New Gold is reporting strong second-quarter earnings on the basis of improved gold prices, higher production and lower costs.
And the company, which operates the New Afton Mine west of Kamloops, may have some additional momentum building: Market analysts predict a continued surge in gold prices this year. Gold stood at $1,757.92 Cdn as of Thursday, July 28. Gold prices have gained 26 percent overall this year.
Shares of New Gold traded up 6.17 percent during midday trading Wednesday on the TSE, reaching $6.19.
Consistent with the expectations outlined as part of its first quarter results, New Gold’s production increased quarter over quarter, resulting in consolidated gold production of 190,234 ounces in the first six months of 2016 which was five percent higher than the same period of the prior year.
Gold production at New Afton during the second quarter increased to 25,287 ounces. The increase relative to the prior-year quarter was due to a 16 percent increase in mill throughput which more than offset a planned decrease in gold grade. Gold recoveries remained consistent at 83 percent despite the significant increase in throughput. New Afton's average mill throughput during the second quarter was 15,320 tonnes per day.
As a result of the continued strong throughput, New Afton's quarterly copper production increased by 11 percent to 22.1 million pounds when compared to the second quarter of 2015.
As a result of the company's strong first half production, New Gold is well positioned to meet its full-year gold production guidance of 360,000 to 400,000 ounces. At the same time, the company's first half copper production of 51.1 million pounds was higher than planned, increasing by 10 percent relative to the prior-year period, and New Gold now anticipates it will exceed the high end of its full-year copper production guidance of 81.0 to 93.0 million pounds.
"We are proud to have delivered such strong second quarter results," stated Randall Oliphant, the company’s executive chairman. "The combination of higher production, lower costs and improved gold prices enabled us to generate a 39 percent increase in our cash flow. We are on track to meet our full-year gold production guidance and pleased to be in a position to lower our cost guidance. We look forward to a strong finish to the year."