New Gold issues three-year guidance

New Gold has said that the challenges that have dogged its Rainy River gold mine in Ontario, Canada, are now in the rearview mirror as the company released its first-ever three-year guidance.

"At Rainy River, the challenges are behind us … we are achieving our targets quarter over quarter," said Rainy River GM Gord Simms during a webcast.

The mine produced 253,745oz of gold in 2023, 10% more than in 2022, with production expected to increase over the next three years as higher-grade underground production ramps up to supplement open pit production. Production will grow to 315,000-355,000oz in 2026, which will help drop all-in-sustaining costs (AISC) from about US$1500/oz in 2023 to $1000-1100/oz.

During the period, New Gold's Growth capital is forecast to reduce by 80% from over $160 million in 2023 to about $30 million in s026, while sustaining capital is due to fall by 60% from about $170 million in 2023 to about $60 million in 2026.

At Rainy River, growth capital is forecast to fall from just under $160 million in 2023 to around $80 million in 2026 as capitalised waste stripping ends and equipment capital parts and components decrease, although underground development will increase. The Rainy River underground contributed 10% of production in 2023 and will ramp to 5000-6000tpd by 2027 to produce 150,000-200,000ozpa.

New Afton

Production at New Afton in British Columbia, Canada is forecast to increase about 50% for gold from 67,000oz in 2023 to 95,000-105,000oz in 2026, while copper output will increase 60% from 47,400Mlb in 2023 to 71-81Mlb in 2026. The production growth and copper credits will turn the operations AISC on a by-product basis from $450-550/oz to negative $800-900/oz.

With the production growth, New Gold's overall AISC is forecast to fall 52% by 2026 to around $700/oz, increasing operating margins and cash flow generation. "We are well positioned to deliver significant cash flow. The company is stronger than ever," said New Gold EVP and COO Yohann Buchard.

Growing production and declining costs will also be good for the company's balance sheet, which at the end of the October 2023 quarter included $395.7 million in long-term debt and $214.1 million in current debt.

Reserves

New Gold reported reserves at the end of 2023 at Rainy River of 59.8Mt grading 1.26gpt gold and 3.3gpt silver for 2.4Moz of gold and 6.3Moz of silver at a $1400/oz gold price. At New Afton it had 34.1Mt grading 0.67gpt gold, 1.69gpt silver and 0.73% copper for 3.2Moz of gold, 8.2Moz of silver and 551Mlb of copper.

Shares in New Gold are trading at C$.172, valuing the company at C$1.2 billion.