(All dollar figures are in US dollars unless otherwise indicated)
February 15, 2017 – New Gold Inc. (“New Gold”) (TSX:NGD) (NYSE MKT:NGD) today announces its 2016 fourth quarter
and full-year financial results and updates its year-end reserve and resource estimates. The company previously
announced its preliminary 2016 operational results and 2017 guidance on January 30, 2017.
2016 FULL-YEAR HIGHLIGHTS
Full-year gold production of 381,663 ounces achieved the mid-point of the guidance range of 360,000 to
400,000 ounces
Copper production of 102 million pounds exceeded the high end of the guidance range of 81 to 93 million
pounds by 10%
2016 operating expense of $640 per gold ounce and $1.14 per copper pound
2016 delivered record low all-in sustaining costs(1) of $692 per ounce, including total cash costs(2) of $349 per
ounce
Cash generated from operations before changes in non-cash operating working capital(3) of $302 million
Cash generated from operations of $282 million
Adjusted net earnings(4) of $24 million, or $0.05 per share
Net earnings of $3 million, or $0.01 per share
Year-end cash and cash equivalents of $186 million
2016 FOURTH QUARTER HIGHLIGHTS
Fourth quarter production of 95,883 ounces of gold and 26 million pounds of copper
Fourth quarter operating expense of $780 per gold ounce and $1.58 per copper pound
Fourth quarter all-in sustaining costs of $619 per ounce, including total cash costs of $360 per ounce
Cash generated from operations before changes in non-cash operating working capital of $69 million
Cash generated from operations of $52 million
Adjusted net loss of $2 million, or $nil per share
Net loss of $20 million, or $0.04 per share
MINERAL RESERVES AND RESOURCES
2016 year-end mineral reserves of 14.7 million ounces of gold, 1.1 billion pounds of copper and 76 millionounces of silver
“Our solid operating performance in 2016 enabled us to deliver record low all-in sustaining costs, resulting in strong
margins and cash flow,” stated Hannes Portmann, President and Chief Executive Officer. “Our three primary areas of
focus in 2017 are enhancing our financial flexibility, executing our updated Rainy River plan and continuing to deliver
operationally. Looking further ahead, we feel well positioned for the long-term with a robust gold reserve base of 15 million ounces.”
2016 FINANCIAL RESULTS
Fourth quarter revenues decreased by $29 million, or 14%, relative to the prior-year quarter, as the benefit from higher
gold and silver prices and higher copper sales volumes was more than offset by lower gold and silver sales volumes.
Fourth quarter production was in line with the first three quarters of 2016, however, production was lower than the
same period last year, which was a record quarter for New Gold. Relative to the fourth quarter of 2015, the average
realized price increased by $117 per ounce of gold, or 11%, $0.29 per pound of copper, or 13%, and $2.36 per ounce of
silver, or 16%. The benefit of this was offset by a 29% decrease in gold sales to 93,936 ounces mainly attributable to the
Peak Mines which benefitted from mining and processing significantly higher gold grade material in the prior-year and
Cerro San Pedro transitioning into residual leaching. New Gold’s 2016 revenues of $684 million decreased relative to
2015, as the benefit from higher gold and silver prices and higher copper sales volumes was more than offset by lower
gold and silver sales volumes due to the planned decrease at Cerro San Pedro.
New Gold’s fourth quarter operating margin decreased by $27 million relative to the prior-year quarter as a result of the
$29 million decrease in revenues. The company’s 2016 operating margin increased by $25 million, or 8%, relative to the
prior year as a result of lower operating expenses, resulting from a reduction in mining activity at Cerro San Pedro and
the company’s business improvement initiatives, partially offset by lower revenues.
New Gold had an adjusted net loss of $2 million, or $nil per share, in the fourth quarter of 2016 relative to adjusted net
earnings of $3 million, or $0.01 per share, in the prior-year quarter. Quarterly adjusted net earnings were impacted by
the combination of a $29 million decrease in revenues from lower production and an aggregate $4 million increase in
exploration, business development, and corporate general and administrative expenses. These items were partially
offset by a total $25 million decrease in operating expenses, depreciation and depletion due to lower production, and a
$6 million decrease in finance costs as more interest has been capitalized to Rainy River. The company reported a net
loss of $20 million, or $0.04 per share, in the fourth quarter. The net loss included the impact of a non-cash $27 million
inventory write-down at Cerro San Pedro, a $7 million pre-tax foreign exchange loss and a non-cash $6 million after-tax
impairment charge related to an early-stage royalty interest at Rio Figueroa, which was partially offset by a $16 million
pre-tax unrealized gain on the company’s gold price option contracts and a $3 million pre-tax unrealized gain on the
company’s gold stream obligation.
