New Gold misses revenue expectations despite record free cash flow

New Gold Inc. reported mixed second-quarter 2025 results, with adjusted earnings of $0.11 per share exceeding analyst estimates of $0.10, but revenue of $308.4 million falling short of the $321.9 million consensus, leading to a 2.3% pre-market share decline. Operationally, the company achieved record quarterly free cash flow of $63 million and increased gold production by 14.6% year-over-year to 78,595 ounces, contributing to a 41.3% rise in revenue. CEO Patrick Godin affirmed the company's momentum and maintained its 2025 consolidated production guidance.

Analysis

New Gold Inc. (NGD) reported mixed second-quarter 2025 results, characterized by a slight earnings beat but a notable revenue shortfall that prompted a 2.3% share price decline in pre-market trading. The company's adjusted earnings per share of $0.11 narrowly surpassed the $0.10 analyst consensus, but revenue of $308.4 million missed the forecasted $321.9 million. Despite the revenue miss, operational performance was strong, highlighted by a record quarterly free cash flow of $63 million and a 14.6% year-over-year increase in gold production to 78,595 ounces. This production growth, coupled with higher gold prices, drove a substantial 41.3% year-over-year increase in total revenue. A key operational highlight was the New Afton mine, which achieved a negative all-in sustaining cost (AISC) of $537 per gold ounce due to significant copper by-product credits, offsetting the higher $1,696 AISC at the Rainy River mine. Critically, management reaffirmed its full-year 2025 guidance, which projects a consolidated AISC between $1,025 and $1,125 per ounce, implying a significant improvement in cost performance is expected in the second half of the year compared to the Q2 figure of $1,393.

Key Decisions for Investors

• Investors should look beyond the headline revenue miss and focus on the strong underlying operational metrics, particularly the record free cash flow generation and robust year-over-year production growth.
• It is critical to monitor the company's progress in reducing all-in sustaining costs in the second half of the year, as achieving the reaffirmed full-year guidance is essential for validating management's outlook and supporting margins.
• Consider the continued strength in copper prices as a key positive catalyst, given its role in generating by-product credits that significantly lower the effective cost of gold production at the New Afton mine.