Q1 2020 Earnings Call
Conference is being recorded if you acquire any further assistance. Please press star zero I would like to now hand, the conference over to your speaker today, and Dave Vice President of Investor Relations. Please go ahead ma'am.
Thank you operator, and good morning, everyone. We appreciate you joining us today for new goals first quarter 2020 earnings conference call and webcast and I hope, everyone as well and staying safe.
We will begin today's session with Rob show say CFO of New gold present, our Q1 financial results and then follow with Renaud Adams CFO to discuss our operational results.
After the presentations have been completed we will open the lines for a brief Q and a period.
Before the team begins presentations today I would like to direct your attention to our cautionary language related to forward looking statements found in the presentation.
Today's commentary includes forward looking statements relating to new gold and this respect we refer you to our detailed cautionary note regarding forward looking statements in the presentation.
You are cautioned that actual results and future events could differ materially from those expressed or implied in forward looking statements.
Slide two and three provide additional information and should be reviewed.
We also refer you to the section entitled Risk factors, and new goals latest Mdna and other filings available on SEDAR, which set out certain material factors that could cause actual results to differ.
Please note that all amounts are presented in us dollars.
In addition included in the presentation. There are a number of end notes that provide important information and should be reviewed in conjunction with material presented I will now turn the call over to Rob show sites.
Thanks, and good morning.
Turning to slide five which provides our operating highlights.
For Q1 2020.
The details are consistent with our April production press release overall, our quarter was impacted by lower grades and higher sustaining capital when compared to prior year quarter.
During Q1, the company produced 103435 gold equivalent ounces. The amount consisted of 18.5 million pounds of copper.
50380, 1000 gold ounces from rainy River and 16409 gold ounces from new Afton.
Total gold of 66790 ounces lower gold production as compared to the prior year corridors, primarily due to planned lower grades at rainy River and the 12 days that the rainy River mine was suspended.
Operating expense per equivalent ounce was higher than the prior year quarter due to lower metal grades and lower sales volumes consolidated all in sustaining cost for the quarter were 14 46 per equivalent ounce, a 33% higher than the prior year quarter due to lower grades and lower sales volumes.
Turning to our financial results on slide six first quarter revenue from continuing operations was 142 million driven by sales of approximately 68800 gold ounces at an average realized gold price.
14, 58 per ounce and sales of 17.7 million pounds of copper to 56 per pound Q1 revenue was 15% lower than the prior year quarter due to lower grades partially offset by a higher gold price operating cash flow before working capital adjustments was 47 million or seven cents.
As per share for the quarter lower than the prior year quarter again, primarily due to lower grades. The company recorded a net loss of 28.3 million or four cents per share during Q1 compared to a loss of 13.4 cents per share and Q1 2019.
After adjusting for certain charges net loss was 17.8 million or three cents three cents per share in Q1 compared to net earnings of mills sense for shared in the first quarter of 2019. Our Q1 adjusted earnings include adjustments related to inventory write down and other gains and losses, including the unrealized.
As adjustments on our gold price option contracts and these stream mark to market. Our Mdna has additional details on the non-GAAP measures discussed here.
Slide seven provides a breakdown of our Q1 2020 capital expenditures, our total sustaining capital and leases up for the quarter was 49.1 million spend was primarily related to tailings work and with drains growth capital was focused on project development at new Afton.
As at March 30, Onest 2020, we had approximately 400 million in cash and approximately 600 million in liquidity and with that I'll turn the call over to Reno.
Thank you, Rob and good morning, everyone. Our I'm on slide 10, before we touch base on the operating performance are likely to discuss some aspect to the Kobin 19.
The early stage of depend they make a crisis, we created our common goal the objective.
Along the preserving and their protecting the health and safety or for our people will be environment in communities.
While preserving the variability and then ticket reaffirmed mines in business.
Thanks to the tremendous commitment in involving overall, we've been pretty successful to date to deliver one that statement.
When it comes to the perfect storm or fall, our employee contractors and community health and safety well. This is where it really the tire hits, the ROE and the true sustainability it takes place.
But CEO of new gold Im extremely proud.
We have achieved to date.
While we are physically separated I truly feel much closer than ever to our employees and community.
I want to go to the details on everything that has been in place I would summarize by saying that.
I really feel that they were both sites and other comp rate level are working with the local governments Inhalants agency recommendation that we've put in place every single aspect.
What we consider to be the best practice currently in place and has very to rules.
And more.
When it comes to a more specifically under rainy we have adapted became situation we have adapted to transportation as well.
We're very key we have created as well some community base consultation, which has been absolutely key to date and this is how I feel I really feel that on their biggest crisis that we have significantly raise the bar when it comes with.
You could see more on our website.
