Lowest stock performance
New Gold (NGD) stock has had the worst stock performance YTD (year-to-date) among the miners in our survey. Until October 17, 76% of its market value has been eroded in 2018. This is a significant underperformance to its peers (GDXJ)(NUGT).
Issues at Rainy River
New Gold stock has tanked so far in 2018 due to delays at its Rainy River mine. In the most recent quarter, Rainy River’s gold grade, gold recovery, and ore throughput came in below the market’s expectations. The issues at Rainy River have not died down. In its second-quarter earnings, the company reduced its 2018 gold production guidance by ~20.0% due to these ongoing issues.
Previously, capex escalation and missed deadlines for the startup of Rainy River were weighing down NGD. Now, operational and mechanical issues have surfaced. As a result, the company has increased its 2018 production costs and decreased its guidance for production volumes.
NGD’s Q3 2018 results
New Gold plans to announce its third-quarter results after the market closes on October 24, followed by a conference call to discuss the results on October 25. Investors are expected to watch for any updates on the Rainy River project.
According to a Reuters report, NGD was exploring a sale and could also divest specific mines if an outright sale doesn’t materialize. The company’s management could also provide an update on these news reports.