New Gold Announces 2011 First Quarter Gold Production of 107,622 Ounces at Record Low Cash Cost of $352 Per Ounce
VANCOUVER, May 4 /CNW/ --
(All figures are in US dollars unless otherwise indicated)
VANCOUVER, May 4 /CNW/ - New Gold Inc. ('New Gold') (TSX: NGD)(NYSE
AMEX: NGD) today announces financial and operational results for the
first quarter of 2011, where the company combined increased gold
production with the lowest total quarterly cash cost((1)) in New Gold's history. The company finished the first quarter with gold
sales of 104,211 ounces at a total cash cost((1)) per ounce sold, net of by-product sales, of $352 per ounce. The
combination of growing gold production, significantly lower total cash
cost((1)) and continued strength in commodity prices resulted in solid financial
results. During the quarter, earnings from mine operations increased by
119% to $80 million, net earnings increased by 85% to $25 million, or
$0.06 per share, and cash flow from operations increased by 120% to $51
million.
New Gold is also pleased to reiterate its production guidance for 2011
with gold production of 380,000 to 400,000 ounces and lower its
guidance for total cash cost((1)) per ounce sold, net of by-product sales, to $390 to $410 per ounce. See
2011 Outlook section for additional detail.
New Gold First Quarter Highlights
-- First quarter total cash cost (()(1)) per ounce sold, net of
by-product sales, decreased to $352 per ounce from $467 per
ounce in the same period in 2010
-- Quarterly gold production increased by 39% to 107,622 from
77,215 in the same period in 2010
-- First quarter cash flow from operations increased by 120% to
$51 million from $23 million in the same period in 2010
-- Stockpiling of ore has started at New Afton with approximately
22,000 tonnes stockpiled on surface at the end of the first
quarter
-- $520 million of cash at March 31, 2011, increased by $29
million since December 31, 2010
-- Subsequent to the quarter end, on April 4, 2011, announced the
friendly acquisition of Richfield Ventures Corp. ('Richfield'),
and its flagship Blackwater Project in British Columbia, at a
transaction value of $513 million
'We are very pleased as the momentum we established through our strong
performance in 2010 continues to build in 2011. Our base of three
operating assets has once again delivered increased gold production at
lower cost,' stated Randall Oliphant, Executive Chairman. 'We feel
fortunate that with the prevailing strength in commodity prices our
margins and cash flows continue to grow significantly. We believe that
this growth will be further enhanced through the development of our two
fully-funded organic growth projects as well as by our proposed
acquisition of Richfield.'
2011 First Quarter Consolidated Financial Results
Consolidated revenue for the first quarter of 2011 was $171 million
compared to $102 million in the same period of 2010. This revenue
increase was driven by a combination of higher production as well as
higher average realized commodity prices.
Earnings from mine operations for the first quarter of 2011 were $80
million compared to $37 million in the same period of 2010. Earnings
from mine operations increased by 119% as a result of higher gold
production, significantly lower total cash cost((1)) and higher average realized gold prices. The consolidated average
realized gold price in the first quarter of 2011 was $1,317 per ounce
compared to $1,079 per ounce in the same period of the prior year.
During the first quarter of 2011 New Gold increased its average margin
by $353 per ounce to $965 per ounce from $612 per ounce in the same
period of the prior year, outpacing the underlying increase in the gold
price.
Net earnings from continuing operations in the first quarter of 2011
were $25 million, or $0.06 per share, compared to $13 million, or $0.03
per share, in the same period of 2010. Adjusted net earnings from
continuing operations in the quarter were $48 million, or $0.12 per
share, which increased from $18 million, or $0.05 per share, in the
same period of the prior year. Net earnings has been adjusted and tax
affected for the group of costs in 'Other gains and losses' on the
condensed consolidated income statement. The most significant
adjustment is the fair value change of the company's share purchase
warrants and convertible debentures in the first quarter of 2011 which
was a loss of $24 million, relative to a loss of $10 million in the
same period of the prior year.
