New Gold Inc.

Good morning. My name is Carrie, and I will be your conference operator today. Welcome to the new Gold's third quarter 2025 earnings call and webcast. 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 1 again. I would now like to hand the conference over to Ann Kitchoff, Executive Vice President and Chief Strategy Officer. Please go ahead.

Thank you, Operator, and good morning, everyone. We appreciate you joining us today for New Gold's third quarter 2025 earnings conference call and webcast. On the line today, we have Patrick O'Danis, President and CEO, Keith Murphy, CFO, Travis Murphy, Vice President Operations, and Jean-Francois Ravenel, Vice President Geology. In addition, we have Luke Buchanan, Vice President Technical Services, available to assist during the Q&A portion of the call. If you wish to follow along with the webcast, please sign in from our homepage at newgold.com. Before we begin the presentation, I'd like to direct your attention to our cautionary language related to four looking statements found on slide two 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. You are cautioned that actual results in future events could differ materially from those expressed or implied in forward-looking statements. Slide 2 provides additional information and should be reviewed. We also refer you to the section entitled Risk Factors in Newgold's latest AIF, 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. The third quarter was an impressive one for Newgold, and slide four highlights some of the key quarterly accomplishments. We had an excellent quarter operationally. with both production and cost making big improvements compared to the second quarter. This was highlighted by Rainy River's record quarterly production of over 100,000 ounces of gold, a 63% increase over the second quarter. At New Afton, B3 continued to overperform during the third quarter, while C-Zone remains on track to ramp up to full production in 2026. We remain well positioned to deliver on our 2025 guidance objectives we outlined at the start of the year. Importantly, these impressive quarterly results were achieved while maintaining focus on safe production, with a low total recordable injury frequency rate of 0.61, down from 0.82 in the second quarter, and continuing the downward trend over the last three years. During the quarter, New Athens surpassed 1 million hours and Rainy River surpassed 1.5 million hours worked without a lost time injury, marking a significant safety milestone at both sites. On a consolidated basis, the company produced approximately 115,200 ounces of gold and 12 million pounds of copper in the quarter. All in sustaining costs reduced from the second quarter by $425 an ounce to $966 per ounce. With an average realized goal price of $3,458 per ounce, this represents an impressive all-in-sustaining cost margin of $2,492 per ounce. We expect all-in-sustaining costs to reduce further through the fourth quarter. The company generated more than $300 million in cash flow from operations and achieved a record quarterly free cash flow of $205 million, highlighted by Rainy River's quarterly record of $183 million in free cash flow. The balance sheet was further strengthened in the quarter as we repaid a total of $260 million in debt, including the $150 million drawn on the credit facility earlier this year as part of the new Afton buyback, and this was repaid one quarter ahead of plan. The company continued to advance initiatives aligned with our three-year production growth and accomplished several key milestones during the quarter. At New Afton, sea zone cave construction is approximately 79% complete, supporting the progressive increase in processing rates towards the target of 16,000 tons per day by early 2026. At Rainy River, the focus remained on increasing underground development and production rates, which Travis will speak to shortly. Lastly, our exploration initiatives made significant progress as outlined in our September news release. highlighted by the significant growth in New Afton's K-Zone and the ongoing exploration activities at Rainy River to offset mine depletion. In summary, we had a strong quarter and we built on the results from the first half of the year, all on maintaining focus on generating meaningful value for our shareholders. With that, I will now turn the call over to Travis.

