New Gold Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
October 30, 2024

There are 11 speakers on the call.

Operator

Good morning. My name is Sylvie, and I will be your conference operator today. Welcome to the New Gold's Third Quarter 2024 Earnings Conference Call. Please note that all lines have been placed on mute to prevent any background noise. Please be advised that today's conference call and webcast is being recorded.

Operator

After the speakers' remarks, there will be a question and answer session. I would now like to hand the conference over to Ankit Shah, Executive Vice President of Strategy and Business Development. Thank you.

Speaker 1

Thank you, Sylvie, and good morning, everyone. We appreciate you joining us today for New Gold's Q3 2024 Earnings Conference Call and Webcast. On the line today, we have Patrick Oden, President and CEO Johan Bouchard, our COO and Keith Murphy, our CFO. In addition, we also have Luc Buchanan, Vice President, Technical Services and Jean Francois Rabenel, Vice President, Geology available to assist during the Q and A portion of the call. Should you wish to follow along the webcast, please sign in from our homepage at newgold.com.

Speaker 1

Before the team begins the presentation, I'd like to direct your attention to our cautionary language related to forward looking statements found on Slide 2 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. Slide 2 provides additional information and should be reviewed.

Speaker 1

We also refer you to the section entitled Risk Factors in New Gold's latest AIF, MD and A and other filings available on SEDAR Plus, 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 endnotes that provide important information and should be reviewed in conjunction with the material presented. I will now turn the call over to Pat for some opening remarks.

Speaker 2

Thank you, Sanket, and good morning, everyone. We had a lot of success in the Q3. We also had some difficult moments. I take this opportunity to commend the team, not just for their accomplishment, but also for all the response and support each other. As a result, the company is well positioned and we look forward with companies.

Speaker 2

Our operations delivered the strongest positioned quarter of the year to date with a 40% increase in production over the 2nd quarter and a 13% decrease in all in sustaining costs. Rainy River delivered an impressive 29% reduction in all in sustaining costs compared to the 2nd quarter. A strong cost performance allowed us to leverage the higher metal price environment and as a result, we had an excellent quarter financially with multiple records achieved, highlighted by a record quarterly free cash flow generation of 57 $1,000,000 Yesterday evening, we also provide an update on our key growth projects. I'm pleased to report that New Gold C zone has achieved commercial production and the territory crusher and conveyor system has been commissioned well ahead of schedule. The importance of these milestones cannot be overstated and will have a direct and positive impact on production, cost and cash flow.

Speaker 2

Renewable also achieved 1st development ore from the underground main zone. Although the ore tonnage from underground mine will stay relatively low until we come in stoping next year, the achievement mark a key milestone in our plan to prepare the underground mine and ramp up production of fire grade underground ore. We also realized positive exploration result at both operations during the Q3. At New Afton, the high grade eastern sector of the mine continues to grow, with promising results at Keyzone and Inu Oil Zone. In Atrani River, in our first major exclusion program since 2017, we are already seeing positive results standing open pit in underground mineralization.

Speaker 2

With that, I will turn the call over to Keith. Thank you, Pat.

Speaker 3

I'm on Slide 6, which has our operating highlights. As Pat mentioned, Q3 delivered the highest production and lowest cost of the year. Production totaled approximately 78,400 gold ounces and £12,600,000 of copper. This represents a 40% increase in gold production compared to the 2nd quarter driven by higher feed grades at Rainy River. Consolidated all in sustaining costs for the quarter were $11.95 per gold ounce, in line with our plan.

Speaker 3

This is a decrease of 13% over the 2nd quarter. This is highlighted by strong cost performance at both operations with Rainy River continuing to decrease its all in sustaining cost and New Afton achieving an all in sustaining cost of negative $408 per ounce after considering the copper credits. We expect the increase in production and decreasing cost trends to continue into the 4th quarter, mostly as a result of higher production at Rainy River and lower costs at New Afton. Our total capital expenditures for the quarter were approximately $63,000,000 with $20,000,000 spent on sustaining capital and $43,000,000 on growth capital. At Rainy River, sustaining capital is primarily related to capitalized waste, capital components and tailings management and construction.

