Why is this ASX 200 mining share sinking 7% today?

Investors have been hitting the sell button today. But why?

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Capricorn Metals Ltd (ASX: CMM) shares are under pressure on Friday.

In morning trade, the ASX 200 gold mining share is down 7% to $5.08.

Why is this ASX 200 mining share sinking?

Investors have been heading to the exits today for a couple of reasons.

The first is broad market weakness, which has seen mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) tumble into the red today.

The second is the release of the ASX 200 mining share's quarterly update.

How did the company perform during the quarter?

According to the release, the Karlawinda Gold Project (KGP) in Western Australia achieved 26,017 ounces of gold production for the March quarter.

This is down 14.5% from 30,399 ounces in the December quarter due to the negative impacts of heavy rainfall. Management highlights that there was in excess of 280mm of rain in the quarter impacting open pit mining activities at KGP.

Positively, though, this production was in line with an update provided last month warning about the weather impacts.

Gold production for the nine months to the end of March was 86,116 ounces.

Cash balance grows

The ASX 200 mining share advised that its cash and gold on hand continued to increase during the quarter despite some investments.

Capricorn Metals' cash and gold balance stood at $177.8 million at the end of March, up from $160.1 million at the end of December. This includes the payment of $9.9 million for the supply and installation of the accommodation village at the Mt Gibson Gold Project.

This means a cash build of $27.6 million for the three months before the discretionary capital expenditure, compared with $28.2 million for the December quarter.

Guidance downgraded

The main drag on its shares today has been management downgrading its FY 2024 production guidance.

Gold production for the June 2024 quarter is expected to be in the range of 26,000 to 29,000 ounces, resulting in FY 2024 annual production of 112,000 to 115,000 ounces. This is down from its FY 2024 guidance of 115,000 to 125,000 ounces.

No details have been provided for its FY 2024 all-in sustaining cost (AISC) guidance. This presumably remains at the upper end of guidance range of $1,270 to S1,370 per ounce.

The good news is that it is expected that earthmoving will be back in line with the mining schedule by the end of the quarter to set the project up for a strong operational performance in FY 2025.

Commenting on the quarter and its outlook, the ASX 200 mining share's executive chairman, Mark Clark, said:

It was a challenging quarter at the KGP with significant rainfall impacting mining operations and gold production. However, it was pleasing that despite these impacts the operation delivered a cash and gold build of $27.6 million for the quarter before the discretionary capital spend at Mt Gibson.

The residual effects on mining productivity are still being felt and will be our key operational focus in the June quarter to set the project up for a strong operational performance in FY25.

Motley Fool contributor James Mickleboro 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 Scott Phillips.

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