Thank you, Ankit. I'm on slide six, which has our operating highlights. As Ankit noted, Q3 delivered strong production and costs. Production totaled approximately 115,200 gold ounces and 12 million pounds of copper. This increase in gold production compared to Q3 2024 was driven by planned higher feed grade at Rainy River, partially offset by lower planned feed grade at New Afton. Consolidated all in sustaining costs for the quarter were $966 per gold ounce on a by-product basis, 19% lower than Q3, 2024 and a substantial improvement over the first two quarters of 2025. Costs are expected to continue to trend down in the fourth quarter. At New Afton, the B3 Cape continued to over deliver compared to the plan set out at the beginning of the year. As a result, New Afton achieved an all-in sustaining cost of negative $595 per ounce after considering copper credits. Rainy River delivered a strong quarter, a record quarter, as the mill processed higher-grade open-pit ore. All-in sustaining costs were $143 per ounce in the quarter, a substantial 39% improvement compared to the second quarter. Costs should continue to trend lower in the fourth quarter with lower sustaining capital. Our total capital expenditures for the quarter were approximately $76 million, with $19 million spent on sustaining capital and $56 million on growth capital. At New Afton, sustaining capital is primarily related to mobile equipment, while growth capital is primarily related to construction and growth mine development, tailings, and machinery and equipment. At Rainy River, sustaining capital is primarily related to open pit stripping and the tailings dam raise, while growth capital is related to underground development and machinery and equipment. Turning to the assets, starting with New Afton on slide seven, New Afton delivered another quarter on plan. B3 contributed approximately 4,300 tons per day during the quarter. The additional tonnage from B3 above and beyond the previously planned April exhaustion continues to provide excellent shareholder value as it comes with no additional capital. We expect the B3 cave will now exhaust in the middle of the fourth quarter as the current contribution has reduced down to around 1,500 tons per day. Annual copper and gold production is expected to be in line with the guidance profile previously provided. During the third quarter, New Afton generated over $30 million in free cash flow while continuing to complete the construction of the C-Zone Block Cave. Through the first nine months of 2025, New Afton has generated $115 million in free cash flow. In terms of development, C-Zone Cave construction continues to advance on schedule with cave construction progress at 79% complete as of the end of September. Sea Zone remains on track to ramp up to full processing capacity of approximately 16,000 tons per day, beginning in 2026. Now, turning to Rainy River on slide eight, gold production in the third quarter was 100,000 and 300 ounces of gold at an all-in sustaining cost of $1,043 per gold ounce sold, an increase a 63% increase in gold production, and a 39% decrease in ASIC compared to the second quarter. This excellent performance was driven by processing higher-grade open-pit material in addition to processing and pouring the 5,900 ounces of golden circuit as discussed at the end of the second quarter. The mill continued to perform well, with quarterly throughput averaging over 25,100 tons per day. Following the impressive third quarter results, Rainy River Gold production is now expected to be above the midpoint of guidance of 265,000 to 295,000 ounces of gold. As a result of the strong Q3 results, Rainy River generated a quarterly record $183 million in free cash flow. As Ankit mentioned, progress was made during the quarter in advancing underground operations with a focus on increasing underground development and production rates. We undertook a number of key initiatives during the quarter specifically designed to improve recruitment and retention of our people and contractors. These include camp facility upgrades and travel improvements. They also included contract modifications to incentivize and reward optimized development rates. While this has led to an increase in cash costs, and certain growth capital items related to the underground, it is a significant step forward in securing the production growth expected in the coming years. We are seeing improvements in the continued ramp up in daily underground development rates, which we expect to build on through the fourth quarter. To sum up, We made excellent progress in the third quarter and remain on track to deliver our 2025 production and cost goals, as well as longer-term objectives. And with that, I'll turn it over to Keith. Keith?