Speaker 3

Sustaining capital is trending lower than guidance as a lower portion of waste tons are capitalized and a higher proportion remains in operating costs, but with no net impact on all in sustaining costs. Growth capital is related to underground development as the underground main zone continues to advance. At New Afton, sustaining capital is primarily related to tailings management and stabilization activities. Growth capital is primarily related to the C zone underground development and is tracking to the low end of the guidance range due to efficient capital management and early commissioning of the crushing convey system. Turning to our financial results on Slide 7.

Speaker 3

3rd quarter revenue was $252,000,000 which is a quarterly record. Q3 revenue was higher than prior year quarter, primarily due to higher metal prices and higher gold sales, partially offset by lower copper production. Cash generated from operations before working capital adjustments was $120,000,000 or $0.15 per share

Speaker 4

for the quarter, higher than

Speaker 3

the prior year period primarily due to higher revenues. Fuel Gold generated record free cash flow of 57,000,000 dollars due to higher revenue and lower capital expenditures. The company recorded net earnings of approximately $38,000,000 or $0.05 per share during Q3, an increase due to higher revenues. Earnings were also impacted by lower depreciation than originally planned

Speaker 2

due

Speaker 3

to the lower accounting asset base resulting from the deemed disposition of assets at New Afton when accounting for the OTPP buyback in May of this year. After adjusting for certain other charges, net earnings was $64,000,000 or $0.08 per share in Q3, a significant increase compared to adjusted net earnings of $23,000,000 in the Q3 of 2023. Our Q3 adjusted earnings include adjustments related to other gains and losses. At the end of Q3, we had cash on hand of $133,000,000 and a liquidity position of $459,000,000 dollars This is after the company made a payment of $43,000,000 to the Ontario Teachers' Pension Plan as part of the minimum cash guarantee under the terms of the original 2020 agreement and also repaid $50,000,000 of the $100,000,000 drawn in its credit facility to fund the payment of the amending agreement with Ontario Teachers, which was entered into in May. And subsequent to the quarter end, we paid an additional $20,000,000 on the credit facility, leaving a balance of $30,000,000 outstanding, which we expect to pay off by the end of the year.

Speaker 3

To sum up, we remain in a very healthy financial position. Now I'll turn the call over to Johan to walk through our

Speaker 4

operating highlights. Johan? Thanks, Keith. Starting with Twin Rivers on Slide 9, gold production in the 3rd quarter was slightly below 78,400 ounces. Although it was our operating operation's strongest quarter so far this year, we were slightly behind plan at the end of September, and we're expecting full year gold to be about 15,000 ounces below the original guidance range.

Speaker 4

There's two main reasons for that. First, as discussed on the Q2 call, operations were impacted by a voluntary suspension follow a fatality in July and the progressive return to full production. Both front end loader were temporarily removed from the fleet, additional safety device were installed on one of the unit and the same unit returned to production only a few days ago. The 2nd loading unit is still waiting for parts and not necessary for production on the short term. 2nd, we have left high grade ore on 2 benches in the open pit.

Speaker 4

Some rich pockets of high grade ore on the 160 and 150 benches were lower tonnage than originally expected. Although the impacted volume was relatively small, the reduction in high grade mill feed impacted those production. Going forward, the team has reviewed the occurrence of high grade blocks considering additional grade control data and historical reconciliation, leading to an adjustment of a small percentage of ore block to mitigate risk. I am confident in the open pit mine plan for the last quarter of this year and our 2020 25 and 2026 production outlook remains unchanged. Despite the lower gold production, the team has done an excellent job to control cost.

Speaker 4

The 3rd quarter all in sustaining cost is about 29% lower than the previous quarter at $13.27 per ounce on a byproduct basis. With the 4th quarter expected to be a lowest cost quarter of the year, we are trending to the top end of the guidance range for the full year. Turning to Slide 10. Rainy River also completes some significant project milestone in the underground mine during the Q3. As you know, the underground mine is divided into 2 main sectors, encrypted, which has been in production since 2022 and the much larger underground main sector, which we're currently developing.

