New Gold’s Q1 2025 Earnings: Strong Free Cash Flow and Strategic Momentum Drive Growth

New Gold Inc. delivered a resilient first-quarter performance in 2025, reporting adjusted net earnings of US$0.02 per share, a modest but meaningful improvement amid challenging market conditions. The Canadian miner’s results underscore its progress in executing strategic priorities, from operational ramp-ups at its flagship mines to aggressive debt refinancing and ownership consolidation. Let’s dissect the numbers to assess whether this sets the stage for sustained value creation.

Financial Performance: A Turning Tide

New Gold’s Q1 2025 revenue rose to $209.1 million, a 9% year-over-year increase, driven by higher gold and copper prices and strong copper sales volumes. While the net loss narrowed to $16.7 million from $43.5 million in Q1 2024, the adjusted net earnings of $0.02 per share (in line with prior-year levels) reflect the company’s focus on cash flow over short-term profitability.

The real story lies in free cash flow generation, which turned positive at $25 million after $43.2 million in growth investments. This marks a dramatic shift from the $14.9 million free cash outflow in Q1 2024. The New Afton Mine was the star performer, contributing $52.5 million in free cash flow—its strongest quarter to date—thanks to by-product copper credits and cost efficiencies.

Operational Highlights: Mines Delivering on Potential

New Gold’s two core assets—New Afton (copper-gold) and Rainy River (gold)—are advancing toward full production capacity, with notable milestones:

1. New Afton:
2. Produced 18,278 ounces of gold (28% of annual guidance) and 13.6 million pounds of copper (25% of copper guidance).
3. All-in sustaining costs (AISC) for gold turned negative at $(687/oz) due to copper by-product credits, a stark contrast to $241/oz in Q1 2024.

4. The C-Zone cave construction is over 50% complete, with dewatering systems and a flotation circuit upgrade (due in Q3) set to boost recoveries. By 2026, processing capacity will hit 16,000 tonnes/day, unlocking further copper production.

5. Rainy River:

6. Delivered 33,908 ounces of gold (12% of annual guidance), slightly ahead of expectations.
7. AISC rose to $2,758/oz due to lower volumes and sustaining capital costs (e.g., waste stripping), but operational improvements—like the pit portal breakthrough—will reduce haulage distances and improve ventilation, enabling higher throughput later in 2025.

Strategic Moves: Deleveraging and Ownership Consolidation

New Gold has prioritized debt management and asset control, which are critical for long-term stability:
- Debt Refinancing: A $400 million senior notes offering (6.875% interest due 2032) refinanced $289 million of higher-cost debt, reducing interest expenses and extending maturities. The remaining $111 million of 2027 notes will be redeemed by July 2025.
- Credit Facility Extension: The revolving credit facility was extended to March 2029, with an $100 million accordion feature, providing flexibility for future projects.
- New Afton Ownership: The company finalized a deal to acquire the remaining 19.9% free cash flow interest in New Afton for $100 million, funded by cash, credit draws, and a gold prepayment. This prepayment requires delivering 2,771 ounces monthly (July 2025–June 2026) at an average price of $3,157/oz, locking in a favorable price for ~33,000 ounces.

Outlook and Risks

New Gold reaffirmed its 2025 production guidance of 325,000–365,000 ounces of gold and 50–60 million pounds of copper, with AISC targeted at $1,025–$1,125/oz. Key risks include:
- Copper Price Sensitivity: New Afton’s profitability hinges on copper prices, which were volatile in Q1.
- Mine Life Extensions: Both mines require exploration success to extend operations beyond 2031 (New Afton) and 2029 (Rainy River).

Conclusion: A Solid Foundation for Growth

New Gold’s Q1 results demonstrate that its strategic initiatives are paying off. The $25 million free cash flow, debt reduction, and operational progress at New Afton and Rainy River position the company to deliver on its 2025 targets. With $213 million in cash and improved credit ratings (S&P B+ and Moody’s B2 with a positive outlook), New Gold is better insulated against commodity price fluctuations.

Crucially, the New Afton consolidation eliminates dilution from minority interests, ensuring 100% of its cash flows benefit shareholders. Meanwhile, the C-Zone expansion and Rainy River’s underground development suggest production could exceed the midpoint of 2025 guidance (345,000 ounces).

For investors, New Gold’s mix of near-term cash flow generation and long-term mine life extension efforts makes it a compelling pick in the gold sector. While the $0.02 EPS may seem small, it reflects a company transitioning from cost-cutting to value-creation mode—a shift that could translate into stronger returns as operational levers fully align.

In short, New Gold is building a foundation for sustained growth, and its Q1 results are a strong first step.