TSX:NMI OTCQX:NMKTF. Q Financial Results November 3, 2016

Transcription

1 TSX:NMI OTCQX:NMKTF Q Financial Results November 3,

2 Forward Looking Statements Certain information set forth in this presentation contains forward-looking statements, and forward-looking information under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements, which include the Company s expectations about its business and operations, and are based on the Company s current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as will, expects, anticipates, believes, projects, plans, and similar expressions. These statements are not guarantees of future performance or outcomes and undue reliance should not be placed on them. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are included in this presentation or incorporated by reference herein, except in accordance with applicable securities laws. All amounts are presented in United States dollars ("$") unless otherwise stated. References in this document to C$ are to Canadian dollars and references to "A$" are to Australian dollars. Certain non-ifrs measures are included in this presentation, including operating cash cost per ounce, all-in sustaining costs ( AISC ) per ounce, and operating cash cost per tonne milled in Australian dollars. In the gold mining industry, these are common performance measures but may not be comparable to similar measures presented by other issuers. Newmarket Gold believes that these measures, in addition to that information prepared in accordance with IFRS, provides investors with useful information to evaluate the Company s performance and ability to generate cash flow from its operations. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For further information, refer to the Non-IFRS Measures section of the latest quarterly MD&A. Qualified Person Simon Hitchman, FAusIMM (CP), MAIG, Principal Geologist, Newmarket Gold, is a qualified person as such term is defined in National Instrument and has reviewed and approved the technical information and data included in this presentation. 2

3 Q CEO Highlights Newmarket & Kirkland Lake Gold Inc. announced a business combination to create a new mid-tier gold producer with annual production of over 500,000 ounces in Tier 1 mining jurisdictions Combined Company Cornerstone Assets: Macassa, Fosterville and Taylor mines will produce 65% of the annual gold production with low operating and all-in-sustaining costs (H1/16 <US$800) and exceptional exploration upside Record YTD Production: Quarterly consolidated gold production of 55,794 ounces with record YTD 2016 consolidated gold production of 175,041 ounces, led by high grade, low cost production from Fosterville, which produced 107,350 ounces. Continued Improving Cash Position: Cash balance of $82.5 million (equivalent to C$108 million), an increase of 126% from $36.5 million at Q Working capital position of $64.4 million. The Company is essentially debt-free with only $5.9 million in capital lease obligations and other loans. Generating Free Cash Flow: Operating cash flow for Q of $25.4 million or $0.14 per basic share based on revenue of $71.9 million. Q free cash flow of $11.9 million based on operating cash flow less capital expenditures of $13.5 million, after investing $3.3 million into growth programs. YTD free cash flow of $38.2 million after investing $10.7 million in growth programs. Fosterville Achieves Strong Quarterly Performance: Gold production of 36,967 ounces based on average mill grade of 6.91 g/t Au and quarterly recovery of 89.7%. Fosterville attained productivity improvements through increased mine tonnage rates and mill throughput rates. Fosterville Achieves Low Quarter Operating Cost & Low AISC: Q Operating cash cost per ounce sold of $471 and All-insustaining costs ( AISC ) per ounce sold of $765. Consolidated YTD Operating Cash Cost & Low AISC: YTD 2016 Operating cash costs per ounce sold of $714 and AISC per ounce sold of $971. 3

4 Q Strong Financial Position Cash position of $82.5 million (equivalent to C$108 million), an increase of 126% from $36.5 million at Q Reflecting free cash flow of $11.9 million during Q Balance Sheet (Sept 30 th, 2016) Cash Balance ($ million) US$82.5 Working Capital ($ million) US$64.4 Debt ($ million) US$5.9 TSX: NMI OTCQX: NMKTF Working capital of $64.4 million, up from $22.3 million at Q Essentially debt-free with only $5.9 million in debt. Capital Structure & Ownership (Sept 30 th, 2016) Issued and Outstanding (million) Options & PSU s (million) 13.2 Warrants 0.4 Fully Diluted (million) Officers, Directors & Principal Shareholders Locked up in voting agreements in support of the transaction 21.3% (All figures are in United States ( U.S. ) dollars, unless stated otherwise) 4