Speaker 4

In Q3, rate borrowing on the main fresh air rays and the 2nd portal located in the east wall of the pit were completed. The 2nd portal will provide a second means of address and improve ventilation for Underground Main and will also significantly reduce the underground outage defenses. The operation also achieved 1st ore development at Underground Main ahead of schedule. Although the ore tonnage is still quite small, it marks a significant milestone in our plan to prepare the underground main sector for stoping in the first half of next year and ramp up to about 5,500 tonnes per day by 2027. Turning now to New Afton on Slide 11.

Speaker 4

New Afton delivered another strong operating quarter. B3 continued to deliver to plan with C zone ramping up well, leading to a 31% increase in tonne milled over the Q3 last year, offset by the planned lower gold and copper grade from E3. All interseting costs decreased significantly compared to the prior year period, driven by lower operating expenses, lower sustaining capital spend and high byproduct revenue. The 1st 9 months at New Austin delivered according to plans and were trending favorably with the annual plan. We continue to transition from the B3 cave to C zone and expect to see a continued ramp up in C zone mining rate throughout the year.

Speaker 4

We expect mill throughput to continue increasing in the 4th quarter, partially offset by lower feed grade due to the cave draw sequence, leading to a fairly consistent quarterly gold and copper production profile as planned. Underlying with New Aspen on Slide 12. Our C zone commercial production and commissioning of the geometry crusher and counter system is completed 2 months ahead of schedule and on budget. With the material and link system now fully operational, Truck haulage is eliminated from C zone removing production constraint and resulting in significant cost reduction going forward. We also completed a total of 18 drawbells as of mid October, achieving hydraulic radius and commercial production in C zone.

Speaker 4

These two milestones are transformative for New Afton, increasing production and decreasing costs to generate meaningful cash flow. I would like to provide an update on some of the technical study that we're working on to unlock additional value at Trinity River and New Afton following the positive exploration results from both operations. At Rainy River, after adding Phase 3 to mineral reserves at the end of last year, we extended the open pit mine life by approximately 1 year and deferred reclaiming of the low grade stockpile. Based on the near surface exploration results this year and considering a high gold price, we're now looking at leveraging the existing mill capacity and open pit mining fleet to further extend the open pit mine life while keeping capital investment to a minimum. While still in the early stages, we have identified potential opportunities to add an additional pushback to the main pit and potentially some smaller satellite pits.

Speaker 4

At New West End, the company continued to optimize C zone with the potential to increase mineral reserves at new additional capital expenditure. The team is also advancing the East Extension typical study with the objective of adding a new high grade zone to the East side to the East of C zone. This extension has the potential to improve the new Afton copper and gold production profile and also to unlock other high grade zones in the eastern section of the mine, including K zone and hanging well zone. In terms of news flow, the Q1 of 2025 will be active for the company. The company will report year end 2024 minuteeral reserve and mineral resources in February 2025.

Speaker 4

Our 3 year operational outlook will also be provided in February supported by an investor and analyst technical session. And the technical information for both operations will be provided in updated NI 40three-1 hundred and one technical report in the Q1 of 2025. With that, I will hand over the presentation to Pat for closing remarks.

Speaker 2

Thanks, Joao. Slide 15 summarizes our 2024 outlook. For the full year, we expect consolidated snow production to be slightly below the range that we present at the start of this year. While New Aspen gold production is expected to be at the top of the guidance range, the river is expected to be below the guidance range due to the reasons that we outlined earlier. Although gold production is slightly lower than planned, all other consolidated operational metrics are in line with or better than target.

Speaker 2

Copper production is on track to be at the midpoint of the guidance range and consolidated all in sustaining costs are trending to the lower end of the guidance range. This is a testament to the team operational discipline and capital management. Softening capital is striking below the low end of the guidance range and the growth capital is striking to the low end of the guidance range, partly the result of early commissioning of the mineral handling system at New Aspen. Before handing over for questions, this slide summarizes some of New Gold's key accomplishments and month into the year, and we have already successfully delivered the majority of our stated strategic goals. The highlight for me has been the cost performance of our operations as we have highlighted throughout this presentation.