Cash flow from operations for the first quarter of 2011 was $51 million
compared to $23 million in the same period of 2010. At the end of the
first quarter of 2011 there was also a $15 million receivable related
to the sale of Peak copper concentrate, the payment of which was
received in April. Cash flow from operations increased by 120% as a
result of higher gold production and increased operating margins driven
by higher average realized gold prices and lower total cash cost((1)).
2011 First Quarter Operations Overview
All three of the company's operating mines, Mesquite, Cerro San Pedro
and Peak Mines, had strong starts to 2011. Collectively, the gold
production from the three operations during the quarter was 107,622
ounces at total cash cost((1)) per ounce sold, net of by-product sales, of $352 per ounce compared to
gold production of 77,215 ounces at $467 per ounce in the first quarter
of 2010. While gold production increased at each of the operations, the
primary driver of the 39% consolidated quarterly production increase
was Cerro San Pedro as the mine had a strong operational quarter
compared to the first quarter of 2010 when the mine experienced a delay
in the receipt of its annual explosives permit. The company is well
positioned as the combination of growing gold production and increasing
operating margins lead to further cash flow growth. In addition, New
Afton, the company's most immediate development project, which has the
potential to more than double the cash flow of the company, continues
to move forward on budget and on schedule with production anticipated
in mid-2012.
'Our first quarter results demonstrate continued execution by our
operating and development teams,' stated Robert Gallagher, President
and Chief Executive Officer. 'We were very pleased as each one of our
mines produced more gold than in the first quarter of 2010 and, after
this strong start to the year, we look forward to continuing to deliver
operationally through 2011 and particularly into 2012 when we bring New
Afton into production.'
Three months ended
March 31,
2011 2010
Production
Mesquite Gold (ounces) 48,855 44,034
Cerro San Pedro
Gold (ounces) 35,601 12,938
Silver (ounces) 635,320 206,700
Peak Mines
Gold (ounces) 23,166 20,243
Copper (million pounds) 3.5 4.0
Total production
Gold (ounces) 107,622 77,215
Silver (ounces) 635,320 206,700
Copper (million pounds) 3.5 4.0
Gold sales (ounces) 104,211 80,020
Total cash cost((1)) ($ per ounce) $352 $467
Mesquite Mine Delivers 65% Increase in Earnings from Mine Operations
Gold sales in the first quarter at Mesquite were 50,418 ounces at a
total cash cost((1)) per ounce sold of $543 compared to 49,502 ounces sold at $543 per ounce
sold in the first quarter of 2010. The combination of higher production
and higher average realized gold prices resulted in a 65% increase in
earnings from mine operations to $29 million from $17 million in the
same period of the prior year. The average realized gold price in the
first quarter of 2011 was $1,239 per ounce compared to $1,047 per ounce
in the same period of the prior year.
Gold production and sales increased during the first quarter of 2011 due
to mining continuing in a higher grade portion of the pit at the
beginning of the quarter, the benefit of which was partially offset by
lower ore tonnes mined compared to the same period of the prior year.
The total cash cost((1)) remained consistent as benefit of mining in a higher grade area of the
pit was offset by an increase in input costs such as diesel and
explosives.
Cerro San Pedro Mine Demonstrates Strong Silver Leverage
Gold sales in the first quarter at Cerro San Pedro increased by 142% to
31,717 ounces from 13,124 ounces in the same period in 2010. In
addition to this significant gold production growth, Cerro San Pedro
benefitted from the continued strength in the silver price with total
cash cost((1)) per ounce of gold sold, net of by-product sales, of $7 per ounce
compared to $622 per ounce in the first quarter of 2010. The increase
in both gold production and average realized price coupled with the
significant decline in total cash cost((1)) led to Cerro San Pedro generating $34 million in earnings from mine
operations in the first quarter of 2011 compared to $3 million in the
same period of the prior year. The average realized gold price in the
first quarter of 2011 was $1,391 per ounce compared to $1,118 per ounce
in the same period of the prior year.
