Intrinsic value of New Gold Inc. - NGD

Previous Close

$3.92

  Intrinsic Value

$1.22

stock screener

  Rating & Target

str. sell

-69%

Previous close

$3.92

 
Intrinsic value

$1.22

 
Up/down potential

-69%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NGD stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -4.05
  23.70
  21.83
  20.15
  18.63
  17.27
  16.04
  14.94
  13.94
  13.05
  12.24
  11.52
  10.87
  10.28
  9.75
  9.28
  8.85
  8.47
  8.12
  7.81
  7.53
  7.27
  7.05
  6.84
  6.66
  6.49
  6.34
  6.21
  6.09
  5.98
  5.88
Revenue, $m
  924
  1,143
  1,393
  1,673
  1,985
  2,328
  2,701
  3,104
  3,537
  3,999
  4,489
  5,006
  5,550
  6,120
  6,717
  7,340
  7,990
  8,666
  9,370
  10,101
  10,862
  11,652
  12,473
  13,326
  14,213
  15,136
  16,096
  17,095
  18,136
  19,220
  20,350
Variable operating expenses, $m
 
  1,445
  1,760
  2,115
  2,509
  2,942
  3,414
  3,924
  4,471
  5,055
  5,673
  6,327
  7,015
  7,736
  8,490
  9,278
  10,099
  10,954
  11,844
  12,768
  13,729
  14,728
  15,765
  16,844
  17,965
  19,132
  20,345
  21,608
  22,924
  24,294
  25,723
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  903
  1,445
  1,760
  2,115
  2,509
  2,942
  3,414
  3,924
  4,471
  5,055
  5,673
  6,327
  7,015
  7,736
  8,490
  9,278
  10,099
  10,954
  11,844
  12,768
  13,729
  14,728
  15,765
  16,844
  17,965
  19,132
  20,345
  21,608
  22,924
  24,294
  25,723
Operating income, $m
  21
  -302
  -368
  -442
  -524
  -614
  -713
  -820
  -934
  -1,056
  -1,185
  -1,321
  -1,465
  -1,616
  -1,773
  -1,938
  -2,109
  -2,288
  -2,474
  -2,667
  -2,867
  -3,076
  -3,293
  -3,518
  -3,752
  -3,996
  -4,249
  -4,513
  -4,788
  -5,074
  -5,372
EBITDA, $m
  366
  126
  154
  185
  219
  257
  299
  343
  391
  442
  496
  553
  613
  676
  742
  811
  883
  958
  1,036
  1,117
  1,201
  1,288
  1,379
  1,473
  1,571
  1,673
  1,779
  1,890
  2,005
  2,124
  2,249
Interest expense (income), $m
  75
  79
  118
  163
  213
  269
  330
  397
  469
  546
  629
  716
  809
  906
  1,008
  1,115
  1,227
  1,343
  1,464
  1,590
  1,720
  1,856
  1,998
  2,145
  2,297
  2,456
  2,621
  2,793
  2,972
  3,158
  3,352
Earnings before tax, $m
  3
  -381
  -486
  -604
  -737
  -883
  -1,043
  -1,216
  -1,403
  -1,602
  -1,814
  -2,038
  -2,274
  -2,522
  -2,782
  -3,053
  -3,336
  -3,631
  -3,937
  -4,256
  -4,588
  -4,933
  -5,291
  -5,663
  -6,050
  -6,452
  -6,870
  -7,306
  -7,759
  -8,232
  -8,724
Tax expense, $m
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  4
  -381
  -486
  -604
  -737
  -883
  -1,043
  -1,216
  -1,403
  -1,602
  -1,814
  -2,038
  -2,274
  -2,522
  -2,782
  -3,053
  -3,336
  -3,631
  -3,937
  -4,256
  -4,588
  -4,933
  -5,291
  -5,663
  -6,050
  -6,452
  -6,870
  -7,306
  -7,759
  -8,232
  -8,724

