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New Gold Earnings Growth, Acquisition Underscore Ambition
By James West
MidasLetter.com
Wednesday, May 13, 2009
New Gold's (TSX:NGD, AMEX:NGD) ambition from the outset has been to
become a major producer of gold. The acquisition of Western Goldfields
(TSX:WGI, AMEX:WGW) currently under consideration by shareholders of Western
Goldfields will certainly be a step in that direction.
And New Gold's first quarter earnings announced yesterday also belie the
company's tight controls on costs resulting in improved net earnings and
lower production costs. Cash flow from mine operations in the first
quarter 2009 was $7.7 million compared to $18.4 million for the same
period last year.
"We are pleased to report excellent operational performance for the
first quarter of 2009, performing in line with our expectations. This
reflects the quality of our team and is consistent with management's
commitment to delivering on our operational targets," said Robert
Gallagher, President and Chief Executive Officer.
The business combination with Western Goldfields announced on March 4,
2009 continues to move forward; materials for the Annual and Special
Meeting of Shareholders were mailed to shareholders for the New Gold and
Western Goldfields meetings which are scheduled for May 13, 2009 and May
14, 2009, respectively. Upon approval, the business combination is
expected to close on or about June 1, 2009.
Full article
New Gold & Red Back - Building a Major League Profile
April 22, 2009
By Richard (Rick) Mills
With gold stocks, bigger is almost always better. When you look at the
cash costs of the industry, almost all the lowest cost producers are
major mining companies. Larger production means more ounces to amortize
costs, so a lower cost per ounce.
There are two ways to become a major - buy it or discover/develop
it. "It" is the production base of one million ounces. Barrick Gold Corp. discovered the large Goldstrike Mine in Nevada in the early 1980s,
developed it and rode that success to be one of the largest gold
companies in the world.
Three of the most successful gold mining companies that are on the cusp
of "major" status are Alamos, Eldorado and Agnico-Eagle. Each
has been able to not only increase their production over the last few
years, but also improve their profitability per ounce of gold produced. (In
an era where cost increases have almost tracked the price of gold, this
is no small feat.)
However, these stocks have also had huge runs as the market has priced in
a lot of their growth. Investors looking for leverage want to look at
growing gold producers on the next rung down to find ones just about to
begin this run - which for these 3 meant 500% over 3-4 years with, aside
from last October's crash - very little volatility.
Don't get me wrong - don't sell those stocks if you own them. Their high
growth rates and low costs say their share prices should continue to grow
with gold staying steady. But a couple junior gold producers look
ready to make the leap to intermediates in both ounces produced and pro
forma cash flow: New Gold and Red Back Mining. Both are increasing
production and decreasing costs.
In scouring research reports from several Canadian brokerage firms and
picking apart the forecast organic growth in gold production along with
cost per ounce, these two companies appear to have the best potential for
large increases in cash flow.
In their presentation (available at www.newgold.com
), New Gold NGD.tsx shows their forecast
organic production growth moving up from 346,000 ounces
of gold this year to 438,000 ounces in 2013. This is not a
huge jump, but when you combine it with their cost per ounce decreasing
from $482 - $309 per ounce over the same time, their theoretical gross
cash flow growth and given a constant gold price of say...$900 per ounce,
cash flow jumps from $144.6 million to $258.8 million - a 79% increase.
Full
article
For more information please contact:
Keith Schaefer
Vanguard Shareholder Solutions
Tel: 604 608 0824
Toll Free: 1 866 398 1088
www.newgold.com
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