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New Gold Produces 272,000 Ounces Gold in 2008
PR Newswire
Tuesday, March 17, 2009
New Gold Inc (TSX:NGD, NYSE Alternext: NGD) today issued fourth quarter and year end results for 2008 today, which is the company's first full year of production since the merger of Peak Gold and Metallica Resources with New Gold.
Highlights
- Gold production of 272,046 ounces in 2008(2)
- Total cash costs of $549 per ounce (net of by-product sales)(2)
in 2008
- Adjusted net earnings(3) of $19.2 million or $0.13 per share
- Cash flow from operations of $66.1 million in 2008(4)
- Year end cash and equivalents of $185.6 million
- Completed business combination with Peak Gold Ltd. ("Peak Gold") and
Metallica Resources Inc. ("Metallica") on June 30, 2008
- New Afton project construction schedule extended with start up
expected in the second half of 2012
- Successful ramp-up of Cerro San Pedro in its first full year of
operation
- Announced business combination with Western Goldfields Inc. on
March 4th, 2009
"Despite the unprecedented economic challenges which unfolded in 2008, New Gold made excellent progress on its strategic objectives while exceeding production targets by 9%," said Robert Gallagher, President and Chief Executive Officer. "New Gold made difficult decisions in a tough market environment to ensure that the Company was in a stronger position to execute our accretive growth strategy through operational excellence, continued development of our New Afton project, and further consolidation of junior gold producers. I'm thrilled about the next milestone in the exciting growth of this Company; the recent announcement of the business combination with Western Goldfields further delivers on our previously stated growth strategy."
Fourth Quarter and Annual Consolidated Financial Results
Consolidated revenue for the fourth quarter of 2008 was $59.0 million for a total of $218.1 million for the full year. Gold sales in the fourth quarter were 78,194 ounces at a realized gold price of $792 per ounce and for the full year totalled 237,589 ounces at a realized gold price of $863 per ounce, which excludes production from Cerro San Pedro prior to the completion of the business combination with Peak Gold and Metallica.
Reported net earnings for the fourth quarter were $41.1 million and the reported net loss for the full year 2008 was $102.7 million. Reported earnings for 2008 were increased by foreign exchange gains ($50.0 million net of tax) and were decreased by the Amapari write down ($156.9 million net of tax) as well as certain expenses related to the business combination with Peak Gold and Metallica ($15.0 million, net of tax).
Cash flow from mining operations in 2008 was $20.3 million in the fourth quarter and $45.8 million for the year. Cash flow from mining operations for the full year including results from Cerro San Pedro for the period prior to the close of the business combination with Peak Gold and Metallica was $66.1 million.
2008 Operational Review
Cerro San Pedro
Cerro San Pedro completed its first full year of production exceeding expectations in operations, health and safety, environmental management systems and practices. Cerro San Pedro achieved gold sales of 21,180 ounces at a realized gold price of $799 per ounce sold in the fourth quarter and 85,362 ounces at a realized gold price of $872 per ounce for the full year. Total cash cost, net of by-product sales was $522 per ounce for the fourth quarter and $432 per ounce for the full year. The increased cost in the fourth quarter is consistent with previous guidance as mining progressed through a lower grade, higher strip ratio phase. Also contributing were higher consumable costs, somewhat offset by depreciation of the Mexican Peso versus the US dollar. The fourth quarter operating loss at Cerro San Pedro was $18.2 million which includes an $18.0 million increase in operating expenses due to purchase price allocation adjustments related to the revaluation of heap leach inventory. For the full year earnings at Cerro San Pedro were $5.5 million.
Peak Mines
Peak Mines achieved gold sales of 28,815 ounces in the fourth quarter at a realized gold price of $788 per ounce sold and 102,928 ounces at a realized gold price of $877 per ounce for the full year. Record mill throughput of 768,727 tonnes in 2008 reflected New Gold's commitment to constant improvement at its operations and demonstrates the high level of competency of the Peak Mines' operating team. Total cash cost net of by-product sales was $624 per ounce for the quarter and $477 per ounce for the full year. Higher cash cost is solely due to decreasing copper price through the latter half of the year with re-pricing of concentrate in process. Direct operating costs for 2008, in Australian dollar terms were only 10% higher than those of 2007, with the cost per tonne milled unchanged year on year. Earnings from Peak Mines were $2.5 million in the fourth quarter and $28.6 million for the full year 2008.
Amapari Mine
Amapari achieved gold sales of 28,199 ounces in the fourth quarter at a realized gold price of $791 per ounce and 87,412 ounces at a realized gold price of $859 per ounce for the year. Total cash cost for the quarter was $568 per ounce and for the full year was $748 per ounce. Earnings from Amapari were $1.6 million in the fourth quarter and a loss of $177.1 million for the full year 2008, net of the $156.9 million impairment charge (net of tax).
The full impact of the improved operating performance was realized in the fourth quarter with record quarterly gold production. However, due to depletion of ore suitable for treatment at the existing facilities, Amapari was placed on temporary care and maintenance on January 2, 2009. New Gold is evaluating a recently completed Preliminary Economic Assessment on the economics of exploiting the underlying sulphide resources which would require installation of a conventional crush/grind/carbon-in-leach mill. Considering the large land package in a geologically interesting setting and the occurrence of several interesting targets, the Company is also investigating other strategic alternatives for the Amapari project.
Development Projects Update
New Afton
New Afton is an exciting project currently under construction in Western Canada, a region known as an attractive destination for development. At today's gold and copper prices, New Afton will be a significant cash flow generator, expecting to more than double the current cash flow from our two operating assets in 2013.
On November 12, 2008, the Company announced that due to New Gold's cash position coupled with the funding requirements of the fast track construction of the New Afton project and the uncertainty of today's capital markets, it was extending the development schedule of the project. Under the revised development plan, surface construction is being curtailed while the critical path development of the underground workings will continue at a reduced rate. Under the original fast track schedule, operations were to commence in late 2009 ramping up to achieve full production in the second quarter of 2011. With the revised plan, surface construction would resume at the end of 2010 with full production achieved in the second half of 2012. The delayed start up provides additional time to arrange the required capital with initial production more likely being achieved in robust metal markets.
The total project development spend excluding interest was $167.8 million up to December 31, 2008 (at an average CDN:USD exchange rate of 0.95). Under the revised development schedule the estimated remaining spend (excluding interest) to bring the project into production is $60 million in 2009 and $340 million between 2010 and 2012 (at an average CDN:USD exchange rate of 0.88).
El Morro
The El Morro copper-gold project entered the permitting stage in November 2008, with delivery of the project's Environmental Impact Statement to the Chilean Authorities. Permitting is expected to take from 12 to 18 months, after which development activities could proceed. Total capital cost of the project has been estimated at $2.5 billion. New Gold has an agreement with Xstrata whereby Xstrata will finance 70 percent of New Gold's 30 percent share of El Morro's project development costs. New Gold will repay the funds advanced by Xstrata through 80 percent of its share of cash flow from the project. With this funding agreement in place and the project entering the permitting stage, New Gold is well positioned to participate in this world class development project, in one of the most mining friendly jurisdictions.
SOURCE: http://news.prnewswire.com/ViewContent.aspx?ACCT=109&STORY=/www/story/03-17-2009/0004989726&EDATE=
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