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

Good afternoon, everyone. My name is Brandon Throop, Director of Investor Relations. We appreciate you joining us today for New Gold's Operational Outlook and Technical Session Conference Call and webcast. Should you wish to follow along with the webcast, please sign in from our homepage at newgold.com. 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 and we will follow up after the event concludes should we run out of time. If you are in attendance and wish to ask a question, please raise your hand and a microphone will be brought over. I'd ask that you state your name and company you represent prior to asking your question. 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. You are cautioned that 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 annual information form, 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 material presented. Slide 4 outlines the agenda for the afternoon. Presenting for New Gold, we have Patrick Godin, President and CEO; Ankit Shah, Executive Vice President, Strategy and Business Development; Luke Buchanan, Vice President, Technical Services; Gord Simms, General Manager for Rainy River; Jeff LaMarsh, General Manager for New Afton; and Jean-Francois Ravenelle, Vice President, Geology. In addition, we have key technical representatives from all aspects of our business available to assist during the question-and-answer portion of the call. Before I turn the call over to Ankit, I would like to do a land acknowledgment. We are meeting today in Toronto, which is situated on Treaty 13 of the Mississaugas of the New Credit, Anishinaabe, the Ojibwe, the Haudenosaunee and the Wendat peoples, an area home to countless diverse First Nations, Inuit and Métis people, and we extend our gratitude to be able to gather together today. I would like to acknowledge that the New Afton mine is located on the Stk'emlupsemc te Secwépemc territory, situated within the unseated traditional lands of the Secwépemc nation. New Afton appreciates the partnership we have with the Stk'emlupsemc te Secwépemc 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 Ankit for some opening remarks.

Thanks, Brandon, and good afternoon, everyone. Slide 7 provides an overview of our portfolio. We have 2 core assets based in Canada that provide us with exposure to both gold and copper. We operate the New Afton mine, an underground block cave mine in Kamloops, British Columbia and the Rainy River mine, an open pit and underground mine near Fort Frances, Ontario. In 2024, our 2 operations produced just under 300,000 ounces of gold and 54 million pounds of copper. As you will hear from the team today, the updated technical reports we filed last night highlight an exciting period for New Gold, extending our mine lives and providing a strong foundation for future growth and success. After facing adversity during the year, we delivered on a number of key milestones. By prioritizing health and safety through our Courage to Care culture, we delivered a low TRIFR and continue to improve year-over-year. As previously mentioned, we produced just under 300,000 ounces of gold and 54 million pounds of copper. Our full year earnings release results are scheduled for release next week and we are on track to meet the low end of our all-in sustaining cost guidance. Throughout the year, we successfully delivered on key project milestones. At New Afton, we achieved commercial production at C-zone and commissioned the crusher and conveyor systems. At Rainy River, we mined the first development ore from the underground main zone. These milestones were accomplished on budget and ahead of schedule. Yesterday, we released updated technical reports for both assets. These reports incorporated mine life extensions at both sites and increased our underlying net asset value. Our exploration efforts throughout the year successfully replaced mining depletion of reserves on a gold equivalent basis. We plan to maintain this momentum in 2025 to unlock additional long-term value. Finally, in May, we increased our exposure at New Afton to over 80% following the transaction with Ontario Teachers, reducing their free cash flow interest from 46% to 19.9%. Slide 9 were catalysts we outlined last fall, and we've executed on all of them. Updated technical reports were filed last night on both assets. At Rainy River, the open pit mine life was extended with the inclusion of Phase 5, extending full mill capacity to the end of 2029, and the underground mine was extended to 2033. At New Afton, East extension was added to the mine plan, which adds high-grade mill feed during the C-Zone period. C-Zone's draw height was increased, extending the mine life to 2031 with no capital. Updated mineral reserve and resources were also released yesterday and successfully replaced mining depletion, and we have presented an impressive updated 3-year operational outlook. Slide 10 summarizes this outlook. Over the next 3 years, we see production growth of 38% in gold and 94% in copper. We also highlight a corresponding 69% reduction in all-in sustaining costs during this period. This will drive significant margin expansion and cash flow generation. I'll conclude my section on Slide 11. At the end of the third quarter, we had $133 million in cash and $459 million in total liquidity. Despite significant capital investments in recent years to advance our growth projects, our liquidity position remains very strong. This financial strength enables us to continue investing in our business and driving long-term growth. Based on our updated outlook, we expect to generate significant free cash flow over the next 3 years following the inflection point reached in mid-2024. At current consensus pricing, this translates to over $1.7 billion in free cash flow over this period. And at current spot prices, this figure exceeds $2 billion. For context, that's roughly 80% of our current market cap. That's an average of approximately $580 million in free cash flow or a free cash flow yield of over 25% over this 3-year period. Any way you look at it, this represents a strong profile. We are well positioned to achieve our updated 3-year outlook, and we have the financial flexibility to advance several opportunities to continue to extend our mines. We are entering an incredibly exciting period for New Gold. With that, I'll now turn it over to Luke to walk us through our updated life of mine updates.

