Q3 2024 New Gold Inc Earnings Call
Good morning, my name is Sylvie and I will be your conference operator today. Welcome to the new goals, third quarter 2024 earnings conference call. Please note that all lines have been placed on mute to prevent any background noise. Please be advised that today's conference call in webcast is being recorded.
After the speaker's remarks, there will be a question and answer session.
If you would like to ask a question during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, please press star then number two. I would now like to hand the conference over to Ankit Shah, Executive Vice President of Strategy and Business Development. Thank you.
Ankit Shah: Thank you, Sylvie and good morning everyone. We appreciate you joining us today for New Goals 3rd Quarter 2021, our name is Conference Call and we're guest.
Ankit Shah: [inaudible]
Ankit Shah: In addition, we also have a Luke Buchanan, Vice President Technical Services, and John François Ravano, Vice President Geology, available to the sister in the Q&A portion of the call. Should you wish to follow along the webcast, we sign in from our own page at newchool.com.
Speaker Change: Before the team begins the presentation, I'd like to direct your attention to our cautionary language related to four lifting statements, found on like two of the presentation.
Speaker Change: Days commentary includes four looking statements relating to Newgoal. In this respect, we refer you to our detailed caution you know regarding four looking statements in the presentation.
Speaker Change: We are cautioned that actual results in future events could differ materially from those expressed for implied importance.
Speaker Change: Slide 2 provides additional information and should be reviewed. We also refer you to the section entitled Risk Factors in NUGLE's latest AIF, MDNA, and other filings available on CDAR Plus, which set out certain material factors that could cause actual results to differ.
Speaker Change: In addition, at the conclusion of the presentation, there are a number of endnotes that provide important information and should be reviewed in conjunction with the material presented. I will now turn the call over to Pat for some opening remarks.
Pat: Thank you, thank you. And good morning, everyone.
Speaker Change: We have a lot of substance in the verdict order.
Speaker Change: We also have some difficult moments.
Speaker Change: I take this opportunity to commend the team, not just for their accomplishment, but also for all their response and support each other.
Speaker Change: As a result, the company is well positioned, and we look forward to upcoming.
Speaker Change: Thank you.
Speaker Change: Our operations delivered the strongest production quarter of the year to date, with a 40% increase in production over the second quarter and a 13% decrease in all infestation costs.
Speaker Change: Rennie River delivered an impressive 29% reduction in all incident costs compared to the second quarter.
Speaker Change: A strong cost performance allowed us to leverage the higher metal price environment, and as a result, we had an excellent quarter financially, with multiple records achieved, highlighted by a record quarterly free cash flow generation of $57 million.
Speaker Change: Yesterday evening, we also provided an update on our key growth projects.
Speaker Change: I am pleased to report that New Gold Season has achieved commercial production and the Jeritary Cross-Rain Conveyor System has been commissioned well ahead of schedule.
Speaker Change: The importance of these milestones cannot be overstated, and without a direct
Speaker Change: and positive impact on production, cost and cash flow.
Speaker Change: Although the ore tonnage from Underground Main will stay relatively low until we come in stopping next year.
Speaker Change: The achievement marked a key milestone in our plan to prepare the underground mine and ramp up production of fire-grade underground ore.
Speaker Change: We also realized positive exploration results at both operations during the third quarter.
Speaker Change: At New Aston, the high-grade eastern sector of the mine continues to grow, with promising results at Key Zone and in Walsall.
Speaker Change: in Adreni River in our first major excursion program since 2017.
Speaker Change: We are already seeing positive results, standing open-pit in underground mineralization.
Speaker Change: With that, I will turn the call over to Keith.
Keith: Thank you, Prada.
Keith: I'm on slide 6 which has our operating highlights.
Keith: As Pat mentioned, Q3 delivered the highest production and lowest cost of the year. Production totaled approximately 78,400 gold ounces and 12.6 million pounds of copper.
Keith: This represents a 14% increase in gold production compared to the second quarter, driven by higher feed grades at Rainy Rivers.
Keith: Consolidated all-in sustaining costs for the quarter were $1,195 per gold ounce in line with our plan. This is a decrease of 13% over the second quarter.
Keith: This is highlighted by strong cost performance at both operations, with Rainy River continuing to decrease its all-in-sustaining cost and New Aston achieving an all-in-sustaining cost of negative $408 per ounce after considering the copper credits.
Keith: We expect the increase in production and decrease in cost trends to continue into the fourth quarter, mostly as a result of higher production at Rainier River and lower costs at New Afton.
