New Gold Inc (NGD) 2022 Q4 法說會逐字稿

Good morning. My name is Michelle, and I will be your conference operator today. Welcome to the New Gold Fourth Quarter 2022 Earnings Conference Call and Webcast. (Operator Instructions) I would now like to hand the conference over to Ankit Shah, Vice President of Strategy and Business Development. Please go ahead.

Thank you, Michelle, and good morning, everyone. We appreciate you joining us today for New Gold's Fourth Quarter and Year-End 2022 Earnings Conference Call and Webcast. On the line today, we have Patrick Godin, President and CEO; and Rob Chausse, our CFO. Should you wish to follow along with the webcast, please sign in from our homepage at newgold.com.

Before the team begins the presentation, I'd like to direct your attention to our cautionary language related to forward-looking statements found on Slides 2 and 3 of the presentation. Today's commentary includes forward-looking statements relating to New Gold. In this respect, we refer you to our detailed cautionary note regarding forward-looking statements in the presentation. You are cautioned that actual results and future events could differ materially from those expressed or implied in forward-looking statements.

Slides 2 and 3 provide additional information and should be reviewed. We also refer you to the section entitled Risk Factors in New Gold's latest annual information form, MD&A and other filings available on SEDAR, which set out certain material factors that could cause actual results to differ. In addition, at the conclusion of the presentation, there are a number of end notes that provide important information and should be reviewed in conjunction with the material presented.

I will now turn the call over to Rob.

Thanks, Ankit, and good morning. I'll start with Slide 5, which provides our operational highlights. The production details on this slide are consistent with our January production press release. During Q4, the company produced 97,800 gold equivalent ounces, somehow consisted of 6.9 million pounds of copper and approximately 69,700 gold ounces from Rainy River and 10,900 gold ounces from New Afton, totaling 80,700 gold ounces.

The lower equivalent gold production as compared to the prior year quarter is primarily the lower tonnes mined and processed at New Afton. Our operating expense per equivalent ounce was higher than the prior year quarter primarily due to lower production and therefore, lower sales volume. Consolidated all-in sustaining costs for the quarter were $1,668 per equivalent ounce, higher than the prior year quarter, primarily due to lower copper sales volume and higher sustaining capital spend. We continue to invest in sustaining capital at our operations during the fourth quarter with the impact of sustaining capital spend per ounce being $360 per ounce in the quarter.

Turning to our financial results slide on Slide 6. Fourth quarter revenue was $162.8 million, driven by sales of 78,500 gold ounces at an average realized price of $1,751 per ounce and sales of 6.8 million pounds of copper at $3.74 per pound. Q4 revenue was lower than the prior year quarter, primarily due to lower copper sales volumes and prices.

Our operating cash flow before working capital adjustments was $44.3 million or $0.06 per share for the quarter, lower than the prior year quarter. The prior year quarter -- prior year period included the sale of the Blackwater stream. The company recorded a net loss of $16.9 million or $0.02 per share during Q4 compared to net income of $0.22 per share in Q4 of 2021 and again, that prior year period included the Blackwater stream gain.

After adjusting for other certain charges, net loss was $6.3 million or $0.01 per share in Q4 compared to net earnings of $0.04 per share in the fourth quarter of 2021. Net loss increase was primarily due to lower revenues. Our Q4 adjusted earnings includes adjustments related to our gains and losses, which include unrealized adjustments on the Rainy River stream mark-to-market and the free cash flow royalty at New Afton. Our MD&A has further details on these on non-GAAP measures.

Our total CapEx and leases for the quarter was $74.3 million, $37.2 million was spent on sustaining capital and $37.1 million on growth capital. Sustaining spend was primarily related to the plan's tailings toward both -- at both operating assets, capital stripping at Rainy River and B3 mine development at New Afton. Our growth capital was focused on our project development, specifically C-zone at New Afton and the underground Intrepid zone at Rainy River.

Slide 7 provides our capital structure. Cash on hand as at year-end was $201 million, and liquidity was $597 million. The decrease in cash from the prior year quarter is primarily due to continued capital investments at our operations.

With that, I'll turn the call over to Pat.

