New Gold Inc.

Good morning, my name is Chris and I'll be your conference operator today. Welcome to the New Gold's fourth quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. Please be advised that today's conference call and webcast is being recorded. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. I would now like to hand the conference over to Ankit Shah, VP of Strategy and Business Development. Thank you.

Thank you, Chris, and good morning, everyone. We appreciate you joining us today for Newgold's fourth quarter and full year 2021 earnings conference call and webcast. On the line today, we have Renaud Adams, President and CEO, and Rob Chaudet, our CFO. Should you wish to follow along with the webcast, please sign in from our homepage at newgold.com. Before the team begins the presentation, I'd like to direct your attention to our cautionary language related to forward-looking statements found on slides two and three of the presentation. Today's commentary includes forward-looking statements relating to Newgold. In this respect, we refer you to our detailed cautionary note regarding forward-looking statements in the presentation. Your caution that actual results in future events could differ materially from those expressed or implied in forward-looking statements. Slides two and three provide additional information and should be reviewed. We also refer you to the section entitled Risk Factors in New Gold's Latest MD&A and Other Filings Available on CDAR, 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 endnotes that provide important information and should be reviewed in conjunction with the material presented. With that, Alan, I'll turn the call over to Renaud.

Thank you, Ankit. Thanks, everyone, for joining us today for 2021 review and 2022 outlook. and reserve and resources update. 2021 sure brought is part of challenges, but I'm extremely proud of our resilient team and the way we ended the year. On the operational side, both assets achieved a consolidated updated production and cost guidance. Q4 delivered the strongest productions and the lowest cost, the quarter. of the year. At Rainier River Mine, the mine achieved its updated 2021 guidance while executing extremely well on its capital project, achieving some savings in the tailings execution. We've also continued to advance the intrepid zone with the view to bring some of the production, the first production in the second half of 2022. The highlight of the year was that the year end updated reserve and the resources while we've seen a meaningful conversion of the mineral resources to mineral reserve, leading in a year-over-year increase in a gold mineral reserve for new gold. At New Afton Mine, the asset achieved its 2021 production guidance, slightly a higher cost, but considering all the challenges that the mine has to navigate through 2021, it was a an excellent execution at New Afton while we continue as well to advance our C zone and advance on plan for delivery and start of production in the second half of 2023. The B3 zone initiated with the delayed and the permitting and continue to advance and ramp up during the second half of 2021. And we've seen some very encouraging exploration results as one in 21, and we'll follow up into 22. At the year end, the company concluded its sale of the Blackwater Gold Stream for a total proceed of $300 million, bringing our cash balance to $482 million. Well, combined to our increase in extended credit facility has now positioned our liquidity a meaningful mark of $850 million. So the crystallized value for the Blackwater has a sure position for a company with a peer-leading balance sheet and a financial capacity to execute on our strategy. On that, I'll turn it over to Rob Chausset, CFO for the Q4 and 2021 review. Rob.

