New Gold Announces Fourth Quarter and 2010 Year End Results with Increased Gold Production at Lower Costs Resulting in a 131% Increase in Cash Flow from Operations During 2010
VANCOUVER, March 3 /CNW/ --
(All figures are in US dollars unless otherwise indicated)
VANCOUVER, March 3 /CNW/ - New Gold Inc. ('New Gold') (TSX:NGD)
(AMEX:NGD) today announces financial and operational results for the
fourth quarter and year ended 2010, with the strongest results in the
company's history. The company bettered its 2010 guidance with gold
production of 382,911 ounces and total cash cost((1)) per ounce sold, net of by-product sales, below the guidance range at
$428 per ounce. Increasing production, coupled with declining costs and
continued strength in commodity prices resulted in record earnings and
cash flow. During 2010, earnings from mine operations increased by 129%
to $203 million, net earnings increased to $135 million, or $0.35 per
share, and cash flow from operations increased by 131% to $182 million.
New Gold is also pleased to reiterate its guidance for 2011 with
forecast gold production expected to increase further to 380,000 to
400,000 ounces at total cash cost((1)) per ounce sold, net of by-product sales, of $430 to $450 per ounce.
Fourth Quarter and Full Year 2010 Highlights
-- Fourth quarter total cash cost((1)) per ounce sold, net of
by-product sales, decreased to $354 per ounce from $472 per
ounce in the same period in 2009, representing the lowest cost
quarter in the company's history
-- Quarterly gold production increased by 11% to 124,445 from
111,672 in the same period in 2009
-- Fourth quarter cash flow from operations increased by 62% to
$88 million from $54 million in the same period in 2009
-- 2010 total cash cost((1)) per ounce sold, net of by-product
sales, decreased by $37 per ounce to $428 per ounce from $465
per ounce in 2009
-- 2010 gold production increased by 27% to 382,911 ounces from
301,773 ounces in 2009
-- 2010 cash flow from operations increased by 131% to $182
million from $79 million in 2009
-- New Afton 2010 underground development of 3,873 metres beat
target by 11%
-- $491 million of cash at December 31, 2010, increased by $219
million since December 31, 2009
'2010 was a very successful year for our company and we are proud of our
results. We remain even more excited about 2011 and the coming years,'
stated Randall Oliphant, Executive Chairman. 'We look forward to
building on New Gold's strong foundation.'
Fourth Quarter and Full Year 2010 Consolidated Financial Results
Consolidated revenue for the fourth quarter of 2010 was $189 million for
a full year total of $530 million, compared to $132 million and $324
million in the same periods of 2009. The significant revenue increase
in both periods of 2010 was driven by a combination of higher
production as well as higher average realized prices.
Earnings from mine operations for the fourth quarter of 2010 were $84
million for a full year total of $203 million, compared to $40 million
and $89 million in the same periods of 2009. Earnings from mine
operations increased by more than 100% in both periods of 2010 as a
result of higher gold production, lower total cash cost((1)) and higher average realized gold prices.
Net earnings from continuing operations in the fourth quarter and full
year 2010 were $73 million, or $0.19 per share, and $135 million, or
$0.35 per share, respectively. This compares to net losses of $2
million, or $0.01 per share, and $183 million, or $0.60 per share, in
the same periods of the prior year. The 2009 full year net loss
included a $192 million goodwill impairment charge.
Cash flow from operations for the fourth quarter of 2010 was $88 million
for a full year total of $182 million, compared to $54 million and $79
million in the same periods of 2009. The cash flow was the highest in
New Gold's history and was driven by the company's strong operating
performance and the continued strength in commodity prices.
New Gold's cash balance at the end of 2010 was $491 million, an increase
of $219 million over the 2009 year end cash balance. New Gold had $230
million of debt outstanding at the end of 2010 comprised of $179
million of 10% senior secured notes due in 2017 (face value of C$187
million), $43 million of 5% convertible debentures due in 2014 (face
value of C$55 million and C$9.35 strike price) and $8 million in El
Morro project funding loans.