Keith: Our total capital expenditures for the quarter were approximately $63 million with $20 million spent on sustaining capital and $43 million on growth capital.
Speaker Change: [inaudible] I'm not sure. I'm not sure.
Speaker Change: At Rainy River, sustaining capital is primarily related to capitalized waste, capital components, and tailings management and construction. Sustaining capital is trending lower than guidance, as a lower proportion of waste tons are capitalized and a higher proportion remains in operating costs, but with no net impact on all sustaining costs.
Speaker Change: Growth capital is related to underground development as the underground main zone continues to advance.
Speaker Change: At New Afton, sustaining capital is primarily related to tailings management and stabilization activities.
Speaker Change: Growth capital is primarily related to the sea zone underground development and is tracking to the low end of the guidance range due to efficient capital management and early commissioning of the cushion convey system.
Speaker Change: Turning to our financial results on slide 7.
Speaker Change: Third quarter revenue was $252 million, which is a quarterly record.
Speaker Change: Q3 revenue was higher than prior year quarter, primarily due to higher metal prices and higher gold sales, partially offset by lower copper production.
Speaker Change: Cash generated from operations before working capital adjustments was $120 million, $0.15 per share for the quarter, higher than the prior year period, primarily due to higher revenues.
Speaker Change: You've all generated record free cash flow of $57 million due to higher revenue and lower capital expenditures.
Speaker Change: The company recorded net earnings of approximately $38.05 million per share during Q3 and increased due to higher revenues.
Speaker Change: Earnings were also impacted by lower depreciation than originally planned due to the lower accounting asset base resulting from the deemed disposition of assets at New Afton when accounting for the OTPP buyback in in May of this year.
Speaker Change: After adjusting for certain other charges, adjusted net earnings was $64 million or $0.08 per share in Q3, a significant increase compared to adjusted net earnings of $23 million in the third quarter of 2023.
Speaker Change: Are Q3 adjusted earnings include adjustments related to other gains and losses?
Speaker Change: At the end of Q3, we had cash on hand of $133 million and a liquidity position of $459 million.
Speaker Change: This is after the company made a payment of $43 million to the Ontario Teachers' Pension Plan as part of the minimum cash guarantee under the terms of the original 2020 agreement and also repaid $50 million of the $100 million drawn in its credit facility to fund the payment under the amending agreement with Ontario Teachers, which was entered into in May.
Speaker Change: Subsequent to the quarter end, we paid an additional $20 million on the credit facility, leaving a balance of $30 million outstanding, which we expect to pay off by the end of the year.
Speaker Change: To sum up, we remain in a very healthy financial position.
Speaker Change: Now, I'll turn the call over to Yohann to walk through our operating items. Yohann?
Yohann: Thank you.
Yohann: Although it was Operation Strongest Quarter so far this year, we were slightly behind plan at the end of September, and we're expecting full-year gold production to be about 15,000 ounces below the original guidance range.
Yohann: There's two main reasons for that. First, as discussed on the second quarter call, operations were impacted by a voluntary suspension following a fatality in July.
Yohann: and the progressive return to full production. Both front-end loaders were temporarily removed from the fleet. Additional safety devices were installed on one of the units and the same unit returned to production only a few days ago. The second loading unit is still waiting for parts and not necessary for production on the short-term.
Speaker Change: Thank you.
Speaker Change: Second.
Speaker Change: We have left migrate or on two benches in the open pit
Speaker Change: Some rich pockets of high-grade ore on the 160 and 150 benches were lower tonnage than originally expected. Although the impacted volume was relatively small, the reduction in high-grade mill feed impacted gold production.
Speaker Change: Going forward, the team has reviewed the occurrence of high-grade blocks, considering additional grade control data and historical reconsideration, leading to an adjustment of a small percentage of all blocks to mitigate risk.
Speaker Change: I am confident in the open-pit mine plan for the last quarter of this year, and our 2025 and 2026 production outlook remains unchanged.
Speaker Change: Despite the lower gold production, the team has done an excellent job to control cost. The third quarter audience sustaining cost is about 29% forward in the previous quarter at $1,327 per ounce on a by-product basis.
Speaker Change: With the fourth quarter expected to be our lowest-cost quarter of the year, we are trending to the top end of the guidance range for the full year.
Speaker Change: Good morning to Slide 10.
Speaker Change: Rainy River also completes some significant project milestones in the underground mine during the third quarter.