Thanks, Ankit, and hello, everyone. As Ankit mentioned, we filed updated technical reports for both operations last night. As we were compiling these reports, it stood out how much the company has achieved in the last few years since the previous reports were completed. At the time of the last Rainy River technical report, the underground mine was not yet in production. Now Intrepid is performing well, and we have accessed the underground main zones, which will facilitate a significant ramp-up in underground production. In the pit, Phase 4, which was the final pushback at the time, was just getting started. Now Phase 5 extends open pit mining by an extra year, and we have several opportunities for further extension, leveraging our existing mining fleet and processing capacity. At New Afton, at the time of the last technical report, we were still mining Lift 1. B3 was not yet in production, and we had just started the declines down to C-Zone. Now B3 has been a complete success story with excellent reconciliation, higher-than-planned extraction rates and almost no convergence on the extraction level. C-Zone has achieved commercial production and is ramping up as planned. The C-zone crusher and conveyor system is fully operational. The TAT plant and in-pit tailings has exceeded performance targets. Stabilization of the HATSF facility is complete and stabilization of the NATSF is ahead of schedule. And the exploration and technical teams have successfully extended the mine life and discovering promising new zones close to existing infrastructure. These successes have positioned New Gold to generate significant free cash flow. I encourage you to read both reports when you get the chance. Today, I will focus on some of the highlights and the potential upside that is not included in the base case mine plans. High-quality mine plans start with high-quality block models, which has been a focus for our geologists over the past 2 years and resulted in a full update of all models using the latest drilling, sampling and reconciliation data. 2024 was a successful year for New Gold, replacing 39% of depleted gold reserves and an impressive 231% of copper reserves. Combined, this represents a replacement factor of approximately 90% on a gold equivalent basis. We also had success expanding mineral resources, increasing measured and indicated resources by 459,000 ounces compared to last year. I will provide more information by operation in the following slides. At Rainy River, we increased gold reserves in the underground mine and Phase 5 of the open pit, offset by mining depletion and capping of high-grade pockets in Phase 4. Total reserves as of year-end 2024 is 2.1 million ounces of gold. A highlight for Rainy River in 2024 was the significant increase in open pit mineral resources, increasing by more than 500% compared to last year as a result of an expanded resource shell shown in light gray on this figure. There are 2 main reasons for this increase. One, an increase in gold price. The resource pit shell is generated using a gold price assumption of USD 1,980 per ounce, and this is the main driver behind the expansion to the south of the main pit and at depth. Secondly, exploration drilling. The updated resource pitch includes the ODM East and Northwest trend following a successful near surface drilling program in 2024. And as JF will show later, there is potential for further growth of Northwest trend with additional drilling. Technical studies are planned to further evaluate these opportunities with the objective to convert a portion of these open pit indicated resources to mineral reserves. The studies will include a comprehensive review of waste rock and tailings storage options, including the opportunity for in-pit storage. While we reported Phase 5 mineral reserves at the end of 2023, this is the first year that we've included Phase 5 in the life of mine plan. The impact is that it extends open pit mining to 2028, defers reclaim of the low-grade stockpile and keeps the mill full until the end of 2029. We've also optimized Phase 5 pit design to increase reserves while reducing strip ratio, and we keep the option open for further push backs to the south in the future. In terms of gold production, Rainy River is expected to average approximately 280,000 ounces per year over the next 5 years with an underground mine ramping up to full capacity, combined with open pit ore from Phase 4 and Phase 5. From 2030, gold production is expected to reduce as only underground ore is processed. However, the open pit extension opportunities mentioned on the previous slide represent potential upside to the technical report for these years and beyond 2033. Slide 16 provides an overview of the life of mine capital and operating cost profiles at Rainy River. The majority of capital in 2025 and 2026 relates to capitalized waste stripping to complete Phase 4 and access Phase 5 using existing open pit equipment. Post 2026, CapEx decreases significantly and is primarily related to underground development as we continue to unlock more ore. The extension of the open pit results in unit costs remaining consistent at around $30 per tonne for the next 5 years, which is consistent with our current unit cost. Unit cost increased in 2030 when only the underground high-grade ore is processed. New Afton increased copper reserves by 15% and gold reserves by 13% net of depletion, with increased reserves at C-Zone and new reserves at East extension. Starting with C-Zone, shown in purple in this figure, reserve tonnes increased by 27% with an increased height of draw. Mining of these reserves from the top of the cave will involve drawing additional tonnes from existing draw bells. So, no additional CapEx is required. The East extension stoping zone with average grades more than double the average C-Zone grades is added to reserves for the first time, supported by a technical study completed in 2024. East extension adds 41,000 ounces of gold and 35 million pounds of copper, while also providing the platform for further growth in the eastern sector of the mine. For mineral resources, exploration drilling resulted in a significant increase in D-Zone resources and an upgrade of inferred resources to indicated. The main focus of exploration drilling in 2024 was K-Zone. As we are still evaluating the extent of the zone and the potential mining methods, K-Zone drilling is not yet reflected in the mineral resource stopes. The success with mineral reserves translates to improved life of mine copper and gold production profiles as shown on Slide 15, both in terms of the production per year and also the mine life. C-Zone achieved commercial production in Q4 last year and is on track to ramp up to approximately 16,000 tonnes per day in 2026. With the increase in mill throughput, combined with the increase in grades from C-Zone, gold and copper production is expected to increase significantly over the next 3 years. From 2026 to 2029, New Afton will be mining from the core of the C-Zone cave, supplemented with higher-grade mill feed from East extension. During this full year period, production is expected to average 125,000 ounces of gold and 98 million pounds of copper per year. With the increased height of draw at C-Zone, the New Afton reserves mine life is extended by 1 year to the end of 2031. However, between conversion of resources to reserves and near-mine exploration upside, New Afton has several exciting opportunities to further extend mine life into the next decade. Slide 19 provides an overview of the life of mine capital and operating cost profiles at New Afton. Investment in C-Zone will be substantially completed in 2025, resulting in low capital, high-margin production for the remainder of the life of mine. East extension access development is completed in 2026 and minimal CapEx is required after 2026. With the C-Zone infrastructure in place, New Afton's cost profile decreases significantly compared to B3 production and at an average of $30 per tonne is consistent with what was previously achieved in Lift 1. With the investment in C-Zone completed on budget and ahead of schedule, New Afton is positioned to generate significant free cash flow for the remainder of its life of mine. These life of mine plans provide the foundation for New Gold's 3-year operational outlook. And while we reflect on our successes, we also learn from our challenges. We have applied these learnings to de-risk not only our operations, but also the life of mine plans presented in the technical reports, allowing us to look forward with confidence. I'll hand over now to Patrick to provide an overview on the operational outlook.

