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Good morning. My name is Jaimie, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Gold Inc. second quarter results conference call. [Operator Instructions] Thank you.Ankit Shah, Director of Corporate Development, you may begin your conference.
Thank you, Jaimie, and good morning, everyone. We appreciate you joining us today for New Gold's 2018 Second Quarter Earnings Results Conference Call and Webcast. On the line today, we have Ray Threlkeld, President and CEO; Paula Myson, CFO; and Cory Atiyeh, EVP, Operations. Should you wish to follow along with the webcast, please sign in from our homepage at newgold.com. If you are participating in the webcast, you may type your questions online through the interface.Before the team begins the presentation, I would like to direct your attention to our cautionary language related to forward-looking statements found on Slide 3 of the presentation. Today's commentary includes forward-looking statements relating to New Gold. In this respect, we refer you to our detailed cautionary note regarding forward-looking statements in the presentation. You are cautioned that actual results and future events could differ materially from those expressed or implied in forward-looking statements. Slide 3 provides additional information and should be reviewed. We also refer you to the section entitled Risk Factors in New Gold's latest MD&A and other filings available on SEDAR which set out certain material factors that could cause actual results to differ. In addition, at the conclusion of the presentation, there are a number of end notes that provide important information and should be reviewed in conjunction with the material presented.I will now turn the call over to Ray.
Thank you, Ankit, and good morning, everyone, and thank you for joining us today. Slide 4 provides a summary of the key operational and financial highlights from the quarter. Our second quarter of start-up production from Rainy River enabled the company to produce consolidated gold production of 109,000 ounces of gold and copper production of approximately 20 million pounds. Costs, during the quarter, were higher than 2017 due to planned higher operating expenses at Rainy River as the mine continues its ramp up.In the second quarter, we generated $66 million of cash flow or $0.11 per share, finishing the quarter with cash and cash equivalents of $167 million. As a result of our start-up challenges experienced at Rainy River over the last 6 months, we have lowered Rainy River's 2018 outlook. During the second quarter, we completed an updated Rainy River life-of-mine plan and will be releasing the technical report in early August. As a result of completing the updated life-of-mine plan and lowering Rainy River's 2018 outlook, we reported an impairment charge of $282 million at Rainy River. Paula will provide additional details on our financial results in a few moments.Slide 5 provides a summary of our mine-by-mine operating results. At Rainy River, mining activity continued to progress during the quarter with the operation, mining a total of 3.3 million tonnes of ore, 1.5 million tonnes of ore was processed at an average grade of 1.24 grams per tonne with recoveries of 87%. This resulted in quarterly production of 55,000 ounces. Operating results and all-in sustaining costs during the quarter were higher than our guidance ranges, primarily due to lower-than-planned second quarter production.At New Afton, gold production decreased compared to the prior year quarter as planned decrease in mill throughput and gold grade was partially offset by an increase in gold recovery. Copper production was also lower relative to the prior year quarter due to a planned decrease in mill throughput, partially offset by an increase in copper recovery. Operating expenses decreased relative to the prior year quarter due to higher relative copper revenues compared to gold. All-in sustaining costs decreased in the quarter due to higher byproduct revenues and lower sustaining costs. Based on our first half performance, we are on track to meet full year guidance at New Afton.At Mesquite, gold production decreased in the quarter due to a planned decrease in ore tonnes mined and placed. Both operating expenses and all-in sustaining costs increased in the quarter due to an increase in process solution flow on the leach pad and lower gold sales volumes. We are on track to meet full year guidance at Mesquite as tonnes placed on the pad are currently on plan.Slide 6 provides additional information on the ramp up at Rainy River. During the quarter, the process facility continued to improve. However, operational and mechanical challenges consistent with startups impacted availability. We completed a detailed review of the various issues encountered during the quarter, and we have begun to implement design improvements to further reduce equipment wear and increase operational stability. Earlier in the quarter, we replaced the carbon screens and have seen a steady improvement with recoveries of 87% during the quarter. We expect to see an increase in recovery during the second half of the year. The crushing and grinding circuit is robust and operating consistently. The process facility continues to demonstrate its operational potential with throughput rates achieving over 24,000 tonnes per day. As previously discussed, we engaged in an external engineering firm to evaluate the potential to increase Rainy River's throughput to a steady state of 24,000 tonnes per day. We are now implementing this plan which involves adjustment to the recovery section of the process plant for a relatively minimal cost. Expansion to 24,000 tonnes per day is now expected to be completed by the beginning of the fourth quarter.Slide 7 provides an update on our 2018 outlook. As previously discussed, due primarily to the variability in Rainy River's process facility startup performance during the first 6 months of the year, we are lowering the 2018 production guidance for Rainy River. Rainy River is now expected to produce between 210,000 to 250,000 ounces of gold. As a result, consolidated gold production for 2018 is expected to be between 415,000 to 480,000 ounces of gold. Annual copper production remains in line with our original guidance of 75 million to 85 million pounds. Costs are also expected to increase as a result of lower gold sales volumes and higher sustaining capital.Now I would like to turn the call over to Paula to discuss our financial performance. Paula?
