Why ASX gold miner Red 5's (ASX:RED) share price is tumbling 10% lower

The Red 5 share price is falling hard. We take a look at the ASX gold miner's latest production guidance update for its Darlot Gold Mine.

| More on:
white arrow dropping down representing the 10 most shorted shares on the ASX

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Red 5 Limited (ASX: RED) share price is tumbling lower in morning trade, down 8% at the time of writing after earlier posting losses of more than 11%.

Below we take a look at the ASX gold miner's latest production guidance for its Darlot Gold Mine.

What production guidance did Red 5 report?

Red 5's share price is moving lower after production guidance for its Darlot Gold Mine for the 2021 financial year (FY2021) was revised downward while costs were forecast to be higher.

The new production guidance comes in at 74,000–78,000 ounces, down from the previous estimate of 80,000­–85,000 ounces. Meanwhile All In Sustaining Costs (AISC) nudged higher, to $2,240–2,290 per ounce, up from the previous $2,150–2,280 per ounce.

Red 5 reported that it was struggling to find enough labour at its Darlot underground mine and its Great Western open pit mine. The labour shortages continue to hamper production.

At the Great Western mine, it said a shortage of machine operators and truck drivers meant the contractor could not increase mining activities as fast as planned, following commencement of mining in the March quarter.

Commenting on the company's gold operations, Red 5's Managing Director, Mark Williams said:

Red 5 continues to make excellent progress on the King of the Hills Gold Project, however we continue to face challenges at our Darlot Gold Mine. The difficulty of sourcing skilled labour for both Darlot and for our new Great Western mine has impacted our ability to achieve our FY21 production guidance.

As previously announced, King of the Hills remains on schedule and budget and is expected to commence gold production in the June Quarter 2022.

The company said it is reviewing its Darlot gold mining operations and will provide production and cost guidance for the 2022 financial year in the September quarter this year.

Red 5 share price snapshot

It's been a difficult year for Red 5 shareholders, with shares in the ASX gold miner down 39% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) is up 29% in that same time.

Year-to-date the Red 5 share price is down 31%.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Gold

Calculator and gold bars on Australian dollars, symbolising dividends.
Gold

What's going on with the Newmont share price today?

Newmont shares should be dropping, but they're not...

Read more »

Gold bars on top of gold coins.
Gold

One ASX 200 gold stock with the 'potential for exceptional free cash flow growth'

This fund manager has a favourite stock in the gold sector right now.

Read more »

Woman holding gold bar and cheering.
Gold

Why are ASX gold shares rebounding today?

ASX investors are going for gold today.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Gold

Newmont share price races higher on $1.3b windfall

This gold miner is catching the eye on Tuesday. But why?

Read more »

A cool man smiles as he is draped in gold cloth and wearing gold glasses.
Gold

4 reasons to buy this ASX 200 gold stock today

A leading expert has a buy recommendation on this ASX 200 gold stock. Let’s find out why.

Read more »

a man wearing a gold shirt smiles widely as he is engulfed in a shower of gold confetti falling from the sky. representing a new gold discovery by ASX mining share OzAurum Resources
Gold

Why this 'sector leading' ASX 200 gold stock could deliver market-beating returns

Bell Potter thinks golden returns could be on offer from this mining stock.

Read more »

Man drawing illustration of a big fish eating a little fish representing a takeover or acquisition.
Gold

Guess which buy-rated ASX gold stock is 'a likely takeover target'

Bell Potter thinks that this gold stock could deliver big returns.

Read more »

Gold bars and Australian dollar notes.
Gold

Down 21% in a month, should you buy Newmont shares before they trade ex-dividend?

This gold stock has been battered by the markets.

Read more »