Fourth Quarter and Full Year 2010 Operations Overview
All three of the company's operating mines, Mesquite, Cerro San Pedro
and Peak Mines, achieved excellent results in the fourth quarter
leading to a strong finish to the year. Collectively, the gold
production from the three operations during the quarter was 124,445
ounces at total cash cost((1)) per ounce sold, net of by-product sales, of $354 per ounce driving the
company to the best annual operating results in its history with 2010
gold production increasing by 27% to 382,911 ounces and total cash cost((1)) per ounce sold, net of by-product sales, decreasing by $37 per ounce to
$428 per ounce. Both gold production and total cash cost((1)) beat the company's 2010 guidance range. With the strong operating
results driving record cash flow, New Gold is well positioned as New
Afton, the company's most immediate development project, continues to
move forward on budget and on schedule with production anticipated in
mid-2012.
'The 2010 operating results further demonstrate the strong platform that
our three operations provide and are reflective of the tremendous
dedication of our operating teams,' stated Robert Gallagher, President
and Chief Executive Officer. 'We are very focused on continuing to
deliver operationally, particularly on bringing New Afton into
commercial production on time and on budget.'
Full year 2009 figures presented below include gold production, sales
and total cash cost((1)) per ounce sold after the completion of the acquisition of Western
Goldfields Inc. and the Mesquite Mine on June 1, 2009.
Three months ended Twelve months ended
December 31, December 31,
2010 2009 2010 2009
Production
Mesquite
Gold 55,990 61,245 169,023 99,298
(ounces)
Cerro San
Pedro
Gold
(ounces) 38,874 25,781 118,708 95,502
Silver
(ounces) 700,988 312,848 2,188,235 1,496,958
Peak Mines
Gold
(ounces) 29,581 24,646 95,180 93,247
Copper
(million 4.2 3.9 15.3 15.6
pounds)
Amapari
Gold - - - 13,726
(ounces)
Total
Production
Gold
(ounces) 124,445 111,672 382,911 301,773
Silver
(ounces) 700,988 312,848 2,188,235 1,496,958
Copper
(million 4.2 3.9 15.3 15.6
pounds)
Gold sales
(ounces) 116,964 106,475 369,077 292,407
Total cash
cost((1)) $354 $472 $428 $465
($ per
ounce)
Full year 2009 figures below include gold production, sales and total
cash cost((1)) per ounce for the period prior to the completion of the acquisition of
Western Goldfields Inc. and the Mesquite Mine on June 1, 2009.
Mesquite Mine Doubles Earnings Contribution in 2010
Gold sales in the fourth quarter at Mesquite were 50,393 ounces at a
total cash cost((1)) per ounce sold of $544 compared to 55,861 ounces sold at $551 per ounce
sold in the fourth quarter of 2009. The combination of lower costs,
higher average realized gold prices and strong gold sales resulted in a
48% increase in earnings from mine operations to $27 million from $18
million in the same period of the prior year. The average realized gold
price in the fourth quarter of 2010 was $1,234 per ounce compared to
$1,041 per ounce in the same period of the prior year.
Gold production and sales during the fourth quarter of 2010 were lower
than the prior year quarter due to lower tonnes being placed on the
leach pad which was partially offset by higher gold grades and
recoveries. The total cash cost((1)) decrease was primarily attributable to the use of a mining contractor
and certain non-recurring maintenance costs during the fourth quarter
of 2009 which were not incurred during the fourth quarter of 2010.
These cost decreases were partially offset by higher diesel consumption
and price during the fourth quarter when compared to the same period in
2009.
Full year 2010 gold sales increased by 18% to 169,571 ounces from
143,509 ounces in 2009, while total cash cost((1)) per ounce sold remained constant at $596 per ounce. The combination of
increased gold sales and higher average realized gold prices during
2010 resulted in a 107% increase in earnings from mine operations to
$62 million from $30 million during 2009. The average realized gold
price in 2010 was $1,117 per ounce compared to $955 per ounce in the
same period of the prior year.
