Gold Industry Split into Two Distinct Parts
New Gold Reports Strong Q2 2025 Results, Demonstrating Production Growth and Improved Cost Controls
In Q2 2025, Canadian mining company New Gold showcased a significant leap in production and cost performance, driving strong operational cash flow and record free cash flow. The company produced 78,595 ounces of gold and 13.5 million pounds of copper, marking a quarter-over-quarter production growth.
The operating expense per gold ounce sold (co-product basis) stood at $1,070, while the all-in sustaining costs (AISC) were reported at $1,393 per ounce sold (by-product basis). These figures represent an improvement in cost controls compared to prior periods, reflecting a focus on sustaining capital and operational efficiencies.
New Gold's strategic approach to calculating cash costs on a co-product basis effectively managed cost pressures. By proportionally allocating costs between gold and copper production, the company leveraged by-product copper sales to reduce net costs for gold production.
The strong operational performance in Q2 placed New Gold on track to achieve its 2025 annual guidance. The company aims for consolidated gold production of 325,000 to 365,000 ounces and copper production of 50 to 60 million pounds, with an expected AISC of $1,025 to $1,125 per ounce.
Rainy River Mine, a key contributor to improved production and cash flow, particularly in the second half of the year, saw production of approximately 61,600 ounces of gold at $1,696/oz AISC in Q2. However, Rainy River's AISC remained elevated due to front-end weighted sustaining capital spend.
Stockpiles at Rainy River's open pit will wind down in 2029, leading to a significant decline in production. On the other hand, Rainy River Underground is expected to have nearly a decade of ore ahead.
New Afton, another significant site for New Gold, is expected to increase gold production by over 70% year-over-year and copper production by over 60%. B3 Cave at New Afton is over-delivering and is now expected to exhaust in the middle of Q3, four months later than planned.
New Gold ended the quarter with approximately $226 million in cash and cash equivalents and just over $400 million in net debt. The company is open to exploring accretive options to diversify its production base.
Market analysts emphasize that the continued steady gold prices and this production ramp-up support New Gold's positive cash flow metrics and future production outlook. Using fair multiples, an updated fair value for New Gold is estimated to be US$5.60. However, a minimum 30% discount to fair value for dual-asset producers is preferred for adequate margin of safety, making the updated low-risk buy zone for New Gold US$3.65 or lower.
[1] New Gold Reports Q2 2025 Results: https://www.newgold.com/investors/financial-reports/quarterly-reports/2025/q2/ [2] New Gold Q2 2025 Production and Costs Highlights: https://www.newgold.com/news/press-releases/2025/q2-2025-production-and-costs-highlights/ [3] New Gold Provides Q2 2025 Production Guidance: https://www.newgold.com/news/press-releases/2025/q2-2025-production-guidance/
In light of New Gold's strong Q2 2025 results and production growth, the company is poised for potential investment opportunities in the mining industry, given the improved cost controls and positive financial outlook. With a focus on exploiting accretive options to diversify its production base and a strategic approach to cost management, New Gold's financial growth could continue to attract investors in the finance sector.