Thanks, Renaud, and good morning, everyone. Slide 6 provides our operating highlights. The details are consistent with our January production press release. During Q4, the company produced 111,500 gold equivalent ounces. The amount consisted of 14.2 million pounds of copper, approximately 68,000 gold ounces from Rainy River, and approximately 13,000 gold ounces from New Afton, giving us a total of 81,000 gold ounces. The lower equivalent goal production as compared to the prior year quarter is primarily due to lower tons processed at both assets. Our operating expense per equivalent ounce was higher than the prior year quarter due to the strengthening Canadian dollar, lower sales volume, and the Canadian weight subsidy received in the prior period. Consolidated all-in sustaining costs for the quarter were $13.55 per equivalent ounce, higher than the prior year quarter, primarily due to higher operating expense. As previously noted, it was partially offset by lower sustaining capital. Turning to slide seven for financial results and capital, fourth quarter revenue was 202 million driven by sales of about 78,000 gold ounces at an average price of 1798 per ounce and sales of 14.2 million pounds of copper at 437 per pound. Our Q4 revenue was 2% higher than the prior year quarter primarily due to higher metal prices partially offset by lower sales volume. Our operating cash flow before working capital adjustments was 93 million or 14 cents per share for the quarter in line with the prior year quarter. The company recorded net earnings of approximately $151 million or 22 cents per share during Q4 compared to a 3 cent loss of the prior quarter. After adjusting for certain charges, net earnings were 24.7 million or 4 cents per share in the quarter equal to the prior year quarter. Our Q4 adjusted earnings includes adjustments related to our gain on the Blackwater stream sale and unrealized adjustments on the Rainy River mark-to-market and free cash flow royalty at New Afton. Our MD&A has additional details on the non-GAAP measures that we've discussed here. Still on slide seven, our total capital expenditures and leases for the quarter were $60.5 million $33.6 million was spent on sustaining capital and $26.9 million on growth capital. Sustaining capital was primarily related to planned tailings work at both operating assets, capital strip at Rainy River and B3 mine development at New Afton. Our growth capital was focused on project development, specifically the C-Zone and the thickened and amended tailings project at New Afton and the underground intrepid zone at Rainy River. Slide 8 provides details on our capital structure. During the quarter, we extended our credit facility, realizing lower interest rates going forward on that. Cash on hand at the end of the year, as Renaud noted, was $482 million, primarily as a result of the proceeds received from the sale of Blackwater. Slide 9, moving on to our guidance. In 2022, we expect to produce on a consolidated basis between 380 and 440,000 gold ounces at an all-in sustaining cost of between 1470 and 1570 per ounce. Fifty-five percent of the annual production is expected to come in the second half of the year, with all-in sustaining costs trending lower through the year. Sustaining capital, which is primarily made up of capital of waste, tailings management, and B3 activities is estimated to be between 180 and 225 million in 2022. Growth capital, which will be focused on C-zone development and underground development at Intrepid, is expected to be between 115 and 155 million in the coming year. With that, I'll turn the call back to Renaud.