5 6,000mN 8050mN SOUTH Fosterville Mine Drilling Success NORTH 22.1 g/t Au over 3.3m First recorded visual Gold from Harrier 16.6 g/t Au over 3.05m 46.2 g/t Au over 6.6m (VG) Drill Targets Harrier g/t Au over 3.4m g/t Au over 3.6m g/t Au over 4.3m (VG) Harrier Drill Drive 6.2 g/t Au over 1.9m 4.4 g/t Au over 6.1m 75.7 g/t Au over 5.4m Harrier Decline 73.2 g/t Au over 7.8m 386 g/t Au over 3.4m 16.4 g/t Au over 16.5m 194 g/t Au over 3.1m g/t Au over 4.5m 13.4 g/t Au over 3.8m 645 g/t Au over 3.4m Lower Phoenix 11.1 g/t Au over 4.9m 12.8 g/t Au over 8.5m 501 g/t Au over 4.5m 112 g/t Au over 11.9m 283 g/t Au over 2.8m 7.3 g/t Au over 13.9m 9.2 g/t Au over 11.8m 12.5 g/t Au over 2.4m 6.5 g/t Au over 4.2m 9.3 g/t Au over 3.3m Mineral Resources, Reserves and mining as at December 31, Drill Rigs Operating Consistently intersecting high grade gold in multiple zones: Harrier, Lower Phoenix, Lower Phoenix South and Lower Phoenix North with grade increasing at depth on all zones Key intercepts Lower Phoenix South and North: g/t Au over 4.5 metres, 13.4g/t Au over 3.8m, 12.5 g/t Au over 2.4 metres, & 7.3 g/t Au over 13.9 metres *New High Grade Visual Gold intercepts Harrier Gold Zone; 64.8 g/t Au over 4.3m, 46.2 g/t Au over 6.6m 5

6 Cosmo Mine Discovery Success Mine Portal Cosmo Pit New Discovery Redbelly Gold Zone Highlight intercepts: 4.29 g/t Au over 11.8m 5.18 g/t Au over 8.75m Four diamond drill rigs operating during Q Sliver Gold Zone Highlight intercepts: 8.76 g/t Au over 7.55m 3.61 g/t Au over 14.4m New Discovery Taipan Gold Zone open Highlight intercepts: 6.23 g/t Au over 21.45m including, g/t Au over 10.15m open Note: For further information on drill results see Newmarket Gold s News Release dated August 22, 2016 located at displayed intervals are down-hole lengths 6

7 Highlights Kirkland Lake & Newmarket Gold Combination New low cost, mid-tier gold producer Production from high-grade, low cost core assets Commitment to exploration across prolific mining districts Tier 1 mining Jurisdictions Strong financial position Combined synergies Re-rating opportunity Combined 2016E 1 gold production of +500 kozs with cash costs <US$650/oz and AISC <US$1,015/oz Macassa, Fosterville and Taylor mines will produce +330koz, at cash costs of <US$600/oz and AISC <US$800/oz Positioned for sustainable growth in district-scale properties in established gold camps in Australia and Canada Located in low-risk, Tier 1 jurisdictions in Canada and Australia with a solid pipeline of high-quality projects with significant exploration upside Pro-forma company Q cash balance +C$300 million & superior free cash flow generation Further value creation possibilities for two autonomous business units that are profitable and have superior free cash flow With diversified production, a superior growth profile, strong balance sheet, and improved market presence, the combined company is well positioned for value creation for shareholders combined production is based on mid-point of company guidance for Kirkland Lake and Newmarket. Refer to Slide 2 Forward Looking Information. Refer to Slide 2 Use of Non-GAAP Measures. 7

