The share price, which has held fairly steady for most of the year, dropped 27 per cent to $1.40 after being as low as $1.35 during the day.

The news comes less than a week after mining consultants Surbiton Associates Pty found Australia recorded its best gold production in a decade in 2014.

Regis managing director Mark Clark said production at its Garden Well mine in remote Western Australia had been hampered by rainfall in February and the start of March, which prevented work in the open-cut mine.

The mined grade – a measure of how much metal is in the rock – at Garden Well had been lower at part of the mine than expected, he said.

At the nearby Rosemont mine, several wall failures in the main pit had meant the higher grade ore the company had planned to dig out early this year could not be reached.

But Mr Clark said the grade of the ore it managed to reach at Rosemont was better than expected.

"Despite lower than expected production in the March 2015 quarter, the company remains on track to deliver within the lower end of the group's 2015 gold production guidance of 305,000 to 355,000 ounces," he said.

UBS commodities analyst Jo Battershill said Regis Resources had been experiencing production problems for some time.

"We were generally coming to the view those issues were resolved, but they weren't," he said.

A single company experiencing production issues would not have a short or medium-term impact on the sector as a whole, but it followed a pattern of the Australian gold mining sector often failing to deliver on market expectations.

Most of the best deposits of gold in Australia had been mined long ago, and many operations were too small to attract the attention of local and international investors, Mr Battershill said.

But he named Independence Group and Northern Star Resources as gold mining companies that were doing quite well.

Regis Resources has been considered a contender to buy Barrick Gold's Cowal mine in central NSW and a share of a mine in Papua New Guinea.

In November last year, Citi chose Regis Resources as one of its top investment picks.