The increase in 2010 gold production and sales was primarily
attributable to increases in gold grade and leach pad recoveries
reaching their steady state when compared to 2009 and was partially
offset by lower tonnes placed on the leach pad during the year. Total
cash cost((1)) per ounce sold during 2010 remained consistent as the benefits of
one-time 2009 costs related to the use of a mining contractor that were
not incurred in 2010 were offset by higher diesel consumption and price
during 2010 when compared to 2009.
Mesquite replaced the ounces mined in 2010 and maintained its 3.1
million ounce reserve base while also adding approximately 0.8 million
ounces to the measured and indicated resource category.
The Mesquite mine is forecast to produce 145,000 to 155,000 ounces of
gold in 2011 at total cash cost((1)) per ounce sold of $620 to $640 per ounce. Ore tonnes processed and
recoveries are anticipated to remain consistent with 2010 levels,
however, the gold grade is expected to move towards reserve grade
resulting in gold production reverting to an average life-of-mine
level. The increase in forecasted total cash cost((1)) in 2011 when compared to 2010 is driven by higher total tonnes mined as
well as the assumption of a higher diesel price than that realized
during 2010. 2011 capital expenditures at Mesquite are forecast to be
approximately $9 million, including $6 million of maintenance and spare
parts which are expected to be capitalized under International
Financial Reporting Standards ('IFRS') which were historically
expensed.
Low Cost Cerro San Pedro Mine Contributes $84 million to Earnings from
Mine Operations
Gold sales in the fourth quarter at Cerro San Pedro increased by 58% to
38,666 ounces from 24,455 ounces in the same period in 2009. The
increased gold sales, together with a significant reduction in total
cash cost((1)) per ounce of gold sold, net of by-product sales, to $138 from $436 in
the fourth quarter of 2009 and higher realized gold prices, resulted in
Cerro San Pedro generating $37 million in earnings from mine operations
in the fourth quarter of 2010 compared to $10 million in the same
period of the prior year. The average realized gold price in the fourth
quarter of 2010 was $1,373 per ounce compared to $1,079 per ounce in
the same period of the prior year.
Gold production and sales during the fourth quarter of 2010 were higher
than the prior year quarter due to gold grades increasing toward
reserve grade and higher ore tonnes placed. 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 fourth quarter of 2010 when compared to the
same period in 2009.
Silver sales during the quarter were 0.7 million ounces at an average
realized silver price of $26.91 per ounce compared to 0.3 million
ounces at $17.36 per ounce in the same period in 2009. The increase in
silver sales volume was primarily attributable to continued improvement
in silver recoveries from the leach pad and higher silver grades.
Full year 2010 gold sales increased by 23% to 114,713 ounces from 93,312
ounces sold in 2009, while, over the same period, total cash cost((1)) per ounce of gold sold, net of by-product sales, decreased to $230 from
$407. As a result of higher gold sales, lower costs and higher realized
gold prices, Cerro San Pedro generated $84 million in earnings from
mine operations in 2010 compared to $28 million in 2009. The average
realized gold price in 2010 was $1,262 per ounce compared to $978 per
ounce in the prior year.
The increase in 2010 gold production and sales was attributable to an
increase in gold grade when compared to 2009 and was partially offset
by the mining of lower ore tonnes, as a result of the delayed receipt
of the explosives permit in early 2010. 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
diesel prices and the appreciation of the Mexican peso during 2010 when
compared to 2009.
Silver sales in 2010 were 2.2 million ounces at an average realized
silver price of $21.40 per ounce compared to 1.5 million ounces at
$14.48 per ounce in 2009. The increase in silver sales volume was
attributable to continued improvement in silver recoveries from
leaching and higher silver grades.
Cerro San Pedro's gold reserves at the end of 2010 were 1.3 million
ounces. Through the company's exploration efforts during the year, the
inferred manto sulphide resource increased by approximately 36% and in
2011 the company will be focused on further increases to this resource.