Speaker 2

By achieving our cost targets, even with the slightly lower gold production, the operations are realizing increasing margins with the iron metal prices. The increasing margins together with production growth and declining capital spending over the guidance period drives higher free cash flows. As previously reported, we achieved our free cash flow inflection point in Q2 slightly ahead of schedule and we have just achieved a record quarterly free cash flow for the company. Another key accomplishment is the successful completion of key projects milestones. From new growth from new Athens season to Rainy Rivers underground main project and tailing dam rates, the team consistently delivers project on schedule and on budget.

Speaker 2

Project execution is now one of New Gold's biggest strengths. With the operation running well and BoJack advancing as planned, the company has included a production program this year. In Q3, we report positive results at both operations, which we expect to be reflected in our year end reserves and resources updates. And finally, we reduced Ontario Teachers' free cash flow interest at New Afton from 46% to less than 20% in Q2, generating meaningful shareholder value and increasing our exposure to a high quality operation with significant exploration of sight. This completes our presentation.

Speaker 2

I will now turn it back to the operator for the Q and A portion of the call. Celine?

Operator

Thank you, sir. And your first question will be from Mike Parkin at National Bank. Please go ahead.

Speaker 5

Thanks guys for taking my questions. If I'm looking at Slide 13, it's an aerial view of your open pit. Just to be clear, you had some issues in the past with grade reconciliation. If I remember correctly, that was in the North Lobe. But is that not completely done and behind you?

Speaker 5

And if I'm looking at it in the right orientation, that is the right side of the picture where you're actually backfilling that pit. So this what seems to be a temporary issue is not in that problematic area of the path that's done in behind you completely. Am I correct on that?

Speaker 4

Hi, Mike. This is Jay.

Speaker 2

I can answer your question. So no, this is

Speaker 4

not in the North zone. We're currently mining. So as you know, I started about 3 years ago, and during that period, 2 have been picked as we can find out well. But like we said in the mine on a monthly basis, we see some positive and negative variance, but overall, it's the answer is balanced. And like Johan mentioned earlier, on 2 benches, we have rich pockets of aggregate ore that were lower than expected.

Speaker 4

Going forward, there's only a few of those high grade blocks remaining in Phase 4 mineral reserves. So we've applied a capping on those blocks to improve mine timing. We don't believe this will have an impact on our 2025 and 20.26 production outlook.

Speaker 5

Okay, that's great. And then that new Afton, you just give us a bit more color like you've got the underground crusher online, the conveyor. Can you just give us a bit more color of how and when that's going to come on and like what kind of tonnage rates you're tracking at for like say the month of October, because that was kind of from what I understood from the site tour last year, that was kind of the key deliverable to unlocking the tonnage, which is up quite a bit quarter over quarter, but we should how soon do you expect to be able to bring that mill up to like full capacity now that you're really kind of unlocking the potential T zone with both the conveyor system and crusher, but I guess also the hydraulic radius being achieved. Do you expect that to be several quarters? Or could we actually see that achieved relatively early into 2025?

Speaker 2

So thank you, Mark. Patrick speaking. So the first part of it is, as Johan explained, we will accelerate the drop decrease. So I think it's one thing. And the fact that we were able to start the conveyor and crushing system in advance, it's eliminating all the trucking that we're cutting out the ramp to this chart of the mineral files and flows of D3.

Speaker 2

So it's a huge cost saving for us. And also, it's these equipments were interacting with development activities and construction activities. So it will be it will improve the efficiency. The volume of work is moving forward. So we want to see that in the short term.

Speaker 2

The fact is that the blood case is unlucky. So the pace of the blood case is something that we should not if you accelerate, we have short term gain for and long term gain. So we have a good sequence that we present in the outlook. So if you look at the deposit the depletion curve of B3 and the progressive curve of C zone in the outlook. So what that means is we'll accelerate B3 and we'll also it means that C zone will show up more in the 2nd part of the year.

Speaker 2

But basically, we respect the ramp up and this progressive ramp up will go to 14,500 tons per day at the end of December 2025.

