• Capricorn slides on stagnant guidance as gold sector cops an almighty hiding
  • Materials falls with lithium and iron ore also in the doghouse
  • Champion Iron hits record production rate in Quebec

A day after his old mob Regis Resources (ASX:RRL) copped an almighty hiding, Mark Clark’s market darling Capricorn Metals (ASX:CMM) has delivered one of the biggest sell-offs of reporting season, falling over 11% this morning.

It came off the back of not only its production report but a 1.6% slide in gold prices overnight to US$1944/oz, hurt by a rising US dollar and strong economic data that raised the previously unlikely prospect of another US Fed rate hike.

$1.6 billion capped Capricorn has been one of the gold industry’s leading lights in recent years, rising almost 1200% in value since 2018.

But the low grade gold miner copped a whack despite hitting the midpoint of its annual gold production guidance of 115,000-125,000oz at the Karlawinda gold mine, with its FY23 costs of $1208/oz well within its $1160-1260/oz range, towards the bottom end of the global cost curve.

One factor of course could be a static guidance for FY24, set at 115,000-125,000oz with AISC to outstrip 2023 levels at $1270-1370/oz alongside $10-20m in growth capital.

Longer term CMM — which had $110.3m in the bank, a decrease from $119.5m at March 31 after spending $36.8m to close out part of its hedge book early — is planning to develop the Mt Gibson mine in WA’s Mid-West as an expansion asset around the middle of the decade.

Capricorn was no orphan today. Gold stocks plummeted across the ASX, falling 4.41% amid broader negativity in the sector and indeed the whole mining market.

Big three Northern Star (ASX:NST), Evolution Mining (ASX:EVN) and Newcrest (ASX:NCM) fell 4.13%, 4.79% and 3.33% at 12.20pm AEST respectively.

Regis (ASX:RRL), Perseus (ASX:PRU), Gold Road (ASX:GOR) and Resolute (ASX:RSG) proved even more exposed to the bad vibes, down 7.94%, 7.56%, 7% and 8.54%.

The materials sector, home to the big mining stocks on the ASX, tumbled 1.64% this morning with lithium and iron ore stocks similarly unloved.

 

Gold stocks share prices today:


 

Champion hits new production record at Bloom lake

Champion Iron (ASX:CIA) is close to bedding in its expansion of the Bloom Lake mine, doubling its capacity from 7.5Mtpa to 15Mtpa after producing the strongest quarter of production from the high grade magnetite iron ore operation in its history.

The completing of the Phase 2 expansion led Champion to produce 3.4Mt of concentrate in the June quarter, up 49% on the previous year and 10% quarter on quarter.

It comes ahead of studies later this year on further expansions through the development of the Kami project and the recommissioning of the Pointe-Noire pelletising plant with a “major international steelmaking partner” that would produce pellets for use in direct reduced iron plants.

DRI plants, the lowest emission steelmaking route, could run on green hydrogen if a number of international trials are successful, making Champion Iron a potential player in the green steel supply chain.

CIA generated C$297.1 million in revenue, up 6% YoY, in the June quarter, but saw sales costs and other expenses lift 23% and 26% to C$208.5m and C$19.6m respectively.

That cut its net income by 60% YoY to C$16.66m and EBITDA by 31% to C$65.8m.

Lower gross selling prices (down 11% to US$125.7/dmt) and higher cash costs (up 10% to C$81.3/t) saw operating margins fall 52% to C$21.8/t. CIA gets a premium linked to the 65% Fe index for its high grade con.

Meanwhile the company stockpiled 1.3Mwmt for sale after logistics networks were cut off by historic Canadian forest fires, which cut into sales in the June quarter, up 27% YoY to 2.6Mt.

$3 billion capped Champion saw its shares fall 3% in morning trade as iron ore prices dropped 3% overnight and Bloomberg declared its recent rally was beginning to “look increasingly brittle”.