Crocodile Gold tanks 25% as investors digest falling output and soaring costs
Toronto-based Crocodile Gold Corp swung into a quarterly loss of over $6 million on flat revenues of $30 million and lowered its gold production forecast for 2011 on expectations of much lower-than-expected grades at its open pit mines in Australia’s Northern Territory.
Crocodile cut its gold production outlook for the year to 66,000 – 69,000 ounces at a cash cost of $1,400 – $1,500 per ounce in 2011, from its earlier forecast of 85,000 – 100,000 ounces, with a cash cost of $875 – $975 per ounce.
The bad news sent the company’s stock down 25% at 40.5c by Friday’s close on the Toronto Stock Exchange. Year to date the company has lost 73% of its value and is now worth $125.5 million.
Chantal Lavoie, who became Crocodile CEO in May said in a statement: “I am happy with the progress of the Company since joining Crocodile Gold, particularly at Cosmo. Unfortunately, in October, unexpected geotechnical conditions associated with the excavation of the top 20 metres of the main ventilation shaft forced us to re-assess how this critical phase of the development work would be completed, therefore delaying the ramp-up of Cosmo by approximately 6 weeks.
The changes are necessary to properly set up the infrastructure so that we can ensure an efficient ramp-up of Cosmo, which is key to our long-term strategy. The decision to delay ramp-up was a difficult one because it affects our 2011 production, however, I am confident that the modifications we are making will set up Cosmo, and the Company, so that both will be successful in 2012 and beyond.”
Crocodile’s (TSE:CRK) Northern Territory gold properties comprises an area of approximately 2,700 square kilometers and contain 3.4 million ounces of NI 43-101 compliant measured and indicated resources and 2.1 million ounces of inferred resources.