- Revising Rainy River Outlook for 2021
TORONTO, Sept. 13, 2021 /PRNewswire/ - New Gold Inc. ("New Gold" or the "Company") (TSX: NGD) and (NYSE American: NGD) provides an update to its 2021 operational outlook for the Rainy River Mine and the consolidated operational outlook. All amounts are in U.S. dollars unless otherwise indicated.

In early August, the Company indicated that July production at Rainy River was primarily from the eastern area of the ODM zone ("East Lobe") and the realized gold grade from this area was below the modeled gold grade in this period. This trend continued in August. Over both July and August, the modeled East Lobe high and medium grade ore negatively reconciled to ounces mined, leading to a total of approximately 20,000 lower gold ounces produced during this period. The Company has since followed up with additional reverse circulation drilling and globally, all areas outside of the East Lobe, continues to reconcile well where mining has occurred or is about to occur, and are consistent with historical results. The East Lobe represents approximately 35% of planned production for the remaining period of September to December 2021. As a result of the variance experienced in the East Lobe, Rainy River's gold equivalent1 production for 2021 is now expected to be between 240,000 and 255,000 ounces.

The Company continues reverse circulation drilling in the East Lobe and the understanding of the mineralization is improving, however, additional drilling is required to refine the block model and improve its predictability. The Company is advancing an underground optimization study for Rainy River, with completion anticipated by year-end, and results would be incorporated into the year-end Mineral Reserve and Resource and life of mine update.

"While the reduction in our near-term guidance at Rainy River is unfortunate, I remain confident the mine has reached an inflection point, as evidenced by the free cash flow generated in the second quarter and the mine is on track to deliver an improved second half of the year", stated Renaud Adams, President & CEO. We continue to seek ways to further optimize our costs and capital profiles, and with the underground growth potential currently being evaluated, Rainy River is expected to be a meaningful contributor of free cash flow in our portfolio going forward."

As a result of the Rainy River revisions, consolidated gold equivalent1 production for 2021 is now expected to be between 405,000 and 450,000 ounces. Annual consolidated copper production guidance remains unchanged at 56 to 66 million pounds. New Gold expects its consolidated 2021 all-in sustaining costs to be between $1,415 to $1,495 per gold eq. ounce2, and total cash costs to be between $960 to $1,030 per gold eq. ounce2. New Afton guidance remains unchanged.

Rainy River
2021 Guidance Revised Guidance Original Guidance
Gold eq. production (ounces)1 240,000 – 255,000 275,000 – 295,000
Gold production (ounces) 235,000 - 250,000 270,000 – 290,000
Total cash costs, per gold eq. ounce2 $925 - $985 $715 - $795
All-in sustaining costs, per gold eq. ounce2 $1,365 - $1,440 $1,125 - $1,225
Sustaining capital and sustaining leases ($M)2 $95 - $125 $95 - $125
Growth capital* ($M)2 $15 - $20 $10 - $15
Exploration ($M) ~$5 ~$5

*$5 million increase in Rainy River growth capital is due to accelerated development of Intrepid zone.

Consolidated Guidance
2021 Guidance Revised Guidance Original Guidance

Gold eq. production (ounces)1 405,000 – 450,000 440,000 – 490,000
Gold production (ounces) 287,000 – 312,000 322,000 – 352,000
Copper production (Mlbs) 56 – 66 56 - 66
Total cash costs, per gold eq. ounce2 $960 - $1,030 $810 - $890

All-in sustaining costs, per gold eq. ounce2 $1,415 - $1,495 $1,230 - $1,330
Sustaining capital and sustaining leases ($M)2 $135 - $185 $135 - $185
Growth capital ($M)2 $95 - $130 $90 - $125
Exploration ($M) ~$17 ~$17

About New Gold Inc.
New Gold is a Canadian-focused intermediate mining Company with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine. The Company also holds an 8% gold stream on the Artemis Gold Blackwater project located in Canada, a 6% equity stake in Artemis Gold Inc., and other Canadian-focused investments. New Gold's vision is to build a leading diversified intermediate gold company based in Canada that is committed to environment and social responsibility. For further information on the Company, visit www.newgold.com.