(in millions of U.S. dollars, except per share amounts) 2016 2015 2016 2015
Revenues $170.3 $199.0 $683.8 $712.9
Operating margin(6) 55.6 82.6 318.0 293.3
Adjusted net earnings/(loss) (2.3) 2.6 24.3 (10.9)
Adjusted net earnings/(loss) per share $nil 0.01 0.05 (0.02)
Net (loss) earnings (19.9) (9.5) 2.7 (201.4)
Net (loss) earnings per basic share (0.04) (0.02) 0.01 (0.40)
Cash generated from operations before changes
in non-cash operating working capital 68.5 87.9 301.8 276.4
Cash generated from operations 51.7 84.9 282.2 262.6
In 2016, New Gold had adjusted net earnings of $24 million, or $0.05 per share, relative to an adjusted net loss of $11
million, or $0.02 per share, in the prior year. The increase in adjusted net earnings was driven by a net $54 million
decrease in operating expenses, depreciation and depletion and a $28 million decrease in finance costs as more interest
has been capitalized to Rainy River. These items were partially offset by a $29 million decrease in revenues from lower
production, a $12 million increase in adjusted income tax expense and an $7 million increase in exploration, business
development, and corporate general and administrative expenses. The company’s 2016 reported net earnings of $3
million, or $0.01 per share, were impacted by the non-cash $27 million inventory write-down at Cerro San Pedro and the
non-cash $6 million after-tax impairment charge related to Rio Figueroa. In 2015, the net loss was driven by the non-cash
$14 million after-tax impairment charge related to the Peak Mines, the non-cash $13 million inventory write-down at
Cerro San Pedro, a $98 million pre-tax foreign exchange loss and a non-cash $99 million after-tax loss associated with the
sale of El Morro.
The company’s fourth quarter cash generated from operations before changes in non-cash operating working capital of
$69 million was $19 million, or 22%, lower than the prior-year period as the impact of lower revenues was only partially
offset by the decrease in expense. Cash generated from operations in the fourth quarter of 2016 was $52 million relative
to $85 million in the prior-year quarter. The major working capital difference at December 31, 2016 was an outstanding
concentrate receivable of $21 million at New Afton which was collected in January 2017.
New Gold’s 2016 cash generated from operations before changes in non-cash operating working capital of $302 million
was $25 million, or 9%, higher than 2015. The increase was directly attributable to the higher operating margin. Full-year
cash generated from operations of $282 million increased by $20 million compared to 2015.
FINANCIAL UPDATE
New Gold’s 2016 year-end cash and cash equivalents were $186 million. During the fourth quarter, the company
received the remaining $75 million of the stream deposit from RGLD Gold AG, a wholly-owned subsidiary of Royal Gold
Inc. and drew $100 million from its $400 million revolving credit facility. At December 31, 2016, an additional $122
million of the facility was used to issue letters of credit for closure obligations at the company's producing mines and
development projects, leaving $178 million undrawn.
In addition, on February 8, 2017, New Gold announced that the company has entered into a binding letter agreement
with Goldcorp Inc. to the sell the company’s gold stream on the El Morro project for $65 million cash. Including the El
Morro proceeds, the company’s pro forma liquidity totals $429 million (cash, undrawn credit facility and El Morro
proceeds) plus its expected free cash flow generation from its operating mines in 2017.
In 2016, New Gold entered into gold price option contracts covering 120,000 ounces of its first half 2017 production,
with put options at a strike price of $1,300 per ounce and call options at a strike price of $1,400 per ounce. The company
has also fixed the price for 31.7 million pounds of the company’s first half 2017 copper production at $2.52 per pound.
These initiatives increase the company’s cash flow certainty during a portion of the remaining Rainy River development
period.
After formally establishing a business improvement function in the second half of 2015, New Gold has continually looked
for opportunities to maximize free cash flow from its portfolio of operating mines. One particularly successful business
improvement initiative has been at New Afton, where improved mining and milling efficiencies have enabled the
company to achieve significantly higher-than-targeted mill throughput after the successful completion of the mill
expansion project in mid-2015. On a consolidated basis, the success of the multiple active business improvement
initiatives was a key contributor to New Gold delivering an all-in sustaining cost of $692 per ounce in 2016, which was
well below the company’s mid-2016 updated guidance range of $750 to $790 per ounce.
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