Thanks, Ray, and good morning, everyone. We’ll start on Slide 8 for the financial summary, and I’ll just provide a few additional comments on some of the key elements in the financial results. So revenues on -- are shown on a continuing operations basis, which to remind you, that excludes our Peak Mines, which we sold last year, and revenues increased by $52 million or 36% during the quarter. That was mainly due to the higher gold sales volume, higher gold and copper prices. Higher gold sales were largely attributable to the contribution from Rainy River in 2018 versus 2017.The operating margin also shown on a continuing operations basis increased by $17 million, driven by the increase in revenue, which was only partially offset by some higher operating expenses. We reported a loss from continuing operations of $302 million or $0.52 per share. That was after an impairment charge of $282 million relating to Rainy River and after finance costs of $18 million and $8 million in a pretax foreign exchange loss.I want to expand a bit on the impairment charge. In accordance with our accounting policies and IFRS, we look at internal and external indicators of impairment on assets every reporting period. And as Ray mentioned, in July, we completed an updated Rainy River life-of-mine plan, and we'll be filing a technical report by the first week of August. That new life-of-mine plan contains changes to the sequencing of production and updated per unit costs. So the change to the life-of-mine plan and the increase in the cost estimates both at Rainy River constitute what we consider indicators of impairment. We have more detail on the methodology and the assumptions in the impairment analysis in the MD&A if you want to delve into those details. But for the period ended June 30, we recorded an impairment loss, net of tax, of $282 million.So our adjusted loss from continuing operations of -- was $2 million or 0 on a cents per share basis. The decrease in earnings relative to the prior year quarter was primarily due to a $24 million increase in depreciation and a $17 million increase in finance costs. These were partially offset by the previously noted $17 million increase in operating margin and a $4 million decrease in exploration, business development and G&A expenses in addition to a $9 million increase in income tax recovery. The change in finance costs, I mentioned, is more appropriately described as a recategorization. It relates to a change in capitalized interest relative to the prior year period. Just a reminder, we ceased capitalizing interest to our qualifying development property, which is Rainy River, in November of 2017 when we began commercial production. So basically, the interest charge that was on our balance sheet at 2017 instead now flows through the income statement going forward. New Gold generated operating cash flow from continuing operations of $66 million or $0.11 per share. The increase relative to the prior year quarter was due to the increase in operating margin of [indiscernible] and an income tax refund, partially offset by the increase in stockpile inventory at Rainy River.Now we'll move to Slide 9, which is our liquidity position and just want to explain a few events during the quarter that had an impact. We ended the quarter with $167 million of cash and $103 million undrawn on our credit facility for a total liquidity of $270 million. In addition to the impact of our normal business operations, there were a few related but nonrecurring events in the quarter that had an impact on our liquidity. So during the quarter, we received the remaining $55 million in proceeds from the Peak sale. And as a reminder, we sold Peak for $58 million. We received the $3 million deposit last year and the remaining $55 million was paid in April. So in addition to the receipt of the final proceeds, we were able to release letters of credit that were associated with Peak's reclamation obligation, those amounted to $16 million. So that resulted in an increase in availability under our credit facility. And finally, with the proceeds from the Peak sale, we reduced the outstanding amount on our credit facility by $50 million.So with that, I'll turn the call back to Ray.
