New Gold eyes March for Teachers buyback
Cash flow improves as production increases
New Gold has reported a net loss of US$64.5 million on revenues of $786.5 million, slightly less than the $66.8 million loss in 2022, as production jumped to 423,500oz in 2023 from 347,000oz in 2022.
Higher production saw the company's all-in sustaining cost fall to $1545/oz in 2023, 15% less than the $1818/oz achieved in 2022.
The company ended 2023 with $186 million in cash and a total liquidity of $559 million, including a $373 million in undrawn credit facility and debt of $396 million.
"We are incredibly well-positioned to achieve our strategic outlook to at least 2030", chief executive Patrick Godin said during the company's results conference call.
New Gold has guided production of 250,000-280,000oz in 2024 from its Rainy River gold mine in Ontario, Canada, weighted to the second semester. At New Afton in British Columbia, Canada, it guided 60,000-70,000oz of gold and 50-60Mlb of copper in 2024.
OTPP
The company expects to make a decision in the June quarter as to whether it will exercise its option to re-acquire 100% of New Afton from Ontario Teacher's Pension Plan (OTPP).
New Gold entered into a strategic partnership with OTPP in February 2022 that saw OTPP acquire a 46% free cash flow interest in New Afton with an option to convert its interest into a 46% joint venture interest in four years or have their interest remain as a free cash flow interest at a reduced rate of 42.5%, for upfront cash proceeds of $300 million.
New Gold can repurchase the interest at the greater of an agreed-upon internal rate of return to OTPP and the fair market value of the free cash flow interest at that time, regardless of OTPP's exercise or intention to exercise its JV interest option. The buyback option allows New Gold to re-acquire 100% exposure to New Afton's cash flows. The four-year anniversary comes due at the end of March, and there is a 60-day window after that to make a decision.
SVP and CFO Kevin Murphy said the company will seek to safeguard its liquidity. The due date on its $400 million of bonds is July 2027.
Shares in New Gold are trading at C$1.61, valuing the company at C$1.1 billion.
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