The Gold Road Resources Ltd (ASX: GOR) share price is under pressure again on Friday.
In afternoon trade, the gold miner's shares are down a further 6% to $1.50.
This means the ASX 200 gold share is now down 14% over the last two sessions.
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Why is the Gold Road share price tumbling?
There have been a couple of reasons for the weakness in the Gold Road share price.
The first is a pullback in the gold price overnight, which is weighing on the gold sector. This has seen the S&P/ASX All Ordinaries Gold Index (ASX: XGD) fall 1.2% today.
The other catalyst has been a production downgrade from Gold Road on Thursday relating to the Gruyere Gold Mine.
According to the update, the reliability and utilisation of the production drills and availability of blasting resources have been below expectations. Together with a recent significant rain event, this has negatively impacted ore and waste mining at the Gruyere Gold Mine.
For the current quarter, production is anticipated to be 72,000 to 76,000 ounces (100% basis), with the range contingent on recovery from the rain event.
Based on this and the anticipated outcomes of its recovery plan, Gold Road is now guiding to 2023 annual production of between 320,000 and 350,000 ounces (100% basis). This is down from its previous guidance of 340,000 to 370,000 ounces.
Should you buy the dip?
Analysts at Bell Potter have been looking over Gold Road's update. And while they have reduced their earnings estimates, they remain positive on the miner.
According to a note, the broker has retained its buy rating with a trimmed price target of $1.95.
Based on the current Gold Road share price, this implies a potential upside of 30% for investors over the next 12 months. It explains its positive stance:
We reduce our target price by 4.9%, forecast a 22.8% [now 30%] TSR, and maintain our Buy recommendation, in line with our ratings structure. GOR owns 50% of Gruyere, a large, long-life, operating Tier-1 gold mine, which is yielding increasing cash flow as production expands to greater than 350kozpa (100% basis) for 10-years, with scope to extend mine-life. GOR's shareholding in DEG provides exposure to the Mallina Gold Project, where DEG are planning a 540kozpa gold project for 13.5 years.
