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Growing Our Communities

We foster open communication with residents and community leaders, from a project’s earliest development phase, through the mine’s life and after closure.

Our goals are to understand the impacts of our operations on local communities, to be a catalyst for increasing quality of life, and to contribute to sustainable development within our host communities. We believe that it is important to thoroughly understand the people, their histories and their aspirations, as well as their needs and concerns, so that we can truly engage and contribute to healthy communities and long-term social, cultural and economic development.

Our people become involved at every level – with local and regional government, business, schools, healthcare and recreational organizations. We actively participate in community organizations, host community events, and seek to connect with people’s priorities and concerns.

Our economic contributions benefit communities and regions in many forms. There are taxes and royalties, but equally important is the impact of the salaries brought home by hundreds of employees and contractors, the vast majority of whom are from the host communities. In addition, whenever it is practical, we strive to source our services and supplies locally. Local communities often benefit from improvements that our operations make to roads, water, energy and network infrastructure, as well as to area schools and health facilities.

Scorecard 3: Community Engagement and Development

2013 Targets
Performance
2014 Targets

Formalize and implement engagement and communications plans at all sites.

Achieved

Engagement plans have been formalized at all sites.

All operations’ engagement plans to achieve substantial compliance with newly created Community Engagement and Development Management Standards.

Formalize external grievance procedures at Blackwater project.

Achieved

A complaint mechanism has been formalized at Blackwater.

All operations’ grievance mechanisms to achieve substantial compliance with newly created Community Engagement and Development Management Standards.

Continue to implement the Cerro San Pedro Sustainable Development Program.

Work with Blackwater Community Liaison Committee to identify opportunities for maximizing local economic impacts.

Achieved

The Cerro San Pedro Sustainable Development Program continued through 2013.

The Blackwater Community Liaison Committee

was instrumental in identifying opportunities for maximizing local economic impacts.

Initiate the Cerro San Pedro Responsible Closure Program, including a collaborative process with local communities to identify priorities for community development.

Community Engagement

At New Gold, community engagement begins while a project is in the exploration and development stage, and continues through the mine’s life and after closure. Our engagement activities are guided by our Community Engagement and Development Standards that are compliant with several standards and guidelines including the Mining Association of Canada’s Towards Sustainable Mining (TSM) protocol on Aboriginal and Community Outreach. Our Community Engagement and Development Standards guide us to identify our communities of interest, effectively engage and maintain dialogue, maintain a feedback mechanism and report on performance. Most operations produce their own sustainability reports, which are distributed locally and often presented in community meetings.

New Gold sites share information regarding operations and upcoming activities with local residents and other communities of interest. We use a variety of engagement methods including community presentations, open houses, one-on-one meetings, household visits, letters, media advertisements, and newsletters. All New Gold sites regularly hold open houses and/or provide site tours to a wide variety of educational institutions, regulators, investors and community groups.

Every year, our sites and employee volunteers contribute to numerous cultural events, sports events and community cleanup activities, as well as initiatives to encourage recycling and healthy lifestyles.

Wherever our operations interact with Indigenous peoples, we endeavour to understand and respect traditional values, customs and cultures. We take meaningful action to serve their development needs and priorities through collaborative agreements aimed at creating jobs, training and lasting socio-economic benefits. By being committed to regularly hosting meetings with local representatives, New Gold remains connected to host communities to understand their priorities and concerns, which helps to resolve existing or potential issues.

While all of our sites conduct local community engagement, we recognize that there are challenges in this area, and that there remains work to do in implementing it consistently across our sites. We are addressing these issues through the implementation of the Community Engagement and Development Management Standards, which are expected to improve performance as well as consistency across our operations.

Performance in 2013

This year’s major achievement in this area was the development of a Community Engagement and Development Management Standards, which clearly define the requirements for community outreach and community development. As of the end of the year, our operations were more than halfway into the implementation of the new standard’s components. They are expected to be fully implemented in 2014.

In 2013, the issues and concerns consistently brought forward through engagement activities across our sites were: environmental management and stewardship, reclamation, regulatory compliance, labour practices, occupational health and safety, contributions to the local economy, local training and employment and community engagement.