8 High Grade, Low Cost Cornerstone Assets Production & cash flow anchored by three high grade, low cost operations: MACASSA MINE COMPLEX, FOSTERVILLE MINE and the TAYLOR MINE account for 65% of pro-forma production and have the opportunity to generate significant free cash flow. Macassa Mine Complex Fosterville Mine Taylor Mine Consolidated Reserve Grades (g/t Au) 19.2 g/t 7.0 g/t 6.3 g/t 13.7 g/t 2016E Production 165k oz 135k oz 40k oz (mid-point of guidance) > 330k oz Cash Costs (US$/Oz Sold) US$600 US$475 US$460 H1/16A < US$600/oz AISC (US$/Oz Sold) US$900 US$775 US$640 H1/16A < US$800/oz Source: Company Guidance. Refer to Slide 44 NI Disclosure. Refer to slide 2 Cautionary Language use of Non-GAAP measures.. 8

9 Q Operating Results 9

10 Fosterville Gold Mine 2016 Q3 & YTD Highlights Gold Production (oz) 36,967 37,245 36,967 Record 2016 YTD Production of 107,350 oz Q3 gold production of 36,967oz, up 13% over Q YTD average mill grade of 7.24 g/t Au Q3 mill recovery of 89.7% Q Operating Cash Costs of $471/oz & AISC of $765/oz Fosterville attained productivity improvements through increased mine tonnage rates and mill throughput rates. 32,793 33,138 31,519 Q3/ 2015 Q4/ 2015 Q1/ 2016 Q2/ 2016 Q3/ 2016 Full Year 2016 Continued investment in exploration programs targeting increasing mineral resources & reserves to extend mine life 2016 Production Guidance: 130, ,000 oz 2016 Operating Cash Costs: $450 - $525/ oz Investment into new larger capacity haulage trucks has contributed to an increase in mined tonnes during the quarter 10

11 Cosmo Gold Mine 2016 Q3 & YTD Highlights Q3 gold production of 10,677oz Record Q3 mill recovery of 95.3% YTD gold production of 42,459 oz Q3 drilling has identified additional ore sources near existing infrastructure. Gold Production (oz) 16,340 15,442 12,672 12,898 10,677 Q3/ 2015 Q4/ 2015 Q1/ 2016 Q2/ 2016 Q3/ 2016 Full Year 2016 Cosmo Access Portal Focus on building resources and reserves including progressing Sliver Lode and the newly discovered Redbelly & Taipan Lode. Progress Maud Creek feasibility tender process 2016 Production Guidance ~60,000 oz 2016 Operating Cash Cost Guidance $975 - $1,050 / oz 11

12 Stawell Gold Mine Gold Production (oz) 2016 Q3 & YTD Highlights Gold production of 8,150 ounces, YTD production of 25,233 oz 218,702 tonnes milled tonnes at an average grade of 1.45 g/t Au and 80.1% recovery 8,352 8,762 8,579 8,504 8,150 Continue to operate sustainably on streamlined operating activities from the upper levels in the underground mine and supplemented oxide stockpiles, with reduced manpower Q3/ 2015 Q4/ 2015 Q1/ 2016 Q2/ 2016 Q3/ 2016 Full Year 2016 Advance Aurora B discovery, mineralization remains open for potential expansion Work with regulators to establish a path forward for Big Hill Revised 2016 Production Guidance ~35,000 ounces Revised 2016 Operating Cash Cost Guidance $1,050 - $1,125 Stawell Gold Mine 12

13 Q Financial Results 13

14 Q CFO Highlights Generating Free Cash Flow: Operating cash flow for Q of $25.4 million or $0.14 per basic share based on revenue of $71.9 million. Q free cash flow of $11.9 million based on operating cash flow less capital expenditures of $13.5 million, after investing $3.3 million into growth programs. YTD free cash flow of $38.2 million after investing $10.7 million in growth programs. Record YTD Mine Operating Income: Q Mine Operating Income of $22.1 million, up 75.5% from Q as a result of a higher average realized gold price. Record YTD mine operating income of $67.7 million was the result of increased ounces sold and a higher gold price environment. Net Income: $7.1 million or $0.04 Basic EPS in Q and $30.3 million or $0.18 Basic EPS YTD, with the current quarter impacted by a higher total tax expense relating mainly to the exceptional performance at Fosterville in a strong Australian gold price environment, accounting for a loss of $0.05 per basic share. 14

