New Gold delivers record Rainy River output

New Gold (TSX, NYSE-A: NGD) soared to its highest in more than a decade on Wednesday after delivering a strong third quarter marked by the best-ever production at its Ontario mine.

The Rainy River mine, located 65 km northwest of Fort Frances near the U.S. border, produced 100,301 oz. of gold during the three months to Sept. 30, a 63% increase over the second quarter and a new all-time record. Accompanying this production was a 39% drop in its all-in sustaining costs.

The company generated record free cash flow of $205 million (C$287 million), of which $183 million came from Rainy River. This helped to boost the company’s balance sheet to $123 million in cash and cash equivalents, it said. The 225% increase in free cash flow compared with the previous quarter allowed the company to repay debt, New Gold President and CEO Patrick Godin said in a release. 

“We repaid, one quarter ahead of plan, the full $150 million drawn on the credit facility for the New Afton transaction earlier this May,” Godin said. “In total, the company repaid an impressive $260 million of debt obligations during the quarter.”

New Gold was up 3% to C$10.10 per share on Thursday morning in Toronto after an 11% gain a day earlier for a market capitalization of C$7.76 billion. The stock is at its highest in 12 years, with strong bullion prices helping it and most other gold producers more than double their value this year. 

Guidance on track

With the results, New Gold said it expects to meet its 2025 production forecast ranging between 325,000 and 365,000 oz. for gold and 50-60 million lb. for copper. Through the first nine months, its production for both metals stood at about 70% of the midpoint of their respective guidance ranges, the company noted.

Production at Rainy River is expected to be above the midpoint of its forecast of 265,000-295,000 oz., while New Afton’s gold production is expected to fall in the middle of its 60,000-70,000 oz. estimate. Copper production at New Afton is also expected to be at the mid-point.

Meanwhile, all-in sustaining costs are trending at the high end of the company’s forecast range of $1,025 to $1,125 per oz. gold sold, and would include a higher share-based expense of $75 per oz. year-to-date due to an increase in the company’s share price, New Gold said.