At the Cerro San Pedro Mine, we significantly expanded our community engagement program in 2013. Community meetings and household visits occur regularly in villages in close proximity to the mine site. The community development team carried out community visioning workshops based on the results of a social economic baseline of the municipality completed in 2012. The purpose of these workshops is to identify sustainable economic diversification opportunities for the municipality. These are continuing through 2014.

In 2013, the Office of the Canadian Corporate Social Responsibility (CSR) Counsellor received a request for review related to the Cerro San Pedro Mine. The request was made by a Non-Governmental Organization (NGO) claiming to represent a small group of residents of the Cerro de San Pedro community. New Gold worked closely with the CSR Counsellor and her team to provide all the requested information and to set up a facilitated dialogue with residents as a means to address their stated concerns. New Gold representatives met with representatives of the NGO as a first step toward resolving misperceptions. Despite repeated attempts by the Company, in the fall of 2013 the requesters declined to participate in direct dialogue and the Office of the Canadian Corporate Social Responsibility Counsellor closed the file. New Gold has invited the concerned community members to participate in the regular community engagement meetings held monthly in the community of Cerro de San Pedro. We continue to engage with the residents of Cerro de San Pedro about their concerns and interests through organized monthly meetings and regular household visits.

Feedback Mechanisms

We maintain open channels through which complaints and suggestions can be received and addressed. Only through respectful, mutually beneficial dispute resolutions can we maintain our meaningful, trust-based relationships with our local communities and other communities of interest.

Performance in 2013

Fifteen external complaints were received via our external feedback mechanisms in 2013. New Afton received two complaints about vibration and one about dust. In addition, a neighbour used our feedback mechanism to express concern about groundwater quality near his property. We are addressing the vibration issues with monitoring and third-party assessment to identify opportunities to reduce vibration. A Ministry-approved dust mitigation plan has been implemented which includes chemical dust suppressants, enhanced reclamation work, a meteorological station, and third-party review of monitoring results. In 2013 we commissioned a Tailings Storage Facility dust suppression study to identify opportunities to enhance dust suppression at the site. Regarding groundwater quality, a thorough investigation has determined that groundwater quality issues at the neighbouring property are unrelated to the activities at the mine site as the aquifers are not connected.

Peak Mines received two complaints regarding vibration and one regarding dust. In 2013 the mine engaged a vibration expert to design a vibration predictive tool specific to the site’s conditions. This has allowed blast designers to more accurately design blasts to reduce concerns to neighbouring properties. Peak Mines continues to monitor air quality and work on suppressing potential dust from the operational areas, and results are published regularly on our website.

At Cerro San Pedro we received five complaints through our external feedback mechanism. These complaints were addressed with much consideration. We have completed investigations and management reviews in all cases, and only one case needed corrective actions. One complaint was related to inappropriate employee behaviour outside of the mine site; another was in relation to improper waste disposal; three were associated with a perceived lack of employment opportunities to the communities in close proximity to the mine site. At Cerro San Pedro, approximately 50% of the employees are from the 13 small communities that make up the municipality of Cerro de San Pedro – where the mine is located – and the other half are from San Luis Potosí, the state capital city, located about 20 kilometres from the mine site.

At Blackwater, four complaints were received related to overlapping or neighbouring tenures, which is commonplace in the jurisdiction where the project is located. In one area associated with exploration and overlapping land use (recreational hunting), crews avoided mechanical disturbance for a period of six weeks. Three complaints at the site were related to disturbance to trees, disturbance to cattle grazing areas and unauthorized land disturbance. These complaints were taken seriously and thoroughly investigated. Investigations concluded that survey crews were following adequate standards when clearing vegetation, the activities of another company in grazing areas was mistakenly identified as ours, and that no land had been disturbed by the Company without proper permits.

In addition to complaints filed through our feedback mechanism, there is one ongoing legal challenge associated with water rights at the Cerro San Pedro Mine. We strongly believe the accusation is without merit; this dispute is currently being processed in court.

Formalized External Feedback Process – Complaints Received

SITES 2010 2011 2012 2013
New Afton1 n/a n/a n/a 3
Mesquite2 n/a n/a n/a
Peak Mines 4 4 3
Cerro San Pedro3 n/a 2 9 5
Blackwater4 n/a n/a n/a 41
Total 4 2 13 15
1

Feedback mechanisms put in place in Q4 2012.