Speaker Change: As you know, the underground mine is divided into two main sectors, in Kripid, which has been in production since 2022, and the much larger underground main sector, which we're currently developing.
Speaker Change: In Q3, raise borrowing on the main fresh air raise and the second portal located in the east wall of the pit were completed.
Speaker Change: The second portal will provide a second means of egress and improved ventilation for underground mining and will also significantly reduce the underground haulage distances.
Speaker Change: The operation also achieved first-order development at Underground Main ahead of schedule.
Speaker Change: Although the ore tonnage is still quite small, it marks a significant milestone in our plan to prepare the underground main sector for stopping in the first half of next year, and ramp up to about 5,500 tons per day by 2027.
Speaker Change: Turning now to New Afton on slide 11.
Speaker Change: You have to deliver another strong operating quarter. B-3 continues to deliver to plan, with C-Zone ramping up well, leading to a 31% increase in tonne yield over the third quarter last year.
Speaker Change: are set by the plan Lower Gold and Copper Grade from B3.
Speaker Change: Omni-sustaining costs decrease significantly compared to the prior year period, driven by lower operating expenses, lower sustaining capital spent, and high by-product revenue.
Speaker Change: The first nine months at New Austin delivered according to plan and were trending favorably with the annual plan. We continue to transition from the B-3 cave to C-zone and expect to see a continued ramp-up in C-zone mining rates throughout the year.
Speaker Change: We expect mill throughput to continue increasing in the fourth quarter, partially offset by lower feed grade due to the cave draw sequence, leading to a fairly consistent quarterly gold and copper production profile as planned.
Speaker Change: I've been playing with NUATN on flight 12. Seasonal commercial production and commissioning of the Jarotery Crusher and Convert system is completed two months ahead of schedule and on budget.
Speaker Change: With the Methadone Link System now fully operational,
Speaker Change: Truck College is eliminated from C-Zone, removing production constraints and resulting in significant cost reduction going forward.
Speaker Change: We also completed a total of 18 drawbells as of mid-October, achieving hydraulic radius and commercial production in season.
Speaker Change: These two milestones are transformative for New Afton, increasing production and decreasing cost to generate meaningful cash flow.
Speaker Change: I would like to, I would like...
Speaker Change: to provide an update on some of the technical study that we're working on to unlock additional value at Trinity River and New Afton following the positive expiration result from both operations.
Speaker Change: At Rainy River, after adding Phase 3 to Mineral Reserve at the end of last year, we extended the open-pit myelite by approximately one year and defer reclaiming of the low-grade stockpile.
Speaker Change: Based on the near-surface exploration results this year, and considering a high gold price, we're now looking at leveraging the existing mill capacity and open-pit mining fleet
Speaker Change: to further extend the Open Pit My Life while keeping capital investment to a minimum.
Speaker Change: While still in the early stages, we have identified potential opportunities to add an additional pushback to the main pit and potentially some smaller satellite pits.
Speaker Change: At New Afton, the company continued to optimize C-Zone with the potential to increase mineral reserves at no additional capital expenditure.
Speaker Change: The team is also advancing the east extension technical study with the objective of adding a new high-grade zone to the east of Cézanne.
Speaker Change: This extension has the potential to improve the new Afton copper and gold production profile and also to unlock other high-grade zones in the eastern section of the mine, including K-Zone and Hanging Wall Zone.
Speaker Change: In terms of news flow, the first quarter of 2025 will be active for the company.
Speaker Change: The company will report year-end 2024 mineral reserves and mineral resources in February 2025.
Speaker Change: Our three-year operational outlook will also be provided in February, supported by an investor and analyst technical session.
Speaker Change: With that, I will hand over the presentation to Pat for closing remarks. Thank you, Wim.
Pat: Slide 15 summarizes our 2024 House Vote.
Pat: For the full year, we expect consumption to be slightly below the limit.
Pat: that we present at the start of this year.
Pat: While U.S. tin coal production is expected to be at the top of the guidance range, timber is expected to be below the guidance range due to the reasons that we outlined earlier.
Pat: Also, though production is slightly lower than planned, all other consolidated operational metrics are in line with or better than target.
Pat: Copper production is on track to be at the midpoint of the guidance range and consolidated oil and sustenance costs are trending to the lower end of the guidance range.
Pat: This is a testament.
Pat: to the Team Operational Discipline in Capital Management.
