Bad news at the end of a volatile year for gold from Gold Road Resources, which says mechanical problems at its Gruyere mine in WA will cost it revenue, profits and higher costs for the quarter and the 2020-21 financial year.
The problems saw the company cut production guidance and lift its costs estimates for the quarter and the year.
The news saw the saws slide 8.5% in early trading before they settled to close the session down 7.5% at $1.31. The fall cut the share price gain for the year to date to less than 1%. The loss in the past month so far is more than 15%.
The company said disruptions at the Gruyere processing plant operations with a torn mill feed conveyor belt forced the company make temporary repairs and cut ore processing rates.
Following the shutdown of the milling circuit to replace the conveyor belt, a coupling on the ball mill failed (it crushes the ore).
As a result, production at Gruyere for the June quarter will be approximately 52,000 to 55,000 ounces at an all-in sustaining cost of $1,675 to $1,800 an ounce.
Gold Road now anticipates gold production for the 2021 calendar year will be within the lower half of guidance of 260,000 to 300,000 ounces.
All-in sustaining costs for the 2021 calendar year are anticipated to be between $1,325 and $1,475 an ounce, with lower the fall June quarter production and higher maintenance and labour costs driving an increase in costs (from previous guidance of between $1,225 to $1,350.
Repairs were made to the ball mill last Friday, with the processing plant returning to normal loads during the weekend. Gold Resources noted that it is currently investigating the cause of the issue to prevent any future occurrence.
