PROFIT & LOSS

COVID-19 rains on New Gold's Q1 parade

A 12-day suspension of mining at New Gold’s Rainy River mine, on account of COVID-19-related restrictions, has deepened the company's March-quarter headline loss.

New Gold has resumed mining at Rainy River, in Ontario, following a temporary pandemic-related shutdown during the March quarter

New Gold has resumed mining at Rainy River, in Ontario, following a temporary pandemic-related shutdown during the March quarter

The company saw a 16% year-on-year slide in gold-equivalent output during the period to 103,435oz, the result of the northwest Ontario asset producing 16% less gold at 66,790oz and a 5% drop in copper production at 18.5 million pounds.

Rainy River was shut down for 12 days from March 20 to allow the local workforce to self-isolate, and operations resumed on April 3 with a gradual ramp-up ongoing. CEO Renaud Adams said on a call Wednesday the mine now averaged 100,000t/d, or about 70% of productivity prior to the shutdown.

Adams said the focus was now on how quickly the company could get back to full production to avoid having to substitute mined ore with more than planned lower-grade material from stockpile during the current quarter, hence the reason for suspending its annual production guidance.

The adjusted loss was US$18 million, or 3c per share, compared with a loss of $2 million, or nil per share a year earlier. Analyst consensus was looking for a loss of 1c per share.

The net loss for the quarter was $28 million, or 4c per share, compared against the loss of $13 million, or 2c, in the same period of 2019.

Revenues dropped 15% year-on-year to $142.3 million, compared with $167.9 million in the prior-year quarter, which the company attributed to lower gold and copper sales volumes because of the mine suspension. The company said sales volumes in the prior-year period were 10% higher than production because of the timing of shipment and sales.

New Gold reported a higher average realised gold price for the quarter at $1,458/oz, compared with $1,301/oz a year ago, while the average copper price fell 8% to $2.56/lb, from $2.79/lb in the comparable year-earlier period.

Adams said a great deal of effort had gone into repositioning New Gold over the past 12-18 months.

"We're now on a clear path forward to achieve operational profitability and growing free cash flow and closing of our recent strategic [$300 million] deal with the Ontario Teachers' significantly improves our financial position and balance sheet, while exploration and revaluation at Blackwater continue to provide optionality to our shareholders," he said.

Some investors are not so optimistic, however, complaining on several social media forums this week about their frustration with the company seemingly unable to turn a quarterly profit despite gold prices around $1,700/oz.

Shares in the company (NGD:TSX) closed 3.28% lower on Wednesday at C$1.18, which capitalises it at $800 million (US$576 million). The equity has ranged between 55c-$2.03 in the past 12 months.

 

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.