Thanks, Ralph. I'm on slide 11 on the Mineral Reserve and Mineral Resources update. I mentioned in my opening comment, year-over-year net increase in mineral reserve renewables to 3.7 million ounces, up from 3.6 million at the end of 2020. This was led by a meaningful conversion of approximately 569,000 ounces of mineral resources to mineral reserve in the underground at the Rainier Group. leading to a net increase of over 200,000 ounces of gold ounces for the year. This is including all depletions of the pit that took place from the mining to the negative reconciliation and mineability. So a net increase of 200,000 ounces of gold mineral reserve at the Rainier River. The East Lobe, which was the East Lobe area, which was really responsible for most of the of the additional depletion will be mined out at the end of 2023. And New Afton Mineral Reserve decreased by approximately 75,000 ounces of gold and 78 million pounds of copper, mostly due to the mine depletion, but also reflecting the closure of the List 1 cave as planned. At Rennie River on slide 13, The mine delivery is the highest production and the lowest cost quarter of the year, achieving its updated 2021 production and cost guidance. The mine performs slightly below the plan at nearly 130,000 tons a day, mostly as a result of of some drill availability issue, but also as we adapted the plan at the year end to accommodate more 433 zone and adjusting our need for the east slope as we were working on optimization. The mill delivered approximately 24,500 tons a day. Lower 27,000 tons a day, but as I mentioned with more for 33 zone harder or process and also with 3 day shutdown that was originally planned for early 22 that was advanced in the December overall strip ratio for the pet at 2.821 in a 4 quarter and in line with our overall year plan of 2.7 for the year. And the average gold grade, it won a grand net improvement over the previous quarter. Gold recovery up at 92%. A lot of very good things happened in the Q4, really. And we're going to build on that, on optimization and operational excellence as we continue in 2022. The asset delivered, and very interesting free cash flow, $36 million in the fourth quarter. $46 million in 2021. This is net of $27 million payment, a stream payment. The exploration activity resumed in the northeast trend, and I'll discuss more of that in the following slides. So looking forward, really, it's all about continuing to optimize the asset and the cost optimization and further the risk-to-grace control while we continue to execute on our intrepid and all-capital plans. As I look on the slide 14, the operational outlook, the gold equivalent production is estimated expected at 276,000 to 295,000 ounces of gold equivalent. This is an increase over the prior year, mostly as a result of better grade, better ton mines and process, as well as commencing the extractions of the intrepid underground zone in the second half of the year. They will be just like last year, slightly higher productions, a ton mine and process in the second half of the year, as we will continue to take advantage of the winter for most of our stripping activity. The ore from the East Lobe is expected to contribute to only 25% of the productions in 2022. and to be higher in the second half of the year, as I mentioned, due to the stripping prioritization in the first half of the year. The all-end sustained costs expected to be in the $12.70 to $13.70 per gold ounces equivalent. This is a net decrease over the prior year, and it's mostly due to higher production, but also as an optimization and the less tons from the east slope and the better productivity in the mine. The sustaining capital expected to be in this 125 to 155 million, very similar to last year, three main areas of execution, including the capital waste in the pit, the annual tailings I'm raised, and the maintenance program and other sustaining capital that would complete the targeted execution. The growth capital expected to be in the 15 to $25 million. This will combine with the roughly $12 million spent in 2021 will contribute and a very low pre-production cost to bring Intrepid into production. On slide 15, as a highlight of the year as I mentioned, there's been a significant increase of total mineral reserve underground. The overall underground mineral reserve grew year over year from 672,000 ounces in the end of 2020 to over 1.2 million ounces at the end of 2021. And this was the result of adding nearly 569,000 ounces of mineral reserve from the central zone, bringing bringing a net increase over 200,000 ounces of mineral reserve for the year. The entropied zone remained roughly at 200,000 ounces of mineral reserve. So as we advance, and you could appreciate on the picture shown on the slide, the 15, this is a significant improvement in the central zone. The lower cutoff has also contributed to improve significantly the continuity on the lateral and vertical. And there are still 1.3 million ounces of majeure and indicated in the majeure indicated resources category, providing the asset with further potential of conversion as we continue to optimize and execute on our underground plant. There'll be a 43-101 technical report that would be filed at the end of the quarter that would incorporate the new central zone in Intrepid and the integrated life of mine. And looking forward to discuss further the details of our plan as we file the 43-101. On the slide 16, So the second phase of exploration drilling started at the end of 2021 and plan to continue through Q1 2022. There were roughly 1350 hundred meter drill in the Q4 and will continue to towards the Q1 2022. and at which point some additional exploration activities also planned, inclusive of a geochemical survey, geological mapping and trenching to validate and assess the result of the first phase program. A total of $5 million is planned for the year, and again, mostly focused on assessment and interpretation in geological and geochemical activity. On the New Afton on slide 18, on the Q4 highlight, great water for New Afton. delivered the production and cost to achieve our production goal equivalent range of 165 to 195,000 ounces equivalent. As I mentioned, slightly above the range of the cost within the 5%, more than acceptable considering all the challenges that we had to face in 2021. The season development continues to