📈 Fed's first cut since 2020: Time to buy the dip? See Tech-focused stock picksUnlock AI Picks

Scotiabank maintains price target on New Gold shares, cites diamond drilling program

EditorNatashya Angelica
Published 09/12/2024, 11:57 AM
NGD
-


On Thursday, Scotiabank reaffirmed its positive outlook on shares of New Gold Inc. (NYSE: NYSE:NGD), maintaining a Sector Outperform rating and a price target of $2.75. The endorsement follows New Gold's announcement regarding its successful diamond drilling program at the Rainy River mine in Ontario. The exploration has confirmed the extension of gold mineralization in multiple zones of the Underground Main.


The company's drilling efforts at Rainy River have yielded significant results, with notable highlights including 3.3 grams per tonne (g/t) gold equivalent (Au-eq) over 7.5 meters at the Intrepid zone, 2.6 g/t Au-eq over 13.5 meters at ODM East, and 4.4 g/t Au-eq over 7.6 meters at the 17-East zone. Additionally, a new intersection of gold mineralization at the Gap area target returned 3.59 g/t gold over 4.50 meters.


In response to these promising findings, New Gold has decided to increase its investment in the Rainy River exploration program by an additional $3 million for the year 2024. This budget expansion will fund an extra 13,000 meters of drilling by the end of the year, marking the second increase in exploration funding for the year.


The recent discoveries and subsequent increased investment in exploration at Rainy River are expected to enhance the mine's mineral resource estimate, which is scheduled for completion at the end of 2024. New Gold's proactive approach to expanding its exploration budget reflects the company's confidence in the mine's potential and its commitment to maximizing the asset's value.


In other recent news, New Gold Inc. has seen significant developments in its operations. The company reported robust financial and operational results in its Q2 earnings call, with increased net earnings attributed to higher metal prices and the gain on derecognition of the New Afton free cash flow obligation. The company's mines, New Afton and Rainy River, played a vital role in this financial boost.


In addition to financial growth, New Gold Inc. has made strategic additions to its board of directors. Veteran mining professionals Sophie Bergeron and Ross Bhappu have joined the board, expected to enhance the company's expertise in mining operations, safety, and financial strategy.


Bergeron, with over 20 years of experience in the mining sector, is recognized for her operational discipline and commitment to safe mining practices. Bhappu, on the other hand, has over 30 years of experience in the mining industry, with a focus on overseeing and financing mining projects.


These recent developments come as New Gold Inc. continues to demonstrate operational excellence and financial resilience. The company is on track to achieve a sustainable production platform of approximately 600,000 gold equivalent ounces per year, with significant cost savings anticipated due to operational efficiencies. As the company advances its mining operations, the market is closely watching the continued execution of its strategic plans.


InvestingPro Insights


As New Gold Inc. (NYSE: NGD) intensifies its exploration efforts at the Rainy River mine, recent data from InvestingPro provides a financial perspective on the company's performance and market sentiment. According to InvestingPro, New Gold's net income is expected to grow this year, which may align with the positive results from their drilling program. This anticipated growth could be a signal of the company's improving operational efficiency and the potential impact of their increased exploration investment.


InvestingPro Data shows a 15.83% revenue growth in the last twelve months as of Q2 2024, indicating that New Gold's expansion strategies may be translating into tangible financial gains. Additionally, the company has experienced a strong return over the last three months, with a price total return of 32.66%, reflecting investor optimism in the wake of their recent operational successes. Despite not paying dividends, New Gold's stock price movements have been quite volatile, which could present opportunities for investors with a higher risk tolerance.


For those interested in further insights, InvestingPro offers additional tips on New Gold Inc., providing a comprehensive analysis for investors looking to make informed decisions. There are currently 11 additional InvestingPro Tips available, which can be accessed for more detailed guidance on the company's financial health and stock performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.