The Gold Road Resources Ltd (ASX: GOR) share price is having a tough time on Thursday.
In afternoon trade, the gold miner's shares are down 9% to $1.59.
Why is the Gold Road share price taking a hammering?
Investors have been hitting the sell button today after the company released a disappointing update on its expectations for the Gruyere Gold Mine.
According to the release, the reliability and utilisation of the production drills and availability of blasting resources were below expectations for the quarter.
Together with a recent significant rain event, this has negatively impacted ore and waste mining at the Gruyere Gold Mine.
This has resulted in a reduced availability of run-of-mine grade ore to the processing plant, with production being supplemented by the processing of low-grade ore stockpiles.
A recovery plan is currently being developed with its joint venture partner and the mining contractor. It will include the mobilisation of new drilling equipment, additional blasting resources, and an additional mining fleet during the September quarter.
Management notes that the timing for the mobilisation and commissioning of these resources will impact the total mining movement for the year. However, it will almost certainly mean it falls short of its guidance in FY 2023.
For the current quarter, production is anticipated to be 72,000 to 76,000 ounces (100% basis), with the range contingent on recovery from the rain event.
Based on this and anticipated outcomes of the recovery plan, Gold Road is now guiding to 2023 annual production at between 320,000 and 350,000 ounces (100% basis). This is down from its previous guidance of 340,000 to 370,000 ounces.
Unfortunately, this lower gold production rate means its costs will be higher. However, the company isn't in a position to provide guidance on its all-in sustaining cost (AISC) just yet. It plans to do this with its upcoming quarterly report.
The Gold Road share price has now wiped out its year to date gains following this decline.