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

Good afternoon, everyone. My name is Ankit Shah, EVP, Strategy and Business Development at New Gold. We appreciate you joining us today for New Gold's Operational Outlook Conference Call and Webcast. [Operator Instructions] Before we begin, I'd like to note a few housekeeping items. For those participating via the webcast, there is an opportunity to type and submit a question through the platform. Our team will strive to reply during the webcast. If you are in attendance today and you wish to ask a question, please raise your hand and a microphone will be brought to you. I would ask that you state your name and company prior to asking a question. Please note, the Q&A portion will be at the end of the presentation. I would like to direct your attention to our cautionary language related to forward-looking statements found on Slide 3 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. Actual results and future events could differ materially from those expressed or implied in forward-looking statements. Slide 3 provides additional information and should be reviewed. We also refer you to the section entitled Risk Factors in New Gold's latest AIF, MD&A and other filings available on SEDAR + 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 end notes that provide important information and should be reviewed in conjunction with the presentation material. On Slide 4, we have summarized our updated guidance metrics. Going forward, the company will report cash costs and all-in sustaining costs on a by-product basis. We believe these metrics better provide insight into our performance of our company. More details are provided on the slide, and I encourage you to review. Slide 5 outlines the agenda for today. Presenting for New Gold, we have Patrick Godin, President and CEO; Yohann Bouchard, COO; Gord Simms, General Manager for Rainy River; Jeff LaMarsh, General Manager for New Afton; and Jean-Francois Ravenelle, our Vice President, Geology. In addition, we have key technical representatives from all aspects of our business available to assist during the Q&A portion of the call. Before I turn the call over to Pat, I would like to do a land acknowledgment. We are meeting today in Toronto, which is situated on Treaty 13 of the Misssissaugas of the New Credit, the Anishinaabe, the Chippewa, the Haudenosaunee, and the Wendat peoples, an area home to countless diverse First Nations, Inuit and Metis peoples, and we extend our gratitude to be able to gather together. I'd also like to acknowledge that the New Afton Mine is located on the Secwepemc territory, situated within the unceded traditional lands of the Secwepemc Nation. New Afton appreciates the partnership we have with the Secwepemc Nation and respect the territory and land on which we operate. I would like to acknowledge that the Rainy River Mine is on the traditional territory of the Anishinaabe of Treaty #3. I also extend my gratitude to the First Nations for their stewardship and teachings about our earth and our relations and ask that we all take time to reflect and honor those teachings. I will now turn the call over to Pat.

Thank you, Ankit, and good morning, everyone. Before turning the presentation over to team, I want to give a few brief remarks. Slide 8 outlines an overview of our portfolio. We are a Canadian-focused gold company with excellent exposure to copper, as you know. We operate the New Afton mine, an underground block cave mine in Kamloops, BC, and the Rainy River mine, an open pit and underground mine near Fort Frances, Ontario. We had an excellent 2023. That's our 2 operations produced over 320 ounces of gold and over 47 million pounds of copper, which translates to over 423 gold equivalent ounces. Our mines' lives extend beyond the end of this decade. And as you will hear from the team, we are entering a very exciting period of realizing the benefits of our growth projects that will lead to excellent cash flow generation for our company and our shareholders with upside potential to extend our mine lives through exploration efforts. Health and safety remain core to our business and our strategy and is highlighted by our Courage to Care campaign. Yohann will take more -- will talk more about this. But 2023 saw us perform exceptionally well as a company, and we are now industry-leading with our health and safety performance. We strive to protect our communities and the environment. We have received the AAA for water and tailings towards sustainable mining protocol at both of our sites, and we continue to prioritize energy-efficient, low-consumption mining methods. And we maintain strong relationship with our indigenous partner with 24% of our employees identifying as indigenous. As I mentioned, 2023 was an excellent year for New Gold. Prioritizing health and safety through our Courage to Care campaign led to an industry-leading total reportable incident frequency rate of 0.8. We simply achieved the top end of our production guidance, which was a 22% increase over 2022. And we are on track to meet our all-in sustaining cost guidance range that will be released next week. We delivered key project milestones on time, such as completing of the first drawbell at New Afton C-Zone as well as advancing Underground Main Zone at Rainy River. And with the operation now stabilized, we were able to return our focus to exploration, which was highlighted by a 74% replacement of Rainy River's mineral reserves and the strategic pipeline for the mine life extension at New Afton. In short, New Gold met or exceeded all stated objectives in 2023. We've covered the exceptional work our company has done over the last 6 quarters. We're going to focus the rest of this presentation on our road map to build on that foundation and grow our business. This morning, we outlined production growth over the next 3 years of 35% in gold and 60% in copper, as well as a corresponding 52% reduction in ASIC and 80% reduction in growth capital over the next 3 years, which will drive significant margin and cash flow. Beyond 2026, we'll discuss our strategic objectives of targeting a production platform of 600,000 ounces gold equivalent per year with a line of sight until at least 2030, as well as our pipeline of opportunities and exploration upside to extend mine lives well into the next decade with a really modest capital investment. Before I pass things over to Yohann, I'll conclude on Slide 12. First, our current liquidity position remains very strong. We had over $179 million of cash at the end of the third quarter with the year-end '23 cash position looking to be very comparable, if not slightly better. And we have $374 million undrawn on our credit facility. Based on the 3-year outlook presented this morning, we expect to generate significant free cash flow over the next 3 years with the inflection point taking place in the second half of 2024. As a result, we are incredibly well positioned to achieve our strategic outlook to at least 2030. We will have the financial flexibility to repay our 2027 bonds and advance several opportunities to add mine life beyond 2030. As I said in my intro, we are entering a very exciting period for New Gold. I will now turn things over to Yohann to walk through our operational review.