The Covanta 19 on their view.
Right.
Just just in term market supply chain or continue to you guys, while somewhat somewhat surprised but very happy to to see that that truly to supply chain has not been impacted.
We have the proper inventory on hand, and required going to Cape and maintain our long term schedule.
As well remain there and remain as planned our.
Our creative business continued to plans both sides are fully mobilized with the response team.
We have different scenarios in the ramping up and ramping down in adjusting has we continue to.
To address their operations and ramp up and bringing more as we needed for capital execution as well.
We've talked about large on our financial status as well so on their discovered crisis, while our two mines are currently operating of course, but feel that we if we have a significantly raise the bar with regards to financial.
Properly funded to go through this crisis.
The only released this suspended in slide activities to date has to do more with their exploration regional exploration program as a result, so far more priority from Goldman.
Been currently focused on the more operating permit and more pricing. So we are expecting a bit up a delayed there, but nothing nothing material to our plans and we continue to believe we've executed and are of course, a key as well as this spring farms are will be the important execution of our capital project.
Timelines as well and execution.
And again, we have been adopting this high apparel as.
That's perfect Covance.
As a closing remark I would say that we are currently actively engaged in initiatives to bring some testing capacity our site, which we believe is crucial to significantly improve our health and safety profile as we continue to increase the amount of activity.
On slide 11 on February 13, we released our new updated 43, where no. One are the release, where a pretty iridiums was pretty detailed are all over the webcast.
Isn't station.
The result, where on the on the year by year basis. So I'm looking at our quarterly plans said that serve to build at 2020 year. One of the plan and I would say that im very pleased with our production as result of for Q1.
Considering.
The 12 basis Spansion ad.
The rainy river as a result of the Kogut.
With a cash costs and all in sustaining costs also aligned with our plan and some weren't below.
While we have withdrawn our guidance, we definitely continue to focus on executing our disclose plant, which remain for time being our internal scorecard.
Operation our operation restart at that rainy River in April Threerd and now after a total of 14 days of suspension and is currently ramping up on operating capacity, but also an equally important in term of capacity for capital execution.
It is all about to safely we incorporating some orders currently using mostly to local workforce, which is about 70% them to total workforce, but as we advance we need to bring more specialized employees and contractors. So we could execute our capital project and also continued to ramp up operation back too.
Right now.
The mail has been operating super well since the restart using barrick feed and stockpile generating hauling inline with our plan.
On slide 12, and term effect key performance indicators for rainy River mine the highlight the as the great performance of the mine in term of total tons efficiencies and unit costs when compared to our plan. Our prior says prior to suspension the open bit. So it was operating at an average of 140000 tons.
Today, and we're very pleased with that performance our strip ratio was lower in Q1 compared to last year ask Brian.
The mill did well in term of stability availability and recovery.
Maybe the only sponsor on our filing Q1 that rainy effecting was the ramp up of the mail to 24000 tonnes a day on much harder rock by February we were there, but it was more difficult start in January we worked on improving fruchtman fragmentation in a bad at commission to payable.
Crusher properly and improve our on bland as as a result that made is now performing very well capital project advance in the Q1 and as planned we are anticipating some increase in Q2 in Q3 as the core of the team may.
Tailing management.
And the rig drains or the water management will be completed potentially opt to Q4.
I'm on slide 13.
New Afton. We also released on February 13, and New Technical report, stating that capital execution in operations of there'd be three and C zone rating, bringing to life of mine to 2030.
We are very pleased with a wonderful work achieve at new Afton, where operation was on uninterrupted during the quarter and continue.
While cobot, while remaining Covanta case free what action taken which we believe was key whereas the implementation of for Fourq in 14 scheduled rent and seven seven which provide for proper self isolation that were 14 days and for 14 days.
While our guidance was withdrawn or we continue to focus on execution of our new plan.
Our gold production cash cost and all in sustaining so we're aligned with our clients.
Action was below our plan due to lower grade mill and plan.
Sustaining sustaining in gross capital were slightly below than originally planned but nothing specific to discuss morning timing of certain activities capital spend also expected to increase in Q2 in Q3 has more schedule work will take place.
On slide 14 in term of key performance indicator for new Afton mine.
Again, when compared to our plan I would say that I'm very pleased with our underground mining and milling productivity both recovery for copper warehouse plan, despite lower copper grade mail in the quarter, we're reviewing some potential operational aspect, causing to higher dilution than expected.
In Q1, and resulting in the lower copper grade.
We are pleased with the to 12, a 131 meters of be Threec zone development achieved in Q1, but believe that the new safety protocol put in place well in short term slowdown a bit the productivity.
The BC governments stated that priority will be gave into the for the time being to more pressing and operating permits or we are expecting some delays with regards to regional exploration permits.