Speaker 5

Okay. And is there any major shutdowns that we should be thinking about for either Q4 or Q1 of next year?

Speaker 6

No.

Speaker 2

You talked about New Haven or you talked?

Speaker 4

Either one.

Speaker 2

No, nothing that is exceptional. So we have regular shutdown at both sites, but to do the maintenance and we are planning our mining sequence and in our production profile and nothing exceptional going forward.

Speaker 5

Great. Thanks very much. That's it for me.

Speaker 2

Thank you.

Operator

Thank you. Next question will be from Eric Windmill at Scotiabank. Please go ahead.

Speaker 7

Great. Good morning, Patrick and team. Thanks for taking my question. Nice to see the results out this quarter. Maybe just quickly on the guidance for the balance of this year.

Speaker 7

Obviously, production is down a bit rainy, but costs also coming down as well. Any additional comments there in terms of how you're able to get the cost down here for the balance of the year?

Speaker 3

Yes, it's Keith. I'd say going side by side at Rainy River, the team has done a great job of focusing on cost control and optimization, which has added the impact of reducing gross costs and unit costs as well. The open pit drilling and blasting, they've made improvements there, reducing haulage distances as well. In the mill, they've been able to optimize and lower consumable consumption. And then on the maintenance side, optimize again and look at our preventative maintenance programs and optimize and reduce costs there.

Speaker 3

On the capital side then, we're performing the tailings dam ourselves. So we're at the raise this year and we're seeing savings there. And also then on the overall mining costs, capital stripping is down. There's no net impact on ASIC. So overall, kind of a lower gross costs at Rainy River.

Speaker 3

New Aspen as well then, you've seen the decrease in mining costs every quarter as the C zone tonnage continues to ramp up. So that's having a really positive impact on costs as well.

Speaker 7

Okay, great. Thanks for that. Really appreciate it. And maybe just one more on New Afton, if I could. So obviously, good positive progress here on the tailings projects.

Speaker 7

Anything additional milestones you're looking at for the rest of this year or sort of stable over the winter months? Is that typically how it operates?

Speaker 2

We are really pleased by the tailings, the dewatering of the tailings and we are over performing compared to the original plan. So we are slightly in the plan. So think we had a pretty dry year this year. And as you know, we see it was pretty warm too. So the evaporator over performed compared to what we planned.

Speaker 2

We maximize the utilization period for the evaporator too. The thing is in control, nothing to report here.

Speaker 7

Great to hear. I know, I'm sure we'll be watching that. Thanks for taking my questions. I'll hop back in the queue. Cheers.

Operator

Thank you. Next question will be from Jeremy Hoi at Canaccord Genuity. Please go ahead.

Speaker 8

Hi, everyone. Thanks for taking my questions. A lot of them have been answered already, but I've got a few more to touch on. You mentioned that there'd be an immediately positive impact on costs from the early commercial production at New Afton. Can you provide any more specifics on how you expect this to impact the rest of this year and early next?

Speaker 3

Yes. It's Keith again. As Johan mentioned, the commissioning eliminates the haulage from the C zone level and increases our tonne too. But throughout 2024, we've continued to see a decrease in the mining cost per tonne as C zone tonnage increases and we realize the benefits from the capital investments that we've made. Our trend will continue into Q4 and into 2025.

Speaker 3

I'd say once fully ramped up at Seasonal, we'll have a similar cost profile to what we had in the early this one from 2012 to 2020. It's all trending very well.

Speaker 8

Got it. Understood. And in terms of the ramp up, the timing, like we're still talking about 14,500 tonnes per day in 2025. When are we expected to see that in 2025?

Speaker 2

If I'm looking at the production profile, it's in Q4. So we have a time range for that. When we develop a block cave, actually, we have 18 drawbells. At the end, we have close to 90 drawbells. So our objective is to draw as equal as possible.

Speaker 2

So we are performing extremely well under development. We are doing also extremely well on construction actually. So and if we are when we'll get close to that, just to remind to you, 14,500 is the average ton process per day. So but the processing plant is, I think, a 16,000 tons of capacity. So the 14,500 is including the shutdown.