2

Feedback mechanisms put in place in Q4 2012.

3

Feedback mechanisms put in place in Q4 2010.

4

Feedback mechanisms put in place in Q4 2013.

Community Development and Economic Impacts

At all times, we strive to leave a positive legacy for our host communities. This commitment to local socio-economic sustainability is demonstrated in the opportunities we create for local employment, the investments we make in community infrastructure projects and local scholarships, through facilitating local entrepreneurship, as well as capacity building and economic diversification projects. Socio-economic impact assessments have been completed or are currently being carried out at five of our sites and have been a useful tool for understanding challenges as well as opportunities within our host communities.

Local procurement and employment are key elements of the New Gold Community Engagement and Development Management Standards. We strive to hire locally, and engage local services and suppliers whenever it is practical. This is a powerful tool for creating direct and indirect economic benefits for local communities. In addition, hiring and purchasing locally makes good business sense. For example, at Cerro San Pedro, our safety vests and sun hats are sourced from an independent seamstress living in the community of Cerro de San Pedro. At Blackwater, the boxes we use for storing our core samples have been manufactured by a local First Nations business.

All New Gold sites continually seek opportunities to support community organizations and activities with a focus on skills development, and to encourage local entrepreneurship to promote diversified, sustainable economic prosperity. Our sponsorships and donations support education, health and wellness, economic diversification, job creation and food banks. At the corporate level, our Corporate Donations Committee meets on a quarterly basis to review requests, with a priority on health, environment, education and community development investments.

Performance in 2013

In 2013, New Gold generated significant direct and indirect economic value in our host communities. Payments for employee wages and benefits increased from approximately $180 million in 2012 to approximately $195 million in 2013. Production and property taxes paid to governments were about $35 million.

Over the year, our sites and employees contributed to numerous cultural events, sports events, and community clean-up activities, as well as initiatives to encourage recycling and healthy lifestyles. At Cerro San Pedro, over 60 scholarships were provided to outstanding students at primary, secondary and high school levels.

Our corporate donations and sponsorships dollars supported a range of local environmental and community programs in British Columbia and Ontario. This included, for example, our support to the Clinton Giustra Sustainable Growth Initiative and its micro-enterprise initiatives, Indspire, the Heart and Stroke Foundation, BC Children’s Hospital, KidSafe, Spinal Cord Injury Ontario, Nature Conservancy of Canada, the United Way, and BC MineralsEd. This year, we have also provided financial support to a new and innovative research program by the Canadian Institute for Health Research – the Pathways to Health Equity for Aboriginal Peoples program, designed to address the health inequities between Aboriginal and non-Aboriginal peoples in Canada. Across the corporation, we invested approximately $4 million in community projects, donations and sponsorships in 2013.

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

 
2012
2013
Revenues
791.3
779.8
Operating costs2,3
836.6
479.5
Employee wages and benefits (includes payroll taxes paid to governments)
180.2
194.7
Payments to providers of capital (interest paid and standby fees)4
22.0
52.3
Payments to governments (property, production and income taxes)5
103.0
34.65
Community investments6
4.2
3.6
1

Unaudited figures. Additional information on economic values, and site-specific economic value generated, are disclosed in our Annual Financial Review available on our website.

2

Payments for materials, products and services. Also includes $20.6 million in exploration and business development expenditures. The decrease in the costs for 2013 was due to the extensive capital costs occurring in 2012 to move New Afton from a development project to an operational mine in mid-2012. In addition, in 2013 there were extensive capital expenditures at Blackwater related to exploration and infrastructure-related expenditures.

3

A total of $2.4 million in property taxes and production taxes had been included in operating costs in 2012; these have been reclassified into payments to governments in 2012 and 2013.

4

In 2012 New Gold had to make only one interest payment in relation to senior unsecured notes issued in 2012. In 2013, New Gold had to make a full year’s worth of payments.
Total income tax paid in calendar year 2013 was $31.7 million compared to $100.6 million in 2012. The main reasons for the reduction in income taxes paid was a result of lower profitability at the Cerro San Pedro Mine and the Mesquite Mine due to lower commodity prices as well as an increase in operating costs. Additionally, New Gold received non-recurring tax refunds in Australia as a result of amending prior year tax returns and also received non-recurring tax incentive credits in Canada all of which combined resulted in overall lower net income taxes paid in 2013.

