Q3 2020 New Gold Inc Earnings Call

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<unk>. Thank you for standing by and welcome to the New Gold third quarter 2020 earnings Conference call. At this time all the participant lines are in a listen only mode. After this because presentation. There will be a question and answer session to ask a question during the session you'll need to press star one on your telephone.

If you require any further assistance please press star zero.

I would now like to have a conference over to your speaker today, and they vice President of Investor Relations. Thank you. Please go ahead.

Thank you operator, and good morning, everyone. We appreciate you joining us today for new Gold's third quarter 2020 earnings conference call and webcast, we have with US today, Renaud Adams, CEO and Rob show say, CFO, who will present, our Q3 operational and financial results.

After the presentation has been completed we will open the line for beef 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.

Todays commentary includes forward looking statements relating to new gold in this respect we refer you to a detailed cautionary note regarding forward 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 the forward statements.

Slide two and slide pre three provide additional information and should be reviewed.

We also refer you to the section entitled Risk factors in New Gold's latest Mdna and other filings available on SEDAR, which set a certain material factors that could cause actual results to differ.

Please note that all amounts presented are in U.S. dollars.

In addition included in the presentation. There are a number of end notes that provide important information and should also be reviewed in conjunction with material presented I will now turn the call over to Renaud Adams.

Thank you Ron and thank you all for joining us today.

We're extremely pleased with a significant turnaround that took place a year ago in the first nine months of 2020 and in particular with our overall performance and significant milestones achieved in the third quarter.

With the restructured balance sheet insignificant cash and liquidity on hand underperforming assets. We are now well positioned to enter our next phase of value creation.

After our third quarter performance during the quarter, we continue to work on implementing enhanced safety protocols with regards to cope with 19, including the use of rapid testing devices in our operating outlook remains kogut free on a quarter.

We're very pleased with our overall operational performance for the quarter and are tracking well to meet our revised consolidated animal guidance with eight six that are expected to be below guidance.

The rainy River mine ramped up towards 2021 target capacity of approximately 150000 tonnes mine the data and the mail delivered a record 27000 tons per day, reaching the maximum monthly average throughput allowed under the existing mill permit.

With both the mine and the mill operating of the capacity and the unit cost tracking towards a 2001 planned level the mine will now.

We'll now shift to online additional reports annuities to further optimize the mine in new product to booties and unit cost performance that will drive strong free cash flow and 21 and beyond.

The improved performance at our new Afton mine and correctly all team has been mobilized to advance all key projects.

Including the B three of the C zone development to pick an amended tailings constructions. Despite realization of the historic tailings facility and the difficulties in the design work for the C zone tailings storage facility and.

Exploration drilling on the Cherry Creek target was recently lounge with the overall objective we're testing the potential of near mine resources that could extend the mine life of new Afton and utilize existing infrastructure.

During the quarter the company completed the divestment of the Blackwater project to automate has gone for total cash consideration of 190 million Canadians.

The initial cash payment of 440 million Canadian was received during the quarter with the remaining 50 million Canadian payments due on August 24 2021 on.

Under the terms of the agreement with Tar to Miss the company retain and 8% gold stream in the 6% Bacon and artemus.

Equities Bacon Artemus [noise].

They're at a current arguments plan the stream represents nearly up to 450000 ounces of gold to be delivered to new growth.

The company also transfer approximately 90 million in letters of credit related to the mine closure cost assertive bonds, increasing the funds available under the credit facility.

Lastly, the company expanded its secured credit facility with a syndicate of eight top tier financial institution. The facility will now mature on October nine 2023, and as a new maximum borrowing limit of 300 infected millenium.

The EBITDA quarter and the company has a healthy cash position of approximately $450 million and a strong liquidity position of approximately 720 million based on the amended credit facility.

In short quarter quarter for new gold and its stakeholders and more to come.

I will now turn it over to Rob shows this year fall for a quick financial review of our third quarter results Ross. Thanks for now and good morning, Joe.

Turning into slide five which provides our operating highlights for Q3 2020.

The details are consistent with our October.

Production press release during the quarter. The company produced a 115500 gold equivalent ounces. So amount consisted of 18.2 million pounds of copper.

63000 ounces of gold from rainy River, and 15955 gold ounces from new Afton totaling 78959 gold ounces, the lower gold production as compared to the prior quarter is primarily due to lower grades at both rainy River and new Afton the operating expense pressure.

We will announce was higher than the prior year quarter due to lower metal grades and lower sales volumes.

Consolidated all in sustaining costs for the quarter were 13 13 per equivalent ounce inline with the prior year quarter.

Turning to our financial results on slide six third quarter revenue from operations was 173.7 million driven by sales of approximately.

76000 gold ounces at an average realized price of 16 13 per.

Per ounce and sales of 17.5 million pounds of copper at 299 per pound.

Slide on capital structure rental touched on a couple of these items, but during the quarter on new gold completed the $400 million senior notes offering.

Yielding 7.5% due in 27, along along with cash on hand to fund the full redemption of the outstanding notes due in 2000 to 2022. The redemption was completed in Q3.

And then also during Q3 the company increased liquidity by $90 million by that transfer of.

Reclamation bonding to surety bonds.

Also in early Q4, the company extended its credit facility to 23.

Lead with some saving realize around the tailing construction.

The production expected to achieve the mid range of guidance and with the operating expenses and cash costs at or below guidance as a result of lower cash costs realized in Q3.

The sustaining capital expected at the low end of the guidance. We did eight second below guidance due to the lower cost and capital spend with no capital expense expenses. They are expected to be pushed to 2021.

Our stand alone on the Graham asset.

So more to come on this question, it's just a matter of time.

Could we start converting this year is that something we would do towards more like mid next year. It's a matter of time, we need to coupled this with some sort of a standalone milling scenario, but we are well positioned to definitely look at his sop side and.

China.

Originally thought we could advance more into Q4 of this year, but we are now potentially looking at up to $20 million gross capital to push to to anyone but it doesn't really change our.

Our expected sky.

Schedule with regards to the season.

We are we felt extremely strong with those target theres a lot a lot of work that's been.

Compile to date.

Gander with.

With the assessment of the geology, and the target is well positioned and the and the proper balance we see here a significant near surface intermodal gold and porphyry copper potential martik term, but now we have initiated a drilling and we're going to be up to three drill and again.

With that 10000 meter targets for this year.

In closing, we have now turned a corner and a definitive turned a corner and are now entering a new profitable path.

With an optimized balance sheet, coupled with significant remaining financial upsides from the divestment of the Blackwater asset.

Rainy River mine position for profitable operation and the C zone. The development supported by his self funded approach to company as dip and they can now well positioned for significant value creation as we look forward.

This concludes the presentation portion of this goal and I will now turn it over to the operator for acuity Q and a portion operator.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.

Please stand by while we compile the culinary roster.

Yes.

Again that is star one for question.

At this time there are no questions.

Ill hand, the call back to Andy for closing remarks.

Thank you operator, and thank you everyone for joining us today as always should you have any further questions feel free to reach out and we'd be happy to accommodate have a good day. Thank you.

Okay.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.