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Here’s why Regis Resources Limited shares have crashed today

If you are a Regis Resources Limited (ASX: RRL) shareholder, look away now…

RRL
Source: Google Finance.

In afternoon trade Regis shares were trending more than 27% lower following an ASX announcement this morning.

The update, on its Duketon operations for the two months to 28 February 2015, showed interruptions at some of its projects – Moolart Well, Rosemont and Garden Well.

Whilst only Garden Well production is expected to come in below guidance, the miner said Moolart Well’s six-monthly production to June 2015 is expected to be lower than the previous record production of 58,030 ounces.

Despite this, Regis said it remains on track to achieve gold production at the lower end of previous production guidance between 305,000 and 355,000 ounces of gold.

The miner also announced it had negotiated a restructuring of its debt facilities with Macquarie Group Ltd (ASX: MQG). It said the new $20 million facility has “relaxed” restrictions on the payment of dividends and will allow the company to make one lump sum repayment on 30 June 2017, as opposed to three annual repayments.

Should you buy Regis shares?

Today’s huge price drop highlights the risks inherent in gold mining stocks. Unlike some of their industrial counterparts, they sell a volatile commodity at a price which they have no control over, which is found in places where uncertainty abounds. Whilst today’s sell-off may prove to be a sound buying opportunity for savvy investors, I’m giving it a wide berth, for now.

Especially since Scott Phillips, lead investment advisor of Motley Fool Share Advisor, has just announced his #1 stock pick of 2015. Not only is it a fast growing tech company which boasts a juicy fully franked dividend, but its shares look like a great buy today (much better than Regis Resources!). But best of all, right now, you can get its name and stock code for free in our brand-new investment report!

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. Owen welcomes your feedback on Google plus (see below) or you can follow him on Twitter @ASXinvest.

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