Speaker 2

But actually, it will happen mostly in the Q4 of 2025.

Speaker 8

Okay, that's helpful. Thank you very much. The last one for me is on the automation system. You mentioned that, that would be online in H1 2025.

Speaker 3

Are you trying to find

Speaker 8

any more specifics on how this will improve mining costs?

Speaker 2

Ken, we'll start a new one, we'll cover. But the main advantage is when you go down with New Western, just a vehicle just to transport the employees, you'll see half an hour to go down, slightly 25, 40 minutes to go up. And in DC, we're restricted to a little bit to 10 hours per day underground. So the big advantage of that is the fact that we will operate between shift and it will be steady operations. So the biggest what is important is and it's safe and people are on surface.

Speaker 2

So it's I'm really impressed honestly and they present to me at the beginning and what they achieved today is really impressive. And this difficult for us to factorize that in the cost that we are going to improve, but basically it will mainly provide a steady operation underground in the 24 hour business going forward.

Speaker 8

Okay, thanks. I really appreciate the color. I'll step back in the queue.

Operator

Thank you. Next question is from Michael Ciudico at RBC Capital Markets. Please go ahead.

Speaker 6

Yes, thanks very much. Maybe first on Rainy River. Could you talk a bit more about what the potential there is for a pushback or the other satellite pits that you mentioned? Would that be fairly gold price driven at this point? Or is it dependent on further drilling or other considerations?

Speaker 6

And maybe can you quantify the potential opportunity there even at a high level?

Speaker 4

Hi, it's Luke here. So like Johan mentioned, there's a few different opportunities. So one of them is that's another pushback to the main pit. So that one we already have the measured and indicated results for. So we don't need to be in this more drilling for that pushback.

Speaker 4

We'll just need to put another core price. So We will set for an update next year.

Speaker 6

Sorry. So just so I heard you right, should we be expecting an update on those opportunities with the updated technical report? Or is that longer term?

Speaker 4

Yes. Those will be included in the technical reports. Are there as resources or possibly as reserves as well? We're still evaluating that.

Speaker 6

Okay. And then maybe just one follow-up. If you were to start refocusing on open pit operations at Rainy, that have anything to do or would it impact the plans for underground development? Or would you think of doing both in parallel?

Speaker 4

We'd continue to do both in parallel. It would just the main benefit would be to defer the reclaim or delayed stockpile and to keep the mill falls longer.

Speaker 8

Right. Okay. And then maybe

Speaker 2

sorry, Mike, the benefit for us will be to provide higher quality answers to the more fit.

Speaker 6

Right, right. Offsetting the lower grades, right. No, it makes sense. Maybe a similar conversation on capital allocation. Obviously, gold driving that opportunity, gold up about $400,000,000 since you reconsolidated part of New Afton from teachers, now declared commercial production.

Speaker 6

How are you thinking about the remaining 20% stake there? And is a full reconsolidation something that we should be thinking about that you're thinking about when it comes to capital allocation?

Speaker 2

It's part of the possibility that we have. So we're always looking for this type of possibility. So the first tranche that we bought was really strategically important for us. And I think it creates value for our shareholders. We're still keeping our mind open and it's one of the possibility that we're currently looking at.

Speaker 6

So would it be fair to say, if I can put words in your mouth maybe that you have significant opportunities for organic growth both at Rainy and potentially at New Afton that maybe keep you looking internal rather than potentially looking outside the company for growth? Is that a fair assessment?

Speaker 2

I don't like to butt myself in this type of question, Mike, as you know. But as we are keeping all our options open, so I strongly believe that the good way to return value to shareholder is through organic growth when it's where the capital is reasonable. And we are really careful about that. And I think we have a nice possibility of our 2 assets. And we respect our people and I think that we if we can increase the mine life, it will portion themselves for the future and we really appreciate that.

Speaker 2

For the other options, I can say to you that's all of my peers, we are vigilant. We are keeping our eyes open. And as we did recently in May, we want to grow, but we don't want to grow to be big. We want to grow to pay value within the creating value of that growth. We don't want to trade about for 4 quarters.

