Shares in gold producer Blackham Resources fell by 21 per cent today after the company revealed a raft of problems at its Matilda project, where operations have been affected by heavy rain and lower grades.
West Perth-based Blackham has downgraded its FY17 forecast production to an unusually wide range, between 42,000 ounces and 51,000oz.
That was after inaugural December quarter production of 8,773oz and March quarter production of 15,056oz, which the company said was below forecast.
Blackham said its production had been affected by heavy rainfall in the eastern Goldfields, which was four times the historic average during the month.
The slow mining rates at the Matilda pits mean that open-pit mining at the higher-grade Galaxy pit is due to start in the first week of April, one month behind schedule.
Blackham has also hit problems with its underground mining activity, revealing today that both development and stope tonnes were lower than forecast in the March quarter.
Its development work and grade control drilling has resulted in a more conservative forecast of gold production from its Golden Age underground operations.
With Blackham’s management focused on operational problems, the completion of its expansion study had been delayed slightly, the company said.
The expansion study is looking at the best way to achieve an increase in annual production from the current goal of 101,000oz to 255,000oz.
Blackham’s shares closed 11.5 cents lower at 42.5 cents, their lowest close since April 2016.
It means investors who pumped $35 million into the company in February, through a placement priced at 68 cents per share, are sitting on big losses.
The funding was to accelerate the expansion studies and associated drilling programs.