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MELBOURNE - Bendigo Mining shares plunged to a 14-year low after the Australian gold-mining company said it would cut production following lower than expected output in the first three months of operation.
Shares in Bendigo slumped 59 per cent after the Victoria state-based company said it would focus on exploration. Goldman Sachs JBWere cut its rating on Bendigo to "underperform" from "marketperform".
Bendigo Mining, the worst-performer on the S&P/ASX 200 index last year, may have to write down its non-current assets by A$210 million ($237.5 million) after it overestimated gold grades in parts of the mine, Goldman Sachs said. The company's market capitalisation before yesterday was A$364 million.
"We cannot see Bendigo outperforming or even market performing until the market regains confidence in the geological model," Ian Preston, a Goldman gold analyst, said in a note to clients.
Shares of Bendigo fell A43.5c to A30c by the close of trade, the lowest since February 1993.
Macquarie Bank cut its rating on Bendigo to "underperform" from "neutral" in a note to clients yesterday.
Rod Hanson replaced Doug Buerger as chief executive officer on Monday. Buerger resigned for personal and health reasons, Bendigo said in the statement made after the market closed on Monday.
Bendigo said it overestimated the potential of the Sheepshead and Deborah lines at the mine. The company had said last October that it may reduce probable gold reserves by as much as a third.
The company produced just 9128 ounces of gold in the December quarter last year, making it unlikely it would reach its 50,000-ounce target, Hanson said.
Bendigo now aims to deliver 150,000 to 200,000 ounces a year from its Kangaroo Flat mine.
- BLOOMBERG