Speaker 2

And we are vigilant and we have capacity to address different challenge. So we have a team today that where has good to mine open pit and underground and we have a lot of skills to mine different type of ore body underground and we showed experiments also in the Americas. So we keep our highs and our auctions open.

Speaker 6

Great. Thank you very much for the answers.

Operator

Thank you. Next question will be from Anita Soni at CIBC. Please go ahead.

Speaker 9

Hi, Patrick, Johan and team. I just wanted to ask a little bit more about firstly at New Afton. Could you just let us know how much the tonnage was in this quarter in this from the C zone?

Speaker 2

Again, the tonnage from C zone, so in the total tonnage and what C zone was represented?

Speaker 4

Sorry, Nizana, sorry, Nizana here. For Q3, most of the orders coming from V3 actually. And we have, I would say, an average of about, I would say, 1,000 tonne per day coming from C zone to Supercar GasLogos.

Speaker 9

So you said 1,000 tonnes per day from the C zone?

Speaker 4

Yes, it's about I mean, we just extract enough to remove the falling factor. I mean, that's all. But what we're going to do in Q4 with some of that topic is we're going to more prioritize the construction of the drop down and we're going to blast all at once pretty much the other drop points to the details about us to be more efficient in construction and save some costs. But the goal is to have at year end about 30, 12 wells fully developed to increase the footprint of the case.

Speaker 9

Okay. Second question around Rainy River as it pertains to next year and 2026. You said you're confident in the that it won't impact the mine plan. Can you just talk about the I guess the evaluation that you did on the 2025 2026 grade profile to come to that conclusion?

Speaker 4

Yes, for sure. I mean, so your question is about maybe to reiterate our outlook 2025 and 2020 6. Is that right, Anita? That's what you're looking for?

Speaker 9

Yes. I'm trying to understand why Okay.

Speaker 4

Very good. So what we did, as you know, we're in the process of preparing our budget and loan And we basically, we change we look at the, I would say, the Saphrini River. We look at the blocks, aggregate blocks that was remaining in Phase 4. And basically, we don't have many blocks that have been subject to what happened in Q3 and Saturday maybe before. We have really uncertainty on those.

Speaker 4

We have realized some capping as well on those blocks. But again, there's not any of those block blocks, but consistent going forward. We re sequenced everything and basically we came up pretty much as I would say the same unplanned that we have that we present at the end of last year outlook.

Speaker 9

Yes. So I guess that explains the 4th quarter impacts, but I was just trying to understand how you basically came to the conclusion that there would be no impact in 2025 and 2026? Are there no higher grade levels or yes or did you apply capping?

Speaker 4

Exactly. And I mean, we did apply all the factor on the remaining of the block model, the factor that Jeff was talking about here. And basically, we were on the mine plan and we came up pretty much at the same production.

Speaker 9

Okay. So maybe higher tons, lower grade or is that or is it completed the same?

Speaker 4

No, there's I mean, the capping that's been put is really, I would say, impacting on this year, but no much impact in the remaining years because there's no much high grade blocks.

Speaker 9

Okay. All right. And then just in terms of the sustaining capital guide that you talked about being about $20,000,000 under some from operational efficiencies and tailings dam, I guess, wins there. But the other aspect you said was a little bit of timing of spending. So how much do you think would be pushed into 2025 for the sustaining capital?

Speaker 3

Yes, not much. So at Rainy River, the majority of the reduction in sustaining capital is effectively reclassification to OpEx. So there's about $2,000,000 in savings on the tailings facility, but the remainder is reclassed to OpEx. So that is all savings and not much deferrals at Rainy River. At New Alton, in terms of capital, a little bit of deferrals on the growth side as we are down to the low end of the range, but some savings as well as the team have optimized and commissioned to compare early.

Speaker 9

So maybe $5,000,000 pushed into next year or Yes.

Speaker 1

Yes. Yes. Yes. There you go.

Speaker 9

Okay. And then lastly on Rainy, as you brought it up with the stripping sorry, the capital moving to OpEx. Is that the result of higher gold prices and waste coming ore? Or I'm just trying to understand why that happened and what

Speaker 1

the carry on would be?

