2012 Third Quarter Results Webcast
- 1. 2012 Third Quarter Results Webcast November 1, 2012
- 2. Speaker Randall Oliphant, Executive Chairman 2012 Third Quarter Results Webcast | November 1, 2012 2 2
- 3. Cautionary statement All monetary amounts in U.S. dollars unless otherwise stated CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information contained in this presentation, including any information relating to New Gold's future financial or operating performance may be deemed "forward looking". All statements in this presentation, 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 use of forward-looking terminology such as "plans", "expects", "is expected", "budget", "scheduled", "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. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and 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 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: significant capital requirements; fluctuations in the international currency markets and in the rates of exchange of the currencies of Canada, the United States, Australia, Mexico and Chile; price volatility in the spot and forward markets for commodities; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production, between actual and estimated reserves and resources and between actual and estimated metallurgical recoveries; changes in international, national and local government legislation in Canada, the United States, Australia, Mexico and Chile or any other country in which New Gold currently or may in the future carry on business; taxation; controls, regulations and political or economic developments in the countries in which New Gold does or may carry on business; the speculative nature of mineral exploration and development, including the risks of obtaining and maintaining the validity and enforceability of the necessary licenses and permits and complying with the permitting requirements of each jurisdiction that New Gold operates, including, but not limited to obtaining the necessary permits for the Blackwater project, in Mexico where the Cerro San Pedro mine has a history of ongoing legal challenges related to our EIS and Chile where the courts have temporarily suspended the approval of the environmental permit for the El Morro project; the lack of certainty with respect to foreign legal systems, which may not be immune from the influence of political pressure, corruption or other factors that are inconsistent with the rule of law; the uncertainties inherent to current and future legal challenges the company is or may become a party to,; diminishing quantities or grades of reserves; competition; loss of key employees; additional funding requirements; actual results of current exploration or reclamation activities; changes in project parameters as plans continue to be refined; accidents; labour disputes; defective title to mineral claims or property or contests over claims to mineral properties. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance or inability to obtain insurance to cover these risks) as well as "Risk Factors" included in New Gold's disclosure documents filed on and available at www.sedar.com. Forward-looking statements are not guarantees of future performance, and actual results and future events could materially differ from those anticipated in such statements. All of the forward-looking statements contained in this presentation are qualified by these cautionary statements. New Gold expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except in accordance with applicable securities laws. 2012 Third Quarter Results Webcast | November 1, 2012 3 3
- 4. Cautionary statement (cont’d) CAUTIONARY NOTE TO U.S. READERS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES Information concerning the properties and operations discussed in this presentation has been prepared in accordance with Canadian standards under applicable Canadian securities laws, and may not be comparable to similar information for United States companies. The terms "Mineral Resource", "Measured Mineral Resource", "Indicated Mineral Resource" and "Inferred Mineral Resource" used in this presentation are Canadian mining terms as defined in accordance with NI 43-101 under guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council on December 11, 2005. While the terms "Mineral Resource", "Measured Mineral Resource", "Indicated Mineral Resource" and "Inferred Mineral Resource" are recognized and required by Canadian regulations, they are not defined terms under standards of the United States Securities and Exchange Commission. Under United States standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve calculation is made. As such, certain information contained in this presentation concerning descriptions of mineralization and resources under Canadian standards is not comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the United States Securities and Exchange Commission. An "Inferred Mineral Resource" has a great amount of uncertainty as to its existence and as to its economic and legal feasibility. It cannot be assumed that all or any part of an "Inferred Mineral Resource" will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. Readers are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into Mineral Reserves. Readers are also cautioned not to assume that all or any part of an "Inferred Mineral Resource" exists, or is economically or legally mineable. In addition, the definitions of "Proven Mineral Reserves" and "Probable Mineral Reserves" under CIM standards differ in certain respects from the standards of the United States Securities and Exchange Commission. TECHNICAL INFORMATION The scientific and technical information in this presentation has been reviewed by Mark Petersen, a Qualified Person under National Instrument 43-101 and an employee of New Gold. (1) TOTAL CASH COSTS “Total cash costs” 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 North America. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies. New Gold reports total cash costs on a sales basis. Total cash costs includes mine site operating costs such as mining, processing, administration, royalties and production taxes, but is exclusive of amortization, reclamation, capital and exploration costs. Total cash costs are reduced by any by-product revenue and are then divided by ounces sold to arrive at the total by-product cash costs of sales. The measure, along with sales, is considered to be a key indicator of a company’s ability to generate operating earnings and cash flow from its mining operations. This data is furnished to provide additional information and is a non-IFRS measure. Total cash costs presented does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other mining companies. It should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS and is not necessarily indicative of operating costs presented under IFRS. A reconciliation will be provided in the MD&A accompanying the quarterly financial statements. (2) PEA – ADDITIONAL CAUTIONARY NOTE This note regarding the preliminary economic assessment (PEA) is in addition to cautionary language already included within the presentation as required under NI 43-101. The Blackwater PEA is preliminary in nature and includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA based on these mineral resources will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. (3) CASH GENERATED FROM OPERATIONS BEFORE WORKING CAPITAL Cash generated from operations before working capital is a non-IFRS performance measure which the company believes provides additional information about the company’s ability to generate cash flows from its mining operations. 2012 Third Quarter Results Webcast | November 1, 2012 4 4
- 5. Preliminary economic assessment cautionary language The Blackwater PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA based on these Mineral Resources will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. 2012 Third Quarter Results Webcast | November 1, 2012 5 5
- 6. 2012 third quarter highlights Operations combine for strongest 2012 quarter to date Highest gold production – 104,577 ounces Lowest total cash costs(1) – $443 per ounce sold Highest margin(2) – $1,117 per ounce Growth projects achieve significant milestones New Afton mill hits both commercial and full production ahead of schedule Blackwater Preliminary Economic Assessment (“PEA”) outlines parameters of company’s new flagship asset Outperformed gold and gold equity indices Notes: 1. Refer to Cautionary Statement and note on Total cash cost. 2. Margin per ounce calculated as average realized gold price in 2012 third quarter less total cash cost per ounce during 2012 third quarter. 2012 Third Quarter Results Webcast | November 1, 2012 6 6
- 7. Key metrics trending in the right direction 2012 Gold Production (thousand ounces) • New Afton production start 120 105 and strong performance of 100 99 95 three other operations 80 60 drives best quarter of 2012 40 20 - Q1'12 Q2'12 Q3'12 • Fourth quarter should be 2012 Total Cash Costs, net of by-product sales ($/ounce)(1) even stronger $600 $543 $472 • Company, once again, on $400 $443 track to achieve both production and cost $200 Q1'12 Q2'12 Q3'12 guidance 2012 Average Realized Margin ($/ounce)(2) $1,200 $1,117 $1,032 $1,014 $900 $600 Q1'12 Q2'12 Q3'12 Notes: 1. Refer to Cautionary Statement and note on Total cash cost. 2. Margin per ounce calculated as average realized gold price in 2012 third quarter less total cash cost per ounce during 2012 third quarter. 2012 Third Quarter Results Webcast | November 1, 2012 7 7
- 8. 2012 third quarter operating results 2012 Third Quarter 2012 Nine Months Earning from Earning from Gold sales Cash cost(1) Gold sales Cash cost(1) Mine Operations Mine Operations (000s ounces) ($/oz) (000s ounces) ($/oz) ($mm) ($mm) Mesquite 32 $722 $13 113 $664 $58 Cerro San Pedro 34 $218 $41 103 $205 $123 Peak Mines 22 $796 $15 64 $772 $42 New Afton 7 ($955) $8 7 ($955) $8 95 $443 $77 286 $486 $231 Note: 1. Refer to Cautionary Statement and note on Total cash cost. 2012 Third Quarter Results Webcast | November 1, 2012 8 8
- 9. New Afton start-up • Mill achieved commercial production (6,600 tpd) on July 31st and full production (11,000 tpd) on September 21st – both ahead of schedule • Total development capital through commercial production start - $793 million • Recoveries meeting expectations – moving into mid-80 percent range through September into October • Operating costs of ~$20 per tonne – By-product total cash costs(1) – ($955) per ounce – Co-product total cash costs(1) - $729 per ounce; $1.87 per pound Notes: 1. Refer to Cautionary Statement and note on Total cash cost. 2012 Third Quarter Results Webcast | November 1, 2012 9 9
