- All dollar figures are in US dollars unless otherwise indicated)

TORONTO, Feb. 20, 2018 /CNW/ - New Gold Inc. ("New Gold" or the "Company") (TSX:NGD) (NYSE American:NGD) today announces its 2017 fourth quarter and full-year financial results and updates its year-end reserve and resource estimates. The Company previously announced its preliminary 2017 operational results and 2018 guidance on January 16, 2018.

As the Company expects the sale of Peak Mines to close in the first quarter of 2018, Peak Mines has been classified as a discontinued operation. The below operational results are disclosed on a total basis and thus include Peak Mines for 2017 (unless otherwise noted). References to results from continuing operations exclude Peak Mines.

2017 Full Year
Full-year gold production of 430,949 ounces (including Rainy River pre-commercial production) was at the high end of the guidance range of 380,000 to 430,000 ounces
Copper production of 104 million pounds met the guidance range of 100 to 110 million pounds
Operating expense of $646 per gold ounce and $1.34 per copper pound
All-in sustaining costs(1) of $727 per ounce, including total cash costs(2) of $403 per ounce, were below the Company's previously lowered guidance range of $760 to $800 per ounce
Rainy River achieved commercial production in mid-October, ahead of plan
Cash generated from operations of $342 million
Cash generated from operations before changes in non-cash operating working capital(3) of $299 million
Rainy River total carrying value reduced by $181 million
Net loss of $108 million, or $0.19 per share
Adjusted net earnings(4) of $49 million, or $0.09 per share
Year-end cash and cash equivalents of $216 million

2017 Fourth Quarter
Record quarterly gold production of 154,530 ounces and 28 million pounds of copper
Operating expense of $738 per gold ounce and $1.56 per copper pound
All-in sustaining costs of $771 per ounce, including total cash costs of $533 per ounce
Record quarterly cash generated from operations of $119 million
Cash generated from operations before changes in non-cash operating working capital of $93 million
Net loss of $196 million, or $0.34 per share
Adjusted net earnings of $33 million, or $0.06 per share

Mineral Reserves and Resources

2017 year-end mineral reserves of 14.8 million ounces of gold, 0.9 billion pounds of copper and 77 million ounces of silver (excludes Peak Mines)


"Together, our five mines delivered very solid operating results in 2017," stated Hannes Portmann, President and Chief Executive Officer. "With production at the high end of guidance and costs below guidance, New Gold generated the highest annual cash flow in our Company's history."

"Despite this record 2017 cash flow, our earnings were impacted by an impairment charge driven by the previously disclosed cost increases at Rainy River. Looking forward, our focus will be building upon our strong 2017 operational results and further optimizing the performance of our mines to deliver on our targeted per share growth in production, EBITDA and free cash flow," added Mr. Portmann.

2017 Financial Results
Three months ended December 31 Year ended December 31
(in millions of U.S. dollars, except per share amounts)
2017 2016 2017 2016

CONTINUING OPERATIONS (excludes Peak Mines)
Revenues $193.5 $140.7 $604.4 $522.8
Operating margin(6) 76.5 46.5 283.4 247.3
Loss from continuing operations (179.6) (23.3) (101.7) (8.6)
Loss from continuing operations per share (basic) (0.31) (0.05) (0.18) (0.02)
Adjusted earnings from continuing operations 6.2 1.5 21.3 19.4
Adjusted earnings per share from continuing operations 0.01 0.00 0.04 0.04
Cash generated from continuing operations 91.2 49.1 275.0 225.0

Cash generated from continuing operations before
changes in non-cash operating working capital 64.8 64.6 234.1 245.3

TOTAL OPERATIONS (includes Peak Mines)
Net loss (195.6) (22.3) (108.0) (7.0)
Net loss per share (basic) (0.34) (0.04) (0.19) (0.01)
Adjusted net earnings (loss) 32.5 (4.9) 49.3 14.6
Adjusted net earnings (loss) per share 0.06 (0.01) 0.09 0.03
Cash generated from operations 118.9 51.9 342.2 282.2

