CA - New Gold: A Brighter Year For Rainy River
2024-02-02 20:18:44 ET
Summary
- New Gold's stock has fallen by ~25% from its highs despite trouncing production guidance, reversing a trend of record of under-delivering on promises in 2021/2022.
- Meanwhile, the company is one year closer to a massive transformation that will see its costs drop below the industry average, with significant free cash flow on deck in 2025.
- In this update, we'll dig into the Q4/FY2023 results, the forward outlook, and whether NGD is offering an adequate margin of safety after its recent pullback.
Just over six weeks ago, I wrote on New Gold ( NGD ), noting that while the company was set up to beat 2023 guidance, the stock was well outside of its ideal buy zone at US$1.55 after its ~80% rally. This is because the stock was back to trading at a ~$1.1 billion market cap and just shy of 4x FY2023 cash flow estimates, which was near its historical multiple (10-year average) of ~4.8x P/CF. Since then, the significant beat on its production guidance midpoint hasn't helped the stock, with NGD suffering a ~25% drawdown which was above that of the Gold Miners Index ( GDX ). In this update, we'll dig into the Q4/FY2023 results, the forward outlook, and whether NGD is offering an adequate margin of safety:
Rainy River Operations - Company Website