advance well, and we're still expected to begin the production in the second half of 23. And as you can appreciate, the copper grade was slightly below the previous quarters at 0.67%. Gold remains good at 0.41 grams a ton. Bull's recovery, even though we're increasing on the surfer gene R, remain above the 80%. But as we prepare for the completions of the left one, some mining activities and ramp up the B3, we have seen now slightly lower productions as we continue to enter the 2022. I'll talk more on the guidance about it. So we've seen as well the completions of five hold on the Cherry Creek, completed three hold totaling 1,200 meters of testing artificial intelligence target. So very encouraging result in 2021 and really looking forward for the plan in 2022. We've seen as well on the ESG side the introductions of the battery electric truck for the underground. This combined with already the electric scoop, and we'll continue to assess the use of electric equipment for the season with the objective to contribute to the reductions of carbon emissions. On new after, when it comes to operational outlook, Appreciate that the production guidance lowered the original plan for 2022. The original plan, and as we continue to execute on the B3 and C zone, was sure, you know, to exhaust and eventually close the Lift 1 cave in the first half of 2022. And this remained the case. So nothing has changed in this aspect. The transition to the in-pit tailing in 2022 was obviously forcing us to complete all activities in the left one before we would start depositing tailings. We've been capable and continue to stretch the use of the current tailing, allowing us to recover the remaining recovery level. For the contribution in 2022, will be on the recovery level and the completions of the List 1 cave with the near-term closure of the List 1 cave. The plan was originally focused on bringing the B3 zone to a full capacity, fully developed at the end of 2021, but as mentioned, the delays and delays The delays and the permitting and some other issues that we had to face in 2021 has not allowed us to achieve our original objective. As a result of that, there will be less tons from the B3 than originally planned for 2022. But looking forward, there's been no change in the B3, the C-zone, in terms of total tons and the grade and metals. available to us as we continue to execute but yes there'll be an impact on the total golden production uh with lower than originally planned productions for 22 mostly as i said as a result of the the delay and the b3 execution the all-in sustaining costs are expected to be at the 1695 to 1795 again higher than originally planned but also reflecting the lower production for the year. And also in a higher sustaining cost span for the B3, which we plan at $55 to $70 million, with the objective to really complete the development of the B3, bringing the B3 at its max capacity towards the end of the year, and allowing 2023 contribution for B3 at its maximum capacity. The growth capital for the year is expected to be in 100 to 130 million. Related to advancing the C-Zone project is, as I mentioned, with the objective to deliver on time and on budget the C-Zone in the second half of 2023. Mostly a split of the investments between underground activities, development, infrastructure, and surface to facility commissioning, completing the commissioning, but also continuing the progress on stabilization. So on the exploration for New Afton, So we've now completed, on the surface side, we've now completed a two-phase of reconnaissance drilling within the Cherry Creek area. Geological mineralization and alteration interpretation defined the patterns, and we continue to see significant potential for porphyry system. But the sources, not yet, have been intercepted. So more work and more interpretation, assessment, and eventually more drilling required in the Cherry Creek The high-grade goal was intercepted as well in one of the targets. The interpretation of the alteration in the hosting structure defined as well a potential target for high-grade goal system within the Cherry Creek shear zone. What I am very encouraging of is a very interesting result of the underground drilling in 2021. In particular, the underground drilling that commenced in March 21 to explore for additional copper and gold mineralization within the new Afton underground footprint with three main priority targets generated by artificial intelligence and has already shown some very encouraging results. And we're going to follow up in 2022 with the objective to locate and unlock some potential higher grade that could contribute eventually to improving on our mine plan as we execute. The drilling program as well on the Upper Eastern Extension, located below the SLC zone, has been planned for early 2022 to define the extension to the Golden Copper Mineralization Discover in 2019. So a lot of focus will be given on the underground while we continue as well on the Cherry Creek Regional. But a lot of focus will be on an underground with the view to accelerate and the potential incorporations of higher grade mineralization in our mine plan. A $15 million budget is planned for 2022 in New Aston. So on that, and as we continue to focus on operational excellence and delivered on our growth opportunities showing A 30% potential growth from the 23-26 compared to the 22. We have an excellent position now on the financial flexibility. We're capable to execute our plan. We see definitely a lot of potential in unlocking values at the new afternoon. Continue to deliver on a D3 and initiate a season which will bring significant free cash flow down the road. Rainier River has already generated free cash flow in 2021, and we see an improved plan year over year as we continue to unlock the maximum value of the remaining ounces in the pit with the planned capitalized trip to be completed by end of 2023, lowering our sustaining capital moving forward incorporation of the underground with potential for more ounces. So operational excellence will be our mantra in 2022 while we continue to work hard in unlocking the full value. So on that, this completes the presentation part of the call, and I will turn it back to the operator for the Q&A portion of the call.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Josh Wolfson, RBC Capital Markets. Josh, please go ahead.

