Why Regis Resources Limited (ASX:RRL) shares were smashed today

One of the worst performers on the Australian share market on Tuesday was the Regis Resources Limited (ASX: RRL) share price.

The gold miner’s share price finished the day down almost 11% to $4.46.

This was an improvement from earlier in the day when the miner’s shares were down as much as 13% at $4.35.

Why did Regis Resources’ shares plunge lower?

This morning the gold miner released its fourth quarter report and guidance for FY 2019.

In the final quarter Regis Resources produced 92,008 ounces of gold, up 8% on the third quarter. This led to record quarterly operating cashflow of $85.3 million.

It also took its FY 2018 production to a total of 361,373 ounces, meaning the company hit the top end of its guidance range.

While this was positive and would have arguably gone some way to justifying its 28% share price gain over the last 12 months, investors appear to have a few concerns over its rising costs and have hit the sell button today.

Due to higher waste volumes, primarily for pre-strips on new pits, the company’s all-in sustaining cost (AISC) rose strongly in the final quarter. Regis Resources reported an AISC of $982 an ounce during the quarter, almost 9% higher than the average AISC of $901 an ounce during the last 12 months.

Unfortunately, this isn’t a one-off. Management expects its costs to rise in FY 2019 and has provided AISC guidance in the range of $985 and $1,055 an ounce.

In addition to this disappointment, the company’s production guidance has been a little on the soft side. It expects production in the range of 340,000 to 370,000 ounces, compared to 361,373 ounces this year.

Should you buy the dip?

With costs rising, production potentially falling, and the outlook for the gold price mixed, I can understand why investors would be heading for the exits today. While this decline has pulled its shares down notably lower, I wouldn’t class them as being overly cheap given its guidance.

If I were bullish on the gold price I would sooner invest in Northern Star Resources Ltd (ASX: NST) and OceanaGold Corp (ASX: OGC) ahead of Regis Resources.

But instead of gold I would suggest investors consider investing in this next major investment opportunity.

7 of 8 People Are Clueless About This Trillion-Dollar Market

One of our investors has recently returned from a research trip to Silicon Valley... and has a warning for fellow investors:

Because he works for an organization dedicated to spreading great investing ideas, his video report is free today... so you can see it and decide for yourself.

Don't miss your chance click here to learn about this warning and how you might be able to profit!

Motley Fool contributor James Mickleboro has no position in any of the 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.