Thanks, Luke. So health and safety remain core to our business and our strategy. This is highlighted by our Courage to Care culture. For us, good production is safe production. Despite our commitment to health and safety, we report a fatal incident at Rainy River in July 2024. The loss of our colleague has been an additional source of motivation for all of us. The best way to honor his memory is to intensify our efforts to prevent or mitigate the risk of our activities. Consequently, 2024 saw us perform very well as a company regarding lead indicators. We significantly increased the unification of hazard and declaration of near misses. More than ever, we are committed to stop work if it's not safe, to never compromise on safety, and to look out for one another. We really strive to protect our communities and the environment. We have received AAA water and tailing towards sustainable mining protocol at both of our sites, and we continue to prioritize energy-efficient and low-consumption mining methods. And we maintain strong relationship with our indigenous partners with 24% of our employees identifying as indigenous. Turning to Slide 22. I would like to focus again on health and safety. Most of you know by now that it's something that I'm passionate about, and it flows through the entire organization. This is reflected in the safety indicators. Since 2022, New Gold has achieved a steady decline in total recordable injuries, and the severity of these injuries also -- has also reduced significantly. We received several awards in 2024, recognizing our health and safety performance. But more importantly, our Courage to Care approach is present in everything we do at all level of the organization. Returning our people home safely at the end of the day is our top priority. I believe we can always continue to improve our health and safety at site. Focus for 2025 will be on strengthening our Courage to Care culture. We'll continue to prioritize the leading indicators of our health and safety management system. In addition, we will roll out our critical risk management program and initiate training on psychological safety. Now I'll give a brief overview of the consolidated 3-year guidance. Gord and Jeff will provide more details on an asset basis in the following sections. This slide displays all guidance range for the next 3 years. It's more visually clear in the next 3 slides, but the key takeaway is growing production and declining costs. Slide 24 outlines our production growth over the 3 years period. We expect continued and significant growth in gold and copper production over the next 3 years. Both operations are contributing to production growth with the realization of growth projects that were completed in '24. Gold production is expected to increase from 300,000 ounces in '24 to a midpoint of 410,000 ounces in '27, a 30% increase over 3 years. Copper production is expected to increase from 34 million pounds in 2024 to an impressive 105 million pounds in '27, a 94% increase over that period. With the increasing production, unit cost per ounces of gold are expected to be reduced significantly. By 2027, the consolidated all-in sustaining cost is expected to be between $400 and $500 per gold ounces, an 81% reduction compared to '24. This is expected to translate directly into increasing operating margin per ounces, ensuring ongoing cash flow generation and providing significant leverage in a favorable metal price environment. Sustaining and growth capital are expected to taper off significantly over the next 3 years. This is primarily due to the completion of major projects and the reductions in open pit stripping at Rainy River. The 2025 estimates consider the carryover of some capital that was not spent in '24. Again, Gord and Jeff will provide a more detailed breakdown in CapEx later in the presentation. In summary, with the increase in production, combined with the reduction in unit costs and tapering capital costs over the next 3 years, the company is well-positioned to deliver significant free cash flow. And with that, I will hand over to our Rainy River General Manager, Gord Simms.