Well, thank you, Pat. So good afternoon, everyone. So, I would like to start by building on some [ stated ] earlier comment about health and safety. It is something that Pat is passionate about, and it flows through the entire organization. This is reflected in the safety indicators and, under Pat's leadership, New Gold has achieved a steady decline in total recordable injuries since 2022. The severity has also reduced significantly. In fact, Rainy River didn't have a lost time incident since October 2022. We received several awards in 2023 recognizing our health and safety performance. But more importantly, our Courage to Care approach is present in everything we do and at all levels of the organization. Returning our people home safely at the end of the day is a top priority. Turning now to 2023 operational performance, both Rainy River and New Afton had a strong year, achieving top end of production guidance. Total production for the year was 424,000 gold equivalent ounces, a 22% increase over 2022. The operations have now achieved production targets for 6 consecutive quarters, highlighting the quality of the technical information, achieving mine plan and operational discipline. The quality of our workforce and mine management team is without a doubt a strong contributor to the stable and consistent operational performance. Achieving on-target quarter-over-quarter give the whole team confidence that we will continue to deliver on guidance looking forward. I talked previously about the quality of the [ critical ] information, and a solid reserve base is the foundation of our strong production results. Through years of operating experience, our operations have developed a robust geological understanding that is incorporated into our resources models and reserves estimates. This is reflected in the excellent reconciliation results that we have seen at both operations. As of year-end 2023, New Gold had a significant reserve base of 3.2 million ounces of gold, 550 million pounds of copper, and 8.2 million ounces of silver. This reserve base underpins our strategic outlook, accounting for more than 90% of the gold equivalent ounces required to sustain a yearly midpoint production of 600,000 gold equivalent ounces for a minimum of 5 consecutive years starting in 2026. In addition to the metal reserves, New Gold has a large resource base with the potential for future conversion to mineral reserves. Incremental replacement of reserves is a cost-effective strategy for extending mine life and increasing net asset value. Well, it is important to say that replacing depletion of mining is a high priority and several promising targets remain untested. We have already started to see results, replacing 74% of 2023 mining depletion at Rainy River, adding both open pit and underground reserves. Gord will provide more detail on this, and several other targets remain to be tested over the years. Now I'll give a brief overview on the consolidated 3 years' guidance. Gord and Jeff will provide more detail on the asset basis in the following sections. It is important to mention that we are expecting a flat copper production profile between the first and the second half of 2024, while gold production is weighted to the second half with about 60% of the gold production coming in H2. This is mostly due to the open pit mining sequence and production ramp-up at Rainy River. I won't spend too much time on this slide because the information is displayed more visually in the next 3 slides. I will just point out that the 2023 guidance costs in this table are recalculated using the new light product matrix. We will release full year costs and financials next week. And as previously disclosed, we're looking to be at the middle to low end of the guidance range. So, we expect market-leading growth in gold and copper production over the next 3 years. Both operations are contributing to production growth with the realization of growth projects starting in 2024. On a gold equivalent basis, production is expected to increase from 424,000 ounces in 2023 to a midpoint of 600,000 ounces in 2026, a 42% increase over 3 years. With the increased production, unit costs per ounce of gold are expected to be reduced significantly. By 2026, the consolidated all-in sustaining cost is expected to be $650 to $750 per gold ounce on a by-product basis, a 52% reduction compared to 2023. This is expected to translate directly into increasing operating margin per ounce, ensuring ongoing cash flow generation and providing significant leverage if we consider more favorable metal prices. Unit costs are expected to benefit from the reduction in open pit waste stripping Rainy River. And at New Afton, the reduction in operating cost per ton is due to the ramp-up in throughput and the elimination of trucking as mining transitions from B3 2 C-Zone. Sustaining and growth capital costs are expected to decrease significantly over the next 3 years, mostly because of the completion of major projects and the reduction in open pit stripping at Rainy River. The 2024 estimates consider the carryover of some capital that was not invested in 2023. Gord and Jeff will provide a more detailed CapEx breakdown later in the presentation. Well, in summary, with the increased production, combined with the reduction of unit costs and decreasing capital costs over the next 3 years, the company is well positioned to deliver significant cash flow. Well, just to wrap up, the team is now stronger than ever, and we're very pleased with the way the company evolved. The company has a strong foundation and is well positioned for cash flow generation. With our projects mostly completed, we look forward for the next 3 years with really high confidence. And with this, I will hand over the presentation to Gord Simms, GM at Rainy River.