Thanks, Travis. Financial results can be found on slide 10. Third quarter revenue was $463 million, higher than the prior year quarter due to higher gold and copper prices and sales volumes. Cash generated from operations before working capital adjustments was $296 million, or 37 cents per share for the quarter, higher than the prior year period, primarily due to higher revenues. Newgold generated record quarterly free cash flow of $205 million, as higher revenue was only partially offset by higher capital expenditures as key growth projects were advanced. The company recorded net earnings of approximately $142 million, or 18 cents per share during the third quarter. The increase in earnings for the quarter and year-to-date is primarily due to increase in revenues, partially offset by higher share-based payments due to the increase in the company share price. Year-to-date, this has also impacted our consolidated all-in sustaining costs by approximately $75 per gold ounce. After adjusting for certain other charges, net earnings was 199 million or 25 cents per share in Q3. Our Q3 adjusted earnings include adjustments related to other gains and losses and non-recurring items. Turning to our balance sheet on slide 11. At the end of Q3, we had cash on hand of $123 million and a liquidity position of $500 million. In July, we redeemed the remaining $111 million of the 2027 senior notes paid for with cash on hand. During the quarter, we also repaid the full $150 million, which was drawn on the credit facility, to fund the new Afton buyback transaction announced back in April. This was one quarter ahead of plan. To sum up, we remain in a very healthy financial position with a significant free cash flow profile ahead of us. With that, I'll turn the call to Jean-Francois to discuss exploration.

Thanks, Keith. I'd like to touch on our exploration successes that were released during the quarter. Exploration at New Afton continues to be at an all-time high. We currently have nine drills turning at K-Zone as we work to define and grow the deposit. We recently increased our exploration budget by $5 million as previously announced, bringing us to a full-year budget of $22 million for approximately 63,000 meters of drilling. We also reported two significant exploration highlights at New Afton. First, in addition to confirming the width and the continuity of previously reported mineralization at K-Zone, we have discovered additional mineralization in the footwall of the zone, which has more than doubled the known extent of this system. The system now reaches an impressive 600 meters in strike length and 900 meters in vertical extent, with the horizontal thickness locally reaching up to 180 meters. Secondly, expression drilling conducted from surface intersected C-zone grade copper goldenization located 550 meters to the east of the current K-zone footprint. As shown on slide 13, borehole 596E intersected 1.1% copper equivalent over 55 meters of core length, demonstrating the high potential for further growth in the eastern sector of the mine. We are continuing to work towards the maiden resource at K-Zone for end of year. Following that, we will work towards completing a feasibility study for the first half of 2027. Moving on to Rainy River on slide 14. The exploration strategy at Rainier River remains focused on sustaining the recent success in mineral reserve replacement. At the Northwest Strand Open Pit Zone, which is located immediately west of the Phase 5 pushback, our drilling programs are expected to grow and upgrade the existing pit-constrained resource to the indicated category. Engineering studies are currently underway to evaluate potential mineral reserves. At Underground Main, Exploration drilling focused on converting inferred resources to indicated resources by growing the existing ore zones down plan general strike, targeting the highest grade ore zones that can provide additional mining flexibility and further improve the production profile. Concurrently, engineering studies are advancing to support conversion of underground resources to mineral reserves. Looking forward, the next phases of drilling to be conducted in 2026 and 2027 will benefit from future underground platforms, which are expected to accelerate resource and reserve development over that period and beyond. In addition to growing the surface and underground footprints, we own a significant land package that has remained largely underexplored. This year, we plan to invest approximately $2 million to initiate the identification of additional exploration opportunities over our 31,000-hectare land package. With that, I'll turn the call to Pat for closing remarks.

Thank you, Jean-François. As I have said previously, we expect continued and significant growth in gold and copper production over the next two years.

