Shares of New Gold (TSX: NGD) surged this week, jumping 10% after earnings and reaching heights not seen since 2018. The company announced earnings that not only demonstrated financial strength now, but more to come for the future.
So, let’s get into what happened with New Gold stock and see if it’s still a buy after earnings.
What happened?
As mentioned, strong earnings were the main catalyst behind New Gold stock’s price movements. The company reported a strong second quarter in 2024, highlighted by sustained free cash flow generation.
New Gold reported revenues of $258.98 million for the second quarter (Q2) of 2024, which was an increase compared to previous quarters. However, the earnings per share (EPS) came in at $0.00, which missed the consensus estimate of $0.02. Despite this miss, the company’s strong revenue performance has been a positive signal for investors.
The company has entered a period of sustained free cash flow generation, which indicates improved operational efficiency and financial health. This is a critical factor for investors looking for long-term stability and profitability. Yet there was even more good news.
Resumption of Rainy River
New Gold resumed operations at its Rainy River Mine following a temporary suspension due to a worker fatality. The resumption of operations ensures continued production and revenue from this key asset.
Operations at the Rainy River Mine had been temporarily halted due to a worker fatality. The restart of mining activities reassures investors about the continuity of production and revenue streams from this important site.
That site is quite important. The mine has demonstrated strong performance in the past. For instance, Rainy River produced 52,719 ounces of gold in the first quarter, which was cut short by the closure. Before that, the fourth quarter saw 76,092 ounces, and the third quarter saw 66,765 ounces.
So, hopefully, in this quarter, the company will be able to increase its production once more to that 70,000-ounce range. The company anticipates between 250,000 and 280,000 ounces for the year, and this will need to be caught up with during the third and fourth quarters.
Time to buy?
With the company’s mines all back on board, now looks like a great time to consider New Gold stock. The gold stock predicts more production and lower costs for the second half of the year. In particular, it should be quite stronger with the higher grade ore processing and optimized operations. As well, of course, as another mine on board.
In fact, the numbers should only improve from here. Back in February, New Gold stock stated that gold production should increase by 35% between 2023 and 206. This would bring in between 410,000 and 460,000 by 2026. This would be driven by both Rainy River and New Afton.
Furthermore, there is copper production increasing as well. This should rise by 60% between 2023 and 2026 to between 71 and 81 million pounds!
Meanwhile, costs should decreases. All-in sustaining costs are expected to drop a whopping 50% compared to 2023 levels to between $650 and $750 by 2026. The first quarter was at $1,638 per ounce, and projected to be between $1,425 and $1,525 by the third quarter.
Bottom line
Altogether, New Gold stock looks like a strong gold stock that’s only getting stronger. And with shares up 10% and more production on the way, now could be the best time to buy.