Thanks, Yohann. Good afternoon. 2023 was a good year for Rainy River, and we're looking to build on that in 2024. We're expecting gold production of 250,000 to 280,000 ounces for the year compared to 254,000 ounces in 2023. Approximately 60% of the production is expected in the second half of the year, mostly because of the open pit mining sequence. We are currently transitioning from Phase 3 to Phase 4, so we will reclaim some lower-grade stockpile throughout Q1 and Q2 while we release higher-grade ore in the pit for the second half of the year. For the same reason, sustaining capital related to waste stripping will be weighted to the first half of the year. In the underground, lateral development meters will ramp up throughout the year as we access additional underground mining zones and more headings become available. As a result, about 2/3 of growth capital is expected in the second half. Looking in more detail at the open pit, this section view illustrates the planned mining sequence over the next 3 years. Phase 3 is now complete with the final bench mine in January. We are currently mining Phase 4 and waste stripping is well advanced. As I mentioned, we have more waste stripping to complete in the first half of the year, and then Phase 4, we'll be well positioned to deliver low-cost, low-risk mill feed until the end of 2026. Phase 4 will be the source of the majority of Rainy River's gold production over the next 3 years. As Yohann mentioned, we recently extended the life of the open pit with the inclusion of Phase 5 in mineral reserves. Phase 5 will be a pushback on the western side of the main pit, as shown in the left side of this section. Tightly-spaced RC drilling carried out in 2023 generated positive results, improving both ore zone grade and continuity. We continue to optimize Phase 5 mining sequence and mining is scheduled to commence after the completion of Phase I in early 2027. Our objectives are to optimize our equipment fleet, maximize in-pit dumping with the short haul to minimize mining costs, utilize in-pit clay for rehabilitation of the waste dumps, and optimize the processing and stockpile reclaim strategy. We expect Phase 5 to extend the open pit mine life by approximately 1.5 years, which would keep the mill running at full capacity until 2030. Now, turning to the underground mine, as you know, we started mining the Intrepid Zone, on the right side of this figure, in 2022. The current production rate is about 850 tonnes per day, accounting for approximately 10% of Rainy River's gold production in 2023. Underground production is planned to ramp up to between 5,000 tonnes and 6,000 tonnes per day by 2027. The key to the production ramp-up is to establish the multiple concurrent mining zones. This slide shows the capital development sequence over the next 3 years. In 2024, the priority is to complete the ODM East ventilation loop. This involves connecting the ODM East ramp from the top and bottom and raise-boring the Fresh Air Raise. In early 2025, we will break through into the pit, establishing a second portal and a secondary means of egress. At the same time, we will continue to develop the Intrepid ramp below the 300 level and start the 17 East lower ramp. By the end of this year, we expect to unlock additional mining horizons at Intrepid below the 300 level, the 17 East Zone and the ODM East Zone.In 2025, the priority will be to complete the next ventilation loop at ODM Main, unlocking wider transverse stopes in the core of the deposit and facilitating higher underground production rates. Wth an average reserves grade 3x higher than the open pit, the underground mine will be an increasingly important source of gold production for Rainy River. At full capacity, the underground mine alone is expected to produce 150,000 to 200,000 ounces of gold per year. From 2026 onwards, we expect to be producing from 5 concurrent mining zones. ODM East, ODM Main zones will be the primary sources of production over the life of mine, containing the majority of underground reserves. We expect to start producing development ore from ODM East and 17 East Lower zones by the end of this year and start stoping from these zones in the first half of 2025, once the secondary means of egress is established. With open pit mining of Phase 4 and ramp-up in underground production, Rainy River is expected to achieve significant production growth and cost reduction over the next 3 years. Gold production is expected to increase by 60,000 to 100,000 ounces over what we achieved in 2023 with all-in sustaining costs expected to reduce to $1,000 to $1,100 per ounce. To provide greater clarity in the capital expenditure decline over the next 3 years, we've broken out capital spend into 4 buckets. First is waste stripping. 2024 capital includes $50 million for capital stripping. This includes $25 million that was deferred from 2023. Capital stripping will drop to approximately $20 million in 2025, representing the final pushback for Phase 4. Post-2025, stripping is complete for the current life-of-mine plan. The second bucket is infrastructure and equipment. You can see, on the chart, the reduction in expenditures aligns with the winding down of the open pit. Over that time, we will gradually reduce the open pit fleet, thereby reducing parts, components, and other maintenance. The third bucket is tailings management. 2024 includes $25 million for the tailings raise. There are 2 further tailings raises in 2025 and 2026, at which point the facility will have the required capacity for the remaining life of mine. The last bucket is underground development. Underground CapEx has held relatively constant over the next 3 years as we access the majority of the mining zones by the end of 2026. The final slide for Rainy River is an indicative life-of-mine processing schedule to illustrate the transition from open pit to underground mining and stockpile reclaim going forward. As mentioned, the majority of mill feed over the 3-year guidance period will come from Phase 4 of the open pit, supplemented with increasing ore from the underground as well as reclaim of the stockpile to keep the mill running at full capacity. The total processing throughput is expected to remain relatively flat at approximately 24,700 tonnes per day. Now, this schedule does not yet include Phase 5 of the open pit. We are still optimizing the sequence, but we expect to extend the open pit mine life by about 1.5 years, which would defer reclaim of the low-grade stockpile and keep the mill running at full capacity until 2030. And this schedule is based only on mineral reserves. Rainy River has several opportunities for resource conversion and significant exploration potential to extend both the open pit and underground mine lives. Jean-Francois will provide an overview of these opportunities in later slides. To wrap up, Rainy River is in good position. As you know, the operation has had challenges through construction and start-up, but those challenges are behind us. With the support of an experienced and stable leadership team on site, we are now achieving targets quarter-over-quarter, and the mine is well positioned to deliver the next 3 years. We are confident and committed to deliver on the production and costs laid out in the 3-year outlook. Now I will hand the call over to Jeff LaMarsh, the General Manager for New Afton.

