New Gold profit jumps, keeps cash costs at $400/oz

New Gold, which owns mines in Mexico, the US and Australia, and is also developing projects in Canada and Chile said second-quarter earnings rose to $49.8 million from a year-earlier profit of $14.1 million.

Quarterly gold sales volumes rose 15% to 95,039 ounces, while revenues rose 52% to $171.6 million. New Gold also reiterated that it expects to produce between 380,000 to 400,000 ounces of gold this year, at cash costs of $390 to $410 per ounce.

Press Release: New Gold Inc. announced on Wednesday financial and operational results for the second quarter of 2011. The company finished the second quarter with gold sales of 95,039 ounces at a total cash cost per ounce sold, net of by-product sales, of $354 per ounce.

The company’s ability to deliver increased gold sales at lower costs along with the continued strength in commodity prices resulted in another quarter of robust financial results. During the quarter, the company’s earnings from mine operations increased by 129% to $83 million with net earnings increasing to $79 million, or $0.19 per share, while pre-tax cash generated from operations increased by 96% to $88 million and net cash generated from operations was $44 million.

New Gold is also pleased to reiterate its production and cost guidance for 2011 with gold production of 380,000 to 400,000 ounces at total cash cost(1) per ounce sold, net of by-product sales, of $390 to $410 per ounce. The company believes that with the continued strength of silver and copper prices, the total cash cost(1) may be below the above noted cost range as it has been on a year-to-date basis.

New Gold Second Quarter Highlights

• Second quarter total cash cost(1) per ounce sold, net of by-product sales, decreased to $354 per ounce from $481 per ounce in the same period in 2010
• Quarterly gold sales increased by 15% to 95,039 from 82,403 in the same period in 2010
• Second quarter net earnings of $79 million, or $0.19 per share
• First caving-related blast successfully completed at New Afton connecting two underground levels below the ore body
• $490 million of cash at June 30, 2011
• Completed the acquisition of Richfield Ventures Corp. (“Richfield”), and its flagship Blackwater Project in British Columbia on June 1, 2011
• Increased the exploration program at the Blackwater Project – targeting 40,000 to 50,000 metres of drilling in the second half of 2011

“The second quarter was particularly important in the continued evolution of New Gold,” stated Randall Oliphant, Executive Chairman. “Our operating results further established our company as a low cost producer in the industry, while development at New Afton and El Morro only helped add further value to those projects. With this foundation, we were able to complete the acquisition of Richfield, adding the exciting Blackwater Project with its established gold resource base and significant exploration potential to our pipeline, all while minimizing dilution to our shareholders and maintaining our financial flexibility.”