Thank you, Paula. As most of you know, I took the role of President and CEO almost 3 months ago. During this time, I spent a great deal of time with our management team at our sites. And I can tell you that I'm impressed with the commitment and dedication to New Gold that I find in all of our locations. Also, we've welcomed 3 new members to our board. The entire board has shown a great deal of support and involvement in the company over the last quarter. During this time, our team has worked very hard to develop a new Rainy River life-of-mine plan and required us to revise our guidance assumptions for 2018. We are committed to achieving the revised outlook and remain focused on the operational execution. Thank you again for joining us today and for your continued support in New Gold. This concludes our presentation. And now we will be happy to answer your questions.
[Operator Instructions] Your first question comes from Rahul Paul from Canaccord Genuity.
You indicated the increase in all-in sustaining costs at Rainy to $1,016 an ounce for the first 9 years from the $875 provided at the beginning of the year. That's a big change. What were the key drivers? What I'm wondering is what changed in the last 6 months or so?
This is Ray. I'll partially answer that and I will give it over to Paula for some of the details. Most of that is related to tailings. We had some carryover from 2017 into 2018 on construction costs in the tailings dam. We also had a large amount of -- we have almost $100 million of sustaining capital that actually moved from development capital into sustaining for this year as we are in operation and it's all related to finishing the tailings dam. And we expect to see some of that follow through, through the next year and a half where we have another lift to tailings to do and complete the entire facility. Do you have any more?
Yes, there was a -- on the OpEx side, there was also some increases in terms of the mining costs -- in the processing costs, in particular, in some of the inputs that we were seeing. It was a combination of some price increases that we were seeing in things like diesel, in emulsion and our consumption rates are changing. We've noticed over the past 6 months what our real consumption rates were rather than theoretical. So we've adjusted those accordingly and those have all flowed through and had an impact.
Okay. And then, if I could, one more question. You also spoke about the planned increase in throughput to 24,000 tonnes a day from 21,000 tonnes a day. Why would you not wait to get to 21,000 sustainably before going ahead with the expansion to 24,000?
Thanks, Rahul. This is Cory Atiyeh. Yes, it's a good question. That's pretty much where we’re at right now, trying to gain stability in the mill. We've run fairly well when we've operated, but we've had a lot of process interruptions with various items taking us down. So the planned increase to 24,000 tonnes is going forward, but we also need to make sure we get some stability in order to achieve that. If you look at the -- in July, we've operated every day in July and the last 10 days we were over almost 23,000 tonnes per day at about 94% availability. So we're making progress. It's just been a long trip.
And then it looks like you go from 24,000 tonnes per day to 25,500 tonnes per day at some -- couple of years down the line. Does that require any additional capital or is that all reflected in your all-in sustaining costs?
There's a little bit of extra capital in there, I believe we've got about $20 million associated with that increase, life-of-mine.
Your next question comes from David Haughton with CIBC.
So I can hear that you've got the issues at -- through the mill. It's interesting to see though that your mining rates are still pretty decent. So that's encouraging. Can you just talk about some of the things that you can see that's holding you back on your mill throughput at the moment and what you've done to address those?
Yes. I mean where we are at in Q2 was kind of [indiscernible] to Q1. We've just had numerous issues in the mill at [indiscernible], some problems with removing carbon, some electrical instrumentation, some component failures with gearboxes and cyanide destruct tank and we've had some increased maintenance due to wear; wear was quicker than what we had planned. It's kind of a potpourri of items, it's no single thing. The crushing and grinding circuit itself runs like a champ. It's just all the other components around that process string, typical startup issues really but probably more of them than what you expected obviously.
So most of that wear then that you are referring to, is that in the mill and you're testing at different liners to be able to address that ongoing or can you just explain a little bit?
Yes, we are getting some increased wear in the mill and we are looking at our liner packages right now. The more of the -- more of the acute issue right now is on screens and piping, cyclones, that type of thing. It's not necessarily in the mill itself.
And when we're looking at Q3, can we expect sort of similar throughput that -- what we've seen in Q2? And I presume it maybe in Q3 and into Q4 you'd have possibly some tie-in implications if you're moving to the 24,000 tonnes a day.
Pardon, I didn't catch your last part of the question.
