The Globe and Mail reports in its Thursday, Aug. 16, edition that RBC Dominion Securities analyst Dan Rollins, citing a further erosion of free cash flow at New Gold's ($1.01) Rainy River project, cut his rating to "underperform" from "sector perform" (all figures U.S.). The Globe's David Leeder writes in the Eye On Equities column that Mr. Rollins shaved his share target to $1.40 from $3.50. Analysts on average target the shares at $2. Mr. Rollins says in a note: "In our view, the elevated balance sheet risk at spot commodity prices/currencies, inherent ramp-up risk related to Rainy River, and lack of investor confidence will preclude New Gold's shares from keeping pace with peers, irrespective of current valuation. Although New Gold's shares have underperformed the GDX by 30 per cent since the company guided to higher costs at Rainy River, we believe they will continue to underperform until risks abate. Upside risks ... include stronger gold/copper prices and/or an opportunistic takeover offer. We believe the key headwind facing New Gold, and potential investors looking at the name following the material sell-off this year, is balance sheet risk."