Endnotes

1. Total gold eq. ounces include silver and copper produced/sold converted to a gold eq. based on a ratio of $1,800 per gold ounce, $25.00 per silver ounce and $3.50 per copper pound used for 2021 guidance estimates. All copper is produced/sold by the New Afton Mine. Gold equivalent ounces guidance includes approximately 585,000 to 600,000 ounces of silver at Rainy River and approximately 250,000 to 270,000 ounces of silver at New Afton.

2. "Total cash costs", "all-in sustaining costs", "sustaining capital and sustaining leases", "growth capital", "cash generated from operations", "free cash flow" and "average realized gold/copper price per ounce/pound" are all non-GAAP financial performance measures that are used in this press release. These measures do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For more information about these measures, why they are used by the Company, and a reconciliation to the most directly comparable measure under IFRS, see the "Non-GAAP Financial Performance Measures" section of this news release.

Non-GAAP Financial Performance Measures

Total Cash Costs per Gold eq. Ounce

"Total cash costs per gold equivalent ounce" is a non-GAAP financial performance measure that is a common financial performance measure in the gold mining industry but does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold reports total cash costs on a sales basis and not on a production basis. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, this measure, along with sales, is a key indicator of the Company's ability to generate operating earnings and cash flow from its mining operations. This measure allows investors to better evaluate corporate performance and the Company's ability to generate liquidity through operating cash flow to fund future capital exploration and working capital needs.

This measure is intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. This measure is not necessarily indicative of cash generated from operations under IFRS or operating costs presented under IFRS.

Total cash cost figures are calculated in accordance with a standard developed by The Gold Institute, a worldwide association of suppliers of gold and gold products that ceased operations in 2002. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies. Total cash costs include mine site operating costs such as mining, processing and administration costs, royalties, production taxes, but are exclusive of amortization, reclamation, capital and exploration costs. Total cash costs are then divided by gold equivalent ounces sold to arrive at the total cash costs per equivalent ounce sold.

In addition to gold the Company produces copper and silver. Gold equivalent ounces of copper and silver produced or sold in a quarter are computed using a consistent ratio of copper and silver prices to the gold price and multiplying this ratio by the pounds of copper and silver ounces produced or sold during that quarter.

Notwithstanding the impact of copper and silver sales, as the Company is focused on gold production, New Gold aims to assess the economic results of its operations in relation to gold, which is the primary driver of New Gold's business. New Gold believes this metric is of interest to its investors, who invest in the Company primarily as a gold mining business. To determine the relevant costs associated with gold equivalent ounces, New Gold believes it is appropriate to reflect all operating costs incurred in its operations.

All-In Sustaining Costs per Gold eq. Ounce

"All-in sustaining costs per gold equivalent ounce" is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold calculates "all-in sustaining costs per gold equivalent ounce" based on guidance announced by the World Gold Council ("WGC") in September 2013. The WGC is a non-profit association of the world's leading gold mining companies established in 1987 to promote the use of gold to industry, consumers and investors. The WGC is not a regulatory body and does not have the authority to develop accounting standards or disclosure requirements. The WGC has worked with its member companies to develop a measure that expands on IFRS measures to provide visibility into the economics of a gold mining company. Current IFRS measures used in the gold industry, such as operating expenses, do not capture all of the expenditures incurred to discover, develop and sustain gold production. New Gold believes that "all-in sustaining costs per gold equivalent ounce" provides further transparency into costs associated with producing gold and will assist analysts, investors, and other stakeholders of the Company in assessing its operating performance, its ability to generate free cash flow from current operations and its overall value. In addition, the Compensation Committee of the Board of Directors uses "all-in sustaining costs", together with other measures, in its Company scorecard to set incentive compensation goals and assess performance.

"All-in sustaining costs per gold equivalent ounce" is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of cash flow from operations under IFRS or operating costs presented under IFRS.

