New Gold: Lower Grade And Tonnes Processed At New Afton

May 31, 2022 6:54 AM ETNew Gold Inc. (NGD), NGD:CA2 Comments


  • Revenues for the first quarter of 2022 increased from $164.9 million to $174.70 million due to higher gold and copper prices.
  • Total gold equivalent production was 87,696 Eq. Oz for Q1 2022, down 8.7% compared to the same quarter a year ago and down 21.4% sequentially.
  • I recommend buying NGD at or below $1.25.
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Pure gold ore on old wooden rails

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Part I - Introduction

Canada-based New Gold Inc. (NYSE:NGD) released its first-quarter 2022 results on May 2, 2022.

Note: This article is an update of my article published on March 16, 2022.

1 - 1Q22 Results highlights

New Gold Q1 2022 highlights

NGD: Quarterly highlights 1Q22 Presentation (New Gold)

VanEck Gold miners ETF price
Data by YCharts

New Gold - Gold Production History

NGD Quarterly Gold Production history (Fun Trading)

  • Details per metal comparing 3Q21, 4Q21, and 1Q22: We can see below that the production was weak for gold, silver, and copper.
New Gold Metals Production

NGD Quarterly Metals production 3Q21 to 1Q22 (Fun Trading)

Copper is produced at the New Afton mine only. Below is the chart of the gold grade per Tonne. Grade per tonne in 1Q22 was 0.92 G/T for Rainy River and 0.38 G/T for New Afton. The grade at the New Afton mine is going down, and it is concerning.

New Gold grade per tonne history per mine

NGD Quarterly Grade per tonne history per mine (Fun Trading)

At Rainy River, Gold production was higher than the same year-ago quarter. However, the production was weak at the New Afton and negatively affected the total gold equivalent produced in 1Q22.
New Gold - Gold production per mine

NGD Gold production per mine (Fun Trading)

  • The Company indicated that the Rainy River mine produced 59,895 GEOs (58,834 ounces of gold and 79,621 ounces of silver) in 1Q22.
  • The New Afton mine produced 27,800 GEOs (9,267 ounces of gold and 8.2 million pounds of copper, and 29,890 Ag Oz) in 1Q22.
New Gold - Quarterly gold production per mine history

NGD Quarterly gold production per mine history (Fun Trading)

  • AISC was very high due to the low output.

New Gold recorded a record-high AISC for 1Q22 of $1,795 per ounce, well above the industry's average.

New Gold - Quarterly AISC history

NGD: Quarterly AISC history (Fun Trading)

Finally, On March 31, 2022, New Gold published new mineral reserves for the Rainy River mine. LOM is ten years, and the average annual gold production from 2022 to 2027 is expected to be 302K Au Oz (309K Au Eq. Oz). AISC per GEO is estimated at $1,047.

CEO Renaud Adams said in the conference call:

I'm very pleased with the result of our updated technical report at Rainy River which has extended the mine life to 2031. Updated mined plan illustrated an attractive average production profile of 310,000 gold equivalent ounces over the period of 2020 to 2027 and over 250,000 gold equivalent ounces for a whole life of mine with full transition from open pit to underground during the period of 2021, '26 for an estimated growth capital of only $71 million to complete the underground pre-production work for both Intrepid Zone.

New Gold Quarterly Revenue history

NGD: Quarterly Revenue history (Fun Trading)

New Gold posted revenue of $174.7 million for 1Q22, up 5.9% from the same quarter a year ago and down 13.8% sequentially. Adjusted earnings were $10.3 million or $0.02 per share in 1Q22.

New Gold Quarterly Gold Price history

NGD: Quarterly Gold Price history (Fun Trading)

New Gold Quarterly Free cash flow history

NGD: Quarterly Free cash flow history (Fun Trading)

Note: The generic free cash flow is the cash from operating activities minus CapEx.

New Gold Cash versus Debt history

NGD: Quarterly Cash versus Debt history (Fun Trading)

New Gold Debt

NGD: Quarterly Debt details (New Gold)

New Gold Investments

NGD: Investments (New Gold press release)

NGD stock technical analysis

NGD: TA Chart short-term (Fun Trading)

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This article was written by

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As an experienced investor, I will help you stay on task more efficiently.

I am a former test & measurement doctor engineer (geodetic metrology). I was interested in quantum metrology for a while.

I live mostly in Sweden with my loving wife.

I have also managed an old and broad private family Portfolio successfully -- now officially retired but still active -- and trade personally a medium-size portfolio for over 40 years.

“Logic will get you from A to B. Imagination will take you everywhere.” Einstein.

Note: I am not a financial advisor. All articles are my honest opinion. It is your responsibility to conduct your own due diligence before investing or trading.

Disclosure: I/we have a beneficial long position in the shares of NGD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I trade short-term NGD often.

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