Contributing to Sustainable Community Development

At New Gold, we aim to understand our host communities priorities so that we can better contribute to local sustainable economic development. Our contributions benefit communities and regions and come in many forms. We pay taxes and royalties directly to governments, and the salaries earned by hundreds of employees and contractors, mostly from the host communities, have an indirect, yet significant, impact on local communities.

To assist us in better understanding the indirect benefits provided to the communities where we operate, we initiated a series of independent third-party studies. In 2012, we commissioned a study of the economic impacts of the Cerro San Pedro Mine on the state and national economies; in 2015, an independent third party evaluated the potential economic and social impact of the Rainy River project to the region, followed by a similar assessment for our sites in British Columbia.

Hiring and training local people is one of the ways we contribute to local economies. Our New Afton, Rainy River and Blackwater sites are great examples of building local capacity among our local Aboriginal communities and local community members, so that we are able to employ an engaged and skilled mining workforce. We support training and employment of local Aboriginal people with internal training programs. At Rainy River, the construction period is being used to train employees for long-term operations.

New Gold’s procurement processes provide opportunities to local suppliers and Aboriginal communities. For example, at Rainy River, to date, over $400 million in contracts have been awarded to Indigenous companies or joint ventures.

All New Gold sites continually seek opportunities to support community organizations and activities – for example, by promoting skills development, encouraging local entrepreneurship and improving environmental stewardship. Our sponsorships and donations support education, health and wellness, economic diversification, job creation, food banks and environmental conservation initiatives. In some cases, we make investments in community infrastructure with long-term benefits, such as roads, and health and education facilities. At the corporate level, our Donations Committee meets on a quarterly basis to review requests from community organizations focused on health, environment, education and community development investments.

In addition to providing financial support to organizations, we have a Corporate Volunteer Committee to organize volunteer events in Toronto, where our head office is located. This past year, we coordinated events where our employees were able to help with tasks such as food preparation and participating in recreation activities with clients from a local mental health agency.

Performance in 2016

In 2016, New Gold generated significant direct and indirect economic value in our host communities. We also worked hard to maximize local and Aboriginal participation in our workforce and supply chain. The following provides the highlights of our direct and indirect economic contributions to the communities where we work:

  • New Gold paid over $15 million in production and property taxes, income and other corporate taxes and royalties.
  • Payments for employee wages and benefits in 2016 were over $160 million. We invested $7.4 million in community initiatives, including infrastructure, scholarships, economic diversification projects, environmental conservation, and other donations and sponsorships.
  • Our sites collectively invested about $0.6 million in local infrastructure development in local communities.
  • More than $190 million of our 2016 expenditures were made locally, and our international suppliers accounted for about 7% of our procurement spending. Of the Rainy River payments for services and supplies, approximately 29% were to local businesses controlled by Aboriginal groups.
  • On December 31, 2016, 80% of Rainy River employees were from local communities and 36% were Aboriginal. At New Afton, 79% of employees were local and 25% were Aboriginal. At Blackwater, 65% of employees were local. The success in local hiring at these sites is attributed to information sessions, career fairs, and our collaborative work with local employment agencies.
  • Our sites collectively provided almost $37,000 in scholarships, which benefited 93 community members – a combination of support to elementary to post-secondary students.

Economic Values Generated and Distributed ($ millions)1 – Includes all New Gold sites

Economic values 2014 2015 2016
Mineral revenues 726.0 712.9 683.8
Expenditure for materials, products and services2 539.3 689.8 790.3
Exploration expenditures3 7.3 4.0 7.4
Employee wages and benefits (includes payroll taxes paid to governments) 175.9 137.4 160.3
Payments to providers of capital (interest paid and standby fees) 52.3 52.3 55.3
Payments to governments4 (royalties, property, production and income taxes) 5.5 26.65 15.56
Community investments7 5.1 7.3 7.4
1.

Unaudited figures. Additional information on economic values, and some site-specific data, is disclosed in our Annual Financial Review available on www.newgold.com.

2.

These figures include operational as well as capitalized expenditures. Does not include exploration expenditures. Previous reports did not include capitalized expenditures under this line item and therefore 2014 and 2015 figures have been revised in this report.

3.

Excludes corporate business development.

4.

Includes production and property payments, income and other corporate taxes, and royalties paid to governments. Also includes taxes paid on the sale of the El Moro property in Chile.

5.

Includes $25.2 million of taxes paid from the sale of the El Morro property.

6.

By country, payments to governments at all levels in 2016 were $5.7 million in Canada, $1.3 million in the U.S., $18.9 million in Australia and a recovery associated with an income tax refund of $1 million from Mexico. Includes $0.9 million of taxes paid to Chile from the sale of the El Morro property. Discrepancy between this figure and the figures disclosed through Extractive Sector Transparency Measures Act (ESTMA) result from the latter not taking into account tax refunds and including payments for government fees and permits, which are not included here.

7.

Expenditures for voluntary donations and investment of funds in the broader community where the target beneficiaries are external to the company. Includes payments associated with participation agreements, contributions to charities, NGOs and research institutes, payments made through participation agreements, funds to support community infrastructure, and direct costs of social programs and direct community development activities for all our sites as well as corporate offices.

New Gold supports many charitable organizations through donations and sponsorships. While our sites support local community groups and projects focused on their regional areas, New Gold’s corporate office supports groups that may have a broader reach. Our recipients in 2016 included Indspire (Indigenous Students Sponsorship), the Canada Breast Cancer Foundation, the Pacific Salmon Foundation, the Breakfast Club Canada, the Mosaic Institute and variety of community-based organizations such as the Toronto SickKids Hospital, BC Children’s Hospital, and Dress for Success.

About Our Supply Chain

At New Gold, we understand that responsible supply chain management is a key generator of business value and an important element of strong corporate responsibility performance. We strive to manage the environmental, social and economic impacts of our supply chain and to create and protect long-term environmental, social and economic value for all involved in our business. New Gold has over 2,000 suppliers across our operations. Our supply chain expenditure in 2016 exceeded $790 million across our mining operations. At our operations, we have approximately 300 suppliers that account for 80% of our expenditures, and tier 1 suppliers (those who provide products directly to the company without using a third party or other manufacturers) account for about 50% of this spending. These tier 1 suppliers include mining contractors, original equipment manufacturers and producers of key commodities and consumables such as mobile equipment; fixed plant, repair, operating and maintenance spare parts; cyanide; explosives; grinding media; drilling tools and consumables; large tires; and chemicals and reagents.

We invest significant resources to ensure our purchasing policies positively affect our host communities by prioritizing local vendors and creating opportunities to develop local businesses and benefit local economies, as well as by promoting responsible and ethical conduct.

Our objective is to develop a cost-effective and sustainable supply foundation by developing relationships with our suppliers, based on the principles of fair competition and integrity. Our approach focuses on ensuring we comply with our commitments and on continuously improving our processes.

2016 Supply Chain Expenditure Profile ($ millions)1

New Afton Rainy River Blackwater Mesquite Peak Mines Cerro
San
Pedro
Total
Local2 9.1 13.5 0.4 30.4 15.4 11.6 80.6
Local Aboriginal spending3 23.8 75.2 0.6 99.4
Regional 17.9 66.2 4.5 23.0 39.5 23.0 174.1
National 26.1 88.5 0.3 76.7 14.9 76.7 252.1
International 3.3 5.9 0.01 3.1 0.1 3.9 16.2
EPCM4 190 190.0
Total 80.6 439.2 5.8 102.1 69.9 115.2 812.4
1.

Figures for Blackwater are not included.

2.

Excludes local Aboriginal contracts shown on following line.

3.

Only Canadian sites track data for this category.

4.

Payments made to suppliers through Engineering, Procurement and Construction Management (EPCM) contractors.

We recognize the equality and dignity of the people we do business with, and we expect ethical behaviour and integrity from our suppliers. We work to develop relationships with suppliers who share our values. The Anti-Bribery and Anti-Corruption Policy introduced in 2015 includes guidance to ensure that key processes are in place to confirm that our suppliers and contractors understand our expectations.

Community Investments1
($ millions)

7255_NewGold_CSR_CommunityInvest
1.

Expenditures for voluntary donations and investment of funds in the broader community where the target beneficiaries are external to the company. Includes payments associated with participation agreements, contributions to charities, NGOs and research institutes, payments made through participation agreements, funds to support community infrastructure, and direct costs of social programs and direct community development activities for all our sites as well as corporate offices.