Cerro San Pedro is forecast to produce 135,000 to 145,000 ounces of gold
and 1.9 to 2.1 million ounces of silver in 2011, with the gold
production increase attributable to a forecasted increase in ore tonnes
placed. Total cash cost((1)) per ounce sold, net of by-product sales, are forecast to be $240 to
$260 per ounce, and assume a $23 per ounce silver price and a foreign
exchange ratio of $12.50 Mexican peso to U.S. dollar. 2011 capital
expenditures at Cerro San Pedro are forecast to be approximately $12
million and will largely be related to leach pad expansions.
Peak Mines' Resource Base of One Million Ounces Highest since 2003
Gold sales in the fourth quarter at Peak Mines were 27,905 ounces
compared to 26,159 ounces sold in the fourth quarter of 2009. Over the
same period, total cash cost((1)) per ounce of gold sold, net of by-product sales, decreased to $312 from
$339, which, with higher realized gold prices, resulted in Peak Mines
generating $20 million in earnings from operations during the fourth
quarter of 2010 compared to $11 million in the same period of the prior
year. The average realized gold price in the fourth quarter of 2010 was
$1,385 per ounce compared to $1,139 per ounce in the same period of the
prior year.
Gold production and sales during the fourth quarter of 2010 were higher
than the prior year quarter due to the mine sequencing leading to
higher gold grades. Total cash cost((1)) decreased as higher by-product revenues from increased copper prices
were only partially offset by the appreciation of the Australian dollar
and lower copper sales volumes in the fourth quarter of 2010 when
compared to the same period in 2009.
Copper sales during the quarter were 4.7 million pounds at an average
realized copper price of $3.89 per pound compared to 4.8 million pounds
at $2.94 per pound in the same period in 2009. The decrease in copper
sales was primarily attributable to the timing of concentrate
shipments.
Full year 2010 gold sales were 84,793 ounces compared to 87,812 ounces
sold in 2009, while, over the same period, total cash cost((1)) per ounce sold, net of by-product sales, was $361 compared to $334. As
a result of the higher realized gold prices, and despite slightly lower
gold sales and higher costs, Peak Mines generated $57 million in
earnings from mine operations in 2010 compared to $42 million in the
prior year. The average realized gold price in 2010 was $1,257 per
ounce compared to $994 per ounce in 2009.
The increase in 2010 gold production was attributable to an increase in
gold grade and was partially offset by lower ore tonnes processed. The
decrease in gold sales was due to timing of concentrate shipments. The
increase in total cash cost((1)) was primarily attributable to the appreciation of the Australian
dollar. These cost increases were partially offset by higher by-product
revenues from both higher copper sales volumes and prices.
Copper sales during 2010 were 14.1 million pounds at an average realized
copper price of $3.48 per pound compared to 13.9 million pounds at
$2.54 per pound in 2009.
Peak Mines ended the year with 1.0 million ounces in the measured and
indicated resource category, inclusive of reserves. This is the highest
resource base since the Peak Mines were sold by Rio Tinto in 2003.
Peak Mines is forecast to produce 90,000 to 100,000 ounces of gold and
12 to 14 million pounds of copper in 2011. Total cash cost((1)) per ounce sold, net of by-product sales, are forecast to be $410 to
$430 per ounce, and assume a $3.75 per pound copper price and a foreign
exchange ratio of $1.05 Australian to U.S. dollar. The anticipated
change in total cash cost((1)) when compared to 2010 is driven by projected lower copper sales and the
assumption of a stronger Australian dollar than that realized during
2010. 2011 capital expenditures at Peak Mines are forecast to be
approximately $45 million with approximately 50% of this total to be
spent on underground development and capitalized exploration and the
remainder on mill and equipment upgrades. The 2011 capital should help
position Peak for continued extensions of its mine life after its
successful 19 year operating history.
New Afton Advancing Steadily Towards Production
New Gold's most immediate development project continued on schedule
during 2010 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 fourth quarter of 2010, the New Afton underground development
crews continued their advance, completing 1,394 metres of development,
bringing the 2010 total development advance to 3,873 metres beating the
2010 target by 11%. During the quarter, a project milestone was
achieved as the first development ore was transported to the surface
stockpile.