Gold production and sales during the first quarter of 2011 were higher
than the prior year quarter due to the timely receipt of the explosives
permit which allowed significantly higher tonnes to be placed on the
leach pad. During the first quarter of 2010 the receipt of the mine's
explosives permit was delayed resulting in only previously blasted ore
being placed on the leach pad. The decrease in total cash cost((1)) was a result of higher by-product revenues driven by both higher silver
production and prices. This benefit was partially offset by higher
total tonnes moved, higher diesel prices and the appreciation of the
Mexican peso during the first quarter of 2011 when compared to the same
period in 2010.
Silver sales during the quarter were 0.6 million ounces at an average
realized silver price of $32.62 per ounce compared to 0.2 million
ounces at $17.08 per ounce in the same period in 2010. The increase in
silver sales volume was similarly attributable to higher ore tonnes
being placed on the leach pad.
Peak Mines Continue Steady Performance
Gold sales in the first quarter at Peak Mines were 22,076 ounces
compared to 17,393 ounces sold in the first quarter of 2010. Over the
same periods, total cash cost((1)) per ounce of gold sold, net of by-product sales, were $413 per ounce
compared to $136 per ounce. Earnings from operations during the first
quarter were $17 million compared to $16 million in the same period of
the prior year. The average realized gold price in the first quarter of
2011 was $1,389 per ounce compared to $1,138 per ounce in the same
period of the prior year.
Gold production and sales during the first quarter of 2011 were higher
than the prior year quarter due to increases in ore tonnes processed
and gold grades. Total cash cost((1)) increased through a combination of the appreciating Australian dollar,
higher mining costs in current working areas and the benefit of the
copper by-product being applied against higher gold sales in the first
quarter of 2011 compared to the same period of the prior year.
Copper sales during the quarter were 3.9 million pounds at an average
realized copper price of $4.19 per pound compared to 4.1 million pounds
at $3.39 per pound in the same period in 2010. The decrease in copper
sales was attributable to minor decreases in copper grades and
recoveries.
New Afton Moving Forward Quickly
New Gold's most immediate development project continued on schedule
during the first quarter of 2011 and is expected to commence production
in mid-2012. The project will be an underground mine and concentrator
which is expected to produce an annual average of 85,000 ounces of
gold, and 75 million pounds of copper.
During the first quarter of 2011, the New Afton underground development
crews continued their advance, completing 1,580 metres of development.
As development crews are now working at the base of the ore body,
development ore continued to be transported to the surface stockpile
which contained approximately 22,000 ore tonnes at the end of the first
quarter of 2011.
New Afton Underground Highlights
-- 571 metres of underground advance in March - a monthly record
-- First two draw points mined from the extraction level
-- 22,000 tonnes of ore moved to surface stockpile
-- Underground conveyor transfer stations well advanced with
conveyor start targeted for mid-year
New Afton Surface Construction Highlights
-- Poured over 1,000 metres(3) of concrete in reclaim and mill
building
-- Completed installation of all buried services throughout the
site
-- Installed overhead pole installations for tie-in to 138kV power
line
-- Completed coarse ore stockpile reclaim chamber
In the first quarter, project spending at New Afton was $45 million.
To date, the company has signed concentrate off-take agreements for 85%
of the estimated concentrate production from New Afton. The agreement
for the remaining 15% is expected to be finalized in the second quarter
of 2011.
The company looks forward to production commencing in approximately 14
months, as New Afton is expected to contribute significantly to New
Gold's current portfolio of operating assets. The project remains
fully-funded with the cash on New Gold's Balance Sheet exceeding the
remaining targeted project capital costs. As a low-cost operation, New
Afton should meaningfully expand the company's operating margin and
cash flow generation. At current commodity prices, the mine is expected
to more than double the company's cash flow.
El Morro Receives Environmental Impact Assessment - Construction
Mobilization Begins
El Morro is an advanced stage gold/copper project located in the Atacama
Region, approximately 80 kilometres east of the city of Vallenar, in
north-central Chile. The El Morro project is a world-class project with
low expected cash costs and great organic growth potential in one of
the best mining jurisdictions in the world. New Gold is a 30 percent
joint venture partner in the project, with Goldcorp Inc. ('Goldcorp'),
the project developer, holding the remaining 70 percent.