Thank you very much. First off, for the Rainy River reserves update, previously there was some discussion about an optimized mine plan that would incorporate some ability, I guess, to extend the mine life by supplementing the underground ore with additional material, given the difference between the plant throughput is high and the underground throughput is low. With the updated reserve, though, it looks like you know, that kind of duration for the open pit versus the underground has sort of been, you know, even sort of even larger in terms of difference. So how should we think about the mine life after the stockpiles are depleted for the open pit?

I think, Josh, the upcoming 43-101 will clarify. What we are doing now is we're currently uh, incorporating this, the new central zone, uh, from the, uh, as I mentioned, that grew by 569,000 ounces. And it's been incorporated in the fully integrated mine plan together with the, uh, the full intrepid zone. Uh, this will clarify on the year by year, uh, on the ton grade zone, uh, mine metal production. Uh, and, uh, but the plan hasn't really changed in a way that the, uh, If you remember, the current 43-101 has already incorporated the upper part of the central zone and the intrepid, and the increase up to the completions of the stockpile, as you mentioned, the increase in the total ounces in the mineral reserve would allow the mine to extend beyond the 2028. And again, all the details will be provided in the upcoming 43-101. Okay.

Should we think about the underground throughput as something that could be, you know, increased from its current level, you know, given, I guess, the grade changes year over year, and maybe as a larger ore body, if you can have more mining faces, or is the throughput sort of more stable?

Yeah, I will clarify, of course, on the details of the throughput, but as you pointed out, if you compare the central zone year over year, you've seen a reduction in the cutoff, a reduction in the overall rate, but a significant increase in total tons targeting volumes over selectivity. and providing with the more ore to increase on the throughput, as you mentioned. But again, the details on the year-over-year and impact of it will be in our upcoming plan. But that was the strategy behind the relooking at $1,400, having a solution for the milling to support the conversion of the reserve post-stockpile, targeting volume in the central zone.

And then moving on to New Afton, one of the key aspects for the C-Zone project still is permitting. It's hard for us to project or estimate when these deliverables are going to be achieved. So thinking about how permitting has affected the B3 zone, what would be the effect if you were to look at C-Zone permitting timelines be slightly adjusted?

Yeah, if that would be the case, I think the risk will be to a certain degree similar. There wouldn't be no impact on the total tons grade mineable and the life of mine, but there will be a shift in the overall productions in the short term, pushing the recovery of those metal at the deferred stage, if you will. Now, on the permitting side, understanding that the B3, there was a delay in the B3, first in-pit tailings, you know, operational in-pit tailings was permitted, stabilizations allowing for more subsidence, you know, as we mine. All those aspects were addressed in the B3. So on the pure technicality, if you will, of the C-zone, there is really nothing new more then more stabilization, more input tailing, and a bit more of subsidence, but all of which were very well addressed in the B3 permitting as well. And again, 21 was a very challenging year as well in BC, including for our host community, and a tremendous wake-up for Canada as well. So there's been a lot of things that happened in 21 on the technical side of addressing the permitting that led to believe that the C-Zone permitting will be on time.

Okay. And then last question, in terms of the C-Zone deliverables in terms of overall spend and timelines, I noticed that the numbers were reiterated. When I look at what the original projections were for 2021 in terms of development rates and overall spending versus what was achieved, there was a slight variance. And then industry-wide, we're obviously seeing a huge degree of inflation. So how comfortable are you with the existing timelines and capital numbers or how much, let's call it, wiggle room or buffer is there for these items?

We felt very good, and we appreciate that 2021 was a challenging year and somewhat, you know, like a complicated mine plan as you exhaust the lift 1Ks and the rehabilitations and the polar recoveries and all those activities at a very low productivity and the ventilation fight, if you will, between the different activities. And if you look at it now, I think our mine plan is significantly simplified with the recovery level. I've been in the sub cave for the remote and with the closing of the lift one as well, significantly improving the ventilation down. So there'll be a lot of focus in 21 to really execute on the C zone and the B3 at the optimal capacity possible. So On that, we continue to be very confident to deliver on the productivities of our plan. As you mentioned, there's been some challenges on the cost side, but I think overall, if you look at our execution in 2021, including Rainier River, where we actually saw some savings on the execution at Rainier River. The adjustment in the capital for the B3 has much more to do with... with extra development cost, the experience of the lift one, of exhausting lift one, and the impact at the end of the cycle, seeing the impact on the rehab and the pillar recovery and the inability, you know, to go back in some zones. So we've made more effort at the early stage to improve on the ground control to avoid those situations down the road. So very few of the capital increase is a result of mega inflation, if you will. So we feel very strong.

Great. Those are all my questions. Thank you very much.

Thank you. Your next question comes from Fahad Tariq, Credit Suisse. Fahad, please go ahead.

