Broker Eight Capital has greeted first quarter results from New Gold Inc (TSE:NGD, NYSE:NGD) with a mixed response, a 'sell' stance on the miner.
The group has a portfolio of four producing assets and two significant development projects.
It produces metal, from the New Afton Mine in Canada, the Mesquite Mine in the United States, the Peak Mines in Australia and the Cerro San Pedro Mine in Mexico .
It also owns 100% of the Rainy River and Blackwater projects in Canada.
In line with broker estimates...
Operating results were in line with the broker's estimates, says analyst Josh Wolfson, with lower output offset by lower costs, and higher free cash flow achieved.
Gold production for the three months came in at 89,327 ounces and copper production was 23.8 million pounds, which was 1% and 10% below the broker's estimates respectively.
But AISC (all in sustaining costs of $597per ounce were a material 20% below the broker's $750 per ounce estimate, it added.
Start-up timelines reiterated..
At the Rainy River development, Wolfson noted that productivity gains are expected through spring and summer, and start-up timelines were reiterated.
But the timeline for the Schedule 2 permit receipt, a critical permit required to facilitate tailings storage past the 6-months of capacity provided by the starter tailings dam, have been revised and pushed back to January 2018, from November 2017, the analyst noted.
The broker's 12-month target price of $4 is based on 1.6 times the broker's target NAV at a long term gold price of $1,300 an ounce.
This is below its peers due to greater development and financial risks, said the broker.