The Environmental Impact Assessment ('EIA') necessary for the project
permitting to proceed was received on March 16, 2011. The granting of
the EIA facilitates commencement of construction activities by
Goldcorp, and specific permits will be obtained during the course of
project development. Goldcorp can now move forward with condemnation
drilling to test for mineralization beneath primary infrastructure
locations.
The budgeted spending at El Morro for 2011 is estimated at approximately
$150 million (100% basis) which is being fully funded by Goldcorp.
With New Gold's 30% share of reserves already containing 2.6 million
ounces of gold and 1.8 billion pounds of copper, the company is excited
to have a highly motivated partner in Goldcorp who are poised to begin
drilling programs in the coming months and are updating the feasibility
study to determine the optimal project configuration. The feasibility
study update is expected to be complete in the third quarter of 2011.
Proposed Acquisition of Richfield Ventures Corp.
Subsequent to the quarter end, on April 4, 2011, New Gold and Richfield
jointly announced a friendly transaction whereby New Gold will acquire,
through a plan of arrangement (the 'Arrangement'), all of the
outstanding common shares of Richfield. Under the terms of the
Arrangement, each Richfield shareholder will receive 0.9217 of a New
Gold share for each Richfield share held. The offer valued Richfield at
$10.38 per share or approximately $550 million, representing a 31%
premium to Richfield's April 1, 2011 closing price and a 46% premium
based on each company's 20-day volume weighted average price. The
transaction value, net of cash and proceeds from all in-the-money
dilutive instruments, is approximately $513 million.
Richfield's flagship asset is the Blackwater Project, located in central
British Columbia, approximately 160 kilometres southwest of Prince
George, a city of approximately 80,000. On March 2, 2011, Richfield
announced the initial mineral resource estimate for the Blackwater
Project, with its attributable share comprising 1.8 million ounces of
indicated gold resources plus 2.0 million ounces of inferred gold
resources.
The Management Information Circular is being mailed to Richfield
shareholders this week and the transaction is expected to close in
early June.
Key Financial Information
New Gold's cash balance at March 31, 2011 was $520 million, an increase
of $29 million over the 2010 year end cash balance. New Gold had $240
million of debt outstanding at the end of the first quarter comprised
of $184 million of 10% senior secured notes due in 2017 (face value of
C$187 million), $44 million of 5% convertible debentures due in 2014
(face value of C$55 million and C$9.35 strike price) and $12 million in
El Morro project funding loans.
2011 Outlook
After completing a strong first quarter which saw the benefit of the
company's by-product revenues more than offset the impact of
appreciating foreign currencies and rising input costs, resulting in
record low total cash cost((1)) of $352 per ounce, New Gold is pleased to provide the following updates
on its 2011 guidance.
-- Gold production guidance for the year remains 380,000 - 400,000
ounces with Cerro San Pedro and Peak expected to continue at
the production levels experienced in the first quarter and
Mesquite production anticipated to decline moderately in future
quarters as mine sequencing moves into areas more consistent
with reserve grade.
-- Consolidated total cash cost((1)) per ounce sold, net of
by-product sales, is now forecast to be $390 to $410 per ounce
compared to $430 to $450 per ounce at the beginning of 2011.
-- The forecast decrease in total cash cost((1)) is driven by the
continued strength of the silver price and the significant
impact it is having on total cash cost((1)) at Cerro San Pedro
where New Gold is expecting to produce between 1.9 and 2.1
million ounces of silver in 2011. It is anticipated that Cerro
San Pedro's total cash cost((1)) could be approximately $150
per ounce below the originally forecast $240 to $260 per ounce.
-- Partially offsetting the benefit from Cerro San Pedro is the
higher diesel prices New Gold is experiencing at the Mesquite
mine. The combination of lower production and higher diesel
prices are expected to result in higher costs at Mesquite in
the coming quarters with total cash cost((1)) for 2011
anticipated to be approximately $40 per ounce above the
previous forecast range.
