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Silver Lake Resources Limited shares drop to a 52-week low

Unfortunately for its long-suffering shareholders, the Silver Lake Resources Limited (ASX: SLR) share price tumbled to a 52-week low of 38 cents today.

This brought the gold miner’s year-to-date decline to a disappointing 39%.

By comparison, the S&P/ASX All Ords Gold (Index: ^AXGD) (ASX: XGD) has climbed 6.5% since the turn of the year.

Why are its shares at a 52-week low?

Investors appear to have been very disappointed with Silver Lake’s subdued performance in FY 2017 and its inability to capitalise on a rising gold price.

Despite the gold price rising significantly, Silver Lake posted a net profit of just $2 million from revenue of $227.5 million.

This means the miner operates on a net profit margin of less than 1%, which is significantly lower than the majority of its peers.

For example, Newcrest Mining Limited (ASX: NCM) currently boasts a net profit margin of 8.8% and Northern Star Resources Ltd (ASX: NST) saw its net profit margin increase to 21% in FY 2017.

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Motley Fool contributor Motley Fool Staff has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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