An unimpressive production performance from struggling gold miner Blackham Resources and the subsequent share price run has prompted a ‘please explain’ from the ASX.

Over 36 million shares were traded yesterday sending the share price down more than 25 per cent after Blackham (ASX:BLK) revealed its costs were again going up and its production still declining.

The ASX wanted to know why almost 75 million shares were traded between Tuesday January 29 and Thursday January 31.

Nearly half that volume was done on the back of the release of Blackham’s quarterly report on Thursday.

The report showed that all-in-sustaining costs — that’s all of the company’s expenses and costs to produce gold — climbed to $1606 per ounce in the December quarter from $1588 per ounce in the previous quarter.

For the entire year costs averaged $1441 per ounce, which was higher than the $1294 per ounce reported for the first six months of 2018.

Gold prices are currently just over $1800, which gives Blackham very little wiggle room. Gold mines usually try to keep costs under $1000 an ounce.

And the outlook for FY19 is that costs could be higher again, with Blackham estimating between $1500 and $1700 an ounce.

In 2017 costs rose as high as $2200 an ounce yet the company was selling at $1617.

Blackham Resources (ASX:BLK) shares over the past year.
Blackham Resources (ASX:BLK) shares over the past year.

Production for the December quarter also slipped, due to lower than expected mined ore grades, particularly in the upper levels of the open pit mines.

Blackham said slower underground mining development also contributed to a lower mill grade.

The company produced 19,016 ounces in the final quarter compared to 19,049 ounces in the September quarter.

However, full year production for the 2018 calendar year was up nearly 28 per cent at 78,089 ounces.

Blackham predicts it will produce between 72,000 and 80,000 ounces in FY19.

In its response to the ASX, the company first pointed to the substantial rally in the gold price over the past two months, which Blackham says “generally increases interest in gold producers”.

It then said the increase in trading volume could be due to its quarterly report.

Directors bail on options

Blackham had 534.4 million unlisted options, exercisable at 8c a share, on issue that expired on January 31.

All of the options lapsed, with not even managing director Bryan Dixon or executive chairman Milan Jerkovic exercising the options they held.

Blackham’s share price fell even further today — to a new 52-week low of 3.9c — with another 8 million shares being sold not long after market open.

The company has wiped off nearly 65 per cent of its market value since hitting a high of 11c in April last year.