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  251
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,314
  6,246
  7,609
  9,142
  10,846
  12,719
  14,759
  16,964
  19,329
  21,852
  24,527
  27,353
  30,326
  33,444
  36,706
  40,111
  43,661
  47,357
  51,202
  55,199
  59,353
  63,670
  68,157
  72,820
  77,667
  82,709
  87,955
  93,416
  99,102
  105,027
  111,204
Adjusted assets (=assets-cash), $m
  5,063
  6,246
  7,609
  9,142
  10,846
  12,719
  14,759
  16,964
  19,329
  21,852
  24,527
  27,353
  30,326
  33,444
  36,706
  40,111
  43,661
  47,357
  51,202
  55,199
  59,353
  63,670
  68,157
  72,820
  77,667
  82,709
  87,955
  93,416
  99,102
  105,027
  111,204
Revenue / Adjusted assets
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
  0.183
Average production assets, $m
  4,049
  5,009
  6,102
  7,331
  8,697
  10,199
  11,835
  13,603
  15,500
  17,523
  19,669
  21,935
  24,318
  26,819
  29,434
  32,165
  35,012
  37,976
  41,059
  44,264
  47,596
  51,058
  54,655
  58,394
  62,282
  66,325
  70,532
  74,910
  79,471
  84,222
  89,175
Working capital, $m
  317
  81
  99
  119
  141
  165
  192
  220
  251
  284
  319
  355
  394
  435
  477
  521
  567
  615
  665
  717
  771
  827
  886
  946
  1,009
  1,075
  1,143
  1,214
  1,288
  1,365
  1,445
Total debt, $m
  1,202
  1,787
  2,463
  3,224
  4,069
  4,997
  6,010
  7,103
  8,276
  9,527
  10,855
  12,256
  13,731
  15,277
  16,895
  18,584
  20,345
  22,178
  24,085
  26,068
  28,128
  30,269
  32,495
  34,807
  37,212
  39,713
  42,315
  45,023
  47,844
  50,782
  53,846
Total liabilities, $m
  2,513
  3,098
  3,774
  4,535
  5,380
  6,308
  7,321
  8,414
  9,587
  10,838
  12,166
  13,567
  15,042
  16,588
  18,206
  19,895
  21,656
  23,489
  25,396
  27,379
  29,439
  31,580
  33,806
  36,118
  38,523
  41,024
  43,626
  46,334
  49,155
  52,093
  55,157
Total equity, $m
  2,801
  3,148
  3,835
  4,608
  5,466
  6,410
  7,439
  8,550
  9,742
  11,013
  12,362
  13,786
  15,284
  16,856
  18,500
  20,216
  22,005
  23,868
  25,806
  27,820
  29,914
  32,090
  34,351
  36,701
  39,144
  41,685
  44,329
  47,081
  49,947
  52,934
  56,047
Total liabilities and equity, $m
  5,314
  6,246
  7,609
  9,143
  10,846
  12,718
  14,760
  16,964
  19,329
  21,851
  24,528
  27,353
  30,326
  33,444
  36,706
  40,111
  43,661
  47,357
  51,202
  55,199
  59,353
  63,670
  68,157
  72,819
  77,667
  82,709
  87,955
  93,415
  99,102
  105,027
  111,204
Debt-to-equity ratio
  0.429
  0.570
  0.640
  0.700
  0.740
  0.780
  0.810
  0.830
  0.850
  0.870
  0.880
  0.890
  0.900
  0.910
  0.910
  0.920
  0.920
  0.930
  0.930
  0.940
  0.940
  0.940
  0.950
  0.950
  0.950
  0.950
  0.950
  0.960
  0.960
  0.960
  0.960
Adjusted equity ratio
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504
  0.504