-- At Peak Mines, the combination of increasing copper prices and
appreciation of the Australian dollar continue to largely
offset one another. New Gold anticipates costs for the year to
be at the top end of the previously forecast cost guidance
range for Peak of $410 to $430 per ounce.
-- Assumptions used in the updated 2011 cost guidance include
silver and copper prices of $33.00 per ounce and $4.00 per
pound respectively and Australian dollar and Mexican peso
foreign exchange rates of $1.00 and $11.50 to the U.S. dollar,
respectively. The oil price is assumed to be $105 per barrel.
Despite experiencing cost pressures related to input costs and foreign
currencies, New Gold's by-product commodities, silver and copper,
continue to provide an effective offset against these cost increases.
New Gold is pleased its operations continue to provide expanded margins
with costs now anticipated to be in the $390 to $410 per ounce range
versus a prevailing gold price of over $1,500 per ounce today. The
company's three operating assets are performing well and New Afton
should continue to achieve major development milestones as the year
progresses. In addition, with the receipt of the EIA it is expected
Goldcorp will continue to advance El Morro and an updated feasibility
study is anticipated in the third quarter of 2011. With New Gold's
portfolio of three producing assets and two large, fully-funded organic
growth projects, the company set out to add a further leg of growth
through the proposed acquisition of Richfield Ventures Corp. New Gold
anticipates the transaction will close in early June and looks forward
to providing further updates about its plans with the Blackwater
Project at that time.
About New Gold Inc.
New Gold is an intermediate gold mining company. The Mesquite Mine in
the United States, the Cerro San Pedro Mine in Mexico and Peak Gold
Mines in Australia are expected to produce between 380,000 and 400,000
ounces of gold in 2011. The fully-funded New Afton project in Canada is
scheduled to add further growth in 2012. In addition, New Gold owns 30%
of the world-class El Morro project located in Chile. For further
information on the company, please visit www.newgold.com.
Cautionary Note Regarding Forward-Looking Statements
Certain information contained in this news release, including any
information relating to New Gold's future financial or operating
performance may be deemed 'forward looking'. All statements in this
news release, other than statements of historical fact, that address
events or developments that New Gold expects to occur, are
'forward-looking statements'. Forward-looking statements are statements
that are not historical facts and are generally, but not always,
identified by the words 'expects', 'does not expect', 'plans',
'anticipates', 'does not anticipate', 'believes', 'intends',
'estimates', 'projects', 'potential', 'scheduled', 'forecast', 'budget'
and similar expressions, or that events or conditions 'will', 'would',
'may', 'could', 'should' or 'might' occur. All such forward-looking
statements are based on the opinions and estimates of management as of
the date such statements are made and are subject to important risk
factors and uncertainties, many of which are beyond New Gold's ability
to control or predict. Forward-looking statements are necessarily based
on estimates and assumptions (including that the acquisition of
Richfield will be completed successfully on the terms agreed upon by
the parties and that the business of Richfield will be integrated
successfully in the New Gold organization) that are inherently subject
to known and unknown risks, uncertainties and other factors that may
cause actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking statements. Such factors include, without limitation:
significant capital requirements; fluctuations in the international
currency markets and in the rates of exchange of the currencies of
Canada, the United States, Australia, Mexico and Chile; price
volatility in the spot and forward markets for commodities; impact of
any hedging activities, including margin limits and margin calls;
discrepancies between actual and estimated production, between actual
and estimated reserves and resources and between actual and estimated
metallurgical recoveries; changes in national and local government
legislation in Canada, the United States, Australia, Mexico and Chile
or any other country in which New Gold currently or may in the future
carry on business; taxation; controls, regulations and political or
economic developments in the countries in which New Gold does or may
carry on business; the speculative nature of mineral exploration and
development, including the risks of obtaining and maintaining the
validity and enforceability of the necessary licenses and permits and
complying with the permitting requirements of each jurisdiction that
