New Gold hits 12-year high, driven by record quarter from Rainy River

[Ben Graham]

New Gold (TSX, NYSE-A: NGD) soared to its highest in more than a decade on Wednesday after delivering a strong third quarter, marked by the best-ever production at its Ontario mine, placing the Canadian miner on track to meet its guidance.

The Rainy River mine, located 65 km northwest of Fort Frances near the US border, produced 100,301 oz. of gold during the three-month period, a 63% increase over the second quarter and a new all-time record. Accompanying this production was a significant decrease (39%) in its all-in sustaining costs.

Its other operating asset, New Afton, added another 14,912 oz. of gold output, taking the company’s consolidated third quarter production to 115,213 oz. The mine, located 10 km west of Kamloops, British Columbia, mainly produces copper, with 12 million lb. of production in Q3.

New Gold extends life of New Afton, Rainy River mines

In its press release, New Gold noted that the quarter’s production helped to generate a record free cash flow of US$205 million, of which $183 million came from Rainy River. This helped to boost the company’s balance sheet, exiting the quarter with cash and cash equivalents of $123 million, it said.

“The performance from our two assets led to a record $205 million of free cash flow, a 225% quarter-over-quarter improvement over our previous record last quarter,” Patrick Godin, president and CEO, stated, adding that it allowed the company to advance its corporate objectives.

“We repaid, one quarter ahead of plan, the full $150 million drawn on the credit facility for the New Afton transaction earlier this May. In total, the company repaid an impressive $260 million of debt obligations during the quarter,” he said.

New Gold rose to as much as C$10.59 a share in Toronto — its highest in 12 years — on the strong Q3 results. By afternoon, it traded 14% higher at around C$10 apiece for a market capitalization of C$7.9 billion ($5.7 billion).

Guidance on track

With the Q3 results, New Gold said it expects to meet its 2025 production guidance, ranging between 325,000-365,000 oz. for gold and 50-60 million lb. for copper. Through the first nine months, its production for both metals stood at approximately 70% of the midpoint of their respective guidance range, the company noted.

Production at Rainy River is expected to be above the midpoint of its guidance of 265,000-295,000 oz., while New Afton’s gold production is expected to fall in the middle of its 60,000-70,000 oz. guidance range. Copper production at New Afton is also expected to be at the mid-point.

Meanwhile, all-in sustaining costs are trending at the high end of the company’s guidance range of $1,025-$1,125/oz. sold, and would include a higher share-based expense of $75/oz. year-to-date due to an increase in the company’s share price, New Gold said.