Shares in Silver Lake Resources Limited. (ASX: SLR) are tracing lower today and now rest 7% down at $1.85 apiece.
The company also released its quarterly activities report for the three months ending 31 March 2022 today, leaving investors to digest the outcome.
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Silver Lake withdraws guidance
Key takeouts from the company's performance last quarter include:
- Quarterly production of 53,822 ounces gold and 262 tonnes copper (55,052 ounces gold equivalent)
- Sales of 55,390 ounces gold and 246 tonnes of copper at an average sales price of A$2,493/oz
- All-in sustaining cost (AISC) of A$1,634/oz
- Cash and bullion of $287.3 million, excluding $17.7 million of gold in circuit and concentrate on hand
- Withdrew FY22 guidance due to COVID-19 related pressures on the labour market and supply chain interruptions
What else happened last quarter for Silver Lake?
The company notes that it was impacted by West Australian Government measures used to tackle the pandemic.
"March quarter operating results from Silver Lake's Western Australian operations reflect the implications of the Western Australian Government response to COVID-19," it said.
In particular, a combination of supply chain constraints, related definitions and treatment protocols have adversely impacted the availability of appropriately skilled professional, operational and maintenance personnel which has resulted in unavoidable disruptions to operations, an inflationary cost environment and heightened operational risk.
On that note, sales for the quarter were tilted towards the Deflector site. They came in line with the top end of the previous guidance, Silver Lake says.
However both the Deflector and Mount Monger sites saw a down-step in production this period whilst AISC remained relatively flat.
Meanwhile, gold bullion sales were down around 2% from the last quarter, whilst overall gold production was down by 4%.
Silver Lake also completed the acquisition of Harte Gold in February, taking control of operations as well from this date.
What's next for Silver Lake Resources?
The company withdrew guidance today due to ongoing uncertainties surrounding COVID-19, and what this might mean for global supply chains and the domestic labour market.
"Whilst Silver Lake's year to date operating performance has it positioned to meet FY22 group guidance,
the severe disruption of COVID-19 related labour shortages in March and April has exacerbated the already tight labour market and supply chain constraints," it remarked.
Along the same lines, it continued:
As a result of the prolonged and continued uncertainty regarding Western Australian's response to COVID19 and the implementation of a proportionate response to any future variants, Silver Lake believes it is unlikely to see an influx of international and interstate skilled workers returning to the Western Australian mining sector in the foreseeable future in preference to employment opportunities closer to home. Should these conditions and associated uncertainty continue, it will impact Silver Lake's ability to provide robust guidance based on first principles assumptions and planning with an acceptable level of risk.
Accordingly, with the continuation of restrictions and isolation requirements on labour during Q4 FY22 and continued supply chain constraints, Silver Lake is withdrawing FY22 sales guidance as it cannot predict Q4 operating performance with an acceptable level of confidence for stakeholders to rely on.
Silver Lake Resources share price snapshot
In the last 12 months, the Silver Lake Resources share price has curled up by around 8%, and is surging more than 4% higher this year to date.
Over the past month however, it has slipped 15% into the red, and is down around 13% for the previous week of trade.
