New Gold posts net loss of $37.9 million in ‘challenging’ second quarter

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(Kitco News) – New Gold (TSX: NGD) yesterday announced gold equivalent production of 70,514 ounces in Q2 2022 (52,431 ounces of gold, 7.4 million pounds of copper and 117,318 ounces of silver), down 33% compared to Q2 2021 (105,705 gold equivalent ounces).

The company said that during the second quarter, operations at the Rainy River mine were affected by heavy rains and flooding in the Fort Frances area of ​​northwestern Ontario.

New Gold also noted that during the second quarter, New Afton focused on developing the B3 and C zones and closed the higher low-grade cost recovery level zone ahead of schedule.

Due to the early shutdown, the tonnes mined were lower than forecast. To maintain mill feed, operations used low-grade stockpiles during the quarter, resulting in lower grades and recoveries and ultimately lower production, the company said. .

New Gold added that its Q2 2022 revenue of $115.7m was down from the prior year period (Q2 2021: $198.2m) due to lower sales volume gold and copper, partially offset by higher realized gold prices.

The company’s Q2 2022 operating expenses of $79.8m were lower than the prior year period (Q2 2021: $95.2m) due to lower sales volumes of gold and copper.

The company added that the net loss of $37.9 million in Q2 2022 increased from the prior year period (Q2 2021: net loss of $15.8 million) primarily due to a lower revenue and higher loss on revaluation of investments, partially offset by lower operating expenses and loss on revaluation of New Afton’s free cash flow interest obligation during of the period of the previous year.

Importantly, New Gold said that due to the revisions at Rainy River and New Afton, its consolidated gold equivalent production for 2022 is now expected to be between 325,000 and 365,000 ounces (previously 380,000 to 440,000 ounces). ).

New Gold also expects its consolidated all-in sustaining costs for 2022 to be between $1,875 and $1,975 per GEO (previously between $1,470 and $1,570 per GEO).

“While the changes in operating outlook for this year are unfortunate, our teams remained resilient through a challenging quarter and I remain confident that we are positioned for a stronger second half and meeting our updated guidance,” said Renaud Adams, President and CEO. “Heavy rain and flooding during the quarter impacted the Rainy River mine plan, but over the past month we have made tremendous progress in our dewatering efforts and underground mining. from the pit took over.”

“Our priority for the rest of the year continues to be to position the surface operations in their optimal conditions. Both of our operations also continue to review optimization opportunities and evaluate cost reduction initiatives to mitigate inflationary challenges faced across the industry,” he said. added.

New Gold is a Canada-focused midstream mining company with a portfolio of two major producing assets in Canada, the Rainy River Gold Mine and the New Afton Copper-Gold Mine. The company also has an approximate 5% stake in Artemis Gold Inc. and other Canada-focused investments.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

Ann J. Cox