Third quarter performance was an excellent indication of our potential production and free cash flow generation in the years ahead. As production volume increased, The unit cost per ounces of gold is projected to decrease substantially. As a result, we continue to expect to generate significant free cash flow over the next three years. We have left the pricing for this figure unchanged since the start of the year. It shows that we generate approximately $1.8 billion of free cash flow over that period. For 2025, we expect to beat the high end of this projection And we have rising production in current spot price, the 2026 and 2027 free cash flow generation, substantially above those outlined in this figure. In closing, the third quarter was really positive for us all as we continue to deliver on our stated strategic goals. We will continue to build on these goals from here. This includes delivering on 2025 production and cost guidance with the same attention to health and safety. Our continuous improvement with our total reportable incident frequency rate performance is a direct indicator of the support from all my teammates from the Courage, for the Courage to Care culture. At New Afton, we will ramp up CISO and continue our aggressive excursion program at CISO with the goal of releasing a maiden resources in early 26. At Windy River, we will continue to ramp up the underground mint and advance phase 5 open pit development. And we will continue our exploration efforts, targeting offsetting mining depletion. Newgoal offers a compelling investment opportunity with increasing production and simple and free cash flow for a generation, combined with our safe, well-established mining jurisdiction, increasingly compelling exploration upside and exposure to what we view as our preferred metal and gold and copper. We are confident in our ability to deliver actual upside from here. We'll continue to build from here, both operationally as well as with project and exploration catalysts, which are expected to create meaningful value for our shoulders and provide increased financial flexibility and optionality for new gold moving forward. This completes our presentation, so we're now going back to the operator for the Q&A portion of the call.

Thank you. At this time, I would like to remind everyone, if you would like to ask a question, please press star, then the number one on your telephone keypad. Your first question will come from Anita Soni with CIBC.

Hi. Good morning, Patrick and team. A couple of questions. So, firstly, on the new Afton C zone and B zone. Can you give us a breakout of how much came from the C and the B in terms of tons?

From tonnage, the B zone contributed 4,300 tons per day over the quarter, and C zone contributed the remainder of the tonnage there, Anita.

Okay. All right. And would it be possible to also find out what the grades were for those?

We are the great for each. Yeah, the great for each.

So can we get back to you on this? Absolutely. And then what we have is the combined rates over.

Yeah. Okay, thanks. I would appreciate a call back on that one. And then just secondly, I wanted to say, so that's an impressive free cash flow generation this quarter. And I think on slide 16, you have $2.2 billion for 2025 to 2027 and using a conservative gold price. at 32.50, considering we're, you know, somewhat over that at spot. I think the question would be, you know, beyond paying down debt, what are your plans from a capital allocation standpoint with that free cash flow?

Hi, Anita. Thank you.

I think we've previously said, you know, we take a very disciplined approach on capital allocation. You're right, we generated good free cash flow this quarter and paid down debt. We also increased our exploration budget on the strong results on the back end of our September release. I think we, from a capital allocation perspective, we have a pretty clear methodology. We want to maintain a strong balance sheet. Beyond that, we want to invest in exploration and also on organic opportunities because we see that as the most value. And then after that, we'll evaluate capital return to shareholders, all while balancing Our evaluation on inorganic opportunities.

Okay.

And then right now we're sorry, continue.

You know, I can say on the capital return, we're currently evaluating options with our board right now. You know, we want to ensure we maintain financial flexibility and capitalize on the right opportunity as they come up. And from an M&A perspective, I think we've shown a very prudent and disciplined approach. We think we did our best deal of the year so far with consolidating new Afton. But we'll continue to take a measured approach on M&A with a goal of increasing value on a per share basis.

Okay. So, yeah, so my follow-up was going to be on would the – special dividend share buyback or, you know, a more structured dividend be the preferred route. And it sounds like it's something that's more flexible. So probably one of the former two options.

Yeah. So we're actually, as I just say, we're reviewing options with our board right now as we go through our budget process this quarter. And we'll be able to provide a better update as we roll out our plans for 2026.

Okay. And then finally, just on exploration. So on the K zone, Could you just, so this extension looks pretty good. Could you just sort of remind me, like, what that would translate to once diluted, like on, I know you're going to be putting out a resource update early in the new year, but I just wanted to try to get an idea in context of what C-zone grades, are you seeing them, you know, going to end up being similar or end up being higher than the current C-zone grades that you have?

Hi, Anita. Jeff here. So, yeah, so on the K zone, it's still have a lot of drilling to do this year, about 10 to 15,000 meters. And, you know, like you say, we still have to do our work, update our models to really know the total size and grade of that will be and placement of concerning shapes as well. So it's still early to say.

