New Gold Announces 16% Increase in Gold Sales and 17% Decrease in Cash Cost
in the Third Quarter of 2009
(All figures are in US dollars unless otherwise stated)
Third Quarter Highlights
Results presented below are for the period of ownership for the Mesquite (
- Gold sales increased by 16% to 77,645 ounces from 67,156 ounces in the same period in 2008 - Total cash cost(1) decreased by 17% to $470 per ounce sold, net of by-product sales, from $565 per ounce sold in the same period in 2008 - Significant increase in tonnes placed on leach pads at both Cerro San Pedro and Mesquite - Completion of development and initiation of production from the high copper grade Chesney ore body at Peak and completion of development of the high gold grade Perseverance Zone D
The Cerro San Pedro and Peak Mines gold production was in-line with expectations during the quarter and silver production at Cerro San Pedro was higher than anticipated. Mesquite's gold production was slightly below expectations in the third quarter, primarily due to lower than expected grade in the Rainbow 3 pit in the first two months of the quarter. Mining has since transitioned into the Rainbow 2 pit where production in September exceeded the prior months and was consistent with the mine plan. Gold production at Mesquite is expected to be significantly higher in the fourth quarter in comparison to the third quarter with higher tonnes and grade of material stacked.
2009 Forecast Update
For the period of ownership, New Gold's previously announced 2009 gold production guidance of 270,000 to 300,000 ounces and total cash cost(1) of
Operations Overview
Results presented below include gold production, sales and total cash cost(1) for the full year of 2009 and 2008 which includes periods prior to the acquisition of Mesquite (
Mesquite
Gold production for the third quarter at Mesquite was 29,012 ounces compared to 42,357 ounces in the third quarter 2008. Mesquite had gold sales in the third quarter of 27,594 ounces compared to 47,535 ounces in the third quarter 2008. Consistent with expectations, gold production was lower in the third quarter 2009 mainly due to lower gold grade, which was partially offset by higher tonnes placed on the pad. The gold grade in the third quarter 2008 was significantly higher than the reserve grade. As outlined in the mine plan, production at Mesquite began ramping up in the month of September and is expected to continue on this trend in the fourth quarter providing the highest production levels for the year.
Total cash cost(1) per ounce of gold sold for the third quarter of 2009 was
For the nine months ending
Total cash cost(1) per ounce of gold sold for the nine months ended
Cerro San Pedro Mine
Gold production for the third quarter at Cerro San Pedro was 24,928 ounces compared to 24,387 ounces produced in the third quarter of 2008 and gold sales were 27,193 ounces compared to 26,070 ounces in the same period in 2008. The increase in production was due to increased tonnes of ore mined, offset by lower gold grade. Silver production increased by 21% in the third quarter to 342,633 ounces from 282,055 ounces in the third quarter of 2008. The increase in silver production over the same quarter in 2008 can be attributed to the higher silver grades and tonnes of ore mined during the quarter.
Total cash cost(1) per ounce of gold sold, net of by-product sales, for the third quarter was
For the nine months ending
Total cash cost(1) per ounce of gold sold, net of by-product sales, for the nine months ended
Peak Mines
Gold production for the third quarter at Peak Mines was 25,591 ounces compared to 26,662 ounces produced in the third quarter of 2008 and gold sales were 22,858 ounces compared to 24,425 ounces in the same period in 2008. The minor decrease in gold production was primarily due to lower grade mined with mining shifting to zones of higher copper and lower gold content, partially offset by higher recoveries. Mill feed grade was 8% lower in gold grade and 42% higher in copper grade. Copper production for the third quarter was 3.6 million pounds compared to 2.4 million pounds in the same period in 2008.
Total cash cost(1) per ounce of gold sold, net of by-product sales, for the third quarter was
For the nine months ending
Total cash cost(1) per ounce of gold sold, net of by-product sales, for the nine months ended
New Afton Project
New Gold's primary development project continued on schedule during the third quarter and is expected to commence production in the second half of 2012. The project will be an underground mine and concentrator which will produce an annual estimated average of 85,000 ounces of gold, and 75 million pounds of copper over a 12 year mine life.
During the third quarter of 2009, the New Afton underground development crews continued to ramp-up development, completing 453 metres compared to 424 metres during the second quarter of 2009. An underground development milestone was achieved in the third quarter with the break-through of the conveyor decline which creates a secondary access to the mine and facilitates improved equipment accessibility.
Major surface construction activities will resume in 2011 once the underground development has reached the bottom of the ore body. Project engineering work is approximately 92% complete and will not advance further until the resumption of surface construction.
El Morro Project
El Morro is a copper-gold project in
New Gold's share of the El Morro project represents annual estimated average production of 95,000 ounces of gold and 100 million pounds of copper over a 15 year mine life.
Third Quarter Production and Cash Cost Overview
Third quarter and year to date results for 2009 are presented in the table below, for the period of ownership for the Mesquite (
------------------------------------------------------------------------- Q3-2009 Q3-2008 YTD 2009 YTD 2008 ------------------------------------------------------------------------- Production ------------------------------------------------------------------------- Mesquite gold oz 29,012 - 38,053 - ------------------------------------------------------------------------- Cerro San Pedro gold oz 24,928 24,387 69,721 24,387 silver oz 342,633 282,055 1,184,110 282,055 ------------------------------------------------------------------------- Peak Mines gold oz 25,591 26,662 68,601 72,875 copper m lbs 3.6 2.4 11.7 5.8 ------------------------------------------------------------------------- Amapari(2) gold oz - 17,752 13,726 56,891 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total Production ------------------------------------------------------------------------- Gold oz 79,531 68,801 190,101 154,153 ------------------------------------------------------------------------- Copper m lbs 3.6 2.4 11.7 5.8 ------------------------------------------------------------------------- Silver oz 342,633 282,055 1,184,110 282,055 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Gold sales oz 77,645 67,156 185,932 159,397 ------------------------------------------------------------------------- Total cash cost/oz $470 $565 $460 $598 -------------------------------------------------------------------------
Conference Call-in and Webcast Details
New Gold will hold a conference call and webcast on
A live and archived webcast will also be available at www.newgold.com.
About New Gold
New Gold is an intermediate gold mining company with three operating assets; the Mesquite Mine in the
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this press release, including any information relating to New Gold's future financial or operating performance may be deemed "forward looking". All statements in this press release, other than statements of historical fact, that address events 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 words "expects", "does not expect", "plans", "anticipates", "does not anticipate", "believes", "intends", "estimates", "projects", "potential", "scheduled", "forecast", "budget" and similar expressions, or that events or conditions "will", "would", "may", "could", "should" or "might" occur. All such forward looking statements are subject to important risk factors and uncertainties, many of which are beyond New Gold's ability to control or predict. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause New Gold's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such factors include, without limitation: New Gold and Western Goldfields will be able to satisfy the conditions in the business combination agreement, that the required approvals (shareholder, third party regulatory and governmental) will be obtained and all other conditions will be satisfied or waived; the results of the preliminary assessment assessing the viability of a new process facility at Amapari; New Gold's operations are subject to significant capital requirements; fluctuations in the international currency markets and in the rates of exchange of the currencies of
(1) TOTAL CASH COST
"Total cash cost" per ounce figures are calculated in accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard is widely accepted as the standard of reporting cash cost of production in
(2) Amapari was placed on care and maintenance on
For further information: Mélanie Hennessey, Vice President, Investor Relations, New Gold Inc., Direct: (604) 639-0022, Toll-free: (888) 315-9715, Email: [email protected], Website: www.newgold.com
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