Pat: Sustaining capital is striking below the low end of the guidance range and the growth capital is striking to the low end of the guidance range, partly the result of early commissioning of the mineral handling system at New Afton.
Pat: Before ending over for questions, this slide summarizes some of New Goal's key accomplishments.
Pat: and Lankan to the year and we have already successfully delivered the majority of our state and strategy goals.
Pat: The highlight for me has been the cost performance of our operations as we have highlighted throughout this presentation.
Pat: by achieving our cost targets.
Pat: Even with the slightly lower gold production, the operations are realizing increasing margins with the higher nickel prices.
Pat: The increasing margins together with production growth and declining capital spending over the guidance period.
Speaker Change: Joyous, Oil-Free Jams.
Speaker Change: As previously reported, we achieved our free cash flow inflection point in Q2 slightly ahead of schedule and we have just achieved a record quality free cash flow for the company.
Speaker Change: Another key accomplishment is the successful completion of key projects milestones.
Speaker Change: From U.S. Fence-Zone to many rivers under our main project containing dam waste.
Speaker Change: The team consistently delivers project on schedule and on budget.
Speaker Change: Project execution is now one of Nubul's biggest strengths.
Speaker Change: With the operation running well and project advancing as planned, the company has increased its production program this year.
Speaker Change: In Q3, we report positive results of both operations, which we expect to be reflected in our year-end reserves and resources updates.
Speaker Change: And finally...
Speaker Change: We reduced Ontario teachers' free cash flow interest at New Athens from 46% to less than 20% in Q2, generating meaningful shareholding value and increasing our exposure to a high-quality operation to a significant explosion of site.
Speaker Change: This concludes our presentation, so I will now turn it back to the operator for the Q&A portion of the call.
Speaker Change: Thank you, sir. Ladies and gentlemen, as stated earlier, if you would like to ask a question, please press star followed by 1 on your touch-tone phone. You will then hear a prompt that your hand has been raised. And if you should wish to decline from the polling process, please press star followed by 2. And also note that if you're using a speakerphone, you will need to lift the handset first before pressing any keys.
Speaker Change: Please go ahead and press star 1 now if you have any questions.
Speaker Change: And your first question will be from Mike Parkin at National Bank. Please go ahead.
Mike Parkin: Thanks guys for taking my questions. If I'm looking at slide 13, it's an aerial view of your open pit.
Mike Parkin: Just to be clear, you had some issues in the past with grade reconciliation. If I remember correctly, that was the North Lobe.
Mike Parkin: But is that not completely done and behind you? And if I'm looking at it in the right orientation, that is the right side of the picture where you're actually back-filling that pit. So this ...
Mike Parkin: what seems to be a temporary issue is not in that problematic area of the past. That's done and behind you completely. Am I correct on that?
Speaker Change: I might suggest I can answer your question.
Speaker Change: No, this is not in the North Joe. It's where we're currently mining. So, as you know, I started about two years ago in gold. And during that period, we've been fixing the Suicune Sog well.
Speaker Change: But like we've seen in mind on a monthly basis, we see some positive and negative variants, but overall the answer is balance.
Speaker Change: And like Yohann mentioned earlier, on two benches we have rich pockets of ivory and ore that were lowered, punished, and expected.
Speaker Change: Going forward, there's only a few of the Wadai Great Bluffs remaining in Phase IV in our reserves.
Speaker Change: So we've applied the capping on those remaining blocks to improve mine timing, and we don't believe it will have an impact on our 2025 and 2026 production outlook.
Speaker Change: Okay, that's great.
Speaker Change: And then that new app, can you just give us a bit more color, like you've got the underground crusher online, the conveyor.
Speaker Change: Yeah, for like, say, the month of October, because that was kind of, from what I understood from the site tour last year, that was kind of the key deliverable for unlocking the tonnage, which is up quite a bit.
Speaker Change: quarter over quarter, but we should, you know, how soon do you expect to be able to bring that mill up to like full capacity now that you're really kind of unlocking the potential T-zone with both the conveyor system and crusher, but I guess also the hydraulic radius being achieved.
Speaker Change: do you expect that to be several quarters or could we actually see that achieved relatively early into 2025?
Speaker Change: So, thank you, Mark, Patrick speaking. So, the first part of it is, as Yohann explained, we will accelerate the drop V3, so I think it's one thing, and the fact that we were able to start the conveyor and crushing system in advance, it's the only thing, all the trucking that were coming up the ramp.
