New Gold Inc. (NGD) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Michelle, and I will be your conference operator today. Welcome to the New Gold New Afton Mine conference call. [Operator Instructions]. Please be advised that today's conference call and webcast is being recorded. [Operator Instructions] I would now like to hand the conference over to Ankit Shah, Executive 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 New Afton update call. On the line today, we have Patrick Godin, President and CEO. Before Pat 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 related 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 on SEDAR, which set out certain material factors that could cause actual results to differ. I will now turn the call over to Pat.

Thanks, Ankit. Good morning, everyone. I want to provide additional details surrounding the New Afton tailing storage facility and the events that have transpired over the last 2 days. On Wednesday, August 9th, a routine visual inspection of the New Afton tailing storage facility was conducted by the Deputy Engineer of Record accompanied by New Gold. During this inspection, surface variances were identified on the external dam structure. To be clear, the variances were considered superficial and no tailings or water leaks from the facility occurred. Mine management, together with the Deputy Engineer of Record and other independent experts recommend a cautious approach to suspend underground mining activities until the Principal Engineer of Record could arrive at site and review the variance in person. The Engineer of Record arrived late on August 9 and conducted this review at New Afton yesterday on August 10. All mining activities, including B3 extraction and C-zone development were suspended for the Wednesday night shift and the Thursday day shift. Processing continued uninterrupted, utilizing surface stockpile, tailing continue to be deposits into the New Afton open pit. To maintain transparency and open communication, all employees, stakeholders and relevant authorities were informed of the situation. I want to commend the diligent actions taken by all parties to ensure the safety of employees and well-being of our stakeholders. The decision to suspend mining operation was not taken lightly and highlights New Gold's commitment to not compromise the health and safety of our people. Yesterday, the Engineer of Record joined his colleagues on site to review data, visually inspect the surface variances and discuss findings and recommendation with the New Gold team. As a result, the Engineer of Record confirmed that the structural integrity and behavior is normal than expected. With his assurance, we approved the resumption of all mining activities at the start of night shift last night. No further litigation measures are required to ensure the ongoing safety of our mining facility at New Afton. Overall, the last 2 days have demonstrated that our extensive surface monitoring program is working and identifying potential variances quickly. The collaborative process between New Gold, the Engineer of Record and other independent consultants has proven effective for ensuring the safety of our people and resolving potential risk promptly. Lastly, the ongoing tailing stabilization program as part of the C-zone project is advancing as planned with all activities on schedule to ensure the timely and safe execution of the C-zone block cave. To summarize the events over the last 2 days, I want to reiterate the 3 key takeaways. First, we received confirmation of the structural integrity of the New Afton tailing storage facility. We felt strongly about this and adding the full support of the Engineer of Record validate this. Second, New Afton's annual production and cost guidance remains on track. To be clear, there was no impact from the [indiscernible] shutdown of the underground mining activities. And third, the C-zone development time line remain intact. C-zone remains well positioned for first production ore in the first quarter with commercial production planned for the second half of 2024. So this completes our presentation, and I will now turn it back to the operator for the Q&A portion of the call. Operator?

[Operator Instructions]. Your first question will come from Anita Soni at CIBC.

Patrick, my apologies if you've gone over this, I missed a couple of minutes in there. But I was just curious, you said there was a visual anomaly, I guess, in the tailing dam that caused the engineers to want to confirm with the Engineer of Record. Can you describe what that is?

Yes, basically, the person who was in charge to do the plant inspection. When she walked around the dam on the external side, for sure, she highlighted some surface, what she will call, had a crack that were part of the -- that we can -- it's visible, it's outside. So this structure is not having any real crack on it, so it's the core of the dam that is mainly exposed to the sun, and et cetera. So it's mainly crack that is coming from retraction. It's small, and we have the movements or we have no movement related to this. It's more, I would say, a preventive reaction than something else. And it's not something that is unusual on the tailing dam of this type that is having no real crack on it. And it's -- we were really cautious, prudent, and you will say, maybe our people would say that we will be accused to overreact. But basically, it's part of the security of the infrastructure and the operating manual and the monitoring of this type of infrastructures. We're in BC, as you know, in BC, we are precedent with this type of tailing storage facility. We are respecting each element, each design criterias and each point of control, and we stick to this, and we were really prudent. It's mainly this.

Okay. I guess it was a presentation you guys did in 2020, I remember being on site in 2019. And as I look back at one of the presentations, they talk about the amount of subsidence to expect. I guess there was really any expected subsidence even like an inch or 2 until 2025 or 2026. And then by 2028 and 2029, it's expected to start to really move -- kind of move into the AB area. Is that still the plan? Is that correct?

Yes. Destiny is designed to move, yes. And -- but actually, with the dewatering it's working really well. We are doing extremely well with the weak drains and the principal drain wells that we put in place. We are trending extremely well to be in advanced to rebate the water table under the foundations of the New Afton tailing storage facility. So as we plan and the EoR and the design is planning for the worst. And actually, the mitigation measures that we put in place are in advance, and we are really pleased by the way the behaviors and the way that the New Afton tailing storage facility is working actually.

[Operator Instructions] There are no further questions. So I will turn the conference back to Ankit Shah for any closing remarks.

Thank you, Michelle. And again, thank you for everyone who joined us this morning. As always, should you have any additional questions, please feel free to reach out to us by phone or e-mail. Have a great rest of your summer.

Ladies and gentlemen, this does conclude your conference call for this morning and I ask you to please disconnect your lines.