NEW GOLD $6.24 (Toronto symbol NGD; TSINetwork Rating: Speculative) (888-315-9715; www.newgold- .com; Shares outstanding: 503.3 million; Market cap: $3.1 billion; No dividends paid) has four mines: the Mesquite project in the U.S., Cerro San Pedro in Mexico, the Peak mine in Australia and the New Afton mine in B.C.
New Gold also owns 30% of the El Morro copper/ gold project in Chile, 100% of the Blackwater property in B.C. and 100% of Ontario’s Rainy River project.
In the three months ended December 31, 2013, New Gold’s cash flow per share fell 17.4%, to $0.19 from $0.23 a year earlier. Prices of gold, copper and silver fell, as did production from Cerro San Pedro, which is scheduled to close next year.
The company recently finished a feasibility study that projects a mine at Rainy River producing an average of 325,000 ounces of gold annually over nine years. Rainy River could hold as much as 3.8 million ounces of gold, and production may start as early as 2016.
New Gold has also completed a feasibility study at Blackwater, which holds 8.4 million ounces. This study envisions a mine producing an average of 485,000 ounces of gold and 1.8 million ounces of silver annually, also over nine years.
The company’s $862.5 million of long-term debt is a moderate 27.8% of its market cap. It also holds cash of $414.4 million, or $0.82 a share. That gives New Gold the funds it needs to continue developing the Rainy River and Blackwater projects, which combined could push its output to over 900,000 ounces within six years.
New Gold is a buy.