Thank you, Pat, and good afternoon, everyone. 2024 was a pivotal year for Rainy River. Yes, with some challenges, but also many milestones achieved, and we are looking to build on that in 2025. We're expecting gold production of 265,000 to 295,000 ounces for the year, a 20% increase compared to the 226,000 ounces produced in 2024. The increase is driven by a 25% increase in gold grade as the underground mining rates increased during the year. I will review and discuss the 2025 profile. Approximately 63% of the production is scheduled in the second half of the year. This is due to the open pit mining sequence. We are currently completing waste stripping in Phase 4 and will primarily process lower-grade stockpile tonnes in Q1. From Q2 onwards, we will release higher-grade, low-strip ore from the open pit. And for the same reason, sustaining capital is weighted for the first half of the year. The underground mine is well-positioned to deliver 846,000 tonnes in 2025. This is the result of the development completed in 2024. Lateral development is consistent throughout the year, and growth capital allocation is higher in the first half of 2025 due to the commissioning of our Fresh Air Raise Fans, which we completed in Q2 of this year. Looking in more detail at the open pit, this section view illustrates the planned mining sequence over the next 3 years. We're currently mining Phase 4. As I mentioned, we have waste stripping to complete in the first half of this year, and then Phase 4 will be well-positioned to deliver low-strip ore through 2025 and 2026. Phase 5 is included into the mine plan following the successful drilling programs in 2023 and 2024. Phase 5 is a pushback on the western side of the main pit and add 6.5 million tonnes of open pit ore at an average grade of 0.64 grams per tonne and strip ratio of 4.05:1. Phase 5 mining is scheduled to start in Q4 of this year, and mining will be complete in 2028. Phase 5 provides additional ore to allow the mill to operate at full capacity until the end of year 2029. Phase 5 will be mined using our existing equipment fleet, and also has the benefit of utilizing the in-pit overburden for progressive reclamation of our waste stockpiles. The cross-section of Phase 4 shown here illustrates the waste stripping that is scheduled to be complete in the first half of the year. The strip ratio for the remainder of Phase 4 is significantly reduced as the pit is mined out in 2026. Turning now to the underground mine. Underground continues to deliver on expectations following first production in 2022 and that has continued through 2024. In 2025, the underground will deliver 846,000 tonnes of ore, accounting for approximately 25% of our gold production this year. With an average reserve grade nearly 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 will produce approximately 150,000 of ounces per year. This slide shows the underground mining zones that are scheduled over the next 3 years to achieve the production ramp-up of approximately 5,800 tonnes by 2027. The key to the production ramp-up is to establish multiple concurrent mining zones in Intrepid, 17 East, ODM East and ODM Main. This slide also shows the capital development sequence over the next 3 years. The priority in 2025 is completing the pit portal breakthrough and advancing ODM East and 17 East. The pit portal breakthrough is on schedule to be complete by the end of Q1 this year and will provide the secondary means of egress necessary for ODM East and 17 East production and allow us to ramp up underground production. At the same time, we will continue the Intrepid development below the 300-meter level. In 2025, the priority will be completing the ODM Main vent loop, unlocking ODM Main production in 2026 and 2027. Turning to Slide 32. This is an indicative life of mine processing schedule to illustrate the transition from open pit to underground mining and stockpile reclaim going forward. We introduced this slide last year and it has been updated to include Phase 5, reflecting the updated technical report. And as you can see, we successfully pushed the low-grade stockpile out by 1 year compared to last year's schedule. 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 where required to keep the mill operating at full capacity. The total processing throughput is expected to remain at approximately 24,700 tonnes per day. A reminder that 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. JF will provide an overview of these opportunities in later slides. I'll conclude with Slide 33. With open pit mining of Phase 4, Phase 5 and ramp-up in underground production, Rainy River is expected to achieve significant production growth and cost reduction over the next 3 years, averaging 300 ounces per year over that period. Capital cost decreased over the 3 years due to a significant reduction in open pit stripping and the completion of underground infrastructure. The table on the right-hand side of this slide breaks down the capital profile. The bar in gold represents approximately $80 million of primarily waste stripping CapEx related to the Phase 5 expansion. This was not included in last year's guidance. Phase 5 stripping will commence at the end of 2025 with the majority of the spend occurring in 2026. The next bucket is infrastructure and equipment. You can see on the chart, the reduction in expenditure 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. 2025 capital includes $25 million for the tailings raise. With the addition of Phase 5, there are 2 further tailing facility raises in 2026 and 2027, at which point the facility will have sufficient capacity. The last bucket is underground development. Underground CapEx is held relatively constant over the next 3 years as we access the majority of the mining zones by the end of 2026. Underground CapEx also included the purchase of some mobile equipment in 2025 to eliminate future rental costs and increase equipment availability. To wrap up, Rainy River is well positioned and we are confident and committed to deliver on the production costs laid out in the 3-year outlook and beyond. With that, I'll hand things over to Jeff to talk about New Afton.

Thanks, Gord. Touching on 2024 for a moment. We had an excellent year at New Afton. Gold production outperformed guidance with copper production achieving the midpoint. On a project basis, we announced commercial production and commissioning of the crusher and conveyor at C-Zone ahead of schedule and on budget. The team has positioned the mine to achieve significant production growth and cost reduction over the next 3 years, consistent with our plan. Turning to 2025, production will look a lot like 2024 as we continue transitioning from B3 to the C-Zone cave. Total gold production for the year is expected to be 60,000 ounces of gold, while copper production is expected to be 50 million to 60 million pounds. C-Zone mining rates will continue to ramp up throughout the year towards 16,000 tonne per day. The increased rate is partially offset by lower grades as B3 cave is exhausted in the first half of 2025 and C-Zone grades gradually increase throughout the year. Production is expected to significantly strengthen in the second half with the first quarter representing approximately 20% of the annual production, again, driven by the lower B3 grades as it nears the end of its cave life. New Afton mineral reserves increased, replacing mining depletion by a factor of 209% for gold and 231% for copper compared to year-end 2023 due to the conversion of East extension and the increase of the C-Zone draw height to 450 meters. With the addition, the mine life is extended to 2031 at an increased processing rate of 16,000 tonnes per day beginning in 2026. The East Extension project at New Afton adds high-grade ore, more than double the average grade of C-Zone concurrent to the C-Zone production period, leveraging low-risk and low-cost operation while simultaneously providing a platform for further growth in the Eastern sector. East Extension will be mined using long-hole stoping and ore production is planned to commence in mid-2026 through to the start of 2031 at an average rate of 500 tonnes per day. East extension ore will be trucked to the C-Zone crusher and waste will be backhauled from C-Zone extraction for stope backfilling. Entering 2025, the C-Zone project has been significantly derisked. Stabilization works are complete on the historic Afton tailings storage facility and dewatering is on track for completion in Q1 2026 for the New Afton tailings storage facility. Thicken and amended tailings in the Afton pit tailings storage facility have been an incredible success. We have reached 5 million tonnes placed with the quality continuing to exceed design specifications. In terms of mining, we have completed several significant milestones over the past 6 months. The C-Zone gyratory crusher and conveyor system was delivered ahead of schedule and automated operations in C-Zone haulage was commissioned with battery electric loaders, leveraging the strength of our integrated operations center pictured on the slide. We are on track to be mining on automation concurrently with cave construction for the second half of the year as we complete the remaining cave construction activities to move into steady-state production. Turning to Slide 38. You will see New Afton's life of mine processing schedule. It clearly illustrates where the 3-year guidance period fits into the overall picture at New Afton. New Afton has been operating the B3 cave since 2021, and it's coming to the end of its life in mid-2025. C-Zone has been ramping up well since first production in late 2023. As mentioned, we declared commercial production in the fourth quarter of 2024 and have been steadily increasing throughput quarter-over-quarter. 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. The updated mine plan includes an increased C-Zone draw height as well as East extension. During last year's presentation, we noted that the throughput was capped at 14,800 tonnes per day based on the plan. With the inclusion of East extension and our confidence in automated operations enabled by our integrated operations center, we have increased throughput to 16,000 tonnes per day, which improves free cash flow as well as net asset value for the mine. I'll conclude on Slide 39, which emphasizes the impressive 3-year profile. Looking forward, production at New Afton is expected to increase to 130,000 to 150,000 ounces of gold and 95 million to 115 million pounds of copper by 2027. Using midpoints, this equates to a 93% increase in gold production and a 94% increase in copper production over the next 3 years. Block caves 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 life of mine to 2031. And although East Extension is not being evaluated as a block cave, its ability to leverage key existing C-Zone infrastructure has resulted in very minimal incremental capital over 2026 and 2027. By 2027, total capital is expected to be below $15 million per year for the remainder of the life of mine. Similar to Gord's section on Rainy River, we've broken out capital into 5 buckets. First is East extension. 2025 capital includes $16 million for this bucket, increasing to $24 million in 2026 when development transitions to ore and mobile equipment purchases are complete. Second is underground development and cave construction. 2025 capital includes $60 million for this bucket with a decline to 0 in 2026, in line with our previous guidance. This aligns with C-Zone development and construction completion, which is on track for completion in early Q1 2026. The third bucket is infrastructure and equipment. 2025 capital includes $20 million for this, a large reduction from 2024 as commissioning of the C-Zone crusher and conveyor occurred in late 2024. The fourth 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 are on track to deliver our stabilization objectives at the New Afton tailings storage facility in 2026. There is a modest capital of $10 million to $20 million in 2025 related to this. Beyond 2026, in-pit tailings has sufficient capacity to double the remaining life of mine with minimal capital requirements. Again, this is in line with last year's guidance. With C-Zone ramping up, high production, high operating margins and minimal ongoing capital spend is expected to generate significant free cash flow over the 3-year guidance period. I will now hand it over to J.F. Ravenelle, who will provide more details about these opportunities as well as the significant exploration upside at New Afton and Rainy River.

