Here’s why the Regis Resources (ASX:RRL) share price is nosediving 14% today

Regis shares are having a woeful start to the week.

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gold bars falling to the ground and smashing representing falling prices of ASX gold shares

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Key Points

  • Regis shares in freefall following a disappointing guidance update
  • A geotechnical incident and other operational challenges have impacted production levels
  • ASIC expected to increase due to lower production over the FY22 period

The Regis Resources Limited (ASX: RRL) share price is being heavily sold off on Monday morning.

At the time of writing, the gold miner’s shares are down 13.81% to $1.81 apiece.

Let’s take a look at what’s driving the company’s shares south today.

Regis readjusts guidance due to ‘operational challenges’

Investors are dumping the Regis share price following the company’s revised full-year guidance for the 2022 financial year.

In today’s statement, Regis advised that a geotechnical incident at its Rosemont mine and other operational challenges have impacted its FY22 guidance.

As such, the group is estimating production to be somewhere around 420,000 ounces to 475,000 ounces of gold. Previously, it estimated that production would stand somewhere between 460,000 ounces to 515,000 ounces of gold.

Consequently, all-in-sustaining costs (ASIC) guidance range is forecasted to come at $1,425 to $1,500 per ounce of gold. The company’s prior assumption was that ASIC would be in the vicinity of $1,290 to $1,365 ounces of gold.

Management noted that heavy rains at Rosemont led one of the walls of the main pit to slip. This caused a breach through multiple benches and geotechnical fences, reaching the pit floor.

A geotechnical engineer attended the site thereafter and deemed on-site operations as unsafe, halting all activity. Evaluations concluded that the ore can only be replaced in the mill feed by low grade stockpiles for the remainder of FY22.

Regis stated that the event is confined to the Rosemont Main Pit and has no negative impact on the ongoing operation of the Rosemont Underground or Rosemont North Pit.

As a result, work is now underway by mining from the existing development in the Rosemont Main Zone Underground area.

Regis share price summary

Since this time last year, Regis shares have lost 49% in value. In 2022 alone, the company’s shares are down by 7% after today’s heavy falls.

Based on valuation grounds, Regis has a market capitalisation of roughly $1.37 billion, with approximately 754.78 million shares on issue.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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