Thanks, Gord. In many ways, New Afton is in a similar position to Rainy River. Both operations are on track to complete major projects in the near term, positioning to achieve significant production growth and cost reduction over the next 3 years. At New Afton, we are transitioning from B3 to C-Zone. 2024 will see a significant ramp-up in seasonal mining rates, achieving commercial production in the second half of the year, although the majority of the production will still come from B3. Throughout the year, B3 will provide a stable mill feed of approximately 8,300 tonnes per day. As we establish the C-Zone cave footprint, C-Zone is expected to ramp up to approximately 5,000 tonnes per day by the end of the year. Overall, we are looking at an increase of 27% in tonnes processed compared to 2023. The higher throughput in 2024 will be partially offset by lower feed grades due to the cave draw sequence. Total gold production for the year is expected to be 60,000 to 70,000 ounces, while copper production is expected to be 50,000 to 60,000 million pounds with production expected to be relatively stable throughout the year. The section view on the left of this slide illustrates the mining sequence for the 2 block caves and provide some color onto the copper and gold grade profiles over the next 3 years. At the top of the image is the B3 cave, which is currently about 50% complete. Towards the top of the cave, we will have higher dilution as waste rock above the cave and within the depleted Lift 1 cave mixes with the B3 ore. This is reflected in the B3 reserve grades of 0.59 grams per tonne gold and 0.7% copper. At C-Zone, we plan to have 32 drawbells constructed by the end of this year. The transverse extraction layout allows us to start the care from the center of the footprint and expand it outwards, as shown in the plan view on the right hand of this slide. As a result, we get these ideally shaped cave profiles shown on the image on the left. Due to the geomegy of the ore body, C-Zone grades are expected to be below the average reserve grades in the first 2 years to establish the cave footprint, increasing in 2026 as the core of the deposit is drawn. Overall, mining of B3 and construction of the C-Zone cave footprint is progressing as planned. The C-Zone project is on schedule. This slide summarizes some of the key milestones completed to date, the most recent being construction of the first drawbell and completion of the NATSF well installation in October last year. All elements of the C-Zone projects are falling into place. Underground development, undercutting and drawbell construction are on track to achieve hydraulic radius in the second half of this year. Thickened and amended tailings plant and in-pit tailings are complete and performance is exceeding design expectations. Tailings stabilization project is proving successful with capital cost items mostly complete and dewatering advancing according to plan. In the major underground infrastructure, including ventilation, dewatering and materials handling, is well advanced. In particular, the C-Zone crusher and conveying system is on track to align with ramp-up in C-Zone production. Looking forward, production at New Afton is expected to increase to 95,000 to 105,000 ounces of gold and 71 million to 81 million pounds of copper by 2026. Using midpoints, this equates to a 50% increase in gold production and a 60% increase in copper production over the next 3 years. Block cave mines are characterized by high upfront CapEx followed by a low-cost production period. With C-Zone nearing completion, minimal capital investment is required after 2025 for the remainder of the reserve's life of mine to 2030. Approximately 50% of mining costs, 75% of processing costs and 90% of G&A costs, fixed unit costs per tonne are expected to decrease within the total -- with the return to higher throughput rates. By 2026, all-in sustaining costs on a co-product basis are expected to reduce to $550 to $650 per ounce of gold, or $1.65 to $2.15 per pound of copper. With C-Zone coming online, high production, high operating margins and minimal ongoing capital spend is expected to generate significant free cash flow. Similar to Gord's section on Rainy River, we've broken out the capital spend into 4 buckets. First is underground development and cave construction. 2024 capital includes $75 million for this bucket with a decline to around $60 million in 2025. This aligns with C-Zone development and ramp-up, which is on track for completion by the end of 2025. As a result, this bucket goes to $0 in 2026. The second bucket is infrastructure and equipment. 2024 capital includes $55 million for this bucket. More specifically, underground infrastructure capital is expected to reduce significantly after commissioning of the C-Zone crusher and conveyor later this year. The third bucket is tailings management. Following the operational success of the in-pit tailings, capital expenditures related to tailings are fairly minimal at New Afton. We're on track to begin reclamation of the New Afton tailings storage facility in 2026. There is $10 million to $20 million in 2024 and 2025 related to this. Beyond 2026, in-pit tailings has sufficient capacity to double the remaining mine life with minimal capital requirements. So to sum it up, 2026 will see New Afton entering a low-cost production period with minimal CapEx remaining. For the final slide, I'll leave you with the life of mine processing schedule. We presented this graph at the mine tour last October, and I think it clearly illustrates where this 3-year guidance period fits into the overall picture at New Afton. After completing the Lift 1 caves in 2022, New Afton has been operating the B3 cave. While B3 has performed well and even exceeded expectations, it is relatively small. The transition from B3 to the larger C-Zone cave over the next 2 years is the driver behind the production increase and cost reduction outlook shown on the previous slide. One difference to the graph we presented last year is that we have capped the planned throughput at 14,800 tonnes per day. Although we know we can exceed this target, and we have successfully achieved higher throughput rates in the past, we have several opportunities with the potential to supplement C-Zone production with higher-grade mill feed. We will continue to evaluate these opportunities throughout the year with the potential to add them to reserves in the future. I will now hand it over to J. F. Ravenelle, who will provide more details on these opportunities as well as the significant exploration upside, both at Rainy River and New Afton.