5

By country: $32.5 million to Mexico, $6 million to Canada, and $0.46 million to the U.S. government. New Gold received tax refunds in Australia as a result of amending prior year tax returns.

6

As defined in the GRI 3.1.EC1 Protocol. Expenditures for voluntary donations and investment of funds in the broader community where the target beneficiaries are external to the company. These include contributions to charities, NGOs and research institutes (unrelated to the Company’s commercial research and development), funds to support community infrastructure and direct costs of social programs. Include sites as well as corporate offices’ community investments.

Working with Aboriginal Communities

At New Gold we are proud of our positive relationships with Aboriginal communities. New Gold has not, in its history, recorded any incidents of violations of rights of Indigenous peoples at any of our sites. In Canada, we have been recognized for excellence in Aboriginal relations and as an advocate for entrepreneurship and economic development within Aboriginal communities.

Performance in 2013

The New Afton Mine enjoys a positive relationship with the Stk’emlúpsemc te Secwépemc Nation, which represents the two First Nations (Skeetchestn Indian Band and Tk’emlúps te Secwépemc Band) in whose asserted traditional territory the mine site is situated. The Participation Agreement with the Tk’emlúps and Skeetchestn Bands, which was signed in 2008 and amended in 2011, has been instrumental in guiding discussion and providing input and oversight in the areas of environmental stewardship, business opportunities, employment, education and training and socio-economics. The Agreement is a partnership that is managed through respectful dialogue and ongoing information sharing between multiple levels of management on both sides. This collaborative, multi-tiered approach ensures that the communities within the Agreement benefit economically, while safeguarding their environmental and cultural interests.

To ensure our Aboriginal partners can participate and provide feedback with regard to environmental management at New Afton, an Environmental Monitoring Board made up of First Nations partners and regulators was also established to provide input with regard to all aspects of environmental planning, projects and performance.

2013 was the New Afton Mine’s first full year in operation, thanks in part to our Participation Agreement. In addition to direct payments from New Gold, the Tk’emlúps and Skeetchestn Bands received their first royalties from the BC government (representing a portion of the mining taxes that we pay the province).

At New Afton, the value of Aboriginal contracts and services in 2013 totalled approximately C$17 million, compared to approximately C$14 million in 2012. New Afton is currently working to expand on the scope and the scale of opportunities for local First Nations businesses through the employment of a full-time Economic Development officer.

Our new Rainy River project is located near several Aboriginal communities, including 15 First Nations bands and the local Métis Nation of Ontario community council. To date, we have succeeded in signing Participation Agreements with six of the First Nations bands, a Memorandum of Understanding (MOU) with another First Nations band and an MOU with the Métis Nation of Ontario. Discussions have been initiated and remain ongoing with the remaining bands.

At Blackwater, we have three Exploration Agreements, three Environmental Assessment Capacity Funding Agreements and are engaging with all First Nations involved in the project. These positive relationships have already facilitated considerable employment and contracting opportunities, including multimillion-dollar contracts providing services in camp drill support, trail construction and support, logging and trail layout, road maintenance, camp install and catering, core box storage racks supply and first aid services. In 2013, the Blackwater project generated over C$2.5 million in Aboriginal contracts, including joint ventures.

Local Employment, Education, Training and Development

Education and training of local community members is key to our policy of striving to hire locally, and sourcing services and supplies from nearby. In communities where the required skill sets and/or work experience are in short supply, we provide funding for education and training. We also offer numerous apprenticeship programs to help young workers on their path to a career in mining. In British Columbia, for example, our support for the Underground Miner Training Program and founding support for the Aboriginal Mentoring & Training Association have resulted in many local Aboriginal residents beginning successful careers in the industry.

Performance in 2013

Both Blackwater and New Afton averaged 23% Aboriginal employees in 2013.

In 2013, New Afton became a sponsor of the Adult Basic Education program for the Skeetchestn Indian Band and Tk’emlúps te Secwepemc Band. Sponsorship includes financial contributions in addition to donations of computers and classroom furniture. We believe that this program will allow more local band members to achieve their education goals. New Afton also granted ten post-secondary scholarships during 2013 to band members to allow them to continue to pursue higher education.