New Gold (NGD) reported strong financial results for the first quarter of 2025, with revenue climbing despite lower gold production, as the company started reaping benefits from its strategic acquisition of the New Afton mine. Investors responded enthusiastically to the news, pushing shares up 18% on Wednesday.
Financial Results
The Toronto-based mining company posted revenue of $209.1 million for Q1, an increase from $192.1 million in the same period last year. This growth was primarily driven by higher metal prices and increased copper sales, which helped offset reduced gold output. The company also reported $25 million in free cash flow, marking its fourth consecutive quarter of positive cash flow generation.
“Our first quarter results demonstrate the resilience of our business model and the strategic value of diversifying our metal production,” said Patrick Godin, President and CEO of New Gold. “The full ownership of New Afton is already enhancing our financial flexibility and contributing significantly to our cash flow.”
While gold production declined to 52,186 ounces, down from 70,898 ounces in Q1 2024, copper production slightly increased to 13.6 million pounds. The shift in production mix, combined with strong metal prices, supported the company’s financial performance despite the reduced gold output.
New Gold reported adjusted net earnings of $12 million, or $0.02 per share, slightly below the $13.1 million reported last year. However, the company’s net loss narrowed significantly to $16.7 million ($0.02 per share) from $43.5 million ($0.06 per share) a year ago, showing improved operational efficiency.
New Afton Acquisition Pays Off
A key driver of New Gold’s improved financial position was the recent consolidation of 100% ownership in the New Afton mine. Previously holding an 80.1% stake, the company acquired the remaining 19.9% interest, allowing it to capture all of the mine’s free cash flow. In Q1 alone, New Afton contributed $52 million to the company’s cash flow.
The acquisition eliminated third-party profit sharing and positioned New Gold to fully benefit from New Afton’s high-margin copper and gold production. This strategic move also strengthens the company’s balance sheet and improves its financial flexibility in the future.
Analysts have responded positively to these developments. For example, Scotiabank’s Eric Winmill raised the price target for New Gold from $4.25 to $4.75 while maintaining an “Outperform” rating. New Gold is rated a Strong Buy based on the recent recommendations of six analysts. The average price target for NGD stock is $4.28, representing a potential upside of 7.54% from current levels.
Promising Outlook Through 2027
Looking ahead, New Gold’s management provided an optimistic three-year outlook. The company expects gold production to be between 325,000 and 365,000 ounces by 2025, with significant growth projected through 2027.
By 2027, New Gold anticipates a 38% increase in gold production and a 94% increase in copper production compared to 2024 levels. The company also projects substantial financial improvements, with cumulative free cash flow of approximately $1.86 billion over the next three years and average annual free cash flow of $620 million.
All-in sustaining costs are expected to decrease by 64% during this period, further enhancing profitability. The company also plans to invest $30 million in exploration activities throughout 2025.