In 2011, project spending at New Afton is forecast to be approximately
$290 million, including $20 million of capitalized interest. While
underground development will continue as the crews continue to develop
the undercut and extraction level below the ore body, the focus in 2011
will move to surface construction with over 50% of the total spending
allocated to this area. Major targeted construction milestones for 2011
include:
-- Completion and initialization of the underground conveyor
system to transport all ore and waste rock to surface
-- Completion of ventilation connections and installation of
permanent ventilation fans
-- Commencement of installation of mill equipment
-- Installation of tailings pipeline
Associated with the continued successful development progress being made
at the project site, New Gold has also signed three concentrate
off-take agreements that, in aggregate, cover 85% of the estimated
concentrate production from New Afton beginning in mid-2012. The three
contracts are with a major Swiss-based trading company and two large
custom copper smelting companies. Discussions related to the remaining
15% of New Afton's concentrate production are advanced and it is
anticipated that a contract should be finalized in 2011.
The New Afton reserves at the end of 2010 included 1.1 million ounces of
gold and 1.0 billion pounds of copper.
The company looks forward to production commencing in less than 17
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 Continues to Grow
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.
The Environmental Impact Assessment (EIA) necessary for the project
permitting to proceed has already been submitted with approval
anticipated in the coming months. On receipt of the required permits,
anticipated to be on a similar timeframe, New Gold's 70% joint venture
partner, Goldcorp Inc. ('Goldcorp'), intends to immediately commence
construction of key project infrastructure as well as further explore
and delineate this large deposit.
As disclosed on February 10, 2011, Goldcorp updated the reserves and
resources for the project as of December 31, 2010. Highlights
attributable to New Gold's 30% share of the project include:
-- 22% increase in Proven and Probable gold reserves to 2.5
million ounces
-- 8% increase in Proven and Probable copper reserves to 1.8
billion pounds
-- 1.2 million ounce and 0.5 billion pound increase in Inferred
gold and copper resources, respectively, reflecting increased
tonnes and higher gold and copper grades in the deeper portions
of the La Fortuna deposit as it extends below the current
reserve pit
New Gold is excited to have a highly motivated partner in Goldcorp who
are poised to begin drilling programs in the coming months to further
delineate the pit at El Morro and expand on positive results from other
targets on the property.
2011 Guidance
New Gold reiterates its 2011 guidance and anticipates further gold
production growth with total cash cost((1)) per ounce sold, net of by-product sales, remaining well below the
industry average.
Gold Production (ounces) Total Cash Cost((1))
2010A 2011F 2010A 2011F
Mesquite 169,023 145,000-155,000 $596 $620-$640
Cerro San Pedro 118,708 135,000-145,000 $230 $240-$260
Peak Mines 95,180 90,000-100,000 $361 $410-$430
Total production 382,911 380,000-400,000 $428 $430-$450
Assumptions used in the 2011 guidance include silver and copper prices
of $23.00 per ounce and $3.75 per pound, respectively, and Canadian
dollar, Australian dollar and Mexican peso exchange rates of $1.00,
$1.05 and $12.50 to the U.S. dollar, respectively. The oil price is
assumed to be $85 per barrel.
Full Audited Financial Statements and related Management Discussion and
Analysis will be available on SEDAR.
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 that are inherently subject to known and
unknown risks, uncertainties and other factors that may cause New
Gold's 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 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
latest annual information form, management's discussion and analysis of
financial condition ('MD&A') and management information circular 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 of New Gold 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 press 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
press 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.
(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.