Okay, thanks. Congratulations on a solid quarter all around from exploration to paying down debt and to delivering on the ops. I'll pass it over to the next panelist.

Thank you.

Your next question will come from Jeremy Hoy with Connacore Genuity.

Hi, patent team. Thanks for taking my questions. I need to address the first one on capital allocation. So maybe I'll focus a little bit more on some of the upside opportunities in existing operations. You know, K-Zone, I think pretty excited about what we could see there. Good to hear we've got a study coming early 2027. Rainy River, Definitely looks like we're going to see more gold there, but just wondering, you know, the tailings management was a key part of potentially extending mine life there rather than just displacing the stockpiles in the production plan. Can you give us an update on how you're thinking about that and what the likely solutions to tailings management are there?

Thank you, Jeremy.

First, you're clearly... By your question, you explained why we are prudent in terms of return capital shoulders. It's our intent to return capital shoulder. The question is not if we're going to do it. The question is what we're going to return. And for that, we need to assess exactly first what is going to be our long-term plan. So we are drilling. So we invest drastically in exploration during the last two years. It's our intent to continue to invest because We create a lot of value for shoulder, and we believe in our two assets, and we see a potential in our two assets. And for that, I think we need to assess the full potential of Keyzone. We're not there. So it's a nice problem. So we did not fix the boundaries of Keyzone, no matter if we drill a significant amount of meters this year. And also, we have Northwest Strands. And we're looking to the possibilities. We have quality to do a pushback. It's going to be another pit extension or a pit satellite. And we want to size our investment before to determine what we're going to return. So that's the first approach. In terms of the tailings to our interest ALT, again, if we have a satellite pit like Northwest Strands, it's becoming not only a source of ore, but it's an opportunity to store tilling storage. So in our game plan here, we try as much as we can to stay away because the TMA actually, we still have room to play in this, but we are close to the full capacity in the current design that we have. And with North Western, I think for now, we're not seeing a need to have further significant investment in the TMA. So it's improving the returns of the mining of the satellite pit. So for now, we're not seeing additional investment in the TMA with the plan that was presented to you and to the shoulders in February last year. And with the addition of Northwest Rand, we're not seeing additional investment with the TMA too.

Great, thanks. That's really helpful.

Also on Rainy River, you mentioned some of the things you've done to, I guess, probably improve retention rates, flights, camp, incentivization, et cetera. Can you give us an idea of what turnover is now and what you're targeting with these improvements?

Yeah. Maybe I can help Travis on this. In Ontario, actually, we had a shortfall of minors. So as you know, uh, don't many of, of trade, uh, of red seals, trade persons or mechanics or quality miners. And so we have more people who are getting retired and people are joining our industry. So we want to make sure to be attractive, to support our, our development. So for that, we have, we plan to attract more local people. We're not in a region where we are sort of mining camp, Rainy river. So we maximize as much as we can the hiring of local people because it's where we're creating value for the local communities. But we have a certain limit, and so we had to increase and improve our camp capacity and the quality of the infrastructure. So we did that. It's a pro because it's helping us to attract people. Also, we have to improve our facility at site to retain people. And also, we work really hard with the contractor to provide an attractive and incentives to retain high-quality performer to achieve the plan that we want to do. So it's mainly what we did. So we capitalized on infrastructures. We improved the quality of our infrastructures.

And also, we implemented incentives in the contract to retain quality miners. Okay, got it.

Thanks for the colour, Pat. I'll step back in the queue. Really nice to see the free cash flow thesis playing out.

Thank you for that.

Your next question will come from Eric Windmill with Scotiabank.

Hi, good morning, Pat and team. Nice to see the free cash flow in the Q3. I think some of my questions have already been answered, but maybe just one here on Rainy River. You're into the higher grade now. I'm just wondering what we should expect from the balance of this year. Based on the photos, it looks like that secondary open pit egress has been completed. So, yeah, just wondering any guidance for Q4 would be helpful. Thanks.

