CA - New Gold soars as RBC raises to Outperform on improved Rainy River outlook

New Gold ( NYSE: NGD ) +13.4% in Monday's trading as RBC Capital upgraded shares to Outperform from Sector Perform with a $1.25 price target, raised from $1, saying it has "higher confidence" in a production rebound at the Rainy River mine in Ontario after Q2 results were hurt by excessive rainfall.

Following a site visit to Rainy River, Michael Siperco said RBC's analyst team "came away with more certainty that open pit issues have been resolved, boding well for revised H2 production guidance, while having more confidence in the longer term shift from open pit to underground mining," foreseeing 40%-plus higher gold equivalent production at 30% lower all-in sustaining costs.

Risks remain, including permitting at New Afton and ramp-up execution at New Afton as well as Rainy River, but "we are increasingly confident in production growth over the next 12-18 months," Siperco wrote.

Earlier this year, New Gold ( NGD ) lowered full-year guidance for gold equivalent production because of the problems at Rainy River .

For further details see: