New Gold posts net loss of $37.9M in a 'challenging' second quarter
(Kitco News) - New Gold (TSX: NGD) yesterday reported 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 eq. ounces).
The company said that during the second quarter, operations at the Rainy River mine were adversely impacted by heavy rainfall and flooding around the Fort Frances area in northwestern Ontario.
New Gold also noted that during the second quarter, New Afton focused on B3 and C-Zone development and closed the low grade-higher cost recovery level zone earlier than planned.
As a result of the early shutdown, tonnes mined were lower than expected. To maintain mill feed, the operation utilized the low-grade stockpile 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 decreased over the prior-year period (Q2 2021: $198.2M) due to lower gold and copper sales volume, 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 gold and copper sales volumes.
The company added that Q2 2022 net loss of $37.9M increased over the prior-year period (Q2 2021: net loss of $15.8M) primarily due to lower revenue and a higher loss on revaluation of investments, partially offset by lower operating expenses and a loss on revaluation of the New Afton free cash flow interest obligation in the prior-year period.
Importantly, New Gold said that due to the revisions at both 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 2022 all-in sustaining costs to be between $1,875 and $1,975 per GEO (previously between $1,470 and $1,570 per GEO).
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"While the operational outlook changes to this year are unfortunate, our teams remained resilient during a challenging quarter and I remain confident that we are positioned to have a stronger second half of the year, and deliver on our updated guidance," stated Renaud Adams, President & CEO. "Heavy rainfall and flooding in the quarter impacted Rainy River's mine plan, but over the last month, we have made tremendous progress on our dewatering efforts and mining at the bottom of the pit has resumed."
"Our priority for the remainder of the year continues to be on positioning the open pit operations to their optimal conditions. Both of our operations also continue to review optimization opportunities and assess cost reduction initiatives to mitigate against inflationary challenges experienced across the industry," he added.
New Gold is a Canadian-focused intermediate mining company with a portfolio of two core producing assets in Canada, the Rainy River gold mine and the New Afton copper-gold mine. The company also holds approximately 5% equity stake in Artemis Gold Inc., and other Canadian-focused investments.