Thanks, Jeff, and good afternoon, everyone. Slide 37 outlines our exploration priorities for 2024. This year, we are pleased to commit $17 million to $22 million for exploration expenditures across both operations. We will be focusing on expanding current mineral resources and reserves and defining new mining zones within the mine footprint. At Rainy River, minimal exploration has taken place in recent years as the focus shifted on ramping up production and stabilizing the operation. As a consequence of this, there are a number of promising targets that remain untested and which we plan to drill this year from both surface and underground. We are encouraged by the opportunity to convert mineral resources to reserves, expanding current resources as well as exploring for new mining zones within the Rainy River footprint. I'll talk about these shortly. At New Afton, we continue to execute on our exploration strategy to extend the mine life beyond 2030. The company is currently evaluating 3 promising opportunities for potential mineral reserve conversion. These include C-Zone extension, East extension and D-Zone. Exploration efforts in 2024 are expected to focus on new potential mining zones above the C-Zone extraction level, which would provide opportunities to minimize capital investment and maximize free cash flow generation. Development of a 370-meter exploration drift is now underway, which will open new exploration opportunities towards the east and allow to fast-track drilling of the AI-Southeast and K-Zone targets. The drift is expected to be partially operational in the second quarter of this year and fully completed early in the third quarter. Beyond these attractive targets, we also intend to conduct exploration within our extensive land packages and regionally within South-Central British Columbia. In summary for this slide, we are entering a new phase of exploration with excellent mine life extension targets at both operations. We plan to ramp up exploration efforts going forward to capitalize on these opportunities. Slide 38 takes a closer look at Rainy River's exploration activities. Existing infrastructure makes any new discovery low CapEx intensive, and further open pit extensions could sustain the processing plant at full capacity beyond 2030. Following the successful addition of Phase 5 to the open pit mineral reserves in 2023, the company will target other near-surface opportunities that were deprioritized during production ramp-up. Examples of these targets include the Western zone, North Target, 280 Zone and ODM East. Slide 39 outlines exciting underground opportunities at Rainy. The company's strategy focuses on growing the underground mineral resources and reserves by targeting the down-plunge extensions of current ore zones. The company will start drilling the underground ODM Main, 17 East and ODM East targets from surface. Exploration will be accelerated once underground development is operational and drilling from underground can commence. We will also conduct infill and delineation drilling to upgrade infill resources and optimize mining shapes. Concurrently, the company will continue to explore for potential new mining zones, such as the Gap zone located between the Intrepid and underground Main Zones. Now, turning to New Afton's upside potential on Slide 40, as I mentioned, the company is currently evaluating 3 promising opportunities for potential mineral reserve conversion, C-Zone extension, East extension and D-Zone. C-Zone extension and East extension are well positioned to benefit from current underground infrastructure for materials handling, ventilation and dewatering, thus reducing the need for additional capital investment. D-Zone will see additional drilling in 2024, but the focus will be on converting C-Zone extension and East extension to mineral reserves by conducting metallurgical test work, geotechnical analysis and engineering studies. Slide 41 outlines a number of promising new mine opportunities at New Afton. The light blue line in this figure highlights the exploration drift that is currently being developed to provide better drilling access and accelerate exploration of K-Zone and AI-Southeast. The first drill bay is expected to be operational in Q2 with full completion scheduled for Q3. K-Zone is a distinct and new zone of porphyry copper-gold mineralization interpreted to trend subparallel to the East Extension Zone. 2024 exploration will continue to target higher grade bornite-dominated mineralization in the upper part of the zone. Results from the ongoing exploration program are promising, and we hope to provide full results to the market later this year. The AI-Southeast Target is another exciting opportunity targeting the high-grade potassic core below the [ HW-Zone ]. The exploration drift will provide a platform to drill shorter holes with better angles and test the down-dip extension of porphyry mineralization intersected above. To conclude the upside potential section of this presentation, I'd like to leave you with 3 takeaways. First, we have excellent new mine reserve conversion potential at both operations. We view this as low-hanging fruit for potential mine life extension. Second, both Rainy River and New Afton are very promising, largely untested targets within the operational footprint which could represent high-quality additions to the life of mine. And third, we are pushing exploration boundaries beyond [ iron ] mine's footprint, both on our extensive land packages and regionally within prospective territories in BC. With that, I'll turn the presentation back to Patrick.