New Gold operates, including, but not limited to, Mexico, where New
Gold is involved with ongoing challenges relating to its environmental
impact statement for the Cerro San Pedro Mine; the lack of certainty
with respect to the Mexican and other foreign legal systems, which may
not be immune from the influence of political pressure, corruption or
other factors that are inconsistent with the rule of law; the
uncertainties inherent to current and future legal challenges the
company is or may become a party to, including the third party claim
related to the El Morro transaction with respect to New Gold's exercise
of its right of first refusal on the El Morro copper-gold project in
Chile and its partnership with Goldcorp Inc., which transaction and
third party claim were announced by New Gold in January 2010;
diminishing quantities or grades of reserves; competition; loss of key
employees; additional funding requirements; actual results of current
exploration or reclamation activities; changes in project parameters as
plans continue to be refined; accidents; labour disputes; defective
title to mineral claims or property or contests over claims to mineral
properties. In the case of Richfield, such risks include, among other
risks, the approvals of regulators, availability of funds, the results
of financing and exploration activities, the interpretation of drilling
results and geological data, project cost overruns or unanticipated
costs and expenses. In addition, there are risks and hazards associated
with the business of mineral exploration, development and mining,
including environmental hazards, industrial accidents, unusual or
unexpected formations, pressures, cave-ins, flooding and gold bullion
losses (and the risk of inadequate insurance or inability to obtain
insurance to cover these risks) as well as 'Risk Factors' included in
New Gold's and Richfield's continuous disclosure documents filed on and
available at www.sedar.com. Forward-looking statements are not
guarantees of future performance, and actual results and future events
could materially differ from those anticipated in such statements. All
of the forward-looking statements contained in this news release are
qualified by these cautionary statements. New Gold expressly disclaims
any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, events or
otherwise, except in accordance with applicable securities laws.
Cautionary Note to U.S. Readers Concerning Estimates of Measured,
Indicated and Inferred Mineral Resources
Information concerning the properties and operations discussed herein
has been prepared in accordance with Canadian standards under
applicable Canadian securities laws, and may not be comparable to
similar information for United States companies. The terms 'Mineral
Resource', 'Measured Mineral Resource', 'Indicated Mineral Resource'
and 'Inferred Mineral Resource' used in this news release are Canadian
mining terms as defined in accordance with NI 43-101 under guidelines
set out in the Canadian Institute of Mining, Metallurgy and Petroleum
('CIM') Standards on Mineral Resources and Mineral Reserves adopted by
the CIM Council on December 11, 2005. While the terms 'Mineral
Resource', 'Measured Mineral Resource', 'Indicated Mineral Resource'
and 'Inferred Mineral Resource' are recognized and required by Canadian
regulations, they are not defined terms under standards of the United
States Securities and Exchange Commission. Under United States
standards, mineralization may not be classified as a 'reserve' unless
the determination has been made that the mineralization could be
economically and legally produced or extracted at the time the reserve
calculation is made. As such, certain information contained in this
news release concerning descriptions of mineralization and resources
under Canadian standards is not comparable to similar information made
public by United States companies subject to the reporting and
disclosure requirements of the United States Securities and Exchange
Commission. An 'Inferred Mineral Resource' has a great amount of
uncertainty as to its existence and as to its economic and legal
feasibility. It cannot be assumed that all or any part of an 'Inferred
Mineral Resource' will ever be upgraded to a higher category. Under
Canadian rules, estimates of Inferred Mineral Resources may not form
the basis of feasibility or other economic studies. Readers are
cautioned not to assume that all or any part of Measured or Indicated
Resources will ever be converted into Mineral Reserves. Readers are also
cautioned not to assume that all or any part of an 'Inferred Mineral
Resource' exists, or is economically or legally mineable. In addition,
the definitions of 'Proven Mineral Reserves' and 'Probable Mineral
Reserves' under CIM standards differ in certain respects from the
standards of the United States Securities and Exchange Commission.
