Shares of New Gold (NYSEMKT:NGD) rose over 15% today after the company announced production results for the fourth quarter of 2018. The gold stock lost 77% of its value last year after its all-important growth asset, the Rainy River gold mine, encountered a slower-than-expected production ramp-up. That forced management to revise full-year 2018 guidance in late July and increase its cost estimate, which sapped earnings from that point on.
The strong end-of-year performance -- bolstered by Rainy River -- has investors hopeful that the company is back on track to realizing its growth potential in 2019. As of 12:39 a.m. EST, the stock had settled to a 10.4% gain for the day and a 18.6% gain since the beginning of the week.
The importance of Rainy River is neatly summarized in one metric: The gold mine generated 77,202 ounces of gold in the final quarter of 2018, or 70% of the company's total output in the period. And despite a slower ramp-up earlier in the year, the asset contributed half of New Gold's total production for the entire year.
Zooming out to the entire portfolio, New Gold reported that all three major gold mines met or exceeded their revised full-year 2018 production guidance. The company also exceeded its copper production guidance for the year by delivering 89.5 million pounds -- 4.5 million pounds more than the high end of expectations.
Considering the headwinds it faced throughout the year, New Gold exited 2018 about as well as investors could have hoped for. Its prized asset hit record levels of production, which should allow the business to significantly reduce per-unit costs in 2019. The sale of the Mesquite Mine for a cool $158 million refocused the portfolio on Rainy River and provided a comfortable financial cushion. And the company even hired a new CFO. Today's update gives investors newfound optimism as they await full-year 2019 guidance, set to be released in the second half of January.