15 Financial Results Q All figures are in United States ( U.S. ) dollars, unless stated otherwise Financial Results (000 s US$ except per share amounts) Q Q YTD 2016 YTD 2015 Gold ounces produced 55,794 53, , ,491 Gold ounces sold 54,053 54, , ,968 Revenue 71,940 60, , ,605 Cost of operations, including depletion & depreciation (49,861) (48,082) (148,316) (147,743) Mine operating income 22,079 12,582 67,718 51,862 Net income (loss) 7,069 (10,325) 30,292 17,450 Net income (loss) per share($/share) basic 0.04 (0.08) Operating Cash Flow 25,438 11,345 74,740 65,903 Capital Expenditures 13,508 13,794 36,586 44,412 Gold Price and Cost per Ounce (US$) Q Q YTD 2016 YTD 2015 Average realized gold price 1,329 1,109 1,240 1,164 Operating cash costs per ounce sold All-in sustaining cash costs per ounce sold 1,076 1,

16 Q&A Contact Us Douglas Forster President & CEO, Director T: E: Ryan King Vice President, Investor Relations T: E: TSX: NMI 16

17 APPENDIX 17

18 Appendix: Mineral Resources (Dec ) Measured Tonnes (kt) Gold Grade (g/t) Oz Gold (koz) Fosterville UG 2, Fosterville Tailings Cosmo 1, Stawell UG Maud Creek 1 1, Total Measured 5, Indicated Tonnes (kt) Gold Grade (g/t) Oz Gold (koz) Fosterville UG 12, ,904 Cosmo 2, Stawell UG Stawell Op 3, Burnside 7, Union Reefs 3, Pine Creek 8, Maud Creek 1 5, Total Indicated 44, ,939 Total (M&I only) 50, ,691 Inferred Tonnes (kt) Gold Grade (g/t) Oz Gold (koz) Fosterville UG a 5, Cosmo C Stawell UG d Stawell Op f Burnside g 6, Union Reefs h 3, Pine Creek i 2, Maud Creek e,1 1, Total Inferred 21, ,751 Source: Newmarket Gold March 21, 2016 press release announcing 2015 year-end mineral reserves and mineral resources Note: Mineral Resources are inclusive of Mineral Reserves. Mineral Resources have been rounded to 1,000 tonnes, 0.01 g/t Au and 1,000 ounces. Minor discrepancies in summation may occur due to rounding. Mineral Resources are stated as of Dec 31, Gold Price A$ 1,500/oz used. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. 1. Newmarket Gold announced a Preliminary Economic Assessment on the Maud Creek Gold Project May 16, A NI Technical Report is available at and under the companies profile on sedar.ca. The Maud Creek Mineral Resources summarize both the open pit and underground resource estimates as included in the PEA. The open pit Mineral Resource is exclusive of the underground mineral resource and reported at a 0.5g/t cutoff grade. The underground Mineral Resource is exclusive of the open pit Mineral Resource and reported at a 1.5g/t cut-off grade. 18

