Ora Banda Mining Ltd (ASX: OBM) shares are ending the week deep in the red.
In morning trade, the ASX 300 gold stock is down over 8% to $1.17.
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Why is this ASX 300 gold stock sinking?
Investors have been hitting the sell button today after the gold miner released an update on its guidance for the Davyhurst Project for FY 2025.
According to the release, the ASX 300 gold stock's production for April and May totalled just 12.1k ounces. This means that year to date gold production is 82.5k ounces.
Looking ahead, June quarterly production is anticipated to be ~24.5k ounces.
Based on the above, management expects FY 2025 total production to be ~95k ounces. This is 5% below the lower end of its guidance range of 100k ounces to 110k ounces. Though, it will still be a 35% increase year on year.
Another negative is that its costs are expected to be higher now. The ASX 300 gold stock is forecasting an all-in sustaining cost (AISC) of ~$2,600 per ounce. This is 4% above the top end of previous guidance of $2,500 per ounce.
What went wrong?
Management advised that the reduction in production has primarily been caused by extended downtime from the processing plant. This is due to the installation of lifter and lining upgrades to the primary mill.
In addition, the commissioning and ramp up of the mill has taken longer than expected to achieve targeted daily throughput rates of 3,700 tonnes per day to 4,000 tonnes per day.
The good news is that the worst could now be over for the ASX 300 gold stock. It highlights that the processing plant works and commissioning are now complete.
Furthermore, the processing plant has demonstrated the required performance of up to 4,000 tonnes per day, resulting in a June production forecast of up to 12.5koz. This is the target monthly rate to achieve annual production of 150k ounces.
Commenting on current production, the company said:
Mining performance is delivering well. In June alone, mining from Riverina (8.5koz) and Sand King (6.0koz) is forecast to deliver ~14.5koz as Riverina continues, and Sand King ramps up to steady state, as expected. In addition to this, and due to the extended downtime and lower mill throughput during commissioning, ore stockpiles at the end of May increased to ~83kt @ 2.8g/t for 7.5koz of medium grade ore and 114kt at 1.2g/t for 4.4koz of low grade.
