Why the Resolute Mining (ASX:RSG) share price is crashing 8% today

This gold miner is having a bad day…

| More on:
A man stands in front of a chart with an arrow going down and slaps his forehead in frustration.

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 Resolute Mining Limited (ASX: RSG) share price has been a very poor performer on Thursday.

At the time of writing, the gold miner's shares are down almost 8% to 52 cents.

Why is the Resolute Mining share price sinking today?

The weakness in the Resolute Mining share price today has been driven by the release of a disappointing quarterly update.

During the second quarter of FY 2021, Resolute Mining reported gold production of 77,450 ounces. This represents a 10% decline on production during the first quarter.

This was driven largely by its Syama Sulphide operation, which reported a 10% reduction in production to 33,463 ounces. It also recorded an all-in sustaining cost (ASIC) of $1,339 per ounce at the operation, up 5.1% quarter on quarter. This was the result of record levels of mining, processing, and roaster throughput, which were offset by power disruptions, an extension of scheduled mill maintenance, and lower grades.

The company's Syama Oxide operation also reported a decline in production and an increase in costs. It saw production fall 13.4% to 13,424 ounces with a 12.6% higher ASIC of $1,466 per ounce. Management advised that record tonnes were processed but offset by lower blended grades and increase in circuit stocks.

Finally, its Mako operation reported a 7.2% decline in production and 5.6% increase in its ASIC to $1,094 per ounce. Management advised that this was in line with expectations during its cut-back phase.

Sales decline

Also declining during the quarter, and potentially weighing on the Resolute Mining share price today, were its sales.

According to the release, the company sold 68,103 ounces of gold during the quarter. This was down 18% on the previous quarter. One small positive was that its average realised price increased by 0.9% to $1,714 per ounce.

However, due to a 7% increase in its group AISC to $1,319 per ounce, its margin fell to $395 per ounce from $490 per ounce in the first quarter.

FY 2021 guidance downgraded

Unsurprisingly, given its poor performance during the second quarter, management does not expect to achieve its FY 2021 production guidance of 350,000 ounces to 375,000 ounces. Nor does it expect its ASIC to be within its guidance range of $1,200 to $1,275 per ounce.

Resolute Mining is now expecting production of 315,000 ounces to 340,000 ounces with an ASIC of $1,290 to $1,365 per ounce.

Following today's decline, the Resolute Mining share price is now down 38% in 2021.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Share Fallers

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why DroneShield, Gentrack, Metals X, and Northern Star shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Bapcor, Boss Energy, Macquarie, and Novonix shares are falling today

These shares are having a tough session on Thursday. But why?

Read more »

Stock market crash concept of young man screaming at laptop on the sofa.
Share Fallers

Guess which ASX 200 stock just crashed 31% on slumping sales

The $1.3 billion ASX 200 stock is getting hammered today.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why CBA, Inghams, Praemium, and Strike Energy shares are tumbling today

These shares are having a tough time on Tuesday. But why?

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Share Fallers

Why Brightstar, Eagers Automotive, Regis Resources, and Westpac shares are sinking

These shares are starting the week in the red. But why?

Read more »

Disappointed man with his head on his hand looking at a falling share price his a laptop.
Share Fallers

Why 29Metals, Atlas Arteria, DroneShield, and Yancoal shares are falling today

Let's see why these shares are ending the week in the red.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Share Fallers

Why 29Metals, CAR Group, DroneShield, and Santana Minerals shares are falling today

These shares are missing out on the good times on Thursday. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Imricor, Imugene, Newmont, and Pepper Money shares are falling today

These shares are having a tough time on hump day. But why?

Read more »