Resolute Mining Share Price Tanks on Production Update (ASX:RSG)

Resolute Mining Share Price Tanks on Production Update (ASX:RSG)

The share price of one of Australia’s largest gold miners Resolute Mining Ltd [ASX:RSG] has tanked on the back of its production updated and 2021 guidance.

Currently, RSG shares are trading down 8.89% or 6.8 cents to 69.5 cents per share.

Resolute Mining Share Price Chart

Source: Tradingview

The miner has been plagued by a steady drop in ore volume and grade, resulting in an increase in its all-in-sustaining-costs (AISC).

Since coming off their high in late July, RSG share have shed more than 50%, making it one of the worst performing gold stocks over the past 12 months.

Will this year be any better?

Unfortunately, calendar year 2021 doesn’t appear like it will be any better for RSG.

The miner set production guidance for 2020 between 400,000oz and 430,000oz, with costs to be around US$980/oz and US$1,080/oz.

RSG just scraped into the lower end of its production guidance with 400,713oz.

While it nearly maxed out its AISC at US$1,074/oz.

Quarterly production continued its downward trend too.

For the December quarter, RSG produced 89,888oz, down from the 105,293oz for the December 2019 quarter.

REVEALED: What’s Next for Aussie Gold Stock Prices? Learn more.

Though this was up slightly from the 87,303oz of gold poured last quarter.

Regardless, RSG appear to be bracing for a rougher year ahead.

RSG is forecasting total gold production for CY21 of 350,000oz to 375,000oz at an AISC of US$1,200/oz to US$1,275/oz.

A significant whack to output compared to 2020 and a steep rise in costs.

This is due to the miner forecasting a decrease in production at its Mako Gold Mine in Senegal of 115,000oz to 120,000oz due to a cut back of the main pit.

Although its Syama Project in Mali is expected to pick up some of the slack, with output expected to increase by 25% to between 155,000oz and 170,000oz.

Gold mining is a game of patience

There are a couple of lessons to be learned here for prospective gold stock traders.

One, you can still lose buying gold stocks, even if the gold price is at historic highs.

Two, gold mining is a slow, methodical game — it pays to look years ahead.

Why do I say that?

Because in RSG’s case, their Mako project expanded its mine life by a further two years.

Meaning mining will continue until 2027.

This is the reason for the cut back at the main pit, which will provide access to deeper sections of the deposit and increase the life of the mine.

So, the outlook for 2021 may not be looking peachy, but if you’re patient you might be able to steal some decent returns for a song.

With the gold price currently stalled, RSG could be a stock to place on your watch. In the meantime, read why our resident gold expert Shae Russell reckons Aussie gold stocks could be set to spike as Australia becomes the next ‘gold epicentre’. If you want to learn more, download your free report here.

Regards, 

Lachlann Tierney,

For The Daily Reckoning Australia