Technical Information - New Gold and Richfield Ventures
The scientific and technical information in this presentation has been
prepared under the supervision of Mark Petersen, a qualified person
under National Instrument 43-101 and employee of New Gold.
See Richfield's March 2, 2011 NI 43-101 Technical Report available on
SEDAR at www.sedar.com for detailed information regarding the Blackwater Project resource
estimate. The Blackwater resource estimate contained in this document
is effective as of March 2, 2011 and was derived from information
prepared by or under the supervision of Mr. Ronald Simpson, P. Geo,
President of Geosim Services Inc., an independent 'qualified person'
under National Instrument 43-101 Standards of Disclosure for Mineral
Projects NI 43-101.
(1) TOTAL CASH COST
'Total cash cost' per ounce figures are calculated in accordance with a
standard developed by The Gold Institute, which was a worldwide
association of suppliers of gold and gold products and included leading
North American gold producers. The Gold Institute ceased operations in
2002, but the standard is widely accepted as the standard of reporting
cash cost of production in North America. Adoption of the standard is
voluntary and the cost measures presented may not be comparable to
other similarly titled measures of other companies. New Gold reports
total cash cost on a sales basis. Total cash cost includes mine site
operating costs such as mining, processing, administration, royalties
and production taxes, but is exclusive of amortization, reclamation,
capital and exploration costs. Total cash cost is reduced by any
by-product revenue and is then divided by ounces sold to arrive at the
total by-product cash cost of sales. The measure, along with sales, is
considered to be a key indicator of a company's ability to generate
operating earnings and cash flow from its mining operations. This data
is furnished to provide additional information and is a non-GAAP
measure. Total cash cost presented do not have a standardized meaning
prescribed by GAAP and may not be comparable to similar measures
presented by other mining companies. It should not be considered in
isolation as a substitute for measures of performance prepared in
accordance with GAAP and is not necessarily indicative of operating
costs presented under GAAP. A reconciliation will be provided in the
MD&A accompanying the quarterly financial statements.
New Gold Inc.
Condensed consolidated
income statements
Three month periods ended
March 31
(Expressed in thousands of U.S. dollars, except
share and per share amounts)
(Unaudited)
2011 2010
$ $
Revenues 171,213 101,620
Operating expenses (70,716) (51,886)
Depreciation and (12,963)
depletion (20,027)
Earnings from mine 36,771
operations 80,470
Corporate administration (5,645)
expenses (6,181)
Share-based payment (1,940)
expenses (2,856)
Exploration expenses (2,126) (1,794)
Income from operations 69,307 27,392
Finance income 1,046 256
Finance costs (1,137) (558)
Other gains and losses (24,398) (4,612)
Earnings before taxes 44,818 22,478
Income tax expense (20,099) (9,436)
Net earnings from 13,042
continuing operations 24,719
Earnings from 305
discontinued operations -
Net earnings 24,719 13,347
Earnings per share from
continuing operations
Basic 0.06 0.03
Diluted 0.06 0.03
Earnings per share from
discontinued operations
Basic - -
Diluted - -
Earnings per share from
continuing and
discontinued operations
Basic 0.06 0.03
Diluted 0.06 0.03
Weighted average number
of shares outstanding
(in thousands)
Basic 399,336 388,956
Diluted 405,523 398,190
New Gold
Inc.
Condensed consolidated statements of
financial position
(Expressed
in thousands
of U.S.