Speaker 3

Yes. It's just the timing of the strip ratio.

Speaker 4

From accounting perspective, we have a cap

Speaker 3

on our ratio that we capitalized. And when we were doing our original guidance, just the way the strip ratio ended up over the year. But the main message is there's no change in the mine plan in terms of the total tons. We've stripped in line with plan. It's just a little bit on the accounting reclassification.

Speaker 9

Okay. And then so next year, as I recall earlier this year, you had said that the remaining life of mine plan strip was at the start of the year 1.95 and you're doing, I guess, about 3 or more right now. So is it fair to say in 2025, 2026, you're going to be below one to 1?

Speaker 3

Yes. I haven't got that number exactly in front of me. But you're right, it's the 2024 was focused on stripping and exposing that ore for 2025 and 2026 in Phase 4. So yes, we will see a significantly reduced strip ratio in 202526.

Speaker 9

All right. Okay. That's it for my question. Thank you for taking my questions there.

Speaker 4

Thank you.

Operator

Next question will be from Lawson Winder at Bank of America Securities. Please go ahead.

Speaker 10

Yes. Thanks very much, operator. Good morning, New Gold team. I just wanted to well, first of all, can I ask about the reserve update for year end? What are you guys thinking in terms of gold and copper price assumption in estimating that reserve and resource update, and particularly as it pertains to the exploration success you've had to date?

Speaker 4

Yes. Hi. It's Luke again here. So just a reminder that at the end of last year, we used metal prices of $1400

Speaker 2

per ounce of gold and

Speaker 4

$3.25 per pound of copper. So with the significant increase in the consensus long term prices this year, we are looking to modestly increase those metal price assumptions for year end reserves, but we're still running some sensitivities in evaluating that at the moment. So I can't provide these numbers for sure.

Speaker 10

Did you sorry, did you say modest increase?

Speaker 4

Yes. It's still going to be significantly below the spot prices, but yes, we are looking at an increase compared to what we did last year.

Speaker 10

Okay, great. And I mean, I was also going to ask about your exploration budget for next year. Given that you're still in that process, I'm not sure if you can give us a very specific number, but perhaps you could give us a directional range. Do you anticipate that exploration budget to increase in 2025 versus 2024?

Speaker 2

We have two things here. Because Jean Francois is in the room that Jean Francois present projects in 2024 at the beginning of the year. And so the way that we are working, these projects were good projects. We're successful in mostly of them. Some others, it's geology, it's exploration, we were not.

Speaker 2

And depending on the progress, we are shipping more. So we adjust the margin 2 times during the year based on the exploration projects and the idea that were generated by the team. So for next year, we're still working on this. We are also we are drilling. So the success of the current exploration work will replace the next step.

Speaker 2

So but we will probably be next year as much as we can aggressive in this model because it's actually, this year it was excellent for the future. We expect that next year also to define the size of Keystone, we'll have to do some to test other property. We have moved the train reverse. So we cannot I don't want to I can't pass me the number here. We're working on that as much as we can, right, give it to some of the

Speaker 10

Okay. Yes, thank you for that color. And then if I could just ask one more question. As you think about potential expansions to Rainy River, are there areas where you could expand that would be exclusive of the Royal Gold stream? Or the areas you're looking at also subject to that stream?

Speaker 10

Thanks.

Speaker 3

Yes. The stream is on the land package at Rainy River. So I think most of the pit pushbacks, etcetera, would be subject to the stream.

Speaker 4

But the

Speaker 3

team are always looking at opportunities around to see if there's other.

Speaker 4

Yes, most of the pushback would be subject to the stream.

Speaker 10

Okay. Thanks very much, John. Appreciate it.

Operator

Thank you. At this time, Mr. Shaw, we have no other questions registered. Please proceed.

Speaker 1

Thank you, Sylvie. And to everyone who joined us today, thank you again. As always, should you have any additional questions, please do not hesitate to reach out to us by phone or email. Have a great day.

Operator

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.

Remove Ads
Powered by Quartr
Earnings Conference Call
New Gold Q3 2024
00:00 / 00:00
Remove Ads