New Gold Inc ((TSE:NGD)) has held its Q4 earnings call. Read on for the main highlights of the call.
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New Gold Inc’s recent earnings call painted a positive picture, highlighting significant achievements in cost management, project milestones, and financial performance. Despite facing some production challenges, the overall sentiment was optimistic, buoyed by future growth projections and anticipated cost reductions.
Achievement of Key Project Milestones
New Gold Inc celebrated critical advancements in its projects, notably at New Afton, where commercial production at the C-Zone was successfully attained, and the crusher and conveyor systems were commissioned. At Rainy River, the first development ore from the underground Main Zone was mined, all within budget and ahead of schedule, signaling effective project management and execution.
Strong Financial Performance
The company demonstrated robust financial health, reporting over $390 million in cash flow from operations and $85 million in free cash flow. Notably, the fourth quarter revenue reached a record $262 million, with net earnings of $55 million, underscoring the company’s strong financial footing.
Improvement in Cost Management
New Gold Inc achieved remarkable improvements in cost management, with consolidated all-in sustaining costs dropping to $1,018 per ounce, a 15% decrease from the previous quarter. New Afton, in particular, achieved an all-in sustaining cost of negative $540 per ounce when considering copper credits, showcasing efficient cost control measures.
Projected Growth and Cost Reduction
Looking ahead, the company projects a substantial increase in gold production by 30% and copper production by 90% over the next three years. Additionally, New Gold Inc anticipates a 64% reduction in consolidated all-in sustaining costs by 2027, reflecting a strategic focus on growth and cost efficiency.
Gold Production Miss
Despite the strong cost management, there was a slight miss in gold production compared to updated guidance. This was attributed to some operational challenges that impacted the production targets.
Mechanical Downtime at Rainy River
Gold production in the fourth quarter was affected by unexpected mechanical downtime on the crushing conveyance system at Rainy River in December, which posed a temporary setback to production efficiency.
Forward-Looking Guidance
During the earnings call, New Gold provided an optimistic outlook for 2025, reporting significant accomplishments and setting ambitious targets. The company expects to increase gold production to a midpoint of 410,000 ounces by 2027, with copper production projected to rise to 405 million pounds. Furthermore, they anticipate reducing all-in sustaining costs to $400-$500 per gold ounce by 2027 and generating over $1.7 billion in free cash flow within three years. The company plans to continue exploring opportunities and managing capital expenditures efficiently to sustain free cash flow generation.
In summary, New Gold Inc’s earnings call conveyed a positive sentiment, highlighting strong financial performance, successful project milestones, and a strategic focus on growth and cost reduction. Despite some production challenges, the company’s forward-looking guidance suggests a promising trajectory, driven by increased production and efficient cost management strategies.