Speaker Change: to discharge the new Alzheimer's cause of V3. So it's a huge cost saving for us. And also, with these equipment, we're interacting with development activities and construction activities, so it will improve the...
Speaker Change: Thank you.
Speaker Change: The fact is that the blockade is a blockade, so the pace of the blockade is something that we should not... If you accelerate, then you have short-term gain for a long-term gain. So we have a good sequence that we present in the outlook.
Speaker Change: So if you look at the depletion curve of B-3 and the progressive curve of C-zone in the outlook, so what that means is we'll accelerate B-3 and it means that C-zone will show up more in the second part of the year, but basically we respect the ramp-up and this progressive ramp-up will go to 14,500 tons per day at the end of December 2025.
Speaker Change: Okay, and is there any major shutdowns that we should be thinking about for either Q4 or Q1 of next year?
Speaker Change: No
Speaker Change: Do you talk about me often, or you don't? Either one.
Speaker Change: No, nothing that is exceptional. So we have regular shutdown at both sites, but to do the amendments, we are planning our mining sequence and our pollution profile and nothing exceptional going forward. Great.
Speaker Change: Thanks very much. That's it for me.
Speaker Change: Thank you. Next question will be from Eric Windmill at Scotiabank. Please go ahead.
Eric Windmill: Good morning, Patrick and team. Thanks for taking my question. Nice to see the results out this quarter.
Eric Windmill: Maybe just quickly on the guidance for the balance of this year, obviously production's down a bit, it's rainy, but costs also coming down as well. Any additional comments there in terms of how you're able to get the costs down here for the balance of the year?
Eric Windmill: Yeah, it's Keith. You know, I'd say, going side by side, at Rainy River, the team has done a great job of focusing on cost control and optimization, which has added the impact of reducing gross costs and unit costs as well.
Eric Windmill: and you know the open-pit drilling and blasting that they've made improvements there and you know reducing haulage distances as well.
Eric Windmill: In the mill, you know, they've been able to optimize and lower consumable consumption. And then on the maintenance side, you know, optimize again and, you know, look at our preventative maintenance programs and optimize and reduce costs there.
Eric Windmill: On the capital side, then, you know, we're performing the tailings down ourselves, and so we're at the raise this year, and we're seeing savings there. And also then on the overall...
Eric Windmill: The capital stripping is down. There's no net impact on ASIC. So overall, kind of a lower gross cost than Rainy River.
Speaker Change: And you asked him as well then, you know, you've seen the decrease in mining costs every quarter as the sea zone tonnage continues to ramp up. So that's, you know, having a really positive impact on costs as well.
Speaker Change: Okay, great. Thanks for that. I really appreciate it. Maybe just one more on New Afton if I could. So obviously good positive progress here on the tailings projects. Anything additional milestones you're looking at for the rest of this year or sort of stable over the winter months? Is that typically how it operates?
Speaker Change: All here.
Speaker Change: We are overperforming compared to the original plan, so we are slightly in advance. I think we had a pretty dry year this year, and as you can see, it was pretty warm too, so the evaporator overperformed compared to what we planned.
Speaker Change: They maximized the utilization period for the Evaporator 2. The team is in control. Nothing to report here.
Speaker Change: Thank you. Great to hear. I know we're watching that. Alright, thanks for taking my questions. I'll hop back in the queue. Cheers.
Speaker Change: Thank you. Next question will be from Jeremy Hoy at Kennecourt Genuity. Please go ahead.
Jeremy Hoy: Hi, everyone. Thanks for taking my questions. A lot of them have been answered already, but
Jeremy Hoy: Got a few more to touch on.
Jeremy Hoy: You mentioned that there'd be an immediately positive impact on costs from the early commercial production at New Afton. Can you provide any more specifics on how you expect this to impact the rest of this year and early next?
Jeremy Hoy: Yeah, it's Keith again. As Yohann mentioned, you know, the commissioning eliminates the haulage from the seasonal level and increases our tonne throughput.
Jeremy Hoy: Throughout 2024, you know, we've continued to see a decrease in the mining cost per ton as sea zone tonnage increases and we realize the benefits from the capital investments that we've made. That trend will continue into Q4 and into 2025.
Jeremy Hoy: I'd say once, you know, fully ramped up at T-Zone, we'll have a similar cost profile to what we had in, you know, the early lift one from 2012 to 2020. It's all trending very well.
Speaker Change: Got it, understood. And in terms of the ramp-up, the timing, like we're still talking about 14,500 tons per day in 2025. When are we expected to see that in 2025?
