New Gold swings back into the black as Q1 revenues, cash flow rise

VANCOUVER (miningweekly.com) – Precious metals producer New Gold has performed better than expected during the March quarter, as it benefitted from a higher metal prices and higher gold sales volumes, partially offset by lower copper and silver sales.

The TSX- and NYSE MKT-listed miner reported adjusted net earnings for the three months ended March 31, of $9.4-million, or $0.02 a basic share, compared with an adjusted net loss of $1.5-million, or nil a share in the comparable prior‐year period. Its performance beat the average Wall Street analyst forecast calling for earnings of $0.01 a share.

Revenue was $169.5-million, compared with $154.5-million a year earlier, based on gold sales of 87 304 oz, compared with 86 031 oz in the same period of 2016.

Gold output in the period was 89 327 oz, compared with 90 811 oz in the prior year, as higher output at the Australia-based Peak Mines and US-based Mesquite operations were offset by lower production from New Afton, in Canada, and Cerro San Pedro, in Mexico.

Cerro San Pedro completed active mining in late June 2016 and, has since transitioned to residual leaching, resulting in a planned decrease in gold ounces produced when compared to the prior‐year period. The company indicated that the difference between output and sales was attributable to the timing of sales at the end of the quarter.

Copper output was 23.8-million pounds, compared with 25.4-million pounds a year earlier, reflecting lower copper output at New Afton as lower grades and recovery weighed on production. Copper sales totalled 23-million pounds, compared with 25.3-million pounds a year earlier.

New Gold added 2 000 oz of gold and 800 000 lbs of copper to inventory, which will be sold in the current quarter.

All‐in sustaining costs fell to a record low of $597/oz for the period, driven by a 16% decrease in total cash costs, reflecting higher copper and silver prices on by‐product credits, partially offset by the effect lower copper sales volumes, the company said.

On the back of cost-saving initiatives and hedging 43.7-million pounds of copper output, scheduled for the second quarter of the year, at $2.73/lb, New Gold has lowered its AISC guidance to $760/oz to $800/oz, down from $825/oz to $865/oz previously.

RAINY RIVER UPDATE
Meanwhile, New Gold said it has invested $126-million in the delayed $1-billion-plus Rainy River project, in Ontario, during the first quarter.

The company stated that the project remains on schedule and on budget according to a January 30 update to the development plan.

Mining rates averaged 110 000 t/d, which was in line with the mining plan.

Further, New Gold reported that the Schedule 2 amendment of the Metal Mining Effluent Regulations, required to close two small creeks and deposit tailings that would allow the two creeks in the tailings facility to be closed, is expected in January 2018, previously pencilled in for late summer or early fall. This would have allowed the completion of the dam before the cold-weather months.

New Gold is currently building a starter tailings cell, located within the broader tailings management area, that does not require a Schedule 2 amendment. This will allow it to start operations before completing the Schedule 2 amendment. Based on its location and scale, the starter cell would provide capacity for about six months of tailings.

New Gold confirmed its guidance for full‐year gold output of between 380 000 oz to 430 000 oz, at AISC of $760/oz to $800/oz, which is a $65/oz reduction from the company’s original guidance range of $825/oz to $865/oz.