New Gold recently released it's second quarter financial results, and a revised outlook for 2020.
Rainy River Outlook for 2020:
Production estimates for the year have been lowered, primarily related to the impact of COVID-19 in the first half of the year, resulting in lower tonnes and slightly lower grades milled for the full year.
Cash costs and operating expense per gold eq. ounce for the year have been slightly increased primarily due to lower sales.
Total capital for the year has increased by less than $10 million due to a portion of the Tailings Management Area construction that was originally scheduled for completion in 2021, now planned for completion in 2020.
On April 15, 2020, the Company, via news release, which is available at www.sedar.com, withdrew annual guidance until the impact of COVID-19 was better understood. Its revised operational outlook for 2020 incorporates the lower than expected grades at New Afton over the balance of the year and the overall impact of COVID-19 at our operations as we continue to prioritize the safety of our employees and local and Indigenous communities. Unit costs and capital are expected to remain near planned levels.
Following a two-week voluntary suspension at the Rainy River Mine due to COVID-19, the mine resumed operations at reduced levels to allow the non-local workforce to be safely reintroduced and is expected to achieve full capacity early in the third quarter. Development of the self-funded C-zone has returned to planned levels and exploration programs will be launched at both operations as permits are received.
In 2020, the Company reports production on a gold equivalent basis as well as on a per-metal basis. Cash costs and AISC will be reported on a per gold equivalent ounce basis. Throughout the year the Company will report gold equivalent ounces using a constant ratio of $1,500 per gold ounce, $17.75 per silver ounce and $2.85 per pound copper, and a foreign exchange rate of 1.35 Canadian dollars to the US dollar.
In the Rainy River outlook for 2020, production estimates for the year have been lowered, primarily related to the impact of COVID-19 in the first half of the year, resulting in lower tonnes and slightly lower grades milled for the full year. Cash costs and operating expense per gold eq. ounce for the year have been slightly increased primarily due to lower sales. In addition, total capital for the year has increased by less than $10 million due to a portion of the Tailings Management Area construction that was originally scheduled for completion in 2021, now planned for completion in 2020.
During the second quarter, the Company as a whole has been able to execute on numerous key strategic opportunities, including the closing of the $300 million partnership with Ontario Teachers' Pension Plan, the divestment of the Blackwater Project for C$190 million cash and an eight per cent gold stream and the restructuring of our balance sheet through the $400 million bond offering due 2027 that funded the redemption of the senior notes due 2022.
"We are very pleased with our overall performance in this unprecedented quarter, a quarter that included enormous challenges presented by COVID-19. While we prioritized the safety of our employees and our key partners, we were able to report strong operational performance and complete two strategic transactions that restructured our balance sheet and improved our liquidity position,” stated Renaud Adams, CEO. “Over the balance of the year, our operations will return to pre-COVID levels and we will complete all non-recurring capital projects at Rainy River and advance the development of the C-zone as we position the Company for free cash flow generation beginning in 2021. New Gold's future will be supported by profitable operations, a stronger balance sheet, and as our current hedges expire at year end, we will be fully exposed to the strengthened gold price.”
The Company's 2019 Sustainability Report, including the updated Tailings Fact Sheet is now available online at www.2019sustainabilityreport.newgold.com.