Thank you, Jean-Francois. I'm on Slide 43. I think this slide does an excellent job of speaking for itself and highlights what our team has been saying this afternoon. We are well positioned to deliver gold and copper production growth and declining costs and capital. [ Cash flow ] is translating to meaningful free cash flow generation over the next 3 years. In addition to that, we have an excellent line of sight to our strategic objective of targeting sustainable gold equivalent production of 600,000 ounces per year until at least 2030. We have a high level of confidence in this plan as more than 90% of the gold equivalent ounces, including the strategic outlook, are already in the mineral reserves and the remaining ounces are expected to be converted to mineral reserve in the remaining -- sorry, in the next few years. We expect very modest capital investment to hit that 600,000 ounces run rate, which will [ show maintainance of ] strong free cash flow, sorry, generation in those years. I'm approaching 2 years of service at New Gold. I can say with certainty and confidence that, operationally, we have made incredible progress. The [ buy-in ] from our employee around the Courage to Care program has seen our [indiscernible] performance become industry-leading. We enhanced the many strengths of our senior management teams, both at our sites and at corporate. This has translated to consistent quarterly provision results. It translates to maintaining our '23 guidance objectives and translates into increased financial flexibility, allowing the company to push on our growth project closer to completion and prioritizing exploration and mine life extension at our operations. With our safe, well-established mining jurisdictions and exposure to what we view are preferred metals in gold and copper, New Gold offers [ accompanying ] opportunity for value creation. We will continue to deliver on our stated strategic goals. For 2024, this includes delivering on our 2024 production and cost guidance with the same attention to [indiscernible]. At New Afton, we will achieve commercial production at C-Zone and commission the crushing conveyors. At Rainy River, we will reach first ore from the underground Main Zone. We will increase our exploration efforts, targeting reserve replacement, and we will provide market clarity on our partnership with Ontario Teacher's Pension Plan. 2024 will be a busy year, but it will be a transformative one for a company, our stakeholders, my teammates and our shareholders. With that, we will open the floor up to questions. So maybe this completes our presentation. So to all of you who have joined us today, thank you again. And as always, should you have any additional questions, please do not hesitate to reach out.

Do have a couple of questions on the webcast here. So the first question is, where do capital returns to shareholders, especially share buybacks, fit into the company's capital allocation strategy in 2025 and beyond?

That's something that is -- we're always countering. For now, I think 2025 and beyond is something that is pretty far. So actually, our main focus, we work pretty hard to preserve the cash. I think we did an amazing job internally. I think our first priority from now to 2024 is to complete our growth project. We are well aligned. We're on time. And I think we're not expecting a high level of risk for the execution of our projects. That's something that we'll look for in the following years.

Mike Siperco from RBC. Maybe a question for Jeff on New Afton. Is it possible to get into a little bit more detail on the time line and how you're comparing versus budget on development and getting to commercial production? What are the bottlenecks? Are you catching up? I think, when we were on the tour, we were talking about getting to the underground crusher as being key to commercial production. How are you doing on that front?

Yes, I can add a little more color to that. So the crusher chamber, all the infrastructure-related areas have all been handed over and are under construction right now. So we remain in good shape for that. And in terms of commercial production on that side of it, critical path has been prioritized, and we're on track into that as well.

And you're on budget, you're on time with respect to all the underground development, everything that you need to do in order to get there for -- is it more towards the end of the second half, end of the year? Or are you thinking sort of end of Q3? I don't know if you can go into that kind of detail.