Thank you, Jeff, and hello, everyone. Building on the momentum gained from a successful 2024 campaign, our combined 2025 exploration expenditures are budgeted at around $30 million. This capital will allow us to conduct approximately 50,000 meters of exploration drilling at each operation. At New Afton, there is a very strong focus on advancing K-Zone and a portion of the budget is allocated to the development of an additional exploration drift, which will accelerate drilling. At Rainy River, exploration will focus on near surface growth with the objective of maintaining the mill at full capacity beyond 2029. We are also targeting growth to the underground ore inventory to provide additional mining flexibility. Slide 42 shows the near surface upside potential identified at Rainy River. 2024 marked the first major exploration program carried out at Rainy since mine opening in 2017. Results from last year proved successful in demonstrating the remaining exploration upside located close to existing infrastructure. As an example, RC drilling confirmed near surface continuity of gold mineralization at Northwest Trend, which contributed to the increase in open pitiable resources at year-end. For 2025, we will continue to drill at Northwest Trend to fully test the extent of the zone and also at Phase 5, which was recently added to the life of mine and still show growth potential. The company is also reviewing additional pushback to the main open pit, which could represent significant additions to the life of mine while not requiring additional exploration drilling. Supported by higher metal prices, the main open pit saw a significant increase of over 0.5 million gold ounces in indicated resources. The economic viability of these growth opportunities, which could defer reclaim of the low-grade stockpile and improve the long-term production profile are currently under evaluation. Looking beyond the existing operational footprint, the company is also exploring other targets on the property, focusing on finding quality ounces that could be quickly added to the life of mine. Slide 43 outlines our underground exploration targets at Rainy. In 2024, exploration drilling targeted key locations within the underground mine. Not only this drilling proved successful in demonstrating remaining exploration upside, it materialized into a significant increase of 200,000 ounces of gold in inferred resources and a slight increase of 20,000 ounces in mineral reserves on top of replacing underground mining depletion. Given our healthy underground reserve inventory at Rainy. The 2025 strategy is focusing on adding high-grade ore to provide additional mining flexibility and further improve the production profile. To do so, the program targets converting inferred resources within the ODM core, following up on high-grade intervals intersected down plunge of existing ore zones and growing the strike extent at Intrepid to increase the amount of ounces per vertical meter. In addition, exploration at Intrepid will benefit from an underground drilling platform being developed to accelerate exploration and definition drilling. The new underground platform is scheduled to be operational in Q4. Turning to New Afton's upside potential on Slide 44. At New Afton, we continue to execute on our strategy to extend the mine life beyond 2031. The 2025 exploration program is strongly centered around K-Zone, building on last year's successful drilling results. K-Zone is a new zone of copper-gold porphyry mineralization with a high-grade bornite dominant core and a wider chalcopyrite dominant halo. The zone remains open and is not yet included in New Afton's mineral resource estimate. To strengthen its position on K-Zone, the company is developing a 700-meter exploration drift at the 4500 level to improve drilling angles, shorten the length of exploration holes and accelerate exploration. Drift development has commenced and the first drill bay is expected to be operational in Q2. Upcoming drilling results will support resource estimation work and aim at improving the confidence and categorization of the zone. This will guide engineering studies on applicable mining methods and eventual conversion to resources. In addition to the strong exploration potential at K-Zone, the New Afton mine has a significant mineral resource base with potential opportunities for conversion to mineral reserves. This includes hanging-wall zone and D-Zone, which saw an increase of 10% and 90% in measured and indicated resources year-on-year, respectively. Further technical studies will be conducted to assess the potential feasibility of these zones. In addition to these initiatives, the company is applying its vectoring knowledge to explore for new copper gold zones in the vicinity of the mine and within its land package. New Afton's processing plant and tailings storing facility have the capacity to process significantly more ore beyond the current mine life. With that, I will turn the presentation back to Pat.

