Red 5 shares dive as FY25 guidance misses estimates
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The news: Red 5 shares dived in morning trade on the ASX as the gold miner's FY25 guidance fell short of analysts' expectations.
The numbers: Red 5 shares were down 8.9% to 33 cents by 11:30am AEST, having gained nearly 45% since January.
The Perth-based miner reported a loss after tax of $5.4 million, an improvement on its $8.7 million loss in FY23. Gold sales rose 35% year on year to 223,500 ounces as revenue increased 47% to $620 million. Underlying group EBITDA jumped from $96.1 million in FY23 to $192.7 million.
However, FY25 guidance fell short of average estimates. RBC Capital Markets analyst Alex Barkley noted that gold sales guidance of 390,000 to 430,000 ounces was 3% below RBC's forecasts of 424,000 ounces at the midpoint. All-in sustaining costs guidance of $2,250 to $2,450 per ounce was 13% higher than RBC's estimate of $2,080 per ounce. Growth capital expenditure guidance of $163 million to $165 million was $20 million above RBC's expected total of $144 million.
The context: Red 5 said that the result was boosted by increased gold sales and a higher realised gold price compared to FY23. However, RBC's Barkley flagged that Red 5's FY24 results are of "limited relevance" following its merger with Silver Lake Resources earlier this year.
Barkley said that Red 5's softer-than-expected FY25 guidance was driven by former Silver Lake sites, while an expected 30% decline in gold sales and 60% AISC increase at its Deflector project in Western Australia is "most concerning".
What they said: "We had already anticipated a worse FY25 at the site, but this missed even our expectations," Barkley said.
"Overall, weaker than expected guidance and questions at the Deflector site should see [Red 5] trade weaker."
The sources: ASX announcement, RBC Capital Markets research
