NEW GOLD $10.11 - Toronto symbol NGD

NEW GOLD $10.11 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold.com; Shares outstanding: 456.5 million; Market cap: $4.6 billion; No dividends paid) has three operating mines: the Mesquite mine in the U.S., the Cerro San Pedro mine in Mexico and the Peak mine in Australia. It also owns 30% of the El Morro copper/gold project in Chile (Goldcorp owns the other 70%) and 100% of the New Afton gold/copper/silver project in B.C.

El Morro contains an estimated 4.7 million ounces of gold and 3.7 billion pounds of copper. New Afton holds 2.7 million ounces of gold, 2.5 billion pounds of copper and 8.3 million ounces of silver.

In June 2010, New Gold bought Richfield Ventures (symbol RVC on Toronto) for $550 million of New Gold shares (all figures except share price and market cap in U.S. dollars).

Richfield owns the Blackwater property in central B.C., 450 kilometres north of New Afton . This property holds up to 6.8 million ounces of gold. After New Afton starts up in mid-2012, New Gold aims to use the same workers to build a mine at Blackwater.

New Gold likely produced 380,000 to 400,000 ounces of gold in 2011. The New Afton mine will add over 85,000 ounces of gold and 75 million pounds of copper a year.

The company reported cash flow of $0.13 a share in the three months ended September 30, 2011. That’s up 18.2% from $0.11 a share a year earlier

New Gold’s $241.1 million of long-term debt is just 5.2% of its market cap. It holds cash of $433.1 million, or $0.95 a share. That gives it lots of funds to further develop its mines and make acquisitions.

New Gold is a buy.

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