Contributing to Sustainable Community and Regional Development

The socioeconomic benefits at the local, regional, and national scale associated with mining activities are the counterbalance to the environmental risks and impacts discussed throughout this report. Quality of life and social well-being require the economic security that comes with industrial development. As a result of this balancing act and the recognition that the people closest to our operations are the ones who are most acutely aware of- and potentially affected by- the impacts of our operations, we prioritize these same people when it comes to providing economic opportunities and benefits.

Description of Impacts

Our business stimulates the local and regional economies surrounding our projects and mines. We pay taxes and royalties directly to governments, which in turn is often used to build and maintain critical infrastructure such as roads, schools, and hospitals. The salaries and revenues earned by our several hundred employees, contractors, and suppliers – who mostly originate from areas near our operations – have direct and significant positive impacts on local and regional socioeconomic conditions. We also directly contribute to local communities through our community investment program. Indirect economic impacts often include the development of local and regional infrastructure.

Management Approach

At New Gold, we aim to understand our host communities’ priorities so that we can better contribute to the sustainable economic development of the local area. In addition to engaging with communities to understand their needs and priorities, we commissioned three independent studies that were completed by economic development specialists in the past several years, focused on Cerro San Pedro, Rainy River, and New Afton mines. The findings from these studies inform our approach to understanding and leveraging opportunities to maximize sustainable economic development of the areas around these mines.

Training and Employment

Hiring and training local people is one of the major ways we contribute to local economies. We support training and employment of local Indigenous Peoples with internal training programs. Our New Afton, Rainy River and Blackwater sites are great examples of building local capacity among local First Nations and Métis communities, as well as other non-Indigenous local community members, which allows us to source a significant portion of the workforce we need from these same communities.

At Rainy River, the construction period provided a great opportunity to train employees for long-term operations. The construction phase involved significant expenditures and it was a priority for New Gold to maximize the proportion of spend allocated to Indigenous companies. During 2017, at our Rainy River site, $64 million (22% of our direct total procurement spending) went to First Nations and Métis-owned companies, including joint ventures. At New Afton, $25 million (28% of our direct total procurement spending) went to First Nations companies and joint ventures. See the Working with Indigenous Communities tab for further information on our approach to prioritizing benefits for local Indigenous communities.

Looking forward, we plan to roll out the New Gold Local Procurement Standard at Canadian sites. The Standard will provide clarity and consistency regarding procurement practices across our sites.

Economic Values Generated and Distributed ($ millions)1
Economic values 2015 2016 2017
Mineral revenues 712.9 683.8 774.9
Expenditures for materials, products and services2 689.8 790.3 833.8
Exploration expenditures3 4.0 7.4 8.7
Employee wages and benefits (includes payroll taxes paid to governments) 137.4 160.3 196.3
Payments to providers of capital (interest paid and standby fees) 52.3 55.3 63.7
Payments to governments4 (royalties, property, production and income taxes) 26.6 15.5 32.05
Community investments6 7.3 7.4 16.0
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.

3.

Excludes corporate business development and wages.

4.

Includes production and property payments, income and other corporate taxes, and royalties paid to governments.

5.

By country, payments to governments at all levels in 2017 were $5 million in Canada, $14 million in the U.S., $11 million in Australia and $2 million from Mexico. Any 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.

6.

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 and impact benefit agreements, contributions to charities, NGOs and research institutes, 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. The significant increase in 2017 is due to issuance of shares for First Nations and Métis associated with the achievement of various milestones at the Rainy River Mine.

 

Community Investments

At New Gold, we consider Community Investments to be donations, sponsorships and/or other investments and payments made through Participation Agreements and Impact Benefit Agreements.

New Gold supports many organizations through donations and sponsorships. Our corporate Donations Committee meets on a quarterly basis to review requests from community organizations. Our sponsorships and donations support education, health and wellness, economic diversification, job creation, food banks and environmental conservation initiatives.

All New Gold sites continually seek opportunities to support community organizations and activities by, for example, promoting skills development, encouraging local entrepreneurship, and improving environmental stewardship. In some cases, we make investments in community infrastructure with long-term benefits, such as roads, and health and education facilities.

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 and sponsors relevant industry, educational and professional organizations’ events. Following the earthquakes in Mexico City and surroundings in September 2017, New Gold doubled the donation made by our Cerro San Pedro Mine to the Mexican Red Cross in support of the UNICEF Canada Earthquake Relief Fund. Other recipients of New Gold corporate donations in 2017 included Indspire, the Breakfast Club, Mining4Life and Special Olympics BC.

2017 Economic Contributions Performance Spotlight

  • Across all sites, New Gold paid over $32 million in production, property, income and other corporate taxes and royalties.
  • Payments for employee wages and benefits in 2017 were over $196 million, a significant increase from about $160 million in 2016 and $137 million in 2015. This is mostly because of the significant efforts in building Rainy River in 2017.
  • We invested $16.8 million in community initiatives – almost $10 million more than 2016 as a result of commitments from agreements with First Nations and Métis communities at Rainy River. These investments also included infrastructure projects, scholarships, economic diversification projects, environmental conservation, and other donations and sponsorships.
  • Our sites collectively invested about $764,000 in infrastructure development in local communities.
  • Several infrastructure investments were completed in 2017 around Cerro San Pedro, including the La Zapatilla community access road.
  • More than $170 million of our 2017 expenditures were made locally, and our out-of-country suppliers accounted for about 2.5% of our procurement spending.
  • As of December 31, 2017, 70% of Rainy River employees were from local communities, and at New Afton, about 75% of employees were local.

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.

We invest significant resources to ensure our purchasing policies positively impact New Gold’s Indigenous and non-Indigenous host communities by prioritizing local vendors and creating opportunities to develop local businesses, as well as 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.

New Gold has over 2,000 suppliers across our operations. Our supply chain expenditure in 2017 exceeded $833 million across our mining operations. We expect ethical behaviour and integrity from our suppliers, and work to develop relationships with suppliers who share our values. Our Anti-Bribery and Anti-Corruption Policy provides clear guidance internally to ensure key checks to confirm that our suppliers and contractors understand our expectations are in place.

2017 Supply Chain Expenditure Profile ($ Millions)
New Afton Rainy River Blackwater Mesquite Peak Mines Cerro
San
Pedro
Total
Local1 9.9 20.3 0.3 28.7 20.1 1.7 81.0
Local Aboriginal2 25.1 64.3 0.5 84.9
Regional 25.2 77.6 4.9 21.5 55.7 9.5 194.4
National 27.1 117.8 0.4 56.0 16.3 38.8 256.4
International 3.3 10.4 0.1 0.5 1.5 15.8
Total3 90.6 290.4 6.2 106.7 92.1 51.5 637.5
1.

Excludes local Aboriginal contracts shown on following line.

2.

Only Canadian sites track data for this category.

3.

Total excludes the EPCM figure.

Community Investments1
($ millions)

Community Investments bar graph
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.