New Gold Inc ((TSE:NGD)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for New Gold Inc. presented a mixed sentiment, highlighting both achievements and challenges. The company reported significant progress in safety metrics, cash flow generation, and financial flexibility. However, it also faced difficulties with decreased gold production, high all-in sustaining costs at Rainy River, and a net loss for the quarter.
Improvement in Safety Metrics
New Gold Inc. reported a remarkable improvement in its safety metrics, achieving a total recordable injury frequency rate of 0.55. This marks a 40% improvement compared to the first quarter of the previous year, showcasing the company’s commitment to maintaining a safe working environment.
Solid Cash Flow Generation
The company generated over $107 million in cash flow from operations and $25 million in free cash flow. Notably, New Afton contributed $52 million to the free cash flow, demonstrating the strong cash-generating capabilities of its operations.
Successful Refinancing and Financial Flexibility
New Gold successfully refinanced its senior notes to 2032 and extended its revolving credit facility to 2029 at lower rates. These strategic financial moves have enhanced the company’s financial flexibility, positioning it well for future growth.
Completion of Critical Path Items
The company achieved significant milestones in its critical path projects, including over 50% completion in cave construction at New Afton and a pit portal breakthrough at Rainy River. These developments are crucial for the company’s long-term operational success.
Exploration and Development Progress
Exploration efforts at New Afton and Rainy River are advancing well, with plans to define K-Zone resources by year-end. The company continues to focus on underground development, which is expected to contribute to future growth.
Decreased Gold Production
Gold production decreased compared to Q1 2024 due to planned lower feed grades, with production totaling approximately 52,200 gold ounces. This decline poses a challenge for the company as it seeks to meet its production targets.
High All-In Sustaining Costs at Rainy River
Rainy River’s all-in sustaining costs were high at $2,758 per ounce during the quarter. However, these costs are expected to trend lower as production ramps up, which could improve the company’s cost structure in the future.
Net Loss in Q1
New Gold recorded a net loss of approximately $17 million, or $0.02 per share, during the first quarter. This financial setback highlights the challenges the company faces in balancing its operational costs and revenues.
Forward-Looking Guidance
Looking ahead, New Gold provided comprehensive guidance for the first quarter of 2025. The company aims to continue improving its safety metrics and operational efficiency. It anticipates substantial free cash flow and mine life extension opportunities, particularly with the consolidation of its interest in New Afton. The company remains focused on maintaining financial flexibility and achieving its production guidance.
In summary, New Gold Inc.’s earnings call reflected a blend of positive achievements and ongoing challenges. While the company has made significant strides in safety, cash flow generation, and financial flexibility, it must address issues related to gold production and cost management. Investors will be keen to see how New Gold navigates these challenges and capitalizes on its strategic initiatives in the coming quarters.