So Q2, should we be thinking something similar to -- sorry, Q3, something similar to Q2 and then moving into Q4 would we have some further downtime with potential tie-in of items required for the expansion?
I think in the forecast going forward, we expect some improvement in Q3 and Q4 as far as mill throughput, and like I said over the last 10 days and throughout July, we've operated fairly consistently. So I see that throughput increasing from Q2 as we get into Q3 and Q4.
And again Ray, I had looked at the all-in sustaining cost you'd mentioned, Ray, that there is a carryover obviously of the tails there for the next 12 to 18 months, are you also considering the expansion as your sustaining CapEx?
Yes, we would. Any expansions are sustaining CapEx.
Your next question comes from Anita Soni with Credit Suisse.
So my first question is with regards to the mining rates, as David had mentioned, your -- I think double what the throughput of the mill is. And I'm just trying to understand when you talk about mining of ore, are you talking about the lower grade stuff that also gets stockpiled. And I'm asking this question because your guidance on the Q1 call was for 1.35 to 1.45 gram per tonne material, I think you did 1.2 and given that you’re mining nearly double what the mill can take, I would have expected the grade to at least hold up.
Yes, this is Ray. The grades that we have mined this quarter were lower because of pit sequencing. And as we move towards -- in the pit we move towards where we thought higher grade or it should be, we obtained a grade of 1.24 in the second quarter. We've not seen very high grade in places that we expected and this is an issue that we're addressing. Now when we look at our total reconciliation over the last 6 months, that reconciliation shows a positive variance from the block model through to the blast hole through the -- through the mill. So we are mining the ounces, but we're not seeing the high grade. That is we are getting more lower-grade ounces than higher-grade ounces. Now we're very early in the pit sequence. We're very early in our mining sequence, and we will -- we do have higher grades below this and we'll be moving towards that. And the reason we're upping our throughput is to try and make up for some of the loss we had, and should the grades remains slightly below what were mentioned in the last quarter call, we will have throughput to take that -- to carry that. That's the reason also for the increased OpEx and sustaining cost is, it's really the denominator and the grade.
So that leaves me just 2 follow-up questions. The next question I guess is the mine plan for this asset was contingent upon basically being able to do a low-grade stockpiling system, I think of it's like an actual strip ratio of 7:1, but the mill feed is 4:1. So the question I guess is, how is the tailings facility going to handle that extra volume if you go to 24,000 tonnes per day because I know you're in a pinch from the tailing side of the equation? And secondly, how does the underground, I mean -- like how do you fill the mill with the underground later on? I'm not quite sure how this is going to work as planned. And I think the third question is, do you have an idea of what the impact to 2019 is now given that you're filing a Technical Report in a few days?
I'll answer the last question first because we are releasing a Technical Report within the next few weeks and all of the annual production figures will be released. I can tell you this that in relation to -- will the tailings have sufficient capacity? The tailings is built upon total reserve and there is no change to the total reserve. There is no change -- there is a 200,000 ounce change to the total ounces mined over the next 14 years, which is, in my mind, is somewhat of a rounding error, because things change as we move along and we get deeper, we find higher grades in different areas. We find more lower grade. We will mine all of our stockpile as originally planned. Right now, our life-of-mine, our stockpile inventories grow a little bit; they grow from 30,000 ounces to 99,000 ounces over the life of the mine. It doesn't mean they all get stacked up, it means that we utilize that material as to support throughput. So no change to facility except for going to the 24,000 tonnes per day and eventually up to 25,500 tonnes per day in 2021.
So how much on tailings capacity do you have built now ahead of you for the next sort of 18 months to 2 years?
For the next 18 months will be all of next year's production. So probably around 9 million tonnes of tailings capacity currently, and then we'll be starting a lift in 2019, and then that lift will take us through I think 3 more years or 4 years of production.
Okay. And then the last question was, any impact right now to 2019 numbers? I think we're setting out [ the last line for like 360-ish ].
There is obvious impact to the 2019 numbers. I don't know if we've ever given any guidance on that.
We have mine to our guidance for sure. So I mean there was a definitely a number…
I'm sorry.
There were definitely a number of Technical Reports put out previously.
Okay. Yes, I believe you can look in the Technical Report that comes out. That will cover all of the cost and all of the production information for the life-of-the-mine on an annual basis.
