New Gold extends life of New Afton, Rainy River mines

New Gold (TSX: NGD; NYSE-A: NGD) has extended the life of its New Afton and Rainy River mines in British Columbia with growth projects over recent years.

New Afton’s copper and gold reserves increased by 15% and 13%, respectively, compared to the end of 2024. The increase is attributed to a 27% rise in tonnage at the C-zone and the introduction of the East Extension zone, where the copper and gold grades are more than double that of the C-zone.

New Gold said the new mineral reserves came at no additional cost and are expected to support a one-year extension to 2031. The Canadian miner also pointed to opportunities to further extend the block-caving operation in B.C. from the prospective K-zone, HW zone and D-zone.

The technical reports for Rainy River and Afton “were both negative to our valuation,” BMO Capital Markets analyst Brian Quast said Thursday in a note to clients.

Quast now expects New Gold‘s cash flow to hit $390 million this year, down from a previous estimate of $578 million. He lowered his target price on the stock to $5.50, while maintaining his outperform rating.

At Rainy River, the open pit — initially set to reach full depletion in early 2025 — has been extended to 2028 after incorporating the optimized stage five pit design, which would push the processing of low-grade stockpile into the future and keep the mill running at full capacity until 2029.

Despite a 2% decrease in open-pit reserves at Rainy River, the company has reported a 76% increase in gold resources, which it said presents an opportunity to further extend the mine, and growth in underground reserves to approximately 1.34 million oz.

CEO Patrick Godin said the life-of-mine plans “successfully outline New Gold’s strong production profile with reducing costs, strong free cash flow generation and increasing net asset value, while also highlighting exciting opportunities to build on over the longer-term.”

2025 outlook

Building on the mine extensions, New Gold has presented a three-year outlook that illustrates higher production and cost reduction leading to significant cash flow generation.

This year, the Toronto-based miner expects its consolidated gold production to increase by 16% to 325,000-365,000 oz., driven mainly by the improved production profile at Rainy River. Over the next three years, the mine located 65 km northwest of Fort Frances, Ontario, is expected to have average production of 300,000 oz. per year.

Meanwhile, its copper production is expected to be in line with 2024 at 50 million to 60 million lb., as the ramp-up in New Afton’s C-Zone throughput is offset by planned lower grades from both the exhaustion of the B3 cave and first draw bells from C-Zone.

All-in sustaining costs are expected to decrease by $215 per oz., or 17% compared to the 2024 midpoint of guidance, to between $1,025-$1,125 per oz., resulting from higher production and lower operating costs from the New Afton C-Zone crusher and conveyor system and as the Rainy River Phase 4 strip ratio decreases.

Total capital is expected to be $270 million to $315 million, in-line with the 2024 guidance range, as New Afton C-zone and Rainy River underground continue to ramp up and as development starts at the New Afton East Extension and Rainy River stage five expansions.

“In 2024, the company reached a free cash flow inflection point and 2025 will continue to build on that. This year, we expect to see the value from the significant investments made in recent years on our growth projects through increased production, decreasing costs, and substantial free cash flow generation,” Godin said.

Increasing margins

In 2026 and 2027, consolidated gold production is projected to increase even higher at 55% (435,000-490,000 oz.) and 37% (375,000-445,000 oz.) respectively, compared to 298,303 oz. in 2024. Again, the increases will be driven by the improved production profiles at both Rainy River and New Afton as growth projects are completed and ramped up in the near-term.

Copper production is also expected to continue to increase, with 2027 copper production pegged between 95-115 million lb., approximately 94% higher than 2024, driven by increased grade and throughput from New Afton’s C-Zone.

All-in sustaining costs are expected to decrease significantly by approximately 70% compared to the 2024 midpoint of guidance to between $400-$500 per oz., coinciding with the anticipated completion of the Rainy River stage five expansion in 2026. The 2027 total capital is expected to be $70 million to $95 million, also a significant drop from 2024.

The higher production, lower costs, and lower capital spend over the 2025-2027 period are expected to drive increasing margins and generate significant free cash flow for the company, New Gold said.

New Gold shares closed unchanged at to C$4.28 in Toronto trading Thursday, for a market capitalization of C$3.4 billion.