Cash generated from operations before changes in
non-cash operating working capital 93.0 68.5 299.2 301.8

Continuing Operations
Fourth quarter revenues from continuing operations increased by $53 million, or 38%, relative to the prior-year quarter, due to higher metal sales volumes and higher gold and copper prices. Relative to the fourth quarter of 2016, gold sales increased by 53%, mainly attributable to the start-up of Rainy River and Mesquite's strong quarter. The average realized gold price increased by $75 per ounce, or 6%, and the copper price increased by $0.23 per pound, or 9%, compared to the prior-year quarter.

New Gold's fourth quarter operating margin increased by $30 million relative to the prior-year quarter due to higher revenues, partially offset by higher operating expenses.

The Company reported a loss from continuing operations of $180 million, or $0.31 per share, in the fourth quarter of 2017 relative to a loss from continuing operations of $23 million, or $0.05 per share, in the prior-year quarter. The fourth quarter loss from continuing operations included the impact of a Rainy River after-tax impairment charge of $181 million, a non-cash pre-tax loss of $17 million on the revaluation of the gold stream obligation, finance costs of $13 million, a $9 million non-cash foreign exchange loss, and a $4 million expense related to the Company's restructuring of its corporate office workforce. The prior-year quarter included the net impact of a non-cash $27 million inventory write-down at Cerro San Pedro, a non-cash pre-tax gain of $11 million on the revaluation of the Company's gold price option contracts, a $5 million pre-tax foreign exchange loss, and a non-cash pre-tax gain of $3 million on the revaluation of the gold stream obligation.

As part of New Gold's annual year-end review, the Company assesses the carrying value of its portfolio of assets. This assessment takes into account, among other things, current commodity prices, current mineral reserves and resources and updated mine plans. On January 16, 2018, the Company announced higher operating expenses and capital expenditures over Rainy River's first nine years of operations which was identified as an indicator of impairment. As a result, after completing its assessment, the Company has reduced the total carrying value of Rainy River by $181 million.

New Gold had adjusted net earnings from continuing operations of $6 million, or $0.01 per share, in the fourth quarter of 2017 relative to $2 million, or $nil per share, in the prior-year quarter. Quarterly adjusted net earnings from continuing operations were positively impacted by a $53 million increase in revenues, a $19 million decrease in adjusted tax expense, a $4 million decrease in corporate administration, and a $1 million decrease in exploration and business development expenses. This was partially offset by a $47 million increase in operating expenses (with the prior-year operating expense adjusted for a non-cash $24 million inventory write-down at Cerro San Pedro), a $17 million increase in depreciation and depletion, and a $12 million increase in finance costs.

The Company's fourth quarter cash generated from continuing operations before changes in non-cash operating working capital of $65 million was in line with the prior-year period. Cash generated from continuing operations in the fourth quarter of $91 million was $42 million, or 86%, higher than the prior-year quarter as a result of an increase in trade and other payables, while the prior-year period included an outstanding concentrate receivable of $21 million at New Afton.

For the year ended December 31, 2017, revenues increased by $82 million, or 16%, relative to the prior-year period due to higher gold sales volumes and higher gold and copper prices. Relative to 2016, the average realized price increased by $36 per ounce of gold, or 3%, and $0.43 per pound of copper, or 19%.

New Gold's 2017 operating margin increased by $36 million relative to 2016 due to higher revenues, partially offset by higher operating expenses.