On slide four out of 15 and.
And on the Blackwater just a quick just a quick comment we've we've now completed our internal scoping study, we'd likely result, and I would like to hopefully make a decision before the end of Q2 with regards to the next step which could lead to a new 40 through on our on compliance study phase on the news.
Scoping, So March income as as we advance and on our Q2.
As a closing remark on slide 16.
Sure a lot has been down over the last 12 to 18 months with regards to repositioning Hugo.
We have now a clear path forward to achieve operational profitability and growing free cash flow and the closing of our recent strategic deal with Ontario teachers significantly improve our financial position and balance sheet.
While exploration in the revaluation of Blackwater continued to provide optionality to our shareholders.
This will close the are the formal presentation and I will turn the call back to operators for the Q any portion of the call.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone to the giant question press the pound or Heskey. Please standby, we've compiled acuity roster.
Your first question comes from the line of Matthew Fields from Bank of America.
Your line is now open.
Hi.
I understand you know the expectations are probably not where you wanted to be.
We ended the quarter, but.
Under the circumstances.
Wanted to ask you about your balance sheet now that you have the extra 300 million of cash.
From the Ontario teachers transaction.
Is there a priority towards doing some kind of refinancing transaction on those 20 twos.
Maybe using some of those proceeds.
For that purpose.
Yes, certainly in Atlanta as you mentioned in the market is.
And interesting one as we sit here so we definitely a priority to take care of the 22 bonds, which are are still two and a half years away from maturity. So.
I think we can be patient and prudent as we addressed all of those bonds and and.
Watch the market farm.
Beneath done and then the.
Opportunistic when when we see the market come around so certainly we want to.
Reduce our debt load and then also.
Deal with any steps that that are out there through opportunistic capital markets move.
Okay, I mean, just for the record.
Maybe the market was not there a month ago at the end of March but your bonds have certainly rallied back pretty hard along with the rest of the market. So I would say the market is there and lots of other metals and mining companies are trying to come to the market now because they don't know at the market's going to be available in the future. So.
You know.
Not a leverage finance banker, but they would usually say you take the money when its available not when it's the right time, but.
Good luck and hopefully you can address those short term maturities to buy yourself more more time in case.
Cover isn't as quick as people think thank you.
Okay. Thanks.
Your next question comes from line of ahead treat credit Suisse. Your line is now open.
Hi, Good morning, Thanks for taking my question just a modeling one for me on rainy River, how should we be thinking about grades and the second quarter given that the proportion of the mill feed will be from the reduced mining, but then also stockpiles I'm just trying to get a sense that are we back at Q4 levels for grades.
Any color there would be helpful. Thanks.
Yes. Good question a reason why we are and now I'm not trying to be a two to avoid a question here, but when I understand you know back though when you know we would drop me an older. The guidance for a reason I think we're ramping up as we speak.
It's all about you know.
How rapidly you know we could get back to feeding the may our went basically 100% from to mine, even though our original plan was considering the.
Considering they use as well up mid grade stockpile in a blending and so it's all part of the of the plan, but yes. So technically if we weren't too or is it too.
To stay at about 70, 75% of the capacity of the mind, you're absolutely right. You should expect you know where lower grade because we'll be well be feeding the mail you know with more than.
Originate fine.
But.
At what level I think as we advance.
As we explained well being better position later on you know in the quarter to come up.
But but yes technically if you're if you want to keep the mail a running and that in the mine is not capable to produce a 100% event you would be you'd be using lower grade stockpile and therefore, you could be down to two lower level, maybe similar to Q4.
Okay, Great. That's helpful and just a quick follow up I might've missed this earlier, but is there a change in the cadence of the Capex at rainy River for Q2 to Q4 or is that kind of hasn't been really is not so much to be I mean like of course, you know like something would happen you know when this situation with that wouldn't get worse than.
And ER and they will be imply you know like as suspension of operation things will be adjusted but this is not where we're looking at when looking at that ramping up when looking at executive positions. So while we hope that we would be executing.
Most if not all the capital that we had originally planned for 2020.
Maybe a little bit of dealer delay our our you know what maybe we could somehow ics that any and all to the Q4 and remember that our original objective was to turn in to a free cash flow at $3700 by Q4, so while we're not necessary interested in Boston.
Owning and then pushing everything towards the end of the year, but there is some ramp up activities as well, we're working very closely with.
With that community how are we going to do this.
When we have to potentially bring people from outside his own so in short maybe a little bit of a timing issue, but the objective remain to execute our plants.
Okay. Thank you.
Thanks.
Your next question comes from the line of Anita Soni Aspen CNBC Bank. Your line is now open.
Hi, guys and Usone.