Your next question comes from Don MacLean with Paradigm.
Just a carry on from Anita's comments on the grade, because those are pretty serious words in the quarterly, so you had an 11% shortfall of grade in Q2. So Ray, maybe can you give us a little more color on this sense of what proportion of that was due to dilution and what proportion of that is due to the high grade just not being where it was supposed to be? And that in talking about where the high grade is or isn't, if we can talk about the selectability?
Yes. Okay. Dilution increased at least 5%. There was about 4.5% dilution in the block model and probably 5% in mine, so you're looking at 9.5%. What really caused the issues in the mine, yes, the grade was a little bit lower, but that was a portion of sequencing for the last 6 months. But mill availability reduced gold production from the previous plan by about 35,000 ounces. That is the real thing. Recovery was about 8,000 ounces from the original plan, dilution -- and we call dilution that is lower grade being applied next to the high grades to reach our throughput, it was about 17,000 ounces. So we are very good on our year-to-date variance production based upon reconciliation to the model. In fact, we're somewhat ahead of ounces mined out of the pit than originally planned. So yes, that doesn't answer your question specifically about high-grade versus grade going forward. We expect and we put into the plan -- the grades going forward are slightly lower than what was originally projected for the project, but the total ounces mined remain the same. What does that do? It increases the operating cost, it increases our all-in sustaining costs slightly. We are working on and doing studies as we speak. On the sampling protocols that we have from the -- from blast hole, we're looking at sampling protocols through the mill and we need to look at every aspect of that to make sure that the ounces -- we can assure ounces going in and assure ounces coming out. We know the ounces coming out of it, but we need to reconcile back and reconcile a little bit better.
And maybe can you talk a bit about the additional work that's been done as you try to figure out whether or not there was a -- because this is a nuggety deposit whether there was a great bias in the reserve calculation or whether it's just sort of a selectivity situation?
A bit of both there. We have consultants looking at now where we looking at block model and we're looking wire frames. We are looking at every aspect of our resource. Our resource calculations are very good. We've looked at them in a number of way. All the gold is there. It is just the sequencing and really throughput to realize the annual production that we previously had guided to. We're looking at the sampling studies. We're looking at mine selectivity improvements, we're looking at cut-off grade improvements, every aspect of it. So we have seen some improvement, like I said, we went from 1.08 to -- in the first quarter to 1.24 in the second quarter, and we expect our grades to come up as well as availability and throughput.
In the -- not to belabor the point, but it is critical. So when you looked at that 1.24 that you got, what would you have expected from the model as opposed to -- did you mine according to the plan that was going to…
We mined according to plan, what the model -- we mined according to the reserve model because reserve model is extremely good. There is no change in our reserve model. What we didn't have is, we initiated a high grading strategy in the early years of this mine to look at gold grade. So initially, we had somewhat higher grades in the budget. When we put our control shapes on that budget there was a reduction in grade and what that reduction in grade really resulted in more ounces in the same amount of ounces that was distributed from higher grades to lower grade zone surrounding those what we thought were higher grade pods. So there is a bit of a smearing apparently. We are looking into that. But we don't have any concern about the amount of ounces there. The amount of ounces are there, they are -- the reserve is solid. We're just going to have to work through our sampling and work through our -- bit of a cut-off strategy and how we can actually draw shapes and mine higher-grade ore.
Just last question, your -- the lower grade implications on the underground.
There should not be any effect on lower-grade assumptions at this stage. The reason being is that we've gone to larger stopes and larger sizes to get larger volume. We did that last year. When we started the Intrepid Zone, the Intrepid Zone has been drilled out at a much tighter spacing than anything else. So we're very confident of that grade.
Your next question comes from Mike Parkin with National Bank.
Guys, could you give us a sense of what we should expect for mining, milling and G&A cost per tonne for the second half of the year?
Yes. Mike, this is Corey. If you look at where we're at from Q1 to Q2, we've come down on the mine unit rate and the processing unit rate and the G&A rate. If you -- we are just over $3 a tonne in Q2 from mining rate. We're a little bit short on tonnes mined, so if you normalize that against what we budgeted and we are just slightly higher than what we planned on the mining side. G&A is in line with what we planned. We had a higher processing cost in Q2, just short of about $13. But again, if you normalize that and -- had the tonnes through the mill, you're at about -- you're less than $9 a tonne, which is in line with our expectations, but a little higher due to some increased maintenance, which we've -- we spoke about in a little bit of labor. But going forward, as long as we move the tonnes and mill the tonnes, I think our estimates for unit rates are in line.
