New Gold poised for better future

New Gold has reported 2023 production of 423,517oz of gold equivalent from its operations in Canada, near the top end of its guidance and a 22% improvement on 2022, although still lagging the annual output achieved in 2018-2020.

A strong December quarter lifted production to 321,178oz of gold, 47.4Mlb pounds of copper and 593,146oz of silver.

New Afton in British Columbia, Canada, saw higher tonnes processed, higher gold and copper grades and higher recovery rates, while Rainy River in Ontario continued to deliver stable production quarter-over-quarter.

"Our strong fourth quarter production results mark our sixth consecutive quarter of delivering to our plan, with a 7% increase in gold equivalent production over the prior year," said New Gold chief executive Patrick Godin.

Godin said stable performance and progress on growth initiatives will pave the way to a good 2024. "I expect 2024 to be transformational for our company and position us well to increase production at decreasing costs and significantly less capital spend, allowing us to maximise our free cash flow generation in the years to come," he said.

New Gold said its capital spending is expected to taper off significantly upon completion of its growth projects and open pit waste stripping at Rainy River after 2024.

At Rainy River, phase 4 of the open pit waste stripping activities are expected to significantly decrease after 2024. Meanwhile, its underground Main Zone is on track for first production in the December quarter. At New Afton, C-Zone production commenced at the end of September 2023 with commercial production on track for the second semester.

2023 results

The company aims to release its 2023 financial results after market close on February 13, with analysts keen to see its progress in bringing down its costs and whether it will record its first quarterly net profit since the December quarter of 2021.

New Gold reduced its all-in sustaining cost to US$1477/oz in the September quarter from $1657/oz in the June quarter. Both quarters resulted in narrow net losses of $2.7 million and $2.6 million, respectively.

Profitability would also enable the company to address its debt. The company last made a meaningful debt payment in early 2022, since when its long-term debt has remained at just under $400 million, which is due in 2027, while its short-term debt has crept over $200 million. New Gold also has an undrawn $400 million revolving credit facility available.

Shares in New Gold are trading at C$1.84, valuing the company at C$1.3 billion.