New Gold Inc. Reported its third quarter operational results for the Company as of September 30, 2020 and reaffirms annual production guidance.
“During this quarter, the Rainy River Mine delivered another strong quarter of operational and technical performance. Mine operations ramped up towards the 2021 target capacity of approximately 150,000 tonnes per day and the mill delivered a record of 27,000 tonnes per day, reaching the maximum monthly average throughput allowable under the existing mill permit. With both the mine and mill operating at capacity, the Company’s efforts will now shift to focus on identifying additional opportunities to further optimize mine and mill productivities and unit cost performance,” the company issued in a press release.
Third Quarter and Recent Highlights
- Total production for the third quarter was 115,536 gold equivalent (gold eq.) ounces (78,959 ounces of gold, 171,825 ounces of silver and 18.2 million pounds of copper), on track to achieve revised annual production guidance.
- The Rainy River Mine produced 64,221 gold eq. ounces (63,004 ounces of gold and 102,814 ounces of silver) for the quarter, on track to achieve the mid-range of revised annual production guidance.
- The New Afton Mine produced 51,315 gold eq. ounces (15,955 ounces of gold and 18.2 million pounds of copper) for the quarter, on track to achieve the mid-range of revised annual production guidance.
- During the quarter, the Company completed the divestment of the Blackwater Project to Artemis Gold (“Artemis”) for total cash consideration of C$190 million. The initial cash payment of C$140 million was received during the quarter with the remaining C$50 million cash payment due on August 24, 2021. Under the terms of the agreement, the Company has retained an 8% gold stream and a 6% equity stake in Artemis. (Refer to the Company’s June 24, 2020 and August 24, 2020 news releases for further information)
- During the quarter, the Company completed the full redemption of its outstanding 6.25% senior notes due in 2022 that was funded from the proceeds of the $400 million senior notes offering that was completed on June 24, 2020. (Refer to the Company’s June 24, 2020 and July 10, 2020 news releases for further information)
- During the quarter, the Company transferred approximately $90 million in letters of credit related to mine closure costs to surety bonds, increasing the funds available under the credit facility.
- On October 9, 2020, the Company extended its secured credit facility with a syndicate of 8 top-tier financial institutions. The facility will now mature on October 9, 2023 and has a new maximum borrowing limit of $350 million. (Additional details provided below)
- At the end of the quarter, the Company had a cash position of $415 million and a strong liquidity position of approximately $720 million, based on the amended credit facility.
- Mr. Eric Vinet has been promoted to Senior Vice President, Operations to be effective October 19, 2020. Eric joined New Gold in January 2019 as Vice President, Technical Services and most recently was the Interim General Manager at the Rainy River Mine where he led the successful repositioning of the operation for profitability and free cash flow generation.
“We are very pleased with the results from the Rainy River Mine as the operations met, or exceeded, target levels. Supported by the strong operational performance delivered in the quarter and with all deferred site construction capital substantially complete, the operation is well positioned to deliver on its life of mine plan that includes strong production growth at lower costs along with a significant and corresponding reduction in capital requirements.” stated Renaud Adams, CEO. “Our improved operational performance has allowed New Gold to complete key corporate transactions during the year that supported the restructuring of our balance sheet and strengthened our liquidity position. As we enter the final quarter of the year, we will continue to build on the progress made during the year as we position the Company for the future and deliver free cash flow generation beginning in 2021.”
Highlights for the Rainy River site:
- Following the approval by Health Canada, three rapid testing devices were procured to test for the COVID-19 virus as we continue to prioritize the safety and well-being of our employees and our local and Indigenous communities. Daily testing increased during the quarter to further enhance screening protocols, which have been instrumental in keeping the operation COVID-19 free.
- For the third quarter, gold eq. production was 64,221 ounces (63,004 ounces of gold and 102,814 ounces of silver), well positioned to achieve the mid-range of revised annual production guidance as the overall grade is expected to continue to improve in the fourth quarter.
- During the third quarter, the open pit mine continued to ramp-up towards our 2021 target capacity of 150,000 tonnes per day. Mine productivity increased by 15% over the prior quarter, averaging 145,701 tonnes per day, achieving 97% of the 2021 productivity target.
- During the quarter, approximately 3.4 million ore tonnes and 10.0 million waste tonnes (including 4.3 million capitalized waste tonnes) were mined from the open pit at an average strip ratio of 2.99:1.
- During the quarter, the mill achieved a record of 26,998 tonnes per day, reaching the maximum average allowable under the existing mill permit. The mill continued to process ore directly supplied by the open pit combined with ore from the medium grade stockpile and processed an average grade of 0.88 grams per tonne at a gold recovery of 89%. Low grade ore continues to be stockpiled for future processing as part of the underground mine plan. Now that the mill has reached its maximum capacity, efforts will focus on additional optimization opportunities to increase recovery and unit cost performance. Mill availability for the quarter averaged 90%, in-line with plan.
- All key capital projects were substantially completed during the quarter, including the Stage 2 tailings dam raise, wick drain installation for stabilization of the east waste dump, commissioning of the maintenance and warehouse facilities as well as the water treatment train following the commissioning of the Biochemical Reactor (BCR2) that allows clean water effluent discharge. As previously disclosed, a small portion of the Tailings Management Area (TMA) construction as well as potentially other smaller projects that were originally scheduled for completion in 2021 are now planned for completion in 2020, thereby reducing planned capital requirements for 2021.
- In the latter part of the quarter, drilling permits were received and an exploration drilling program will be launched during the fourth quarter that will initially focus on the northeast trend area, located approximately 18 kilometers northeast of the Rainy River Mine. The 8,000 metre drilling campaign has been designed in two phases and will test previously identified high priority targets.
