PRESS RELEASE
New Gold Announces Third Quarter Production Results and Cash Cost in Line with
Annual Guidance
(All figures are in US dollars unless otherwise stated)
October 23, 2008 � VANCOUVER, BC � New Gold Inc. (�New Gold�) (TSX and AMEX �
NGD) is pleased to announce its third quarter production results and cash cost,
which are in line with annual guidance. The production and cash cost
information provided below are approximate figures and might differ slightly
from the third quarter earnings. They also include year to date results for the
period prior to the close of the business combination among New Gold, Peak Gold
Ltd. and Metallica Resources Inc. on June 30, 2008.
Third Quarter Highlights
Third quarter highlights reflect the operating results for the three months
ended September 30, 2008 for Cerro San Pedro, Amapari and Peak Mines.
- Gold production was 68,801 ounces versus
62,705 ounces in the second quarter
- Gold sales were 67,156 ounces versus 62,730
ounces in the second quarter
- Total cash cost was $566 per ounce (net of
by-product sales) versus $612 per ounce in the second quarter
- Copper production was 2.37 million pounds
versus 1.24 million pounds in the second quarter
- Silver production was 282,055 ounces versus
283,749 ounces in the second quarter
Year to Date Highlights
For the nine month period ending September 30, 2008, the operational results
for Cerro San Pedro, Amapari and Peak Mines are as follows:
- Gold production was 193,096 ounces
- Gold sales were 197,508 ounces
- Total cash cost was $541 per ounce (net of
by-product sales)
- Copper production was 5.77 million pounds
- Silver production was 794,427 ounces
Cerro San Pedro Mine
Cerro San Pedro achieved good results in the third quarter with gold sales
increasing to 26,070 ounces compared to 22,190 ounces in the second quarter. Gold
and silver production for the third quarter was 24,387 ounces and 282,055
ounces, respectively, and for the nine month period ending September 30, 2008,
gold and silver production was 63,330 ounces and 794,427 ounces, respectively. The
increase in production over the second quarter was due to a higher recovery as
leach pads approach equilibrium. Total cash cost net of by-product sales for the third
quarter was $369 per ounce and for the nine month period ending September 30,
2008 was $403 per ounce. Cash cost were lower in the third quarter mainly
because of the increase in the volume of gold sold offset by the reduction in
the selling price of silver, higher strip ratio and increased consumable costs.
Amapari Mine
Amapari produced 17,752 ounces of gold in the third quarter and 56,891 ounces
for the nine month period ending September 30, 2008. The positive results of a
major overhaul of the operating systems at Amapari that commenced early in the
quarter are evidenced by the significant increase of recoverable ounces placed
on the leach pads. Recoverable ounces placed increased from 16,400 in the
second quarter to 23,600 in the third quarter, an increase of 44 percent.
Higher mobile equipment availabilities resulted in more tonnes moved and higher
grade ore delivered to the leach pad while better plant availability increased
tonnes placed by 33 percent. Recoveries of completed piles averaged 75 percent
compared to historic results in the low 60 percent range. Total cash cost per
ounce decreased from $968 in the second quarter to $882 in the third quarter.
Full impact on production and cash cost from the recent improved operating
performance is expected to be realized in the fourth quarter.
Evaluation of results from the 2007/2008 drill program at Amapari has not added
significant amounts of oxides that would be economical to process in the
existing heap leach circuit. Remaining heap leachable material will be
exhausted in the fourth quarter of 2009. Production beyond 2009 is subject to
ongoing studies on the feasibility of mining and processing the sulphide
resources underlying and surrounding the oxide pits. New Gold continues to
monitor operating performance at the Amapari Mine and will take further action
as appropriate.
Peak Mines
Peak Mines produced 26,662 ounces of gold and 2.37 million pounds of copper in
the third quarter versus 21,114 ounces of gold and 1.24 million pounds of
copper in the second quarter. Metal production returned to planned levels with
improvement in ore grade as mining focused on primary stopes. Mill throughput
of 196,633 tonnes reflects consistent underground production and high mill
availability. Total cash costs for the quarter were high at $560 per ounce sold
as a result of negative adjustment to copper concentrate accounts receivable
due to decreased copper prices.