Speaker Change: If I'm looking at the person's profile, isn't it 24?
Speaker Change: So we have a time range for that, you know, when we develop a block cave, actually, we have 18 drawbells. At the end, we'll have close to 90 drawbells. So anyway, our objective is to draw as equal as possible. So we are performing extremely well on the development. We are doing also extremely well on construction, actually.
Speaker Change: So, and...
Speaker Change: If we are, when we'll get close to that, you know what, just to remind you, 14,500 is the average.
Speaker Change: done process repaying
Speaker Change: So, but the processing plant is having 16,000 tons of capacity, so the 14,500 is including the shutdown.
Speaker Change: Actually, it will happen most in the Q4 of 2035.
Speaker Change: Okay, that's helpful. Thank you very much. The last one for me is on the automation system.
Speaker Change: You mentioned that that would be online in H1 2025. Are you providing more specifics on how this will improve mining costs?
Speaker Change: I'm going to start and Yohann will cover it, but you know what the main advantage is, you know, when you go down, you have to use a vehicle just to transport the employee, it's mostly half an hour to go down, it's probably 35-40 minutes to go up.
Speaker Change: is the fact that we will not operate between shifts.
Speaker Change: And it will be a steady operation. So, basically, what is important is that it's safe and people are on the surface.
Speaker Change: So it's, you know, I'm really impressed, honestly, and what they presented to me at the beginning and what they achieved today, it's really impressive.
Speaker Change: And it's difficult for us to factorize that in the cost, but we have room to improve. But basically, it will mainly provide a steady operation on the ground in the 24-hour business moving forward.
Speaker Change: Okay, thanks. I really appreciate the color. I'll step back in the queue.
Speaker Change: Thank you. Next question is from Michael Serpico at RBC Capital Markets. Please go ahead.
Michael Serpico: Thanks very much. Maybe first on Rainy River, could you talk a bit more about what the potential there is for a pushback or the other satellite pits that you mentioned? Would that be purely gold price driven at this point or is it dependent on further drilling or other considerations and maybe can you quantify the potential opportunity there even at a high level?
Luke Buchanan: Hi, it's Luke here.
Luke Buchanan: So like Yohann mentioned, there's a few different opportunities, so one of them is another pushback to the main bit, so...
Speaker Change: That one we already have the measured and indicated resources for, so we don't need any additional building for that project. It'll just be dependent on the core price, so we're currently evaluating that at the moment. He's going to provide an update in the first quarter. For some of the other satellite goods...
Speaker Change: around the main pitch, and I'll continue to introduce the bars equally in those areas.
Speaker Change: And I thank you all.
Speaker Change: Sorry, so just so I heard you right, should we be expecting an update on those opportunities with the updated technical report or is that longer term?
Speaker Change: Yeah, they'll be included in the technical reports, either as resources or possibly as reserves. We're still evaluating that.
Speaker Change: Okay and then and then maybe just one one follow-up would
Speaker Change: If you were to start refocusing on open pit operations at Rainey, would that have anything to do, or would it impact the plans for underground development, or would you think of doing both in parallel?
Speaker Change: We'd continue to do both in parallel. The main benefit would be to defer the reclaim of the low-grade stockpile and to keep the mill full for longer.
Speaker Change: Friday.
Speaker Change: Bye.
Speaker Change: The benefit for us would be to provide higher quality answers to your feedback.
Speaker Change: Right, right. Offsetting the lower grades. Right. No, it makes sense.
Speaker Change: You know, maybe a similar conversation on capital allocation. Obviously, gold driving that opportunity, gold up about $400,000 since you reconsolidated part of New Afton from teachers.
Speaker Change: you've now declared commercial production. How are you thinking about the remaining 20% stake there and is a full reconsolidation something that we should be thinking about that you're thinking about when it comes to capital allocation?
Speaker Change: It's part of the possibility that we have. So we always...
Speaker Change: We're always looking for this type of possibility, so the first trench that we buffed was really strategically important for us, and I think it created value for our shareholders.
Speaker Change: We're still keeping our mind open, and it's one of the possibilities that we're currently looking at.
Speaker Change: So would it be fair to say, if I can put words in your mouth maybe, that you have significant opportunities for organic growth both at Rainey and potentially at New Afton that maybe keep you looking internal rather than potentially looking outside the company for growth? Is that a fair assessment?
Speaker Change: I don't like to bust myself in this type of question, Mike, as you know, but you know as we're keeping all our options open, so I strongly believe that a good way to return value to shareholders is through organic growth.