And sorry, I don't have the G&A number for Q1, do you have that handy?
On the unit rate?
Yes.
That was about 5 -- 5.90 per tonne, again impacted by the lower mill throughput.
You kind of covered off the issues in the plant. And then in terms of, I guess, you kind of answered it, the higher all-in sustaining costs for Rainy for the second half relative to Q2. That would be largely impacted by the increase in sustaining capital that's being spent to expand the mill. Is that correct?
It's tailings -- the expansion of the mill is not as significant capital, so it's mostly tailings spending. It is sensitive to the capital number. If you want to look at, for 2018, about -- just a sensitivity metric would be a $30 million change in capital at Rainy would produce approximately $120 per ounce change in the ASIC.
And then with the Ray's comments about gold there, so it sounds like basically the new life-of-mine plan is going to have a larger tonnage and the reserves lower grade same amount of contained ounces approximately minus couple hundred thousand ounces. So you can take the strip ratio down by the amount that the reserve tonnes will go up?
Actually, reserve tonnes -- there's very little difference. What it is, is -- yes, there's a 4% increase in ore tonnes. That's all. What it is, is a reclassification from higher grades into stockpile material. More ounces go into stockpile and they do get mined in the future. All the golds remains the same. All the tonnes remain the same. It is -- a slight increase in tonnes, but there's relatively little change in the ounces.
Your next question comes from Dan Rollins with RBC Capital Markets.
So Ray, listening to what you've been saying, it sounds like you're still going to use the stockpiling strategy. I was just wondering when you look at the new AISC of $1,016 for the first 9 years, you layer in the impact of the royalty, the gold stream on the realizable margin on the asset. And then you take in account the capital that you are going to be putting into working capital for stockpiling that low grade. What is the true AISC of this assets cash out the door over the first 9 years? Is it closer to $1,150 or where do you stand on that particularly from a -- I know the ounces are there, but it sounds like the issue right now is the profitability of the mine, and it's just not going to generate nearly the free cash flow, it was supposed to be at the beginning of this year, or where it was 2 years ago?
Yes. Costs are up. It is profitable and it makes money. The 2018 and 2019 are not reflective of the life-of-mine. That's for sure. We've given some life-of-mine guidance on all-in sustaining cost. And if you back out those first 2 years, we were above what we originally planned. But it still is a good mine and it still makes good money.
And then, just given the change in the free cash flow potential of the company as a whole, where do you stand on the C-zone at New Afton? Is that still on the table, it's for a slow build out over the next 3 years and then incrementally put money in years 4 and 5 for now? Or is the C-zone sort of off the table right now?
No. C-zone is on the table. I view the C-zone as a tremendous asset. We've done lots of improvement on C-zone capital costs and we're continually revising that. We will be spending some money later this year, probably on starting into that C-zone work. It's a very integral part of our life-of-mine for the company if you recall that.
And then just one last one from me, just on the AISC for the next 9 years, how much of that is just sort of going to the lower grade direct mining ore, because you're actually moving ounces from direct mining or into the more the stockpile? Is that half the change, 25% of the change? Just trying to get a delta on what the great impact here is on the AISC.
I don't have those figures in front of me. I can certainly get back to you on those. I would suspect that there's probably a 10% impact on cash costs, and maybe another 10% based upon all-in sustaining cost.
Your next question comes from Steven Butler with GMP Securities.
So Ray, you talked about the overall reserve models works but, of course, you were going to say that you'll have greater tonnage -- 4% more tonnage so I assume, roughly speaking, you'll have a 4% decline in grade. We'll see that in the Tech Report, but is that roughly what we're talking about or is it more than that on grade reductions?
2.5%, I think is the real number is 2.5%. So the average grade I can tell you goes from 1.13% to 1.09% and that includes all of the stockpile and the underground.
We'll look for that. And then the other one, Paula, if you have it, and we'll look for in the Tech Report, but can you let us know if you have it on the top of your mind here the remaining sustaining capital specifically for tailings dam full on completion over the life-of-mine.