Thank you, Jean-Francois. I'm on Slide 46, and I believe that it speaks for itself, reinforcing the point of our team made this afternoon. We are well positioned to achieve growth in gold and copper production with declining cost and capital. This should lead to substantial free cash flow generation over the next 3 years. The support from our employees for the Courage to Care program has contributed significantly to our health and safety performance since I joined the company. We have a team dedicated to value creation as demonstrated today with the delivery of 2 new technical report and mine life extension at both of our assets. These efforts increase our net asset value and creating value for our shareholders. As Ankit stated at the beginning, we have entered in a very exciting time for New Gold, marked by increasing production and significant free cash flow generation in a robust community cycle. Combine that with our safe, well-established mining jurisdiction and exposure to what we view our preferred metal in gold and copper, and New Gold offers a compelling investment opportunity. In closing, 2025 will be another important year for us. We will continue to deliver on our stated strategic goals. This includes delivering on 2025 production and cost guidance with the same attention to health and safety. At New Afton, we will ramp up C-Zone and advance the development of East extension. At Rainy River, we will continue to ramp up the underground mine -- main and advance Phase 5 open pit development. We will continue to increase our exploration efforts at both sites targeting further reserve replacement. '25 will be a busy year, but we look forward to building a free cash flow inflection point achieved in 2024 to create value for our company, our stakeholders, my teammates and our shareholders. Before to open the floor up for questions, I just want to, for a company of our size, we have a small group, but we have a committed group and to deliver 2 technical reports of this quality in the same time, we have 2 different assets that are spread out or separate by 3,000 kilometers each. It's an amazing amount of work. And I'm exclude of this. And I want to say thank you to the guy to the people who are at the front of this room today because they did all this work and the proof that no one wins alone, and I'm really honored to be their leader. So for that, open for questions.

Thanks, Pat. We're going to open it up for Q&A. Anybody in the room who has a question, we have a mic, we can bring it to you.

Mike Siperco with RBC. Maybe a couple of quick ones. On the CapEx side, first, looking at growth CapEx over the next couple of years, I know you provided a number on the East extension and Phase 5 stripping. Is that the right way to look at it in terms of new CapEx to support growth initiatives, about $100 million of the roughly $250 million over the next couple of years is new in this plan to support growth?

Why don't I hand it over to Keith?

Yes. Yes. Yes, that's a good way. There's about $80 million of capital related to Phase 5. That's primarily the stripping and the maintenance of the open pit equipment and about $40 million for East extension.

And is there anything in the updated sustaining numbers that are related to those 2 items?

Yes. So, all of Phase 5 is in sustaining because it's kind of is produced the year after. So the majority of that is in sustaining. I mean maybe just to go through the capital. For the 2 years, I'd say, there's about $140 million of total capital related to those -- sorry, $120 million of total capital related to those 2 projects. There is an increase of stripping of about $20 million for Phase 4, which is kind of Phase 4, as we said last year, we said was about $20 million under and there will be about $20 million of that increase in capital related to Phase 4 stripping. Then there's about $15 million, $20 million of capital carried forward from 2024. And then the remainder is related to some new projects. We have some equipment purchases underground. And we've also got some kind of additional projects to enhance operational efficiency kind of at both mines.

And the K-Zone drift would be included in that...

In that exploration.

That's in exploration?

Yes.

Okay. Maybe switching gears, a little bit to the resource. Can you talk a little bit more about the sensitivity, I guess, especially at Rainy, but maybe when it comes to exploration at New Afton as well, the sensitivity to the gold price. You increased the assumption with this resource update. How sensitive are the resources to gold? And if we look at, say, CAD 5,000 gold, which shockingly, we're not that far away from, how do you see the projects evolving?

Maybe I'll hand that to Luke.

Yes. So as I said, the current resources are estimated at almost USD 2,000 per ounce. If we increase the resource price, we would have a bigger pit that would also subtract away from the underground though because we would have to mine deeper in the pit and then some of those ounces from underground would be converted to open pit. At New Afton, we would also see an increase in resources at a higher gold price as well and a higher copper price. But most of the, overall, the resources at New Afton are not as sensitive to increasing gold price as it is at Rainy River with the increase in pit size.

Okay. And then maybe just a follow-up at Rainy. You talked a bit about the grade capping. Is the right way to look at that along the lines of a more conservative outlook with potential to do better than the current block model, the updated block model?

The capping that we've applied now is to match with the reconciliation that we had in 2024. So we're expecting that the new block model and the new reserves that we've estimated for the open pit at Rainy River, that's what we're expecting to actually get. We haven't been overly conservative there. I think that's right in the middle of where we expect to be.

Yes. So just taking -- Anita Soni from CIBC. Just taking a look at the Rainy River technical report. Is it fair to assume that the grades that you're mining from the various buckets we can just assume the average reserve grades like, for example, I think the stockpile is what 0.38 and we just assume it's all just 0.38 as it comes in.

That's right here. There's a very small amount of high-grade stockpile, but most of it is around that grade.

Similarly, on the open pit, 0.88 and then is there any variation?

Well, no, in the open pit over the next couple of years, we will actually be mining at a rate higher than the processing rate. So we will be stockpiling the lower grade material from the open pit. So the average grade that we mine -- that we process from the open pit over the next couple of years will be higher than the average reserves grade.

Okay. Yes, I guess I was looking for the blend, which leads me to my next question, which is that you've got development ore and basically about stope ore of about kind of half to 1/3 of your highest peak rates coming in, in 2025. How many phases do you need for that for the 551 and ultimately, how many phases are you trying to get to by 2027?

