Mixed quarterly production data from gold miner Kingsgate Consolidated have seen the shares sold off today, as the company disclosed problems at its Challenger mine in South Australia.
A slump in production at this project undermined a boost to output at its Chatree mine in Thailand, following a recent capacity upgrade.
Kingsgate shares were down 18 cents, or 2.9 per cent, at $6.08 in afternoon trading, holding near the day’s low of $6.05. The day's high was $6.42.
The company raised $70 million through a placement at $7.10 in February, which the market has found difficult to absorb, with the shares also weaker following the softer gold price.
Kingsgate produced 60,614 ounces of gold in the March quarter, benefitting from the ramp up in production at its newly expanded facility in Thailand, but with a slump in output at the Challenger mine, where output dropped to 22,000 ounces, from 27,300 ounces, limiting the uplift.
This decline pushed up production costs to $US744 an ounce from $US608 in the previous quarter.
‘‘Throughput at Chatree was positive, but this was offset by production difficulties at Challenger,’’ one securities analyst said, who did not wish to be named.
Production at Challenger was down sharply in January due to ‘‘poor underground equipment availability and an unpredicted shortage of experienced operators in January and February’’ it said in its March quarterly report released earlier in the day.
Kingsgate paid $376 million to take control of Dominion Mining in 2010, which gave it control of the Challenger mine.
The company has been on a buying spree since, taking control of the Neuva Esperanza gold/silver project in northern Chile and acquiring the Dowdens silver prospect near Mudgee, in NSW.