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4
  -381
  -486
  -604
  -737
  -883
  -1,043
  -1,216
  -1,403
  -1,602
  -1,814
  -2,038
  -2,274
  -2,522
  -2,782
  -3,053
  -3,336
  -3,631
  -3,937
  -4,256
  -4,588
  -4,933
  -5,291
  -5,663
  -6,050
  -6,452
  -6,870
  -7,306
  -7,759
  -8,232
  -8,724
Depreciation, amort., depletion, $m
  345
  428
  522
  627
  743
  872
  1,012
  1,163
  1,325
  1,498
  1,681
  1,875
  2,078
  2,292
  2,516
  2,749
  2,992
  3,246
  3,509
  3,783
  4,068
  4,364
  4,671
  4,991
  5,323
  5,669
  6,028
  6,403
  6,792
  7,198
  7,622
Funds from operations, $m
  346
  47
  36
  22
  7
  -11
  -31
  -54
  -78
  -104
  -133
  -163
  -196
  -230
  -266
  -304
  -343
  -385
  -428
  -473
  -520
  -569
  -619
  -672
  -726
  -783
  -842
  -903
  -967
  -1,033
  -1,102
Change in working capital, $m
  -35
  16
  18
  20
  22
  24
  27
  29
  31
  33
  35
  37
  39
  41
  42
  44
  46
  48
  50
  52
  54
  56
  58
  61
  63
  66
  68
  71
  74
  77
  80
Cash from operations, $m
  381
  31
  18
  2
  -16
  -36
  -58
  -82
  -109
  -137
  -167
  -200
  -234
  -270
  -308
  -348
  -390
  -433
  -478
  -525
  -574
  -625
  -677
  -732
  -789
  -849
  -910
  -974
  -1,041
  -1,110
  -1,183
Maintenance CAPEX, $m
  0
  -346
  -428
  -522
  -627
  -743
  -872
  -1,012
  -1,163
  -1,325
  -1,498
  -1,681
  -1,875
  -2,078
  -2,292
  -2,516
  -2,749
  -2,992
  -3,246
  -3,509
  -3,783
  -4,068
  -4,364
  -4,671
  -4,991
  -5,323
  -5,669
  -6,028
  -6,403
  -6,792
  -7,198
New CAPEX, $m
  -766
  -960
  -1,093
  -1,229
  -1,366
  -1,502
  -1,636
  -1,768
  -1,897
  -2,023
  -2,146
  -2,266
  -2,384
  -2,500
  -2,616
  -2,731
  -2,847
  -2,964
  -3,083
  -3,205
  -3,331
  -3,462
  -3,598
  -3,739
  -3,888
  -4,043
  -4,207
  -4,379
  -4,560
  -4,751
  -4,953
Cash from investing activities, $m
  -768
  -1,306
  -1,521
  -1,751
  -1,993
  -2,245
  -2,508
  -2,780
  -3,060
  -3,348
  -3,644
  -3,947
  -4,259
  -4,578
  -4,908
  -5,247
  -5,596
  -5,956
  -6,329
  -6,714
  -7,114
  -7,530
  -7,962
  -8,410
  -8,879
  -9,366
  -9,876
  -10,407
  -10,963
  -11,543
  -12,151
Free cash flow, $m
  -387
  -1,274
  -1,503
  -1,748
  -2,008
  -2,281
  -2,566
  -2,862
  -3,168
  -3,485
  -3,811
  -4,147
  -4,493
  -4,849
  -5,216
  -5,595
  -5,985
  -6,389
  -6,807
  -7,240
  -7,689
  -8,155
  -8,639
  -9,143
  -9,668
  -10,215
  -10,786
  -11,381
  -12,004
  -12,654
  -13,334
Issuance/(repayment) of debt, $m
  135
  585
  676
  760
  845
  929
  1,012
  1,094
  1,173
  1,251
  1,327
  1,402
  1,475
  1,546
  1,618
  1,689
  1,761
  1,833
  1,907
  1,983
  2,061
  2,141
  2,225
  2,313
  2,405
  2,501
  2,602
  2,708
  2,821
  2,939
  3,064
Issuance/(repurchase) of shares, $m
  13
  979
  1,173
  1,377
  1,595
  1,827
  2,071
  2,327
  2,595
  2,873
  3,162
  3,462
  3,772
  4,093
  4,426
  4,769
  5,125
  5,493
  5,875
  6,271
  6,682
  7,108
  7,552
  8,013
  8,493
  8,993
  9,514
  10,058
  10,625
  11,218
  11,837
Cash from financing (excl. dividends), $m  
  173
  1,564
  1,849
  2,137
  2,440
  2,756
  3,083
  3,421
  3,768
  4,124
  4,489
  4,864
  5,247
  5,639
  6,044
  6,458
  6,886
  7,326
  7,782
  8,254
  8,743
  9,249
  9,777
  10,326
  10,898
  11,494
  12,116
  12,766
  13,446
  14,157
  14,901
Total cash flow (excl. dividends), $m
  -202
  290
  346
  389
  432
  475
  518
  559
  600
  640
  679
  717
  754
  791
  827
  864
  900
  937
  975
  1,014
  1,054
  1,095
  1,138
  1,183
  1,230
  1,279
  1,331
  1,385
  1,442
  1,503
  1,567
Retained Cash Flow (-), $m
  36
  -979
  -1,173
  -1,377
  -1,595
  -1,827
  -2,071
  -2,327
  -2,595
  -2,873
  -3,162
  -3,462
  -3,772
  -4,093
  -4,426
  -4,769
  -5,125
  -5,493
  -5,875
  -6,271
  -6,682
  -7,108
  -7,552
  -8,013
  -8,493
  -8,993
  -9,514
  -10,058
  -10,625
  -11,218
  -11,837
Prev. year cash balance distribution, $m
 