Hi, good morning. Thanks for taking my question. On Rainier River, can you just give us some more guidance on the grades for this year? Is it right to think that grades will be lower in the second half But tonnage will be higher in the second half versus the first half. Thanks.

Yeah, I appreciate, you know, that we're so close, you know, to the 43-101. So, of course, the first year of the 43-101 will be updated. But roughly, if you look at our guidance of 260,000 to 290,000 ounces of gold, it basically reflects an overall grade at 27,000 tons a day melt between 0.9 and 1 gram. That's basically the... the way to look at our guidance. And as you mentioned, we're slightly higher in the second half as we still prioritize in the wintertime some stripping. And so about 55% of the ounces in the second half and 45% in the first half, roughly.

Okay, thank you. And just on the cost optimization at Rainy River, Can you just give us more details on where you're seeing opportunities to lower the costs? Thanks.

Yeah, the biggest opportunity is to target, of course, where you spend the most money, which is in the pit. So if you look at our overall OEE efficiencies, you know, and execution in the pit from 2019 to 2020, remember that late 2018, we were mining still in the $3 plus dollars a ton mine, and we've managed to reduce this significantly in the $2.50 to $2.70 a ton mine as we improve our cycle. But nonetheless, even though we've seen some improvement in the OEE from 19 to 20 to 21, we still believe that there is some room for optimizing our OEE performance which will automatically contribute, of course, to decide better productivities. It's like if you want to do your 150,000 tons a day, but with less equipment and effort, if you will, and reducing your cost to achieve the same production. So OEE is the target number one. There's still some costs involved. cost drivers such as tires and others you know that still could be uh improved uh to meet uh to meet the best in class if you will for that kind of operations uh the 27 000 tons a day will bring as well on a per ton basis reductions in the milling and the gna uh the improvement of the oee should you can't achieve a significant improvement in oee could lead you know to uh even parking some equipment, which also will have an impact on the maintenance costs as an overhaul is required. So it's a complete exercise, and we're using, of course, external resources as well. And we're in the phase now to complete details, plan for it. But we still see some good opportunity here.

Okay, and then maybe just one for Rob. Can you just remind us on gold hedges? Are there any hedges in place for 2022 on the gold price?

No. No, we're on hedges on metals.

Okay, fantastic. Okay, thanks so much.

Thank you. Your next question comes from Trevor Turnbull, Scotiabank. Trevor, please go ahead.

Thanks, Renaud. Just a little bit of a follow on, I guess, to the last question about the grades at Rainy River. I can appreciate you've got a new technical report coming. And I was just looking back at the old technical report. I think it was from 2020. And it indicated that the grades from the open pit would really start to pick up starting this year on the order of, you know, 1.5. two or something like that grams relative to say the one gram that you're talking about for this year. And I just wondered if you could give us a bit of color on why the grade is so much lower than the original tech report and perhaps when we would expect that open pit grade to start to come back towards those levels originally envisioned a couple years ago.

The going back to the mineral reserves update the slide. There's a comment that they're looking forward. So, 1 contribution to a contributor to it is the, the applying of a factor of 85% for the remaining slow ounces. So, as a result of the experience of 2021. The mineral resources and reserve for the remaining is low hope it has been applied a factor of 85% So that's one the the timing and the execution and the contribution of the underground ounces as we incorporate and Underground from 22 to 26 and the timing of it and the amount of ounces to the plant has is also somewhat a a contributor to it so other than that if you compare the uh the the plan the original plan with that one uh the east slope has been uh uh incorporating the factor and uh and uh there is uh in 2022 uh less than slightly or around the 10 000 ounces from the intrepid zone uh there was also some more ounces of originated plants so It's not about rushing the gun, but doing the right things and really control the execution of it. So as we continue, we're going to complete the east slope in 23. The 433 zone as well, which has been heavily used the last year, would eventually also be completed in 22. So as you advance, most of your open pit will be focused on the main zone, which will bring, you know, better better efficiencies in the mining, and also the overall reconciliations and performance in the ODM main zone was the best and remain the best. So there's still some optimization, if you will, and challenges as we execute R22, but as we advance in 23, depleting towards the 26, the plan gets simpler. and more focus on the main, as you say, the main higher-grade zone. And more underground as well make its way to the middle.