Speaker Change: when the capital is reasonable, and we are really careful about that, and I think we have a nice possibility of our two assets.
Speaker Change: And we...
Speaker Change: We respect our people, and I think that if we can increase the amount of life that they can portion themselves for the future, then we really appreciate that.
Speaker Change: For the others options, I can tell you that all of my peers, we are vigilant, we are keeping our eyes open.
Speaker Change: And as we did recently in May, we want to grow, but we don't want to grow to be big. We want to grow to create value. If we're not creating value, we're not growing. We don't want to trade a buck for two or four quarters.
Speaker Change: And we are what we are vigilant and we have capacity to
Speaker Change: to address different challenges. So we have a team today that has been to mine open pit and underground, and we have a lot of skills to mine different types of ore body underground, and we showed experience also in the Americas. So we keep our eyes and all our options open.
Speaker Change: Great. Thank you very much for the answers.
Speaker Change: Thank you. Next question will be from Anita Soni at CIBC. Please go ahead.
Anita Soni: Hi Patrick, Yohann and team. I just wanted to ask a little bit more about, firstly at New Afton, could you just let us know how much the tonnage was this quarter from the C Zone?
Anita Soni: and many more. Thank you. Thank you.
Speaker Change: and Dhanush from Tuzan, so in the talk of Dhanush and what Tuzan was representing.
Speaker Change: Most of the orders come in from B3, actually. And we have, I would say, an average of about, I would say, 1,000 contracts coming from CISAN to procure their products.
Speaker Change: So you said a thousand tons per day from the sea zone?
Speaker Change: Yeah, it's about I mean we just extract enough to remove the swelling factor I mean, that's all but what we're what you're going to do in QFAW with on that topic is we're gonna we're gonna more prioritize the construction of the the drop L and we're gonna last all at once
Speaker Change: and the other draw points to the project to be more efficient in construction and save some costs. But the goal is to have at the end about 30 core bells fully developed to increase the footprint of the case.
Speaker Change: Okay, second question around Rainy River as it pertains to next year in 2026. You said you're confident that it won't impact the mine plan. Can you just talk about the, I guess, the evaluation that you did on the 2025 and 2026?
Speaker Change: a great profile to come to that conclusion.
Speaker Change: Yeah, for sure. I mean, so your question is about maybe to reiterate our outlook 2025 and 2026. Is that right, Anita? That's what you're looking for? Yes, I'm trying to understand why... Okay.
Speaker Change: Go ahead. Very good. So what we did, as you know, we're in the process of preparing our budget in London and we basically, we change, we look at the, I would say, the Saturday River.
Speaker Change: We looked at the blocks.
Speaker Change: before. We have really good expertise on those. We apply some capping as well on those blocks, but again, there's not any of those blocks that are really consistent going forward.
Speaker Change: We re-sequenced everything and basically we came up pretty much as I would say the same on plan that we have that we presented at the end the last year outlook.
Speaker Change: Yeah, so I guess that explains the fourth quarter impact, but I was just trying to understand how you basically came to the conclusion that there would be no impact in 2025 and 2026.
Speaker Change: are there no higher grade overlap or did you apply capping?
Speaker Change: We did apply all the factor on the remaining of the block model, the factor that Jeff was talking about here. And basically we ran the mine plan and we came up pretty much at the same production.
Speaker Change: Okay, so maybe higher times, lower grade, or is that, or is it completely different? No, it's, there's, I mean, the capping that's been put is really, I would say, impacting on this year, but no, no much impact in the remaining years because there's no much high grade blocks.
Speaker Change: And then just in terms of the sustaining capital guide that you talked about being about $20 million under some from operational efficiencies and tailings dam, I guess, wins there. But the other aspect you said was a little bit of timing of spending. So how much do you think would be pushed into 2025?
Speaker Change: for the Sustaining Capital.
Speaker Change: Not much, so at Rainy River, the majority of the reduction in sustaining capital is effectively reclassification to OPEX.
Speaker Change: So there's about $2 million in savings on the tailings facility, but the remainder is reclassed to OPEC. So that is all savings and not much deferrals at Rainy River. At New Hampton, in terms of capital, a little bit of deferrals on the growth side as we're down to the low end of the range.
Speaker Change: but some savings as well as a team of optimized and commissioned conveyor early.
Speaker Change: So, maybe $5 million pushed into next year? Yes.