No, I won't be able to go into that kind of detail, but we are on track for budget, which is second half of the year for both pressure commissioning and cave commercial production.

Just a question on Rainy River. Can you just give us some kind of idea as to approximate grades and strip ratio for Phase 5?

Yes. So for Phase 5, it isn't in the mine plan currently, but their strip ratio is around 6:1 and the grades are between 0.5 and 0.6. So some of the things that make Phase 5 attractive is the haul distance. So because the mining will commence in 2027 after the completion of Phase 4, there's an opportunity to short-haul that material and backfill Phase 4, which is going to have a significant impact on reducing the mining cost. And that's a big factor that's driving the value with Phase 5.

And will that require any lift on the tailings facility?

For Phase 5, it will. The current TMA schedule to the end of 2026 accounts for the current life of mine. To include Phase 5, we've looked at that with our engineer records. It's a modest increase of our dam height within the current footprint. And the incremental cost for the tonnes is around $3.5 [ million ].

[indiscernible].

That's right. We have not included it into the mine schedule as presented today, but it is included in the reserves statement for the end of the year.

This [indiscernible] [Technical Difficulty].

That's right. Phase 5 stripping will start in 2027.

Farooq Hamed from Raymond James. Just a few questions really related to '25 and '26 cost guidance for both operations. There's a departure from the standing technical reports that are last published on both assets. And maybe this is a question that gets taken offline. But can you give us some insights into what kind of cost per tonne metrics we're looking at for both operations, in the case of Rainy River, on an open pit and underground basis, and obviously for New Afton often as well?

Yes, I can -- I'm going to try to give you some color on that. So the thing is, for unit cost, we didn't factorize any improvement of our cost. We use the actual cost basically to build the cost structure. The thing that -- if we go like -- but on the other hand, we're also having some other initiative ongoing now to reduce those costs that will, in fact, arise that's going to more than offset inflation, I would say, over the years. But we didn't factorize all that. I mean we're going to wait to have more [indiscernible] on that. I mean what you saw is really a prudent approach. I would say, starting by Rainy River, you have to basically think about the activities that's going to phase out, I would say, with time that's contributing a decreasing cost. So Rainy, for example, lower stripping that's going to start mid this year is going to decrease further in 2025 and 2026, which is going to decrease significantly the operating costs going forward. Okay? That's one of the major factors. And on the other hand, for sure -- I mean, we have -- we're going to produce more metal, as you see here. So fixed costs over less gold produced, I mean, is really attractive also on costs. And in parallel, if you look at New Afton, with the completion and construction of the crusher, we're going to eliminate all truck underground, all trucking. So that's going to be a major decrease with cost, and we're going to see that happening in the second half of this year when it's going to be completed. And again, same thing. I mean, we're going to see an increase of throughput, so again, the same fixed cost over more tonnes processed. So, it's all based on quantity, basically, what you see there, but we didn't factorize yet those improvements that we're going to see. And on a capital perspective, I would say we're still optimizing ODM West, the Main Zone, I would say. And we still see opportunities to increase efficiency with development, but also to reduce the amount of waste development to access the same tonnes.

Right. No, thanks for that color. Maybe a follow-up. Will we see updated technical reports for both assets this year?

We're planning to update the report in the first half of next year.

For both assets?

For both operations, yes. Yes, correct.

Okay. I'll just ask one more and then I'll pass it on. Just on Rainy River, you talked about the underground ramp-up, 850,000 -- sorry, 850 tonnes per day. Currently, you're ramping up to, I think it was 5,000, 6,000 tonnes per day by 2027. What's kind of the run rate between now and 2027 in terms of how it's going to ramp up?

Yes. From the 850 this year, 2025 is around 2,500 and then 4,300 in '26 million, and then to the 5,000, 5,500 for '27 onwards.

Eric Winmill from Scotiabank. Just a quick question. Maybe can you elaborate a bit more on what's involved in the C-Zone extension in terms of development and, I guess, drilling and technical work.

Jeff?

So very minimal is required on the C-Zone extension. So, that's really just continuing to mine the C-Zone footprint upward vertically. The 350-meter cutoff is a reserve cutoff, but it doesn't preclude us from continuing to draw those draw points further into the future. So there is ore above that. But from a reserve standpoint, that's why it's cut off at the 350-meter elevation.

Sorry. Just one more for me on New Afton again and the project CapEx in 2025. Can you go into any more detail on that? Is that just completing construction of the drawbells? Or what's the sort of split there between development and cave construction?

As the development continues, strong rate until the end of next year, and so does cave construction. So both those costs kind of remain as they are now right through to the end of next year when cave construction completes. So, we're going to stay at our current development rates right through. There's not necessarily a ramp-down per se. So that splits pretty even.

And then after that, in 2026, all drawbells are completed and then the next project CapEx would come presumably when and if there is an extension to the C-Zone or something else at New Afton, right?