I don't know the number of exact phases off the top of my head, but we're lucky at Rainy River. We have, I think, 7 different zones that we can mine from at any onetime, and they're all sort of spread out horizontally rather than at depth. So we're expecting now with the development at underground Main to access several additional new zones over the next couple of years that we don't currently have access to.

Thanks, Anita. Any other questions?

Farooq Hamed from Raymond James. Maybe just a question more topical about what's going on politically. In your estimates for 2025, if you think about cost and CapEx, do you have a lot of U.S. inputs into any of your cost or capital items?

Keith?

Yes. So looking at our operating cost, it's about 40% labor, 20% contractors, 15% diesel and electricity and about 25% consumables. Of that consumables bucket, there's about 10% directly sourced from the U.S. So there may be a knock-on impact to that. But we're also evaluating our local suppliers to see whether or not they have any in their supply chain. But at the same time, we're evaluating if we have alternative suppliers, et cetera. The other part of it is that the majority of our operating cost is denominated in Canadian dollars. So you do see a bit of an offset there.

Right. So just the U.S. element is pretty de minimis and it's 10% of a 25% bucket or something like that.

Exactly, yes.

Okay. So, no real concern from if you have reciprocal tariffs or something like that?

We hope not, but yes.

Okay. And then the next question just was related to K-Zone. So obviously, you talked about developing the drift to K-Zone this year and a lot of, I guess, exploration dollars allocated to K-Zone. Can you give us and I know it's early, but can you give us a little bit of context of how you see access to K-Zone and eventual development of resource and reserve at K-Zone? Like what are some of the milestones or steps along the way and maybe associated timing with that?

Yes. So from an access -- Jeff LaMarsh, from an access perspective, really looking to leverage the existing infrastructure out of C-Zone as being the primary means. But at this date or at this time, we don't know a lot about the deposit, hence, the drift and being able to access it with the right angles for exploration. So that's really the priority for this year is to fully understand the scope of it and then make a determination of what level would make the most sense if it's mineable.

Okay. And so does that mean probably 2026, we get a better handle on kind of your strategy to drill it to start actually understanding it better?

We don't have an exact date for that. But as we mentioned, we don't have resources yet. We're working on it. We're obviously very excited about it. But yes, we need to execute on developing the drift, doing the drilling, updating our models and determining the right mining method as well. So quite a bit of work still left to do.

Eric Winmill from Scotiabank. Just a quick question on New Afton, please. On toll milling, should we think about that? Are you looking to do any of that going forward?

Jeff?

In our current 43-101, we don't have any toll milling baked into the plan. So for us, mill throughput was a big opportunity for us over the past kind of 3, 4 years with B3's lower rate. But as we move into full C-Zone production, toll milling becomes a lot less attractive in generating additional cash just because C-Zone is quite a high-grade ore source and looking to maximize its throughput through the mill.

Great. Maybe just sticking on New Afton, obviously, the East Zone development cost is pretty low. Any sort of estimates there in terms of what it would cost if you weren't able to piggyback off that infrastructure or maybe like estimates in terms of how many development meters you have to do to get there? And is that contract or owner operated?

Yes. So on the development meters, it's all included in the 43-101. It's broken out as East extension. It's all done internally. So our plan is to leverage the existing workforce we have for C-Zone development and segue that rate into East extension development.

And any idea on the cost savings using existing?

So East extension works out to about a $3 mining or hit to our average mining cost. It's just under USD 100, right around the USD 85 a tonne. So it's very synergistic with C-Zone and unlikely that it would be mined as a stand-alone, especially at those lower rates. It's quite a small deposit.

All right. Just a quick question on exploration too, if you don't mind, at Rainy, especially that Northwest trend, trying to think, have we seen results there? And what kind of grades are you getting would be similar to kind of the Phase 5? And then maybe -- sorry, a follow-up just on the underground to what you're seeing in terms of have you done any sort of metallurgy there, any change in the zones as you get deeper?

Yes. So, on Northwest trend, we did publish some results last fall on that exploration results following up on historical results that we had. And in terms of grade, so the indicated resources we flagged in the presentation, they're at 0.8 grams per tonne. On the metallurgy, maybe Gord or Luke? The underground. But basically, in terms of the continuity of the ore, it's the same material that's plunging down. So we don't expect major changes there in terms of metallurgy.

Sorry, it's Farooq again from Raymond James. Maybe just a question about overall corporate strategy and capital allocation. So the plan that you laid out, the 3-year guidance that you laid out, there's significant free cash flow over the next 3 years even with these projects. Can you just kind of give us a highlight of what your capital allocation of your free cash flow priorities are in terms of returning capital to shareholders or other?

It's a good question. A question is coming oftenly. It's something that will be addressed. It's something that we already discussed at the Board level and internally between us. But mostly is -- it will be more at the end of this year that we will see the cash flow that will show up in our balance sheet significantly. We'll be more positioned to determine what is the best option for our shareholders more in Q1 2025 to what we're going to do in terms of cash distribution and/or as a miner, I will always wish to propose a better investment to my shareholders to provide better return. It's what we're always looking for. But it will be more when we'll be at the stage to have a strong balance sheet with cash on hand to look at this. It will be more in Q1 2025.

Jeremy Hoy, Canaccord Genuity. I'll be a little bit more specific on that last question. I mean, we're always poking at what potential targets could look like. And I think in the past, New Gold has spoken about a preference for, if it was the right time and the right asset, producing assets in North America, potential willingness to look elsewhere where the team has experience in Latin America and whatnot. I was just wondering if you could provide an update on your thinking around potential M&A.

