grade processed for the quarter was 0.78 grams per tonne at gold recovery of 89%.
- During the quarter, approximately 2.1 million ore tonnes and 9.4 million waste tonnes (including 2.8 million capitalized waste tonnes) were mined from the open pit at an average strip ratio of 4.48:1.
- Since the April 3 restart, the mill has ramped up to full capacity, achieving an average run rate of approximately 24,700 tonnes per day, including downtime during the quarter, primarily to complete a liner change as well as other maintenance related to the SAG mill. Mill availability for the quarter averaged 90%, in line with plan.
- During the quarter, key capital projects were advanced including a planned tailings dam raise, wick drain installation for stabilization of the east waste dump, final stage construction of the maintenance and warehouse facilities, as well as the commissioning of a bio-chemical reactor (BCR2) to allow clean water discharge. It is expected that all key construction projects will be substantially completed by the end of the third quarter with all planned capital projects expected to be completed by year end. A small portion of the Tailings Management Area (TMA) construction that was originally scheduled for completion in 2021 is now planned for completion in 2020, thereby reducing planned capital requirements for 2021.
New Afton Mine Operational Highlights
- The New Afton Mine reached a significant safety milestone, achieving 3 million person-hours lost-time injury-free.
- The mine produced 48,446 gold eq. ounces for the quarter (15,494 ounces of gold, and 16.9 million pounds of copper), below plan primarily due to lower copper and gold grades. During the quarter, scheduled mine and mill shutdowns were completed for maintenance, including the replacement of 2 kilometers of underground conveyor belts and replacement of SAG mill liners, with the original completion date extended due to COVID-19 safety protocols. There are no further planned major shutdowns expected over the balance of the year.
- During the quarter, total development towards the B3 and C-zone advanced by approximately 1,253 metres, achieving 95% of planned levels year to date.
- The underground mine averaged 15,358 tonnes per day for the quarter, the lower production was primarily due to a planned maintenance shutdown.
- The mill averaged 14,240 tonnes per day for the quarter, including the maintenance shutdowns as described above, at an average gold and copper grade of 0.46 grams per tonne gold and 0.72% copper, respectively, with gold and copper recoveries of 81% and 83%, respectively, in-line with plan.
- During the quarter, the mill continued to process lower than planned copper and gold grades as the mine continued to experience lower grades mined during the quarter. The 2020 and 2021 mine plans incorporate multiple sources of mined ore, including depletion of the east and west caves and rehabilitation and pillar recoveries of medium-high grade zones. In the first and second quarters of 2020, higher than expected dilution was experienced in portions of the east and west caves. Additionally, the rehabilitation and pillar recovery productivities were lower than planned contributing to the lower grades mined in the first half of the year. Management continues to work on optimization scenarios, but based on current information, lower grades are expected to continue over the balance of the year and potentially into 2021 as we complete mining in these areas. It is not expected that the lower grades currently being experienced in the east and west cave zones will be encountered in the SLC, B3 and C-zones. Ore extraction from the B3 cave is expected to begin in second half of 2021.
- During the quarter, key capital projects were advanced including the development of the C-zone as well as detailed engineering and earthworks related to the thickened and amended tailings (TAT) plant.
- Exploration activities in the quarter included underground delineation drilling on the East Extension zone and refinement of exploration targets for the planned drilling campaign within the Cherry Creek Trend area.
About New Gold Inc.
New Gold is a Canadian-focused intermediate gold mining company with a portfolio of two core producing assets in Canada, the Rainy River and New Afton Mines as well as the 100% owned Blackwater development project. The Company also operates the Cerro San Pedro Mine in Mexico (in reclamation). New Gold’s vision is to build a leading diversified intermediate gold company based in Canada that is committed to environment and social responsibility. For further information on the Company, visit www.newgold.com.
Source: https://www.newgold.com/investors/news-releases/news-details/2020/New-Gold-Reports-Second-Quarter-Operational-Results/default.aspx
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