That is correct. Yes, no development is planned in 2026 and no cave construction is planned 2026.

Maybe just a follow-up on that question on New Afton development CapEx, so if I look at '24 and '25 growth CapEx at New Afton, it's about $220 million, in that ballpark. And it was about $100 million in the previous -- if you look at the technical -- previous technical report. Is the difference caused by kind of the delay, like the timing difference that you had at New Afton getting into commercial production? Or is there some other costs that are associated with the variance?

That is the primary driver, is the delay in development and cave construction costs.

So did -- was that deferred CapEx then that you're seeing, or like from going back to the time of the delay, is the additional costs that you're seeing in '24 and '25 just because CapEx was deferred?

That is correct. Yes. Critical path has been maintained. That's noncritical development spend.

Okay. And maybe one follow-up, which is not on these operations, but rather on your Ontario Teachers agreement that is coming up at the end of this quarter. Can you just maybe just remind us about what your options are, when you have to respond, how much time you have to respond and when a deal could end -- a multipart question here -- and what your options are or alternatives are as to how you can kind of move forward with this deal?

Yes, Farooq. So, from a timing perspective, March 31 is the 4-year anniversary of our transaction. From that point forward, we have 60 days to reach out to teachers to indicate any interest on a buyback. And then we have 30 days beyond that point to complete financing. So, as Pat mentioned towards the end of the presentation, this is something that we look to provide the market with an update in the second quarter. In terms of our strategy and our thinking around this, we're going to do what's best for our shareholders. We're going to be -- we're going to look at the options we have available to us and conclude on something that's thoughtful and prudent while maintaining the flexibility of our balance sheet.

Do you have options to do something other than buy back the whole royalty, or is it kind of a whole royalty or nothing? And what -- sorry. And what do you think the expected cost, if you have to buy back the royalty, would be?

So from an option perspective, per our agreement, we have the right to buy them back. If we choose not to, they can convert it into a joint venture or into a free cash flow interest. To answer your question in terms of, can you do something in between, I would say, that would be part of a discussion we would have with teachers. And from a value perspective, if you take your consensus price and take 46% of that, that may give you an indicative value. But again, that would be part of our negotiation with teachers. The price is based on the greater of a predetermined IRR that's not disclosed and a fair market value assessment by an independent bank.

Right. Just one follow-up on that. Do you still expect to have a minimum interest payment to make to them on that deadline?

Yes. As part of the agreement that we had in place, there is a minimum payment. And based on current commodity prices, we've paid them $17 million, per our financial statements, and the top-up payment would be $43 million.

So first question, I guess, I want to ask, how committed are you to the 40/60 split on Rainy River and production? Because last year, we got that same kind of guidance and it ended up happening.

Yes. We're confident in delivering the production profile as stated. It's really dependent on the Phase 4 stripping rate. So our mining rate, as you see in the presentation, has accounted for the reduction of available mining headings in the pit. So the stripping rates are realistic, achievable, and we are realizing those. And as a result, that higher-grade ore will be released on schedule in the second half of the year.

Okay. You're not -- I mean you're halfway through the quarter right now, so you're on track?

Yes, we are.

Okay. We're not going to get any positive surprises in Q1?

Hopefully, positive surprises, but we are on track, yes.

Okay. And then the second question, as you look -- so you've extended the Rainy River by using this Phase 5 and then extending the underground optionality there. Anything that we need to think about as we go to 2026, 2020 -- sorry, 2027, in terms of capital? Like, is there any fleet replacement that you otherwise would not have had or anything like that?

From a fleet perspective, we will utilize the existing fleet and transition that from Phase 4, which is scheduled to complete in 2026, and then allocate that to Phase 5 stripping in 2027. So there is no equipment replacement or additional fleet requirements to complete Phase 5 stripping.

Any capital that we should be thinking about at the tail end of the mine life that -- or is it a 0 until -- from 2027 to 2030?

There is no significant capital. And as far as continuing milling production, there's no significant capital there either.

So what would be a good run rate, like, exit rate for sustaining capital at both? I'll ask the question first for New Afton and for Rainy. But if I was running out a life-of-mine total capital number from 2027 to the end of time, what's a good average to use?

[Technical Difficulty] Sorry, Anita. I was just going to say that's part of the optimization that the team is doing, and that's part of the reason for the timing of the technical reports in the first half of next year. And so that's the work that the team is going to do this year. So it would be a little premature to give a number. But what we want to do is ramp up C-Zone and bring this into our plans, and that's why the reason for the first half tech reports would have all these estimates in it.

So first half 2025 for these tech reports?

Correct.

We have no more questions, so I think this completes our presentations. So, thank you for who have joined us today. Thank you again. So, as always, should you have any questions, [indiscernible] welcome, please do not restate to contact us. It would be a pleasure for us to answer your questions. Have a nice and safe day, as we all say at the mine.