I always like because you're asking that. It's always the last question. So I think that our first priority is to have a strong plan. I think it's what we present to you today. It's a commitment that we made to you last year to have -- looking forward, we know what is the foundation of the business is what we present to you. We strongly believe to provide more value through organic growth. I think that I'm a strong believer in K-Zone, but we didn't talk also we have a wall zone that can be -- and the way that I'm seeing New Afton, New Afton is a mine that is having an efficient and versatile mill, high-quality operation. We have power that is high quality and cheap low price compared to the other province and maybe elsewhere in the world. We don't have to invest capital in the tailings storage facility that is huge and also in terms of permitting, too. So, it's pretty easy. And it's one of the -- I will not assume the opportunity of that. It's coming from my predecessor, but the decision to invest in ticketing plant is probably the best decision ever that we made at New Afton. So -- and we have -- and the approach of what I'm saying to investors and our shareholders is we did not present the resources for K-Zone because we want to work out K-Zone, and we want to have a holistic approach about K-Zone and C-Zone and D-Zone. And if you look at D-Zone by itself, it will drive value for shareholders. But if you look at D-Zone combined to K-Zone and you share the same access, it's good. The thing also that we want to make sure at New Afton is we want to be cash flow generator. We don't want to have the peak and valleys that we had to face. And based on that, it's why we want to improve the NAV for shareholders. So that's one thing. Strongly believe that 2 assets will be in a good position in the next year to extend the mine life of our both assets. My view is to do our money, it's not like to buy, I would say, a suit at the tailor shop. It's to customize that to what you want is one thing, but what you get is another thing. I strongly believe in the consolidation for a few things, the cost of capital. Third, the fact that if you combine asset, we're making cash flow, if you want to build something because our industry by nature we need to -- if we want to extend our mine life, create more value, we need to build something. To build something, we need capital. So it's always a [ cash 22 ] in our approach. But in order to do this, the best way is if you have a larger market cap, it's easier to build value for shareholders without diluting them or reduce the dilution for them. That's really what I'm seeing. The other aspect of it too, is that I'm lucky because the guys who are on my left are mostly in the 40s, and they have a good 20 years in front of them. It's a pipeline of talent of people having a lot of will and want -- and grip and they want to succeed in their career and they want to succeed with New Gold. But this pipeline of talent, we need to feed it. And some other in the industry, we are short of talent. So the combination of talent and M&A is something -- it's something that is crucial for me. I don't want to merge with someone and to lose 50% of the talent, it's not adding value for shareholders. And basically, for that, it's easy if we think we'll have -- if we do something to combine to combine companies who want to play together. We'll have to share some to balance the risk between each other too. So I'm having the feeling that it's the trend actually in the street is that people are looking for that. I think it's not to be big, to be big that we want to be. I'm not interested by this, but also, it's what is the next step. How are we going to grow this business? What type of value we can create for our shareholders? It's my job. My job is to -- our job is to create value for shareholders safely and in compliance with regulation. But I did not answer your question because I can't. And also, it doesn't mean that we have, but when it starts, it starts.

So patience and discipline then.

Patience is not my nature. It's not my best quality, but...

So I asked that because it followed up on the capital allocation question, but there was some more detailed stuff I wanted to touch on, too. We didn't talk a lot about D-Zone, although you did mention it. Has K-Zone become more of a priority that you guys are envisioning could potentially come into the mine plan before D-Zone then? Or what's the thinking around that currently?

Good question. It's coming back to what I said before. I think if we just have D-Zone, we will run after D-Zone, and we'll try to squeeze as much as we can for D-Zone. The approach that we have a bit of time in front of us. So that's why I don't want to box us with K-Zone because more we drill, we're seeing upside and I think it's something that can be big or can be very interesting for us. But the idea is D-Zone is an asset that we believe in, but can we make more margin with D-Zone if we plan this in parallel or subsequently to K-Zone because one will pay for the other. So what is interesting with K-Zone, the way East extension, what Jeff has explained is all the infrastructures of C-Zone will be in play for East extension. The only investment is development. If we look to wall that is in the wall of the first lift that we mined, if we do this, we don't want to capitalize in crusher and conveyor and stuff, it's the first lift that we'll pay for that. The main capital and the main execution risk that we have at New Afton is long development, ventilation, crusher, dewatering, so maintenance facilities, all this is draining a lot of cash, but this cash will be already deployed for the Lift 1 and already deployed in C-Zone. And what we want to maximize is this. We want to improve the return of the investment that we did in this 2-block caving. And it's true we need to be a bit patient. And if we look, we have a holistic approach and we have 3 zones that can combine together give us 10 years of feed. And if we -- the way that we scale it one after the other, it's reducing the capital requirement, that's our job. And we have an 18-month window that we can have the time to look at this adequately, I think.

Okay. Yes. So back to the statement you guys had made previously, which is that development level for C-Zone, it's kind of key to keep new projects above that, if possible, to maximize economics.

Yes. But K-Zone actually is above and below. But if the below is 300 meters, it's manageable for us. It's not complicated.

Got it. Okay. One other one that's related is you guys mentioned a few times the East extension could be a platform for future growth. Could you just talk about that a bit more? Is that just the development as you can run additional development off of that? Or is there room for East extension to grow further? Or just some clarification would be helpful.

Yes, it's really the East extension provides a secondary pathway for fresh air to the level. It really opens us up to the East where we have minimal subsidence for ventilation raises, really anything in that sort as we move out to the East where we move further and further away from where we've previously caved. So, it's really around infrastructure if infrastructure is required for production out to the East.

So I don't think we have any additional questions. So that completes our presentation for today. Thank you for everyone who joined us and everyone who joined us online. Should you have any follow-up questions, please feel free to reach out to us. Thank you.