Commenting on operating results, Robert Gallagher, President and Chief
Executive Officer said, �The third quarter results are in line with the annual
forecast. Cerro San Pedro had good gold production and cash cost results this
quarter. We congratulate them in the receipt of both the Safety Award from the
Mexican Mining Association and the ISO 14001 certification. At Amapari,
operating performance improved considerably through the quarter which is
expected to result in significant improvement in gold produced and cash cost as
the full effect of these improvements bear fruit in the fourth quarter. Peak
Mines had a good quarter with grades returning to their planned levels and
increased mill throughput. Peak Mines reached a noteworthy milestone in the third
quarter, producing their two millionth ounces� concluded Mr. Gallagher.
Gold production and cash cost are in line with 2008 guidance of approximately
250,000 ounces and total cash cost (net of by-product sales) between $500 and
$520 per ounce.
New Afton Project
The New Afton project remains on schedule with three development crews working
underground where a total of 1,432 metres of advance was achieved in the third
quarter. Work included completion of a 430 metre ventilation intake raise and
the completion of the first of four conveyor ramps.
Surface development is ahead of schedule with completion of the concrete
placement for the Ball Mill, SAG Mill foundations and for the Mill building
footings and completion of the Ball Mill piers. The Pothook Dam permit was
received during the quarter allowing construction to commence and providing
increased water storage capacity.
The concentrator and related facilities is expected to be completed during the
first three quarters of 2009. The first ore is scheduled to be trucked to
surface and along with stockpiled development ore should enable commencement of
milling operations during the fourth quarter of 2009. Ramp up to four million
tonnes per year capacity is expected to continue throughout 2010 and into early
2011.
�The New Afton project is proceeding as scheduled and offers significant
internal growth opportunities for New Gold in the near future. The New Afton
mine is expected to be a significant cash generator for the company,� said
Robert Gallagher
New Gold will hold a conference call on Wednesday, November 12, 2008 at 10:00
a.m. Pacific time to discuss these results. You may join the call by dialing
toll free 1-888-789-9572 or 1-416-695-7806 to access the call from outside
Canada or the U.S. You can listen to a recorded playback of the call after the
event until December 10, 2008 by dialing 1-800-408-3053 or 1-416-695-5800 for
calls outside Canada and the U.S. Passcode 3273675.
New Gold is an intermediate gold mining company with three operating assets in
Mexico, Brazil and Australia and two development projects in each of Canada and
Chile. For further information on New Gold, please visit our website at www.newgold.com.
CAUTIONARY NOTE
REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this press release, including any information
as to New Gold�s future financial or operating performance, may be deemed
�forward looking�. All statements in this press 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 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: anticipated synergies from the
business combination may not be realized, there may be difficulties in
integrating the operations and personnel of New Gold, Peak Gold Ltd. and
Metallica Resources Inc. New Gold is subject to significant capital
requirements associated with its expanded operations and portfolio of
development projects since completion of the business combination; 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 necessary licenses and
permits; 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 �Risks and
Uncertainties� included in New Gold�s MD&A filed August 14, 2008 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 press 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.
CASH COST
�Total cash cost� figures for gold production 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
the accepted standard of reporting cash costs 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. Total cash
costs include mine site operating costs such as mining, processing,
administration, royalties and production taxes, but are exclusive of
amortization, reclamation, capital and exploration costs. Total cash costs are
then divided by ounces produced to arrive at the total cash costs of
production. The measure, along with production, 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. 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.
For further information please contact:
M�lanie Hennessey
Vice President Investor Relations
New Gold Inc.
Direct: +1 (604) 639-0022
Toll-free: +1 (888) 315-9715
Email: info@newgold.com
Website: www.newgold.com
or
Keith Schaefer
Vanguard Shareholder Solutions
Direct: 604-608-0824
Toll-free: 1-866-398-1088
New Gold
Vanguard Shareholder Solutions
Vanguard Shareholder
Solutions (Vanguard) provides, for remuneration, corporate communications and
investor relations services to the above mentioned client(s). The information
contained in this email is based on existing disclosure documents or other
publicly available information. You are encouraged to seek independent
verification of any information that is important to your decisions. By
responding to your inquiry neither Vanguard nor the above mentioned client(s)
is offering securities or advising or soliciting the purchase or sale of
securities.
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