- 10. Financial highlights Earnings from Mine Operations Adjusted Net Earnings per Share ($ millions) ($ per share) $100 $0.15 $77 $76 $78 $76 $0.11 $75 $0.10 $0.10 $0.10 $0.09 $50 $0.05 $25 - - Q3'12 Q2'12 Q1'12 Q3'11 Q3'12 Q2'12 Q1'12 Q3'11 Cash Generated from Operations before Working Capital Net Cash Generated from Operations ($ millions) ($ millions) $100 $91 $100 $80 $82 $80 $71 $75 $75 $47 $46 $50 $50 $37 $25 $25 - - Q3'12 Q2'12 Q1'12 Q3'11 Q3'12 Q2'12 Q1'12 Q3'11 2012 Third Quarter Results Webcast | November 1, 2012 10 10
- 11. Relative share price performance 2012 Third Quarter NGD Gold Price S&P/TSX Gold Index FTSE Gold Mines Index HUI Index 130% +29% +20% 120% +19% 110% +15% 100% +11% 90% 29-Jun-12 10-Jul-12 21-Jul-12 1-Aug-12 12-Aug-12 23-Aug-12 3-Sep-12 14-Sep-12 25-Sep-12 29-Sep-12 Nine Months Ended September 30, 2012 130% NGD Gold Price S&P/TSX Gold Index FTSE Gold Mines Index HUI Index +21% 120% +13% 110% 100% +3% 90% (1%) 80% (3%) 70% 30-Dec-11 5-Feb-12 13-Mar-12 19-Apr-12 26-May-12 2-Jul-12 8-Aug-12 29-Sep-12 14-Sep-12 Source: 1. Bloomberg. All amounts in USD. Note: 2. S&PTSX Gold Index includes 59 gold companies in various stages of development/production. 3. FTSE Gold Mines Index includes 26 gold producing companies. 4. HUI Index includes 15 of the major global gold producers. 2012 Third Quarter Results Webcast | November 1, 2012 11 11
- 12. A future of further gold and copper leverage • Blackwater and El Morro combine to provide New Gold shareholders with significant gold and copper resource exposure • The two assets combined should more than double the company’s production base at low costs Measured & Indicated Life-of-Mine Average Annual Inferred Resources(1)(3) Resources(1)(2) Gold/Copper Production(4)(5) Gold Copper Gold Copper Gold Copper (Moz) (Blbs) (Moz) (Blbs) (Koz) ~600 (Mlbs) 12 3 6 3 600 100 10.9 4.9 El Morro ~85 10 500 El Morro 2.2 75 8 2 4 El Morro 2 400 1.7 6 300 50 4 Blackwater El Morro 1 2 Blackwater El Morro 1 200 Blackwater El Morro 25 2 100 - - - - - - Gold Copper Gold Copper Gold Copper Notes: 1. Refer to New Gold website for detailed disclosure on Reserve and Resource calculations. El Morro shown at New Gold’s attributable 30% share. 2. Blackwater Measured and Indicated resources inclusive of Capoose Indicated resources of 384koz. 3. Blackwater Inferred resources inclusive of Capoose Inferred resource of 443koz. 4. Blackwater gold production based on initial 15-years of mine life. 5. El Morro shown at New Gold’s attributable 30% share. 2012 Third Quarter Results Webcast | November 1, 2012 12 12
- 13. Blackwater – Preliminary Economic Assessment summary 2017 production start Conventional open pit and 60,000 tonnes per day processing plant Low strip ratio – 2.36 to 1 First five year annual average – 569,000 ounces at $467 per ounce Base Case Spot Case – September 20th Au: $1,275/oz Ag: $22.50/oz US$/CDN$ - $0.94 Au: $1,775/oz Ag: $34.50/oz US$/CDN$ - $1.00 NPV ($ billions) 1.1 NPV ($ billions) 2.8 IRR (%) 14 IRR (%) 26 Payback (years) 4.8 Payback (years) 2.7 2012 Third Quarter Results Webcast | November 1, 2012 13 13
- 14. Blackwater – Indicative timeline • The below provides a preliminary indicative targeted timeline through exploration, development and into production(1) Project Schedule 2012 2013 2014 2015 2016 2017 First Nations & Public Consultation Drilling PEA Feasibility Study Permitting Construction Production Notes: 1. Indicative timeline is dependent on continued exploration success, permit approvals and the determination that the deposit is economically viable. There is no assurance this timeline will be achieved nor that the deposit will ever reach the production stage. 2012 Third Quarter Results Webcast | November 1, 2012 14 14
- 15. Net asset value per share appreciation Net Asset Value(1) $15.00 High Share price ~1.5x 6/1/09 Today NAVPS Current Closing of $13.00 Richfield ~1.0x P/NAV acquisition Mesquite, Cerro San Pedro, Peak $11.00 High ~ $875 $1,704 Completed $1.2bn ~1.5x US$ NAV and Share price business combination with Western Goldfields New Afton $9.00 High ~ $120 $1,373 $7.00 ~1.5x Low ~0.7x El Morro(2) High $5.00 ~1.5x ~ $40 $737 370% increase in NAVPS $3.00 Blackwater(3) 292% increase in share price $1.00 $-- $1,315 26-Aug-11 15-Oct-09 1-Jun-09 12-Apr-11 9-Jan-12 7-Oct-12 27-Nov-10 24-May-12 14-Jul-10 28-Feb-10 31-Oct-12 Source: Broker Reports, Company Estimates and Announcements, Bloomberg. Notes: 1. Street consensus NAV. 2. Current street consensus NAV for El Morro; Includes $50mm cash payment received from Goldcorp as part of transaction consideration. 3. New Gold purchased Richfield for C$480 million and Silver Quest for C$110 million. The deals closed on June 1, 2011 and December 23, 2011, respectively. 2012 Third Quarter Results Webcast | November 1, 2012 15 15
- 16. The New Gold investment thesis EXPERIENCED BOARD AND MANAGEMENT FULLY FUNDED COMPANY WITH STRONG BALANCE SHEET DIVERSIFIED ASSET BASE IN MINING FRIENDLY JURISDICTIONS ORGANIC GROWTH OPPORTUNITIES/METAL OPTIONALITY PRODUCTION GROWTH/MARGIN EXPANSION INCREASING UNDERLYING ASSET VALUE MULTIPLE CATALYSTS COMPELLING INVESTMENT PROPOSITION 2012 Third Quarter Results Webcast | November 1, 2012 16 16