Okay. That's great. I appreciate it. Thanks, Renaud.

Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star 1 on your touchtone phone. Your next question comes from Anita Soni, CIBC World Market. Anita, please go ahead.

Hi, good morning, guys. Thanks for taking my call. I have similar questions about grades and tonnage at New Afton. If you could give us some clarity on what we would be seeing there, that would be greatly appreciated.

Yeah, we did not provide the breakdown, but basically... What you should be expecting is because of the delays in the B3 zone, so the use of the stockpile, of course, contributes to a higher proportion of the total tons processed. So if you look at the overall productions and the guidance, the B3 zone will be the main lead, targeting about the 4,000 tons a day. Grades are provided, you know, when the reserve resource is stable. That would be the main lead. Completing the recovery level as well will be the second lead in the overall year. But there will be as well a use of the low-grade stockpile on surface as well to supplement the mill, which also is the biggest impact. There was always the use of the stockpile and the plant, but the difference that B3 was supposed to be at basically double the tons compared to what it's planned for. So that is the main contributor here. But the B3 would follow, you know, as a mineral reserve average grade, but basically less half the ton and higher contribution from the stockpile.

And would you still be expecting tonnage, I guess, in the 14,000, 15,000 ton per day mark, or is that... No, that would be less than that.

If you recall the original plan, even on the original plan, it was always showing that in the transitions, once you close the cave one, there was... there was a clear dip in the lower productions as we transitioned to the C-zone. So that was always, even in the original plan, that was one of the highlights of the plan, that at some point in time you would use the stockpile to transition. What happened now in 2022 is just the transitions between the B-tree and C-zone, considering the delay in the B-tree, has increased. lowered even further the productions for 22, hasn't changed a total metal recoveries of the plant, but has deferred and creating even more so. But even in the original plant, it was always a dip in the production as we transition and close the cave one and 22.

Okay, so what I was driving at was just how full will the mill be this year?

The overall will be between the $8,000, $9,000, $10,000, depending on how good we're going to do with the B3. Okay, thanks.

And then just in terms of the Rainy River, a little bit more detail. You mentioned what your strip ratio is overall, but Can you give us the operating number, the operating strip number, so I can try to reconcile the cash cost?

That would be about 3.2, a 3.2 plan for 2022, and that's compared to about 2.7 overall for 2021. Okay, so the 3.2 is the operating strip. That's what contributes to the cash cost, or it does some of that... Some of the waste, so the way I look at it is on the total execution. So from the 55 million tons, some of the waste are considered operating waste and some is capital waste. And quite frankly, it's only an accounting here. I'm looking at Rob here. It's only an accounting situation here. So I look at it as a global execution, 55 million tons, trip ratio overall of 3.2%. of the plan. And some, as I said, depending on the specific quarter or the quarter, some is capitalized, some is operations, but doesn't really change the execution globally at 2.2 for the year.

Yeah, I'll probably take it offline with Rob because I don't want to, you got it to 60 million in waste stripping, so I don't want to be double counting that. That's what I'm trying to drive at here.

No, and cash costs are lower as a result of that as well. So that's why, you know, I'm looking at it as an all-in sustaining cost approach. And sometimes, and you've seen it in the past as well, there is some shift, you know, depending on the execution of work. But on the global, the plan is 55 million tons or so at the 3.2. But yes, please reach out to Rob if you... Sure, yeah.

I don't want to penalize you twice there. Okay. And then lastly, I'm trying hard not to. The last question I have is with respect to the tons that were added at Rainy River. I think Josh was driving at that a little bit. But, you know, when do you expect, how full do you expect the mill to be when you're processing the underground material?

It's going to go with the C-Zone. I want to really put any details on this. Let's wait for the update. Everything that has to do with the underground, as I mentioned, we're in the process to integrate all this. It's going to be a full detail on a year by year, you know, zone by zone, and the ramp-up in total tons and tons mill and so forth. But I can already tell you that to achieve that, you have a mill that could be used as a batch. You have a lot of capacity, so you're targeting a much higher volume than originally planned in the original 43-101. And that was the whole... purpose of redoing this at the lower cutoff is to target volume. But I'll leave the details to later in March, and we'll definitely engage with the market once we have all the numbers.

