U.S. stocks rise on Fed cut bets; earnings continue to flow
Introduction & Market Context
New Gold Inc. (NYSE:NGD) delivered its second quarter 2025 earnings presentation on July 28, highlighting record free cash flow generation and improved operational performance across its mining assets. The company’s stock has demonstrated remarkable momentum with a 189% year-to-date return, trading near its 52-week high of $7.59, despite a slight decline in recent trading sessions.
The gold and copper producer has positioned itself for substantial growth over the next three years, with ambitious free cash flow projections and strategic development initiatives at both its New Afton and Rainy River mines. Recent trading data shows the stock closed at $7.17, with a slight dip in pre-market activity to $7.06, reflecting broader market conditions rather than specific concerns about the company’s performance.
Quarterly Performance Highlights
New Gold’s Q2 2025 results demonstrate significant improvement over the same period last year, with consolidated gold production reaching 78,595 ounces, up from 68,598 ounces in Q2 2024. Copper production remained relatively stable at 13.5 million pounds compared to 13.6 million pounds in the prior-year quarter.
The standout achievement was the company’s record quarterly free cash flow of $63 million, with Rainy River contributing a record $45 million. This financial performance was supported by strong operational results, including record monthly production at Rainy River and better-than-expected performance from the B3 zone at New Afton.
As shown in the following comprehensive financial results table:
Revenue increased substantially to $308.4 million in Q2 2025, up from $218.2 million in Q2 2024, while net earnings rose to $68.3 million ($0.09 per share) compared to $53.1 million ($0.07 per share) in the prior-year period. Adjusted net earnings showed even more dramatic improvement, reaching $89.8 million ($0.11 per share) versus $17.0 million ($0.02 per share) a year earlier.
Operational Updates
The company’s operational performance showed quarter-over-quarter improvements in both production and costs. Operating expenses per gold ounce sold decreased to $1,070 in Q2 2025 from $1,156 in Q2 2024, though all-in sustaining costs (AISC) per gold ounce sold increased slightly to $1,393 from $1,381 in the prior-year period.
New Afton’s operations continued to deliver strong results, with the B3 zone exceeding expectations. The mine produced 16,991 ounces of gold and 13.5 million pounds of copper in Q2 2025. The C-Zone development remains on schedule, with cave construction approximately 65% complete and the undercut level completed in May.
The New Afton 2025 outlook indicates continued strong performance:
Rainy River achieved record monthly production during the quarter and generated record free cash flow of $45 million. The mine produced 61,604 ounces of gold in Q2 2025, a significant increase from 50,298 ounces in Q2 2024. Underground development reached important milestones, including pit portal breakthrough in early April and completion of the ventilation loop in June.
The Rainy River 2025 outlook shows promising production targets:
Financial Analysis
New Gold’s financial position strengthened considerably during the quarter, with cash generated from operations reaching $162.9 million, up from $100.4 million in Q2 2024. The company maintained a robust liquidity position of $452 million, consisting of $226 million in cash and cash equivalents and $226 million in an undrawn credit facility.
Following the quarter, New Gold redeemed the remaining July 2027 Senior Notes, enhancing its financial flexibility. The company’s debt structure now consists primarily of a $400 million revolving credit facility maturing in March 2029 and $400 million in senior unsecured notes due April 2032.
The company’s balance sheet and hedging strategy are detailed below:
New Gold has implemented a strategic hedging approach, with approximately 75% of foreign exchange exposure and fuel consumption hedged for Q3 2025, providing stability against market volatility. Additionally, the company completed a gold prepayment financing in April, securing $100 million at an average gold price of $3,157 per ounce.
Strategic Initiatives and Outlook
New Gold is investing heavily in exploration at both mines, with 18,000 meters of the planned 48,000 meters completed at New Afton through H1 2025, and 28,000 meters of the planned 58,000 meters completed at Rainy River during the same period. These exploration efforts are critical to extending mine life and identifying new resource opportunities.
The exploration activities at New Afton focus on the K-Zone, with drilling from both underground and surface locations:
At Rainy River, exploration is advancing in parallel for both open pit and underground opportunities:
Perhaps most compelling is New Gold’s three-year financial outlook, which projects cumulative free cash flow of approximately $2.2 billion from 2025 to 2027, with average annual free cash flow of around $720 million ($0.90 per share). This represents an average annual free cash flow yield of approximately 20%.
The company’s free cash flow forecast demonstrates significant growth potential:
CEO Patrick Godin emphasized the company’s strategic growth initiatives during the earnings call, stating, "We want to be bigger to be better," while maintaining a disciplined approach to mergers and acquisitions. This balanced strategy aims to deliver substantial shareholder value while ensuring sustainable operational performance.
With both mines showing improved operational metrics, strategic development projects on track, and a strong financial position, New Gold appears well-positioned to capitalize on favorable gold and copper market conditions while executing its ambitious growth strategy over the coming years.
Full presentation:
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