19 Appendix: Mineral Reserves (Dec ) 2P Reserves Tonnes (Mt) Grade Au (g/t) Au (kozs) Fosterville (Under Ground) Fosterville (Tailings) Cosmo Stawell (Under Ground) Stawell (Open Pit) Big Hill Union Reefs (Under Ground) Union Reefs (Open Pit) Pine Creek Total Proven & Probably Reserves Additional Information Notes for Pages 24-26: For information regarding mineral resource and reserve estimates, including parameters used to generate the estimates and depletion, please see the technical reports titled: NI TECHNICAL REPORT FOSTERVILLE GOLD MINE, VICTORIA, AUSTRALIA PREPARED FOR NEWMARKET GOLD INC dated March 21, 2016 and; NI TECHNICAL REPORT BIG HILL ENHANCED DEVELOPMENT PROJECT AT STAWELL GOLD MINE MINERAL RESOURCES & RESERVES PREPARED FOR CROCODILE GOLD CORP dated June 6, For the Northern Territory Mineral Reserve Estimates please refer to the technical reports titled: REPORT ON THE MINERAL RESOURCES & MINERAL RESERVES OF THE COSMO DEEPS GOLD PROJECT dated March 21, 2016; NI TECHNICAL REPORT STAWELL GOLD MINE, VICTORIA, AUSTRALIA PREPARED FOR NEWMARKET GOLD INC dated March 21, 2016; REPORT ON THE MINERAL RESOURCES & MINERAL RESERVES OF THE UNION REEFS GOLD PROJECT dated December 31, 2012; REPORT ON THE MINERAL RESOURCES & MINERAL RESERVES OF THE PINE CREEK GOLD PROJECT dated December 31, 2012;Technical Report Preliminary Economic Assessment of the Maud Creek Gold Project, Northern Territories, Australia dated May 18, 2016 and; REPORT ON THE MINERAL RESOURCES & MINERAL RESERVES OF THE BURNSIDE GOLD AND BASE METAL PROJECT dated December 12, All reports available on SEDAR under the Newmarket Gold Inc. profile or on Mineral resources that are not mineral reserves do not have demonstrated economic viability. Source: Newmarket Gold March 21, 2016 press release announcing 2015 year-end mineral reserves and mineral resources Note: Mineral Resources have been rounded to 1,000 tonnes, 0.01 g/t Au and 1,000 ounces. Minor discrepancies in summation may occur due to rounding. Mineral Reserves have demonstrated economic viability. Processing Recoveries range between 88% and 93%, excluding Fosterville Tailings which expects recoveries of 25% (see reports for details). Mining Recoveries range from 85% and 95% (see reports for details). Gold Price of $A1,450/Oz used. Mineral Reserves as of December 31, Mining Dilution ranges from 5% to 20% (see reports for details). 19

20 Appendix: Mineral Resources (Dec ) Fosterville Central Area Lower Sulphide Mineral Resources (Inclusive of Mineral Reserves) below 5050mRL as at Dec. 31, 2015 Measured Indicated Inferred Classification Structure Tonnes Grade In situ Gold Tonnes Grade In situ Gold Tonnes Grade In situ Gold (kt) g/t Au (koz) (kt) g/t Au (koz) (kt) g/t Au (koz) Allwood* Lower Phoenix Eagle* Lower Phoenix East Dippers* Lower Phoenix Ellesmere Harrier Kestrel Lower Phoenix* Lower Phoenix Lower Phoenix* FW Lower Phoenix Phoenix* Phoenix Raven Robin Splays Vulture Stockpile# Total Sulphide , ,109 1, Notes: *Fosterville s underground Measured and Indicated Mineral Resources include resources in the existing mining fronts in the Phoenix and Lower Phoenix gold system of 673,000 ounces grading 8.33 g/t Au. For the Mineral Resource estimate, the Qualified Person is Troy Fuller, MAIG, Geology Manager for Newmarket The Mineral Resources reported are inclusive of the Mineral Reserves for the same area. Lower cut-off grade of 3.0 g/t is applied to Lower Sulphide Mineral Resources below 5050mRL. Mineral Resources are rounded to 1,000 tonnes, 0.01 g/t Au and 1,000 ounces. Minor discrepancies in summation may occur due to rounding. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. The Mineral Resource estimate used a gold price of A$1,500 per ounce. #Stockpile Inventory includes Lower Central Area Mineral Resources contained within the Run of Mine Stockpile and Coarse Ore Stockpile as at 31 st December

