Q4 2022 New Gold Inc Earnings Call

Good morning, My name is Michelle and I will be your conference operator today.

Welcome to the Newbuild fourth quarter 2022 earnings conference call and webcast.

All lines have been placed on mute to prevent any background noise.

Please be advised that today's conference call and webcast is being recorded.

After the Speakers' remarks, there will be a question and answer session.

If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad.

If you would like to withdraw your question. Please press Star then the number two.

I would now like to hand, the conference over to Anne kits Shah Vice President of strategy and business development. Please go ahead.

Thank you Michelle and good morning, everyone. We appreciate you joining us today for new Gold's fourth quarter and year end 2022 earnings conference call and webcast on the line today, we have Patrick Rodin, President and CEO and Rob <unk> our CFO .

Should you wish to follow along with the webcast. Please sign in from our homepage at new gold Dot com.

Before the team begins the presentation I'd like to direct your attention to our cautionary language related to forward looking statements found on slides two and three of the presentation.

Today's commentary includes forward looking statements relating to new gold in 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 slides two and three provide additional information and should be reviewed we also refer you to the section entitled risk factors in new Gold's latest annual information form MD&A and other filings available on SEDAR, which set out certain material.

Factors that could cause actual results to differ.

In addition at the conclusion of the presentation. There are a number of our notes that provide important information and should be reviewed in conjunction with the material presented I will now turn the call over to Rob.

Thanks, Thank you and good morning all.

Starting with slide five which provides our operational highlights.

Production details on this slide are consistent with our January production press release during Q4. The company produced 97800 gold equivalent ounces amount consisted of $6 9 million pounds of copper and approximately $69 700 gold ounces from rainy River and 10900 Golar ounces from <unk>.

New afton totaling 8700 gold ounces below or equivalent gold production as compared to the prior year quarter is primarily due to lower tonnes mined and processed at new Afton, our operating expense per equivalent ounce was higher than the prior year quarter, primarily due to lower production and therefore lower sales volume.

Consolidated all in sustaining costs for the quarter were <unk> 68 per equivalent ounce higher than the prior year quarter, primarily due to lower copper sales volume and higher sustaining capital spend we continue to invest in sustaining capital at our operations during the fourth quarter with the impact of sustaining capital spend per ounce being $360.

<unk> per ounce in the quarter.

Turning to our financial results slide on slide six fourth quarter revenue was $162 8 million driven by sales of 78500 gold ounces at an average realized price of $17 51 per ounce and sales of $6 8 million pounds of copper at $3 74 per pound Q4.

<unk> was lower than the prior year quarter, primarily due to lower copper sales volumes and prices our operating cash flow before working capital adjustments was $44 3 million or <unk> <unk> per share for the quarter are lower than the prior year quarter the prior year quarter.

Prior year period included the sale of the Blackwater stream. The company recorded a net loss of $16 9 million or <unk> <unk> per share during Q4 compared to net income of 22 per share in Q4 of 2021 and again the that prior year period included the Blackwater stream game.

After adjusting for other certain charges net loss was $6 3 million or <unk> <unk> per share in Q4 compared to net earnings of <unk> <unk> per share in the fourth quarter of 2021 net loss increase was primarily due to lower revenues Q4. Adjusted earnings includes adjustments related to our gains and losses, which include.

On the unrealized adjustments on the rainy River stream mark to market and the free cash flow royalty at new Afton. Our MD&A has further details on these non-GAAP measures are total capex and leases for the quarter was $74 3 million to $37 2 million was spent on sustaining capital and $37 1 million on growth capital.

<unk> sustaining spend was primarily related to the plant tailings work both at both operating assets.

Capital stripping at rainy River and B three mine development at New Afton, our growth capital was focused on our product development, specifically C zone at new Afton and the underground Intrepid zone at rainy River.

Slide seven provides our capital structure with cash on hand at year end was $201 million and liquidity was $597 million. The decrease in cash in the prior year quarter is primarily due to continued capital investments at our operations.

With that I'll turn the call over to Pat.

Good morning, everyone.

Slide nine provides a summary of our 2023 operational home kit.

Gold equivalent production was expected to increase by over 30% to $2 65 to 425.

<unk>.

Similar to last year, we expected approach on distribution to be more heavily weighted to the second half of the year of approximately 55%.

All in sustaining costs are also expected to decrease by $150 per boxes.

215 to increasing to 60 number.

Costs are lower than last year due to the lower sustaining capital expenditures and audience what options.

We expect the cost to trend lower in the cigarette half of the year.

The production profile.

Sustaining capital is expected to be 140 to 117 million.

