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Why the Pantoro share price crashed 23% lower today

It has been a very disappointing start to the week for the Pantoro Ltd (ASX: PNR) share price.

Whilst weakness in the gold price has weighed on the shares of fellow gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) today, Pantoro has fallen significantly more for a different reason.

At the time of writing the Western Australia-based gold producer’s shares are down a massive 23% to 6.5 cents.

Why is the Pantoro share price crashing lower today?

Investors have been heading to the exits after Pantoro provided an update on its performance during the June quarter.

According to the release, the company produced a total of 9,557 ounces of gold at its Halls Creek project during the three months. No all-in sustaining cost (AISC) was provided as its costs “are still being finalised and will be advised in the full quarterly report.”

This was a 15.3% quarter on quarter decline in production. In the March quarter Pantoro achieved 11,280 ounces of gold at an AISC of $1,217 per ounce.

But perhaps worst of all was the fact that in April the company spoke positively about ramping up production significantly.

At the time it said: “Ore sorting has continued to achieve excellent results and has been used primarily for lower grade material during the period. As ore supply increases from Wagtail, the full benefit of ore sorting will be realised. Pantoro remains on track to achieve its increased annualised production target rate of +80,000 ounces around the middle of CY 2019.”

We are now in the middle of calendar year 2019 and its annualised production sits at a disappointing 38,228 ounces, which is less than half of what was being targeted.

The company’s managing director, Paul Cmrlec, acknowledged that things haven’t gone to plan.

He said: “Total production for the quarter and the planned ramp up to increased production rates by the end of the June quarter was below Pantoro’s expectation due to a number of factors as set out in this announcement. The primary driver to the lower production was the slower than anticipated ramp up in mining at Wagtail North in the latter part of the quarter. As a result, lower grade material mined from Nicolsons was processed to assist in gold output.”

But he remains optimistic on the future. He added: “We remain focussed on maximising production from the combination of Nicolsons, Wagtail underground and open pit ore during the September quarter. Pantoro is very pleased with the Norseman transaction which provides an outstanding growth opportunity for the company. The project consists of a large number of quality gold deposits, and our focus is to develop a sustainable long term mine plan during the coming twelve month period.”

But that clearly hasn’t been enough to keep some shareholders on board today.

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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.

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