Sure. It's Travis here. Thanks, Eric. Yeah, generally we're seeing a continued trend in Rainy River Open Pit Phase 4 from what Q3 is, and it's going to continue on into Q4. So we're not seeing any real changes in our trajectory there. Phase 4 is working out very well for us.

Okay, great.

Thank you very much. Appreciate it. And then just on New Afton here in terms of K-Zone, so you're drilling, I think you said about 66,000 meters this year. Wondering if all that will make its way into the resource for next year. And, you know, I know it's still early days, but any thoughts in terms of development here? Are you thinking about this as, you know, more of a traditional underground as opposed to a block cave or a sub-level cave? Any detail would be appreciated.

Thanks. Thanks. Here, it's preliminary.

So first, the problem that we have with Keyzone is to determine the size of the animal, if I can say that, because we're still open and we still have training to do. And so for sure, what we like is we can, when Luke's needs with Jean-Francois to complete the feasibility study with the team, we have multiple factors that will determine if it's a cave shape or not. And also we have to deal with how deep is the ore body too. So I can say to you that it's premature at this stage to confirm that it's going to be a cave or a more selective mining method. But we are, for that, we need to size it. And I can say to you, Eric, that next year we'll need to continue to drill. to determine what we have on them because the limits are not, and we have two objectives. It's always the two objectives that Jean-Francois is having, is to advance the resource to produce reserves and also to look what's next. At Newgold, we were not necessarily good to develop this arrow of projects to get to reserves because we were limited in our capacity to invest in exploration. Now that we are, and we demonstrate to shareholders that we're creating value for this, We want to be one step forward in advance. So our objective and our dream was as a team to bring new outcome beyond 2040. I think it was trending well, but we have work to do to confirm the possibility of that. But we are already thinking beyond 2040, can we push that to 2050? And it's what we're looking at.

But it's premature for now to say what mining method we're going to have here.

Okay, great. Thank you. I really appreciate that. And obviously, the second part, you do expect all of the drilling for this year will make its way into the resource, or are you seeing a lot of backlogs in the labs and getting the assays back?

Yeah, that's right. We'll drill all the way to the holidays, basically in December, and we will include all of the drilling and the assays that we can in January when we update our models and define the resource.

Okay, fantastic. Thanks for that. Yeah, congrats on the quarter.

I'll hop back in the queue. Cheers. Thank you.

And once again, ladies and gentlemen, for any questions or comments, please press star 1 now. Your next question will come from Mohammed Society with National Bank Capital Markets.

Good morning, Pat and Tim, and congrats on a great quarter and a free cash flow, positive free cash flow in the quarter. So most of my questions have been answered, but just maybe on you, Afton, given the good performance from the B3 cave as it exists there, how should we think about the grades coming into 2026? Could we see maybe a little bit lower grade on the tech report there, or could you help me maybe provide some color on that one? Thank you.

Yeah, I think in 2026, as we, you know, add that great performance from B3 throughout the year, we are now focusing and transitioning across to continuing that ramp up of C-zone. As we have previously disclosed, you know, the grades at the start of a cave will be a little bit lower as you continue to, you know, advance that healthy cave growth. So we should see that transitioning up in line with our plan.

Great, thank you. And then, Ceylon, you asked on an With the positive progress at K-Zone and the additional exploration efforts that will continue during 2026, what do we think about the CapEx there versus the Tech Report?

I think we're done with the CapEx for the Tech Report.

We can get back to you on this, but actually we're not seeing some extras.

I think we're trending in the same.

Sounds good, Pat. I think I lost you there, but I'll follow up post-call. Congrats again on a good quarter. Thank you.

Thank you.

And there are no further questions at this time. I'll turn the call back over to Ankit for any closing remarks.

Great. Thank you very much, and thank you to everybody who joined today. As always, should you have any additional questions, please do not hesitate to reach out to us by phone or email. Have a great day.

Thank you for your participation. This does conclude today's conference. You may now disconnect.