Okay, and the last question, briefly, I didn't catch exactly what you said about the tailings capacity at New Afton. Can you just quickly summarize again what you did there? You said you were stressing out?

As a safety aspect, you know, like if you look at the lift one and the proximities underneath the pit. So the original plan was by summer to, you know, to transitions from conventional tailing into in-pit tailing. And as a result of the fatality last year, you know, the opportunity here is to not leave any recovery level behind. And the team has been capable to optimize the use of the conventional tailings. And we see probably, you know, late in the year now with extended months. And I think we'll be capable to accommodate most of 2022, if not all, into the conventional tailings program. and not rushing the transition into MPIT, which would limit our ability to mine the remaining recovery level.

Okay, thank you.

Thank you. Your next question comes from Mike Parkin, National Bank of Canada. Mike, please go ahead.

Thanks, guys. Just a couple questions. You're obviously sitting on a fair bit of cash, and then the sale of the Gold Stream brings in a lot more. What are your thoughts? You've got some good notes there in terms of what your premium is on the senior notes, if you call them. It seems quite reasonable. Should we expect a potential calling of those notes?

I think our current balance sheet provides significant optionality. As we work through 22 and in the near term, our focus will be to deliver on our business plans, specifically with C-Zone and the underground. But beyond that, we will be looking at debt repayment, specifically the 25s, and then other shareholder initiatives. Yeah, we're looking at that.

All right, thanks. And then on the underground at Rainey, You've got, you know, obviously a pretty impressive reserve update this morning. Where is it in terms of the deposit, in terms of being open at depth, and what kind of depth do the reserves kind of terminate now? Where do you kind of see the potential of being able to push deeper using a ramp?

Yeah, the – if – I was just looking at the slide to bring back you to, sorry about that, slide 15. So you appreciate, you know, like the 43-1N will provide way more. But if you look, if you compare the depth, the depth, sorry, the depth of the total resources, the total resources MI and inferred as shown on the top figure compared to the bottom figure, which is the N of 21, It remains pretty much the same, and it's mostly data constraint, as you can imagine. As you go deeper, you know you lose the drilling spacing and the tightness of the drilling, allowing you to really appreciate and convert. So it remains open at that, but as you could appreciate in the pictures, around or a neighborhood of the 1.2 or the 1 million ounces of the central zone you still have some some very close by ounces there is another 1.3 million ounces in the MI category and that is not a result of having extended the depth more than we've converted a significant amount but there's still a lot of ounces remaining that with optimization Maybe more drilling, more tightness, optimization of the plan could lead to eventually more. As you go deeper, as you execute your plan, and as you lower over time, there is no doubt in my mind it will be a tremendous opportunity to continue, you know, to look at dipping, you know, at the depth of the mineralization and potential extension as basically the whole central zone is a data constraint.

okay and then i remember from chatting with you in the past that in terms of the tailings facility at rainy river i remember the old design used i think it was 11 to 1 width versus height ratio they applied it across the entire length of the the dam and from our past conversations you felt there was optimization potential there where there are parts that come into bedrock which could use a much you know, kind of more normal ratio, which could obviously save a lot of material movement. Is that something that has been factored in or is that something that's still some upside to what the latest numbers that are publicly available are based on?

Yeah, the answer to that is our plan continues to be used at the full 11 to 1. And there is definitely some potential optimization down the road, but we prefer to still look at this, you know, on the 11 to 1 with some buttresses. The difference is over the last couple of years, there's been a significant advance in instrumentations, you know, and monitoring. on a basically 100-meter basis, you know, allowing us to, as we advance and we see proper dissipations of the pressure, there could be a potential down the road for the subsequent phases to optimize. But as we speak, the plans still reflect on reflecting the 1121 building.

Okay. That's it for me. Thanks very much, Chris.

Which was the case for 21, by the way. 21 was fully executed on the 1121 strategy.

Thank you. There are no further questions at this time. I would now like to turn it back to your host for closing remarks.

Thanks, Chris, and thanks to everybody who joined us today. As always, if you have any additional questions, please don't hesitate to reach out to us by phone or email. Thanks very much, guys. Have a great day.

Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.