October 18, 2012
So what: Gold Resource managed to produce 22,300 ounces of gold equivalent in the third quarter -- a 64% increase over the year-ago period -- but downbeat production for the full year is forcing Wall Street to lower its valuation estimates yet again. Challenges in underground development at its El Aguila Mine continue give the company headaches, triggering even more uncertainty surrounding production.
Now what: Management now sees 2012 annual production of 85,000-100,000 ounces of gold equivalent, down from its most recent view of 100,000-120,000. "We are currently focused on reducing dilution in our long hole stoping methods, implementing cut and fill mining in certain zones to minimize dilution and working to improve overall operational efficiencies," President Jason Reid reassured investors. Given that today's revision is the second time in three months that management has dropped its 2012 production guidance, I'd be extremely cautious about buying into that optimism.
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