Consolidated statements of operations
Three and twelve month periods ended December 31,
(Expressed in thousands of U.S. dollars, except share and per share
amounts)
(Unaudited)
Three months ended Twelve months ended
December 31, Decemer 31,
2010 2009 2010 2009
$ $ $ $
Revenues 189,355 131,765 530,450 323,780
Operating
expenses (80,790) (67,369) (250,338) (176,491)
Depreciation
and depletion (24,675) (24,714) (77,016) (58,668)
Earnings from 203,096
mine operations 83,890 39,682 88,621
Corporate
administration (8,933) (9,390) (32,622) (24,689)
Business
combination
transaction - - - (6,583)
costs
Exploration
(3,434) (1,317) (12,834) (6,412)
Write-down of (15,728) - -
mining assets (15,728)
Goodwill
impairment - (2,465) - (192,099)
charge
Income (loss) 141,912
from operations 55,795 26,510 (141,162)
Other income
(expense)
Realized and
unrealized
(loss) gain on - 905 - 8,161
gold contracts
Realized and
unrealized gain
on fuel - - - 797
contracts
Realized and
unrealized gain 2,110 (14,636) 9,128 351
on investments
Unrealized
gain (loss) on
prepayment (3,889) - 7,679 -
option
Interest and
other income 1,418 1,521 3,258 4,158
Gain on sale
of investment 39,710 - 39,710 -
Gain on
redemption of - - - 14,236
long-term debt
Interest and
finance fees (587) (667) (947) (1,435)
Other
expense (820) (252) (2,883) (967)
Loss on
foreign (9,616) (11,181) (21,816) (52,667)
exchange
Earnings (loss) 176,041
before taxes 84,121 2,200 (168,528)
Income and
mining taxes (11,242) (4,495) (41,110) (14,906)
Net earnings
(loss) from 134,931
continuing 72,879 (2,295) (183,434)
operations
Earnings (loss)
from
discontinued - (5,355) 42,023 (10,882)
operations
Net earnings 176,954
(loss) 72,879 (7,650) (194,316)
Earnings (loss)
per share from
continuing
operations
Basic
0.19 (0.01) 0.35 (0.60)
Diluted
0.18 (0.01) 0.34 (0.60)
Earnings (loss)
per share from
discontinued
operations
Basic
- (0.01) 0.11 (0.04)
Diluted
- (0.01) 0.11 (0.04)
Earnings (loss)
per share
Basic
0.19 (0.02) 0.46 (0.64)
Diluted
0.18 (0.02) 0.45 (0.64)
Weighted
average number
of shares
outstanding
(in thousands)
Basic 392,952 388,512 390,883 306,288
Diluted 398,828 388,512 395,233 306,228
(i) Stock
option expense
(a non-cash
item included
in corporate
administration) 1,772 1,775 8,151 6,621
New Gold Inc.
Consolidated balance sheets
as at December 31
(Expressed in thousands of U.S. dollars)
2010 2009
$ $
Assets
Current assets
Cash and 490,754 262,325
cash equivalents
Restricted
cash - 9,201
Accounts
receivable 11,929 10,345
Inventories 106,325
86,299
Future
income and 9,127 8,848
mining taxes
Current portion of
mark-to-market gain on fuel - 706
contracts
Prepaid
expenses and 7,325 6,933
other
Current assets of
operations held for sale - 10,298
Total current 625,460 394,955
assets
Investments
7,533 45,890
Mining 2,073,695 2,000,438
interests
Future income
tax asset 931 2,250
Reclamation
deposits and 31,295 17,646
other
Assets of
operations held - 27,080
for sale
Total assets 2,738,914 2,488,259
Liabilities
Current
liabilities
Accounts
payable and
accrued 66,654 36,033
liabilities
Current
portion of - 12,088
long-term debt
Current portion of
mark-to-market loss on gold 40,072 19,206
contracts
Income and
mining taxes 33,983 15,677
payable
Current liabilities of
operations held for sale - 10,414
Total current 140,709
liabilities 93,418
Reclamation and
closure cost 25,721 19,889
obligations
Mark-to-market
loss on gold 113,303 76,780
contracts
Future income
and mining 280,026 316,426
taxes
Long-term debt 229,884 225,456
Deferred
benefit 46,276 -
Employee
benefits and 9,804 5,355
other
Liabilities of
operations held - 19,890
for sale
Total 845,723 757,214
liabilities
Shareholders'
equity
Common shares 1,846,712 1,810,865
Contributed
surplus 82,787 82,984
Share purchase 138,806 150,656
warrants
Equity component
of convertible 21,604 21,604
debentures
Accumulated
other
comprehensive (67,813) (29,205)
loss
Deficit
(128,905) (305,859)
(196,718) (335,064)
Total
shareholders' 1,893,191 1,731,045
equity
Total
liabilities and 2,738,914 2,488,259
shareholders'
equity
New Gold Inc.
