New Gold(NGD) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported second quarter revenue of $308 million, an increase compared to the prior year quarter due to higher gold prices and sales, slightly offset by lower copper prices and sales [18] - Cash generated from operations before working capital adjustments was $161 million or $0.20 per share for the quarter, higher than the prior year period [18] - The company achieved a record quarterly free cash flow of $63 million, driven by higher revenue [18] - Net earnings for the second quarter were approximately $68 million or $0.09 per share, with adjusted net earnings of $90 million or $0.11 per share [19] Business Line Data and Key Metrics Changes - Gold production for the second quarter totaled approximately 78,600 ounces, with copper production at 13.5 million pounds, reflecting a planned increase in feed grade at Rainy River [6][11] - New Afton achieved an all-in sustaining cost of negative $537 per ounce after considering copper credits, while Rainy River's all-in sustaining costs were $16.96 per ounce [12][14] - Rainy River generated a quarterly record of $45 million in free cash flow, with production in June reaching over 37,300 ounces at an average grade of 1.44 grams per tonne [17][18] Market Data and Key Metrics Changes - Gold production for the first half of the year was about 38% of the midpoint of the consolidated production guidance range of 325,000 to 365,000 ounces [7] - The company expects to generate significant free cash flow over the next three years, with projections of approximately $1.86 billion at current consensus commodity prices [23] Company Strategy and Development Direction - The company is focused on achieving its 2025 production and cost guidance while maintaining a strong emphasis on health and safety [24] - Exploration efforts are being increased at both New Afton and Rainy River, with a combined investment of $30 million for 2025 targeting further reserve replacement [25] - The company aims to consolidate its assets and evaluate opportunities for mergers and acquisitions that align with its strategic objectives [36][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver on its stated strategic goals and generate meaningful value for shareholders [25] - The company anticipates a smooth transition to primary C zone mining at New Afton, with expectations of increased throughput and grade [41] - Management remains vigilant in evaluating acquisition opportunities while prioritizing organic growth [44][46] Other Important Information - The company has cash on hand of $226 million and a liquidity position of $452 million at the end of Q2 [19] - A gold prepayment agreement was entered into, committing to deliver approximately 2,770 ounces of gold per month at an average price of $3,157 per ounce [20] Q&A Session Summary Question: Can you provide additional color on the split in production between Q3 and Q4 of 2025? - Management indicated that production is expected to be consistent across both quarters, with Rainy River generating the majority of cash due to planned production increases [28][29] Question: Do you expect to replace reserves in 2025? - The company aims to increase end-of-year resources and convert inferred resources to reserves, particularly at New Afton and Rainy River [30][32] Question: What are the capital allocation priorities regarding buybacks and dividends? - Management stated that shareholder returns are a focus, with plans to evaluate buybacks and dividends as free cash flow increases towards the end of the year [34][36] Question: Can you clarify the transition to primary C zone mining at New Afton? - Management confirmed that the transition is expected to be smooth, with the B3 zone extending the mine life of C zone and not affecting production guidance [40][41] Question: What is the grade profile expected for the second half of the year? - The company expects a similar high-grade profile in the second half, aligning with production guidance [58][61]