21 Quarterly Operating Results Operating Results Q Q Q Q Consolidated Gold Produced (oz) 55,794 53,817 61,191 58,057 Consolidated Gold Grades (g/t) Consolidated Recoveries (%) % 86.8% Fosterville Gold Mine Ore Milled (Tonnes) 185, , , ,868 Average Grade (g/t Au) Recovery (%) % 86.8% Gold Produced (oz) 36,967 32,793 37,245 33,138 Cosmo Gold Mine Ore Milled (Tonnes) 138, , , ,025 Average Grade (g/t Au) Recovery (%) % 90.7% Gold Produced (oz) 10,677 12,672 15,442 16,340 Stawell Gold Mines Ore Milled (Tonnes) 218, , , ,558 Average Grade (g/t Au) Recovery (%) % 79.9% Gold Produced (oz) 8,150 8,352 8,504 8,579 21

22 Stawell Mine Aurora B Discovery Section 7.06 g/t gold over m Traditionally mined West Flank Total production to date 2.3 million ounces Magdala East Flank Target Aurora B 8.03 g/t gold over 8.8 m East Flank Target Aurora A 22

23 Non-IFRS and Additional Information Non-IFRS Measures Newmarket Gold believes that investors use certain indicators to assess gold mining companies. The indicators are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance in accordance with the International Financial Reporting Standards. Operational Cash Costs per Ounce is a non-ifrs performance measure which could provide an indication of the mining and processing efficiency at the operations. The Company calculates operating cash costs per ounce by deducting silver sales revenue as a by-product from operating expenses per the consolidated statement of operations, then dividing by the gold ounces sold during the applicable period. Operating expenses include mine site operating costs such as mining, processing and administration as well as royalties, however excludes depletion and depreciation, share-based payments and rehabilitation costs. There are variations in the method of computation of operational cash costs per ounce as determined by the Company compared with other mining companies. For more detail on the operational cash costs per ounce determination for Newmarket Gold, please visit or and review the latest Annual Financial Statements. All-In Sustaining Costs per Ounce of Gold ( AISC ) Effective December 31, 2013, the Company has adopted an all-in sustaining cost ( AISC ) performance measure that reflects all of the expenditures that are required to produce an ounce of gold from current operations. While there is no standardized meaning of the measure across the industry, the Company s definition conforms to the AISC definition as set out by the World Gold Council in its guidance dated June 27, The World Gold Council is a non-regulatory, non-profit organization established in 1987 whose members include global senior mining companies. The Company believes that this measure will be useful to external users in assessing operating performance and the ability to generate free cash flow from current operations. The Company defines AISC as the sum of operating cash costs (per above), sustaining capital (capital required to maintain current operations at existing levels), capital lease repayments, corporate general and administrative expenses, in-mine exploration expenses and rehabilitation accretion and amortization related to current operations. AISC excludes capital expenditures for significant improvements at existing operations deemed to be expansionary in nature, exploration and evaluation related to growth projects, rehabilitation accretion and amortization not related to current operations, financing costs, debt repayments, share-based compensation not related to operations, and taxes. Additional Information For information regarding mineral resource and reserve estimates, including parameters used to generate the estimates and depletion, please see the technical reports prepared in accordance with National Instrument supporting the 2015 Mineral Reserve and Mineral Resource estimates. The reports are titled as follows: Report on the Mineral Resources & Mineral Reserves of the Fosterville Gold Mine, Victoria, Australia, dated March 21, 2016 and effective December 31, Report on the Mineral Resources & Mineral Reserves of the Northern Territory Operations in the Northern Territory, Australia, dated March 21, 2016 and effective December 31, Report on the Mineral Resources & Mineral Reserves of the Stawell Gold Mine in the State of Victoria, Australia, dated March 21, 2016 and effective December 31, Technical Report Mineral Resources of the Maud Creek Gold Project, Northern Territory, Australia dated March 21, 2016 and effective December 31,