Consolidated statements of cash flows
Three and twelve month periods ended December 31,
(Expressed in thousands of U.S. dollars)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
2010
2009 2010 2009
$ $ $ $
Operating
activities
Net earnings 72,879 176,954
(loss) (7,650) (194,316)
Loss (earnings)
from
discontinued - 5,355 (42,023) 10,882
operations
Items not
involving cash
Goodwill
impairment - 2,465 - 192,099
charge
Unrealized
gain on gold (2,247) (3,051) (8,425) (12,389)
contracts
Unrealized
(gain) loss on 102 156 340 (523)
fuel contracts
Unrealized
foreign 9,616 9,696 21,816 46,057
exchange loss
Unrealized
and realized (2,110)
(gain) loss on 14,967 (9,128) 351
investments
Gain on
sale of Beadell (39,710) - (39,710) -
shares
Write-down
of mining 15,728 - 15,728 -
assets
Loss on
disposal of 8 - 1,054 -
assets
Depreciation 23,951
and depletion 25,266 76,307 59,473
Stock option 1,772
expense 1,775 8,151 6,621
Unrealized
gain on 3,889
prepayment - (7,679) -
option
Future
income and (12,713) (1,230) (17,197) (1,441)
mining taxes
Gain on
redemption of - - - (14,236)
long-term debt
Other -
- (2,657) -
Change in
non-cash 16,843
working 9,264 6,072 (13,597)
capital
Cash provided
by continuing 88,008 54,356 182,260 78,981
operations
Cash provided
by (used in)
discontinued - (406) (1,696) 5,576
operations
Investing
activities
Mining (61,185)
interests (35,169) (149,165) (111,522)
Purchase of
short term - 5,996 - -
investment
Cash
acquired in
business
combination and - - - 20,735
asset
acquisition
Reclamation (1,545)
deposits (1,547) (1,590) (1,547)
Receipt of
accrued
interest on - (1,701) - 3,015
investments
Reduction
of restricted - - 9,201 -
cash
Proceeds
from disposal 167 - 439 -
of assets
Cash
received in El
Morro
transaction, - - 46,276 -
net of
transaction
costs
Investment
in El Morro - - (463,000) -
Proceeds
from sale of 58,364 - 58,364 -
Beadell shares
Proceeds
from settlement - 23,351 48,112 36,636
of investments
Cash used in
continuing (4,199) (9,070) (451,363) (52,683)
operations
Cash provided
by (used in)
discontinued - 649 34,410 (1,405)
operations
Financing
activities
Common 107,015
shares issued - 3,033 -
Repayment
of short-term - 7,841 - -
borrowings
Exercise of
options to 8,860 -
purchase common - 15,649
stock
El Morro 463,000
loan - - -
Revolving
credit facility (4,225)
initiation - (4,225) -
costs
Repayment
of long-term - (41,406) (27,235) (66,981)
debt
Cash provided
by (used in) 4,635 447,189
continuing (30,532) 40,034
operations
Cash used in
discontinued - - - (7,000)
operations
Effect of
exchange rate
changes on cash 11,306 4,985 16,803 13,980
and cash
equivalents
Increase in
cash and cash 99,750 19,982 227,603 77,483
equivalents
Cash and cash
equivalents, 391,004 243,169 263,151 185,668
beginning of
period
Cash and cash
equivalents, 490,754 263,151 490,754 263,151
end of period
Comprised of
Cash and
cash
equivalents of 490,754 262,325 490,754 262,325
continuing
operations
Cash and
cash
equivalents of - 826 - 826
discontinued
operations
490,754 263,151 490,754 263,151
Cash and cash
equivalents are
comprised of
Cash 191,844 191,844