The Company reported a loss from continuing operations of $102 million, or $0.18 per share, for the year ended December 31, 2017, relative to a loss of $9 million, or $0.02 per share, in the prior-year period. The current period net loss included the net impact of a Rainy River after-tax impairment charge of $181 million, a $44 million non-cash foreign exchange gain, a $33 million pre-tax gain on the disposal of the El Morro stream, a $22 million pre-tax loss on the revaluation of the Company's gold stream obligation, an $18 million pre-tax loss on the revaluation of the Company's gold and copper price option contracts and copper forward contracts, and a $3 million gain on the modification of long-term debt. The prior-year period included the net impact of a $31 million pre-tax loss on the revaluation of the Company's gold stream obligation, a non-cash $27 million inventory write-down at Cerro San Pedro, a $12 million non-cash foreign exchange gain, and an $11 million pre-tax gain on the revaluation of Company's gold price option contracts.

New Gold had adjusted earnings from continuing operations for the year ended December 31, 2017 of $21 million, or $0.04 per share, relative to $19 million, or $0.04 per share, in the prior-year. Adjusted net earnings were negatively impacted by a $70 million increase in operating expenses (with the prior year operating expense adjusted for a non-cash $24 million inventory write-down at Cerro San Pedro), a $24 million increase in depreciation and depletion, and a $7 million increase in finance costs. This was partially offset by an $82 million increase in revenues and a $20 million decrease in adjusted tax expense.

The Company's cash generated from continuing operations before changes in non-cash operating working capital for the year ended December 31, 2017 of $234 million was $11 million, or 5%, lower than the prior year as higher operating margins were offset by higher income taxes paid and a $4 million expense related to the Company's restructuring of its corporate office workforce. Cash generated from continuing operations for the year ended December 31, 2017 of $275 million was $50 million, or 22%, higher than the prior year, which benefitted from an increase in trade and other payables and the prior year including an outstanding concentrate receivable of $21 million at New Afton.

Total Operations (including Peak Mines)

The Company reported a net loss of $196 million, or $0.34 per share, in the fourth quarter of 2017. The increase in the net loss relative to the loss from continuing operations relates to a non-cash after-tax loss of $34 million from the sale of Peak Mines, which was only partially offset by earnings from operations at Peak Mines.

New Gold had adjusted net earnings of $33 million, or $0.06 per share, in the fourth quarter of 2017. The increase in adjusted net earnings relative to adjusted net earnings from continuing operations is due to a benefit from adjusted earnings from discontinued operations (Peak Mines).

The Company's fourth quarter 2017 cash generated from operations before changes in non-cash operating working capital and cash generated from operations were higher than those from continuing operations due to the contribution from Peak Mines.

The Company reported a net loss of $108 million, or $0.19 per share, for the year ended December 31, 2017. The increase in net loss relative to the loss from continuing operations relates to a non-cash after tax loss of $34 million from the sale of Peak Mines, which was only partially offset by earnings from operations at Peak Mines.

New Gold had adjusted net earnings of $49 million, or $0.09 per share, for the year ended December 31, 2017. The increase in adjusted net earnings relative to adjusted net earnings from continuing operations is due to a benefit from adjusted earnings from discontinued operations (Peak Mines).

New Gold's 2017 cash generated from operations before changes in non-cash operating working capital and cash generated from operations were higher than those from continuing operations due to the contribution from Peak Mines.

Financial Update

New Gold's cash and cash equivalents as at December 31, 2017 were $216 million. During the quarter, the Company drew an additional $30 million from its $400 million revolving credit facility. At December 31, 2017, a total of $230 million had been drawn and $139 million had been used to issue letters of credit for closure obligations at the Company's producing mines and development projects, leaving $31 million undrawn.

At December 31, 2017, the face value of the Company's long-term debt was $1,030 million (book value – $1,008 million). The components of the long-term debt include: $500 million of 6.25% face value senior unsecured notes due in November of 2022; $300 million of 6.375% face value senior unsecured notes due in May of 2025; and $230 million drawn from the revolving credit facility. The Company currently has approximately 579 million shares outstanding.

On October 18, 2017, New Gold entered into copper price option contracts covering approximately 60 million pounds, or 75%, of its targeted 2018 copper production, with put options at a strike price of $3.00 per pound and call options at a strike price of $3.37 per pound.
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