New Gold CEO Discusses Q2 2012 Results - Earnings Call Transcript

New Gold Inc. (USA) (NGD)

Q22012 Earnings Call

August 1, 2012 5:00 pm ET


Hannes Portmann - Vice President, Corporate Development

Randall Oliphant - Executive Chairman and Director

Brian Penny -Executive Vice President and Chief Financial Officer

Robert Gallagher - President and Chief Executi8ve Officer


Dave Cass - JPMorgan

Steve Butler - Canaccord Genuity

Steve Parsons - National Bank Financial

Lauren McConnell - Paradigm

Trevor Turnbull - Scotia Bank



Good afternoon. My name is Kyle, and I will be your conference operator today. At this time, I would like to welcome to the 2012 second quarter's results conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions].

Thank you. I would now like to turn the call over to Mr. Hannes Portmann, Vice President of Corporate Development. Sir, you may begin your conference.

Hannes Portmann

Thank you, operator, and good afternoon everyone. We appreciate you joining us today for the New Gold 2012 second quarter earnings results overview. On the line today, we have Randall Oliphant, Executive Chairman of New Gold, Robert Gallagher, our President and CEO, and Brian Penny, our CFO will be available during the Q&A period of the end of the call.

The operator will provide instructions for those wish to ask questions at the conclusion of the presentation. Should you wish to following along with the webcast, it is available on our homepage at If you are participating in the webcast, you can also type your questions through the internet. They will be addressed during the Q&A period.

Before Mr. Oliphant provides us with an overview of the results, I will go through an abbreviated version of our forward-looking statements, which are also provided in greater detail on slide three and four of the presentation.

Some of today's commentary may contain forward-looking information for 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 their respective conclusions, forecasts or projections. We refer you to the section entitled Risk Factors in New Gold's latest MD&A and other filings available on SEDAR which sets out certain material factors that could cause the results to differ.

As well, regarding references to mineral, resources and other technical terms defined in National Instrument 43-101, we refer you to our detailed cautionary note to U.S. readers concerning estimates of measured, indicated and inferred resources in the presentation.

I will now turn the call over to Randall.

Randall Oliphant

Thank you, Hannes. Good afternoon, everyone. Thank you for joining us today to discuss our second quarter results, which we believe provide us with a strong momentum as we head into the second half of 2012.

Slide five provides few of the second quarter highlights. Before I speak about our operations and development projects, I would like to mention two people who recently joined New Gold.

We are absolutely delighted to have to have The Honourable David Emerson join our Board of Directors, and Ernie Mast joined our management team as Vice President of Operations.

David Emerson has extensive experience in both, Canada's public and private sectors. During his time with the Government of Canada, he served as Minister of Foreign Affairs, Minister of International Trade, and Minister of Industry. We look forward to working with David and believe our company should benefit significantly from him joining the board.

We are also very excited to have Ernie become part of our management team. He has a tremendous amount of experience with both, operating and development stage projects. Ernie was most recently President of Inmet Mining's Panamanian operations and prior to that, worked in progressive more senior roles with Falconbridge, Noranda and Xstrata. Ernie will oversee the company's four currently producing mines. We feel fortunate knowing our operations are in good hands.

During the quarter, our operating mines combined produced over 95,000 ounces of gold at a cash cost of $472 an ounce. After providing shareholders with an average realized margin of over $1,000 an ounce for the first time in 2011, we are proud to have maintained this level for both the first and second quarters of 2012.

A few very important milestones were achieved during the quarter. We announced the successful start at New Afton, delivering on the targeted June timeline laid out over three years ago. The first ore was processed through the mill on June 28. Since that time, the team has done a wonderful job in steadily ramping up the operation. It is to their credit that we are able to announce that we have achieved commercial production ahead of schedule.

In the month of July, we processed an average of 7,428 tons per day through the mill, representing 68% nameplate capacity. Over the last five days, the mill has produced over 11,000 tons a day and is thus running at nameplate capacity as we speak.

In June, we won the El Morro lawsuit, as the Ontario Superior Court of Justice dismissed Barrick's claims questioning the validity of the exercise of the right of first refusal. As the timeframe to appeal the decision as now lapsed, we look forward to moving ahead with Goldcorp. as our partner with the continued development of this great project.

At Blackwater, we continue to find more gold. We announced an updated mineral resource which increased the resource to 7.1 million ounces of indicated gold resources, plush an additional 2.5 million ounces of inferred. Since acquiring the project in mid-2011, the indicated resources have increased by almost 300%. We are excited with the progress being made at Blackwater, and are focused on the completion of the preliminary economic assessment in September.

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