As mentioned sustaining capital is expected to decrease versus last year, primarily as we complete the chief development Officer.

Growth capital is expected to be 115 to 155 million. This is an increase over last year and it's Berlin uncertainty the season.

<unk> and underground development at rainy River.

But it does provide further details on rainy river in 2023 outlook.

All of the development production is expected to increase.

125 to 265000 ounces.

Primarily due to an increase in gold grade tons mine and process as well as the ramp up of the <unk> zone.

Similar to last year, we expect the approach on distribution to be more heavily weighted to the second half of the year of approximately 55%.

All in sustaining costs are also expected to decrease to 1400 75.

215 75.

Costs are lower than last year, primarily due to volume reductions.

So I think capital is expected to be 125 to $1 5 million primarily related to capital waste annual dealing beam rates dime raise maintenance program and other sustaining capital related to the interest in development.

Rob covered loans expected to be $20 million to $30 million.

And is probably related to the development of the Intrepid zone and commencing development of the main underground zone below the pits.

Slide 11 provides further details on new after in 2020 triage.

<unk> production is expected to increase by approximately 30% towards the 130 to 160000 ounces as between production achieved steady state mining rates and higher gold and copper grades.

Between mining rates are expected to average approximately 8000 tonnes per day as all drop ones already completed.

All in sustaining costs are also expected to decrease recruiting touring turning them on.

So recruiting on June 14th on good costs are lower than last year, primarily due to the lower sustaining capital spend will be three development completed all your production.

Sustaining capital is expected to be 15 to 35 million primarily related to the stabilization of activities and tuning management.

Growth capital is expected to be 130 to 150 million and is primarily oriented.

To the continued advancement of the seasonal until Dec.

We focus on.

We'll focus on mine development and faster through installation and segmentation.

Slide 12 provides an update on the company's going to look at consolidated reserves canceled due to gold mineral reserve decreased by approximately 285000 ounces compared to last year.

Revenue due to the annual mine depletion from Bolthouse resource them, whether it be with <unk> and ounces from sub level cave in.

<unk> knew afterwards.

Okay.

In closing I, just want to spend a few minutes to discuss Gulf and Cynthia Ingold Yoga and safety is our highest priority is our employees are the heart and soul of our business.

In 2022, our total recordable injury frequency rate or <unk> was zero 90, fives and significantly decreased by approximately 46% compared to 2021.

We have implemented the courage to care campaign across our business to encourage and foster a fifth go through for our <unk>.

Over 15000 employees across the company.

We are extremely proud of this achievement and in 2023, the health and safety of our employees will continue to drive our success.

This completes our presentation. So I will now turn it back to the operator for the Q&A portion of the call Michelle.

Thank you Sir.

Ladies and gentlemen, we will now begin the question and answer session for analysts.

If you would like to ask a question. Please press star followed by the number one on your telephone keypad.

The answer to your question has been answered and you would like to withdraw from the queue. Please press star followed by the number too.

And if you are using a speaker phone please lift your handset before pressing any keys.

Please standby, while we compile the Q&A roster.

Ladies and gentlemen, once again, if you would like to ask a question. Please press star one now.

Mr. Shaw there are no questions Oh My apologies, we do have a question. Your first question will come from Muhammed for died of CIBC. Please go ahead.

Hi, Patrick and Tim It's Mohammed <unk> from CIBC here on behalf of Bermuda, sorry jumping in from conference call to conference call here, but I just wanted to ask on the production profile for 2023, if we should expect any sort of seasonality as we go through the year and then second question was just on your cost profile for 2023.

I may have missed that part, but if you could talk about any inflationary impact that you've seen despite the.

That you're incorporating in your guidance given the year over year lower guidance and I'm sure. It's probably production. Thank you.

Production.

Our production profile.

Is slanted more towards the second half of the year.

But basically 55% coming in the second half, it's mainly related to the great deal of another tonnage, but the grade itself.

Yeah go ahead, I was going to say as far as inflation, we have incorporated.

Some inflationary impacts primarily related to diesel and grinding media, which are that are the biggest increases but.

As being a Canadian company, we have also hedged our.

CAD exposure, but also had some fuel so we're we're working hard to mitigate any.

Any inflationary pressures.

Sounds good thank you so much.

Okay.

There are no other questions at this time I will turn the conference back to <unk> for any closing remarks.

Thank you Michelle.

Again to everyone, who joined US today. Thanks again, if you have any follow up questions. Please reach.

To us by phone or email have a great day.

Ladies and gentlemen, this does conclude your conference call for this morning, we would like to thank everyone for participating and ask you to please disconnect your lines.

Yes.

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