Thank you, Rob, and good morning, everyone. On Slide 9 provides a summary of our 2023 operational outlook. Gold equivalent production is expected to increase by over 13% to 365,000 to 425,000 ounces. Similar to last year, we expect the production distribution to be more heavily related to the second half of the year at approximately 55%. All-in sustaining cost are also expected to decrease by over [$150] per ounce to 1,500 to 1,600. Costs are lower than last year due to the lower sustaining capital expenditures and higher production. We expect the cost to trend lower in the second half of the year consistent with the production profile.

Sustaining capital is expected to be $140 million to $170 million. As mentioned, sustaining capital is expected to decrease versus last year probably as we complete B3 development at New Afton. Growth capital is expected to be [$150 million] to $155 million. This is an increase over last year, and it's primarily set to the seasonal development of New Afton and underground development at Rainy River.

Slide 10 provide further details on Rainy River 2023 outlook. All equivalent production is expected to increase to 235,000 to 265,000 ounces, primarily due to an increase in gold grade, tonne mines and process as well as the ramp-up of the Intrepid zone. Similar to last year, we expect the production distribution to be more heavily weighted to the second half of the year at approximately 55%. All-in sustaining costs are also expected to decrease to $1,475 to $1,575. Costs are lower than last year, primarily due to higher productions.

Sustaining capital is expected to be $125 million to $135 million, primarily related to capital waste, and (inaudible) demurrage, maintenance program and other sustaining capital related to the Intrepid development. Growth capital is expected to be $20 million to $30 million and is primarily related to the development of the Intrepid zone and commencing development of the main underground zone below the pit.

Slide 11 provides further details on New Afton 2023 outlook. Gold equivalent production is expected to increase by approximately 30% to 130,000 to 160,000 ounces as B3 production achieved steady-state mining rates and higher gold and copper grades. These 3 mining rates are expected to average approximately 8,000 tonnes per day as all draw points are already completed. All-in sustaining costs are also expected to decrease to 1,300 to 1,400 costs are lower than last year, primarily due to the lower sustaining capital spend with B3 development completed and higher production. Sustaining capital is expected to be $15 million to $35 million, primarily related to the stabilization activities and [training] management. Growth capital is expected to be $130 million to $150 million and is primarily related to the continued advancement of the C-zone project, we focus -- which will focus on mine development and infrastructure installation and stabilization.

Slide 12 provides an update on the company's consolidated reserves. Consolidated gold mineral reserve decreased by approximately 285,000 ounces compared to last year, primarily due to the annual mine depletion from both assets, resource mineability at Rainy River and ounces from Sub Level Cave and East Cave Recovery at New Afton.

In closing, I just want to spend a few minutes to discuss health and safety at New Gold. The health and safety is our highest priority as our employees are the heart and soul of our business. In 2022, our total recordable injury frequency rate are (inaudible) was 0.95 and significantly decreased by approximately 46% compared to 2021. We have implemented the [Courage to Care] campaign across our business to encourage and foster a safe culture for our over 1,500 employees across the company. We are extremely proud of this achievement and in 2023 the health and safety of our employees will continue to drive our success.

This completes our presentation. I will now turn it back to the operator for the Q&A portion of the call. Michelle?

(Operator Instructions) Your first question will come from Mohamed Sidibe of CIBC.

It's Mohamed Sidibe from CIBC on behalf of Anita. Sorry, jumping in from conference call to conference call here. But I just wanted to ask on the production profile for 2023, if we should expect any sort of seasonality as we go through the year? And then second question was just on your cost profile for 2023. I may have missed that part, but if you could touch about any inflationary impact that you've seen despite the -- that you incorporated in your guidance given the year-over-year lower guidance. And I'm sure it's probably production.

Our production profile is slanted more towards the second half of the year but basically 55% coming in the second half.

It's mainly related to the [grade] here, not the tonnage, but the grade itself.

I was going to say as far as inflation, we have incorporated some inflationary impacts primarily related to diesel and grinding media, which are the biggest increases. But as being a Canadian company, we've also hedged our CAD exposure but also hedged some fuel. So we're working hard to mitigate any inflationary pressures.

There are no other questions. At this time, I will turn the conference back to Ankit Shah for any closing remarks.

Thank you, Michelle. Again, to everyone who joined us today, thanks again. If you have any follow-up questions, please reach out to us by phone or e-mail. Have a great day.

Ladies and gentlemen, this does conclude your conference call for this morning. We would like to thank everyone for participating and ask you to please disconnect your lines.