I noticed the deal closed on March 31st for the Ontario Teachers' pension. So just like any definitely on these fancy IVC Bank. Your line is now open.
And on can you hear me.
Hello.
Sorry operators I'm sure the same for you, but I, we can't hear any question.
Oh, no I don't hear anything I mean should Amazon.
Yes. Thanks.
Your next question comes in line of Don Maclean from that paradigm capital. Your line is now open.
Pretty close operator on the name. Thanks, Thanks, guys for having the.
The call.
Just was hoping you could give us a little bit more color on the dilution of the new Afton mine.
What what can you do given it's a block cave and how important is that particular source of feed for.
For the overall production profile.
I did a good good question.
I mean, there's definitely more to look at a there is a two things right. There is the like you're saying remember that we are now and is and the timing of.
Between to be three and a completing the east gave into West gave then you have some pillar as recovery as well.
And the rehab and so there is a lot of.
I would say our component you know to look at as we speak so.
Absolutely absolutely agree with you when it comes through a block gave you know you already have like so but is it. The you know like radiata crosses or margin dilution all across this was like more.
Spotty, what about the pillars recovery, what about the bland what about demand the true, but there is where I mean, there's a lot to lockout too early stage. If we were in a position to ER to give more details you know we would like we're not our there's a few things that are clearly you know didn't work out.
As planned in Q1 with regards to where the copper grade done now will be our will be a and we are as we speak you know looking at more.
I wouldn't be and better position later on you know into Q2, two to be more specific about that and Don went on for the moment I wouldn't say there is maybe four or five parameters. We can look that and are we going to run their own we're going to go to the details of each of them.
And that hopefully correct the situation.
Okay. So I guess the bottom line or the takeaway is that you're optimistic that you have enough.
Parameters and levers to pull that you can.
Address at least partially this.
Extra dollar yet I think I think it's a fair comment at this stage.
Okay, great. Thank you.
Thank you.
Your next question comes from the line of Mike Parkin.
Please state your company and your line is open.
Hi, Thanks for taking my question guys, It's Mike Parkin from National Bank or just following up on that can you give us an idea of what the new apps in Q1 budget grade was.
A very very pretty much aligned with the full year, a you know when you're looking at our technical report to you know as I referenced.
You are like in the very low Eightys, a 0.8% and we did.
Just looking out the details here processing rate yeah. So.
Uh huh.
Where.
Someone you know like maybe 10% below than what we were hoping.
Okay.
And there are you seeing that continue into the month of April or.
Was it well I mean, I think it yeah I think I think it's fair to say you know that Weve turned the corner you know in 24 hours, but but like I told a previous or questions I mean, where we're very much on looking at it.
You know if you recall last year, we did had a couple quarters you have nowhere.
Copper was actually lower but you know goal was higher silver equivalent basis, you know we run the business on equipment in days away, but this quarter and the Q1 of our goal was a was pretty much you know along with clients, but unfortunately, we saw like copper been below so we need to look at it and early stage again.
Five have more information I wouldnt be providing it but uh huh.
But yes, we were about 10% below plan in the Q1.
And can you just remind me again on the.
There's a period, there where you get into supergene copper material that.
Where you're at right now we arent necessarily union, we are into supergene right. Now we are producing a concentrated you know like are they a copper oh the separated from the.
So far concentrate so it's already happening right now and we've been very good maintained a recovery on the adjusted sales and strategy and so forth. So it's already working Atlanta.
All right and one last question.
What's the grade of the medium grade stockpile at rainy River.
The major Oems are stockpile is you another mainly on what we call mediums stockpile is usually between <unk> 0.5, and 0.9. So our assumption is that the averages about and the midpoint of it we have some zone, sometimes that are higher or some zone or maybe closer to the point in five.
But technically and all your could technically you were about like the 0.75.
Average.
For any alright, that's again.
Thank you for me thanks, guys.
Your next question comes from the line of Trevor Turnbull Scotiabank. Your line is now open.
Yeah. Thanks renewal following up on maybe a I think it just on this question about or someone's question on Capex.
That's very Turnbull your line is now open.
Yeah.
Can you hear me guys.
Okay, hoping we're not having a nice issue here, but Uh huh.
Can hear that one.
Do you likely to move on to the next question.
Yes. Please.
Your next question comes from the line of Anita Soni. She Ibcs CNBC. Thank your line is now open.
Well, let's try this again, so I heard Trevor and people could hear me on that calling so let's see if you can hear me then either Sony from JBC LPMI.
Hi, good to hear a little bit of background here, but again just like you. So while just in case I meet those listening to us. So on why don't you just please reach out directly to end after called and I will take your question on them one on one.
Sorry about that just can hear you.
All right. Thanks.
<unk>.
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Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.