New Gold defines "all-in sustaining costs per gold equivalent ounce" as the sum of total cash costs, net capital expenditures that are sustaining in nature, corporate general and administrative costs, capitalized and expensed exploration that is sustaining in nature, lease payments that are sustaining in nature, and environmental reclamation costs, all divided by the total gold equivalent ounces sold to arrive at a per ounce figure. The definition of sustaining versus non-sustaining is similarly applied to capitalized and expensed exploration costs and lease payments. Exploration costs and lease payments to develop new operations or that relate to major projects at existing operations where these projects are expected to materially increase production are classified as non-sustaining and are excluded. Gold equivalent ounces of copper and silver produced or sold in a quarter are computed using a consistent ratio of copper and silver prices to the gold price and multiplying this ratio by the pounds of copper and silver ounces produced or sold during that quarter.

Costs excluded from all-in sustaining costs are non-sustaining capital expenditures, non-sustaining lease payments and exploration costs, financing costs, tax expense, and transaction costs associated with mergers, acquisitions and divestitures, and any items that are deducted for the purposes of adjusted earnings.

Sustaining Capital and Sustaining Leases

"Sustaining capital" and "sustaining lease" are non-GAAP financial performance measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold defines "sustaining capital" as net capital expenditures that are intended to maintain operation of its gold producing assets. Similarly, a "sustaining lease" is a lease payment that is sustaining in nature. To determine "sustaining capital" expenditures, New Gold uses cash flow related to mining interests from its statement of cash flows and deducts any expenditures that are capital expenditures to develop new operations or capital expenditures related to major projects at existing operations where these projects will materially increase production. Management uses "sustaining capital" and "sustaining lease", to understand the aggregate net result of the drivers of all-in sustaining costs other than total cash costs. These measures are intended to provide additional information only and should not be considered in isolation or as substitutes for measures of performance prepared in accordance with IFRS.

Growth Capital

"Growth capital" is a non-GAAP financial performance measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. New Gold considers non-sustaining capital costs to be "growth capital", which are capital expenditures to develop new operations or capital expenditures related to major projects at existing operations where these projects will materially increase production. To determine "growth capital" expenditures, New Gold uses cash flow related to mining interests from its statement of cash flows and deducts any expenditures that are capital expenditures that are intended to maintain operation of its gold producing assets. Management uses "growth capital" to understand the cost to develop new operations or related to major projects at existing operations where these projects will materially increase production. This measure is intended to provide additional information only and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this news release, including any information relating to New Gold's future financial or operating performance are "forward-looking". All statements in this news release, other than statements of historical fact, which address events, results, outcomes or developments that New Gold expects to occur are "forward-looking statements". Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "budget", "scheduled", "targeted", "estimates", "forecasts", "intends", "anticipates", "projects", "potential", "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "should", "might" or "will be taken", "occur" or "be achieved" or the negative connotation of such terms. Forward-looking statements in this news release include, among others, statements with respect to: the continued reverse circulation drilling in the East Lobe and the potential improvement in model predictability; planned production in the East Lobe for the remaining period of September to December, 2021; the Company's expectations regarding gold equivalent production for 2021 at Rainy River and on a consolidated basis; the anticipated percentage of ounces resulting from the East Lobe in 2022 and 2023; the completion of a underground optimization study for Rainy River and the timing thereof as well as; the Company's plan to incorporate the results into the year-end Mineral Reserve and Resource and life of mine update; the Company's expectations regarding higher grades in the near and medium term and an improved second half of the year at Rainy River; the anticipated free cash flow to be contributed to the Company's portfolio from Rainy River; and the Company's expectations regarding consolidated 2021 all-in sustaining costs and total cash costs.

All forward-looking statements in this news release are based on the opinions and estimates of management that, while considered reasonable as at the date of this press release in light of management's experience and perception of current conditions and expected developments, are inherently subject to important risk factors and uncertainties, many of which are beyond New Gold's ability to control or etc etc.

Technical Information

The scientific and technical information contained in this news release has been reviewed and approved by Eric Vinet, Senior Vice President, Operations of New Gold. Mr. Vinet is a Professional Engineer and member of the Ordre des ingénieurs du Québec. He is a "Qualified Person" for the purposes of National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

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SOURCE New Gold Inc.