dollars)
(Unaudited)
March 31 December 31 January 1
2011 2010 2010
$ $ $
Assets
Current
assets
Cash and
cash 520,169 490,754 271,526
equivalents
Trade and
other 29,542 11,929 10,345
receivables
Inventories 107,902 103,055
86,299
Current
portion of
derivative - - 706
assets
Prepaid
expenses and 5,467 7,325 6,933
other
Current assets
of operations - - 10,298
held for sale
Total
current 663,080 613,063 386,107
assets
Investments
- 7,533 45,890
Mining 1,830,427 1,767,240 1,664,563
interests
Deferred tax
assets 10,211 10,058 11,098
Reclamation
deposits and 24,553 31,295 17,646
other
Assets of
operations
held for - - 78,989
sale
Total assets 2,528,271 2,429,189 2,204,293
Liabilities
Current
liabilities
Trade and
other 76,975 69,245 37,999
payables
Current
portion of
long-term - - 12,088
debt
Current
portion of
derivative 40,718 40,072 19,206
liabilities
Current tax
liabilities 38,203 31,392 13,711
Current
liabilities of
operations held - - 10,414
for sale
Total
current 155,896 140,709 93,418
liabilities
Reclamation
and closure
cost 35,571 34,173 24,764
obligations
Provisions
12,569 9,227 4,541
Non-current
portion of 106,736 113,303
derivative 76,780
liabilities
Non-hedged
derivative 183,367 155,365 37,542
liabilities
Deferred tax 178,034 179,180 245,969
liabilities
Long-term 239,550 229,884 225,456
debt
Deferred
benefit 46,276 46,276 -
Other
661 577 814
Liabilities
of
operations - - 19,890
held for
sale
Total 958,660 908,694 729,174
liabilities
Equity
Common 1,862,196 1,845,886 1,810,039
shares
Contributed
surplus 77,881 81,176 82,984
Share
purchase - - 11,850
warrants
Other
reserves (40,531) (51,913) (27,639)
Deficit
(329,935) (354,654) (402,115)
(370,466) (406,567) (429,754)
Total equity 1,569,611 1,520,495 1,475,119
Total
liabilities 2,528,271 2,429,189 2,204,293
and equity
New Gold Inc.
Condensed consolidated
statements of cash flows
Three month periods
ended March 31
(Expressed in thousands
of U.S. dollars)
(Unaudited)
2011 2010
$ $
Operating activities
Net earnings 24,719 13,347
Earnings from
discontinued operations - (305)
Adjustments for:
Unrealized gain on
gold contracts (2,178) (2,076)
Unrealized loss on
fuel contracts 176 65
Unrealized foreign
exchange gain (3,115) (1,369)
Unrealized and
realized gain on of
investments (1,349) (3,944)
Unrealized loss on
non-hedge derivatives 24,355 10,109
Loss on disposal of
assets 108 398
Depreciation and
depletion 19,637 13,070
Share-based payments 1,775 1,898
Unrealized loss (gain)
on embedded derivative
contract 2,454 (1,907)
Unrealized loss (gain)
on hedging items
entered into for cash
flow hedges 1,827 -
Income tax expense 20,099 9,436
Income tax paid (11,236) (9,120)
Finance income (1,046) (256)
Interest received 1,046 232
Finance costs 1,137 558
Interest paid (265) (206)
Change in non-cash
working capital (27,601) (6,950)
Cash provided by
continuing operations 50,543 22,980
Cash used in
discontinued operations - (1,696)
Investing activities
Mining interests (57,182) (22,002)
Recovery
(contribution) of
reclamation deposits 8,147 (41)
Proceeds from disposal
of assets 132 29
Cash received in El
Morro transaction, net
of transaction costs - 46,276
Investment in El Morro - (463,000)
Proceeds from sale of
investments 8,927 48,112
Cash used in continuing
operations (39,976) (390,626)
Cash used in
discontinued operations - (219)
Financing activities
Exercise of options to
purchase common stock 11,240 765
El Morro loan - 463,000
Revolving credit
facility costs (431) -
Repayment of long-term
debt - (27,235)
Cash provided by
continuing operations 10,809 436,530
Cash provided by (used
in) discontinued
operations - -
Effect of exchange rate
changes on cash and cash
equivalents 8,039 5,295
Increase in cash and
cash equivalents 29,415 72,264
Cash and cash
equivalents, beginning
of period 490,754 272,352
Cash and cash
equivalents, end of
period 520,169 344,616
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2011/04/c9035.html
Hannes Portmann
Vice President, Corporate Development
Direct: 1 (416) 324-6014
Email: info@newgold.com