  251
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -438
  -827
  -988
  -1,163
  -1,352
  -1,554
  -1,768
  -1,995
  -2,233
  -2,484
  -2,745
  -3,018
  -3,303
  -3,598
  -3,906
  -4,225
  -4,556
  -4,900
  -5,257
  -5,628
  -6,013
  -6,414
  -6,830
  -7,263
  -7,714
  -8,184
  -8,673
  -9,183
  -9,715
  -10,270
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
 
  -418
  -748
  -844
  -933
  -1,012
  -1,080
  -1,133
  -1,170
  -1,191
  -1,194
  -1,180
  -1,149
  -1,103
  -1,044
  -974
  -895
  -810
  -721
  -632
  -545
  -462
  -384
  -314
  -251
  -197
  -151
  -113
  -83
  -60
  -41
Current shareholders' claim on cash, %
  100
  67.7
  46.2
  31.9
  22.3
  15.8
  11.2
  8.1
  5.9
  4.3
  3.2
  2.3
  1.7
  1.3
  1.0
  0.7
  0.6
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0

New Gold Inc. is an intermediate gold mining company. The Company is engaged in the development and operation of mineral properties. Its segments include New Afton, Mesquite, Peak Mines, Cerro San Pedro, Corporate and Other. It has operating mines in Canada, the United States, Australia and Mexico; development projects in Canada, and a stream on gold production from a development property in Chile. Its development projects include Rainy River and Blackwater projects, which are located in Canada. Its Rainy River project is a gold project located approximately 65 kilometers northwest of Fort Frances in northwestern Ontario, Canada. The Rainy River comprises approximately 192 square kilometers of various rights and claims. The Blackwater Project is located approximately 160 kilometers southwest of the city of Prince George in central British Columbia, Canada and 110 kilometers southwest of the town of Vanderhoof. The Blackwater project covers an area of over 1,000 square kilometers.

FINANCIAL RATIOS  of  New Gold Inc. (NGD)

Valuation Ratios
P/E Ratio 503.4
Price to Sales 2.2
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 5.3
Price to Free Cash Flow -5.2
Growth Rates
Sales Growth Rate -4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 45.6%
Cap. Spend. - 3 Yr. Gr. Rate 14.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 42.9%
Total Debt to Equity 42.9%
Interest Coverage 1
Management Effectiveness
Return On Assets 2%
Ret/ On Assets - 3 Yr. Avg. -4.2%
Return On Total Capital 0.1%
Ret/ On T. Cap. - 3 Yr. Avg. -6.9%
Return On Equity 0.1%
Return On Equity - 3 Yr. Avg. -9.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 76.5%
Gross Margin - 3 Yr. Avg. 77.1%
EBITDA Margin 45.8%
EBITDA Margin - 3 Yr. Avg. 8.2%
Operating Margin 2.3%
Oper. Margin - 3 Yr. Avg. -23.8%
Pre-Tax Margin 0.3%
Pre-Tax Margin - 3 Yr. Avg. -33.1%
Net Profit Margin 0.4%
Net Profit Margin - 3 Yr. Avg. -31.2%
Effective Tax Rate -33.3%
Eff/ Tax Rate - 3 Yr. Avg. -5.1%
Payout Ratio 0%

NGD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NGD stock intrinsic value calculation we used $924 million for the last fiscal year's total revenue generated by New Gold Inc.. The default revenue input number comes from 2016 income statement of New Gold Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NGD stock valuation model: a) initial revenue growth rate of 23.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.9%, whose default value for NGD is calculated based on our internal credit rating of New Gold Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of New Gold Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NGD stock the variable cost ratio is equal to 126.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NGD stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.6% for New Gold Inc..

Corporate tax rate of 27% is the nominal tax rate for New Gold Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NGD stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NGD are equal to 438.2%.

Life of production assets of 11.7 years is the average useful life of capital assets used in New Gold Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NGD is equal to 7.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2801 million for New Gold Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 573.81 million for New Gold Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of New Gold Inc. at the current share price and the inputted number of shares is $2.2 billion.

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Financial statements of NGD
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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