New Gold Inc. Delivers Improved Q1 Results Amid Strategic Progress

New Gold Inc. (TSX: NGD) (NYSE American: NGD), formerly known as Mayfair Gold, has reported its first-quarter 2025 financial results, revealing a stark contrast between its GAAP net loss of $(0.02) per share and its robust operational and financial advancements. While the GAAP earnings figure remains negative, the company’s progress toward cost management, debt reduction, and mine optimization positions it for stronger performance in the coming quarters.

The GAAP EPS Context: A Story of Improvement

The reported GAAP net loss of $(16.7 million) for Q1 2025, or $(0.02) per share, marks a dramatic turnaround from the $(43.5 million) loss (or $(0.60) per share) in the same quarter last year. This improvement stems from higher revenue ($209.1 million vs. $192.1 million in Q1 2024), driven by rising gold and copper prices and increased sales volumes. Notably, the company’s non-GAAP metrics shine brighter: free cash flow hit $25 million, and operating cash flow reached $108 million, underscoring the disconnect between accounting losses and operational health.

Operational Strengths: Mines Delivering Results

New Gold’s two flagship mines—New Afton and Rainy River—demonstrated mixed but promising performance:
- New Afton produced 18,278 ounces of gold and 13.6 million pounds of copper, with negative all-in sustaining costs (AISC) of $(687) per gold ounce due to strong by-product copper credits. The mine’s C-Zone cave construction is over 50% complete, setting the stage for higher copper production in H2 2025.
- Rainy River delivered 33,908 ounces of gold, though its AISC rose to $2,758 per ounce due to waste stripping activities. However, a critical pit portal breakthrough in April 2025 will reduce haulage costs and improve ventilation, supporting future output.

Financial Strategy: Debt Reduction and Ownership Consolidation

New Gold’s Q1 results were bolstered by strategic financial moves:
1. Debt Refinancing: The company issued $400 million in senior notes (due 2032 at 6.875%) to refinance $289 million of higher-cost debt maturing in 2027. Remaining 2027 notes will be retired by July 2025, reducing interest burden and extending maturity dates.
2. Credit Upgrades: S&P raised New Gold’s corporate rating to B+ and bond rating to BB-, while Moody’s upgraded its outlook to Positive, reflecting improved financial flexibility.
3. New Afton Ownership: The acquisition of the remaining 19.9% free cash flow interest in New Afton for $100 million solidifies control over the mine. The deal is funded via cash, credit facilities, and a gold prepayment requiring deliveries of ~2,771 ounces monthly from July 2025 at an average price of $3,157/ounce—a savvy hedge against future price fluctuations.

Outlook and Risks

New Gold remains on track to produce 325,000–365,000 ounces of gold in 2025, with free cash flow expected to grow as New Afton’s C-Zone comes online and Rainy River’s strip ratio improves to 1:1 by 2026. Exploration efforts at both mines—targeting extensions of the K-Zone at New Afton and the NW Trend at Rainy River—could further bolster reserves.

Risks persist, however. Rainy River’s higher AISC in Q1 is temporary, tied to waste stripping that constrained high-grade ore feed. New Afton’s B3 cave is nearing exhaustion, but the C-Zone transition is on schedule. Investors should monitor execution risks at both sites, as delays could pressure costs and timelines.

Conclusion: A Turnaround in Motion

New Gold’s Q1 results highlight a company transitioning from recovery to growth. While its GAAP EPS remains negative, the $(0.02) figure is a mere artifact of accounting standards, overshadowed by $213 million in cash, strong free cash flow generation, and strategic moves that reduce debt and enhance control over core assets. The stock’s recent performance—up 15% year-to-date—reflects investor confidence in its path.

With gold prices holding near $2,000/ounce and copper demand robust, New Gold’s dual-metal exposure and operational leverage position it well to convert higher metal prices into profits. If the company meets its 2025 guidance, investors may see a GAAP profit emerge sooner than expected. For now, the metrics suggest New Gold is moving in the right direction—albeit with eyes on the long game.

Investors should consider New Gold’s strong balance sheet, strategic refinancing, and operational milestones as critical positives, even as they acknowledge the lingering GAAP deficit.