Well, we do it -- this -- just to give you an idea of Rainy sustaining capital breakdown. When we gave you the last guidance -- I'll go this year and I'll go forward next year. We were -- when we're at 195 million in terms of the sustaining guidance, we had about 45 million of that was capital, stripping 75 million of that was the TMA and 75 million was other which would be your mill maintenance, your mobile equipment, your -- and small amounts for increasing throughput. Going to the 210 million on the sustaining for 2018, our capital stripping has actually gone down. Our TMA had stayed pretty stable this year at 75 million. There's about 20 million in water treatment and sediment ponds and $85 million is now mill maintenance and mobile equipment that other category. Next year, in terms of the TMA spent, we'll be doing that first -- we'll be doing a lift and that isn't as capital intensive, it's about $20 million. And I would expect the third lift to be -- I would expect the next lift to be and that's in 2022, 2023 and it would be in that same magnitude of capital. It wouldn't be any larger.
Because you said that tailings was the main culprit for the large increase in the ASIC circuits and the main reason for the -- I guess it was sequencing and costs that you were driving the $282 million. It wasn't necessarily tailings dam lift costs necessarily or sequencing and cost structure -- overall cost structure I guess.
It is a combination of those.
Your next question comes from Wayne Lam with RBC Capital Markets.
I think my question has been answered already. I will leave the way for others in the queue.
Your next question comes from Don MacLean with Paradigm.
I waited quite a while just to let everybody to ask their questions. Paula, what is the current book value now for Rainy River? And what was the metal price assumptions in the SEDAR assumption?
So in terms of the carrying value that's down to just under $1 billion, it's actually $995 million right now.
And that's Canadian or American?
That's all U.S.
And how do you calculate that carrying value is that using the 5% discount rate?
4.5%, Dan.
And that just carrying on from Steve's question about the sustaining CapEx, in the Q1 we were told 2019 might be a $100 million all-in and then it would drop to $50 million going forward. Is that profile still pretty similar?
I think, if you were -- if you were to give a profile with all of the changes in terms of the spending the extra money, we are just putting it in different areas like sediment ponds and that. After 2018, which is the $210 million on sustaining, I'd say, 2019 is more in the $150 million range than $100 million and that include -- that it would include the first lift. And in 2020, underground becomes part of the sustaining number. So I would say, that would be like in the range of $125 million, $130 million and that would include the open pit, the mill and the underground. And then on an ongoing basis, after that, you get some vacillation depending on lifts and some activity, but it would go between $40 million and $70 million a year. And that's for sustaining side of it.
And then just a couple of questions on the New Afton that Dan touched on for the C-zone, how long will the B-zone and what's the remaining life of the B-zone?
This is Cory. On the A-lift or A-zone that we're on right now is for that mine after 2021. And then the B3 as we call it or B-zone only has about 2-year mine life or 2- to 3-year mine life while we get to -- while we develop to C-zone.
So does that -- Cory, does that give you to sort of the end of 2023 with [indiscernible].
Yes, it will take us out into 2023 and then 2023, 2024 is when C-zone starts ramping up. We've got a plan during that period of time we'll be at little bit lower milling rate than where we're at right now. But we've got a couple of things we could look at as far as is filling that gap to.
So just back to the second quarter, you mentioned that the mill has slowed or was slower. Why was that and how long will that slower milling take place? Are you trying to stretch out the life of the A-zone?
It wasn't really a plan to stretch out the life of the A-zone. What we're doing with operating at 16,000 ounces per day, 16,500 ounces per day is we're stressing the cave a lot. And it caused us some issues with dropped points underneath and things like that. So we slowed down the mining rate a little bit to try to get some cave health back per se. And it's been very successful for us so far. Plus, we've been able to increase recovery of these lower throughput rates.
And that will benefit your grade in the long run?
Yes.
There are no further questions at this time. I will turn the call back over to the presenters.
Well, thank you. Ladies and gentlemen, I certainly appreciate all the questions you put forth to us and please don't hesitate to reach out to us by email and/or phone and we'll be certainly get back to you with any questions may have. Thank you again.
This concludes today's conference call. You may now disconnect.