Speaker Change: And then lastly on Rainey, as you brought it up with the capital moving to OPEX, is that a result of higher gold prices and waste becoming more? I'm just trying to understand why that happened.
Speaker Change: Thank you. Thank you.
Speaker Change: It's just the timing of the strip ratio, you know, from an accounting perspective we have a cutoff.
Speaker Change: on, you know, our ratio that we capitalize.
Speaker Change: And when we were doing our original guidance, just the way the strip ratio ended up over the year. But the main message is there's no change in the, you know, mine plan in terms of the total tons. You know, we've stripped in line with plan, it's just a little bit on the accounting reclassification.
Speaker Change: Okay, and then, so next year, as I recall, earlier this year you had said that the remaining
Speaker Change: Remaining life of mine plan the strip was at the start of the year 1.95 and you're doing I guess about three or more right now so is it fair to say in 2025 2026 you're going to be below one one-to-one?
Speaker Change: Yeah, I haven't got that number exactly in front of me, but you're right, it's, you know, 2024 was focused on stripping and exposing that ore for 2025 and 2026 in phase four. So, yes, we will see a significantly reduced strip ratio in 2025 and 2026.
Speaker Change: Alright, okay, that's it for my questions. Thank you for taking my questions there.
Speaker Change: Thank you. Next question will be from Lawson Winder at Bank of America Securities. Please go ahead.
Lawson Winder: Thanks very much, Operator. Good morning, New Gold team. I just wanted to, well, first of all, could I ask about the
Lawson Winder: The reserve update for year-end. What are you guys thinking in terms of gold and copper price assumption in estimating that reserve and resource update and particularly as it pertains to the exploration success you've had to date?
Luke Buchanan: Hi, it's Luke again here. So just a reminder that at the end of last year we used...
Luke Buchanan: that will cost $1,400 grams of gold and
Speaker Change: 3.25 per pound of copper. So with the significant increase in the consensus long-term prices this year, we are looking to modestly increase those metal price assumptions for year-end reserves, but we're still running some sensitivities and evaluating that at the moment, so I can't provide the exact numbers just yet.
Speaker Change: Did you, sorry, did you say modest increase?
Speaker Change #100: Yeah, it's still going to be significantly below the spot prices, but yeah, we are looking at an increase compared to what we did last year.
Speaker Change #101: Okay great and I mean I was also going to ask about your expiration budget for next year. Given that you're still in that process I'm not sure if you can give us a very specific number but perhaps you could give us a directional range. Do you anticipate that expiration budget to increase in 2025 versus 2024?
Speaker Change #102: We have two things here, because Jean-Francois is in the room, but Jean-Francois presented projects in 2024 at the beginning of the year.
Speaker Change #103: and so the way that we are working is this project were good projects, we were successful in most of them, some others in geology, in exploration, we were not.
Speaker Change #103: And depending on the progress we are achieving more so.
Speaker Change #103: So one more thank you, we're still working on this. We are also...
Speaker Change #103: We are turning, so the success of the current exploration work will be the next step.
Speaker Change #103: So, we will probably be next year, as much as we can, aggressive in this pilot because it was excellent for the future.
Speaker Change #103: I expect that next year also, perhaps.
Speaker Change #103: to define the key zones that I have to do some, to test other ideas.
Speaker Change #103: Actually, there are movements through the waters, so ... I don't want you to catch me on your phone here
Speaker Change #103: We're working on that as much as we can to try to get it to jump on the floor, the full supportive support to the executives of UPS.
Speaker Change #104: Okay. Thank you for that, Culler. And then if I could just ask one more question. As you think about potential expansions to Rainy River, are there areas
Speaker Change #105: to where you could expand that would be exclusive of the Royal Gold stream, or the areas you're looking at also subject to that stream. Thanks.
Speaker Change #106: Yeah, the stream is on the land package at Rainy River, so, you know, I think most of the...
Speaker Change #107: Pit pushbacks, etc. would be subject to this meeting, but the team are always looking at opportunities around to see, you know, if there's other...
Speaker Change #108: Yeah, they have the most intense response we've had subject to.
Speaker Change #109: Okay. Thanks very much, John. Appreciate it.
Speaker Change #110: Thank you. And at this time, Mr. Shah, we have no other questions registered. Please proceed.
Ankit Shah: Thank you, Sylvie. And to everyone who joined us today, thank you again. As always, should you have any additional questions, please do not hesitate to reach out to us by phone or email. Have a great day.
Speaker Change #111: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.