New Gold(US:NGD)2021-08-11 15:34Financial Data and Key Metrics Changes - In Q2 2021, the company produced approximately 105,700 gold equivalent ounces, which included 18.2 million pounds of copper and 66,900 gold ounces from its two mines [6][10] - Revenue for Q2 was $198 million, a 54% increase from the prior quarter, driven by higher sales volumes and metal prices [9] - Operating cash flow before working capital adjustments was $84.7 million, or $0.12 per share, higher than the prior-year quarter [10] - The company recorded a net loss of $15.8 million, or $0.02 per share, compared to a loss of $0.07 per share in the prior-year quarter [10][11] - Adjusted net earnings were $26.7 million, or $0.04 per share, compared to a net loss of $3.3 million in Q2 2020 [11] Business Line Data and Key Metrics Changes - Rainy River produced 52,900 gold ounces, while New Afton contributed 14,088 gold ounces, totaling approximately 66,900 gold ounces [6] - Operating expenses per equivalent ounce increased due to planned higher costs at New Afton and a strengthening Canadian dollar [7] - Consolidated all-in sustaining costs for the quarter were $1,551 per equivalent ounce, higher than the prior-year quarter [8] Market Data and Key Metrics Changes - The average realized gold price was $1,817 per ounce, and copper was sold at $4.43 per pound [9] - The company expects to meet its gold equivalent guidance despite challenges in the East Lobe of Rainy River [38] Company Strategy and Development Direction - The company is focused on high-grade and lower strip ratio operations at Rainy River, with an emphasis on cost optimization [14] - Development of the C-Zone and the Thickened and Amended Tailings project at New Afton is ongoing, with a focus on delivering projects on time and on budget [37] - The company is evaluating potential short-term opportunities using a lower cut-off grade due to current metal prices being significantly above reserve pricing [39] Management's Comments on Operating Environment and Future Outlook - Management highlighted the risk of not achieving production guidance due to lower-than-expected gold grades from the East Lobe, which represents about 50% of planned production for the second half of 2021 [22][23] - The company is monitoring the wildfire situation in British Columbia, which has not yet impacted operations [35] - Inflationary pressures, particularly in fuel and exchange rates, are expected to impact costs, with an estimated annual impact of $3 to $4 million from fuel price increases [56][57] Other Important Information - Total capital expenditures for the quarter were $82.4 million, with $49.2 million on sustaining capital and $33.2 million on growth capital [12] - The company had $138 million in cash and $464 million in liquidity as of June 30, 2021 [13] Q&A Session Summary Question: What grade was expected for the East Lobe? - Management indicated that they were expecting grades around 1 to 1.2 grams per ton for the second half of the year, with the East Lobe contributing 50% of the tons needed to achieve that [44] Question: What kind of ore sources and grades should be expected for New Afton going into Q3? - Management acknowledged being 3 to 4 months behind on B3 development, with expectations to continue sourcing from Lift 1, which has performed well [46][48] Question: What inflationary pressures is the company facing? - Management noted that fuel and exchange rates are significant factors, with an estimated $10 per ounce impact from fuel price increases and a $30 per ounce impact from exchange rate changes [56][57]