Ora Banda Mining Shares Rise 7% as Gold Miner Recovers Part of Friday's Plunge After Quarterly Output Miss

Ora Banda Mining Ltd shares rose more than 7% on Monday. The Western Australian gold producer recovered some of the ground it lost in a heavy sell-off last week, after its September-quarter production fell short of market expectations.

Ora Banda shares gained 8.25 Australian cents, or 7.43%, to A$1.1925. In the session they traded between A$1.105 and A$1.205. About 6.3 million shares changed hands, and the company's market value rose to about A$2.3 billion.

Over the past year the stock is down about 5%.

The rise came on a mixed day for gold. Spot prices were near US$3,996 an ounce, after falling below US$4,000 on Friday for the first time in about three months. The broader S&P/ASX 200 was up 0.13% at 8,806.8 at 2:22 p.m. Sydney time.

Friday's sell-off

Monday's bounce followed a sharp fall. On Friday Ora Banda shares dropped about 16.5% to close at A$1.11, and they fell 21% over the week, according to The Bull. The stock is down about a third over two months.

Technical analysts noted that the shares had closed below their 200-day moving average. They also noted that the stock's relative strength index, a momentum gauge, was in oversold territory, a level that sometimes comes before a short-term rebound.

Ora Banda did not release any market-sensitive news on Monday.

Production shortfall

Last week's sell-off followed Ora Banda's quarterly report:

The company produced about 33,300 ounces of gold in the September quarter, roughly 17% below the consensus estimate of about 40,000 ounces. It blamed an extended shutdown of its Davyhurst processing mill and wet weather, which disrupted haulage and slowed mining. All-in sustaining costs, a key industry measure of the cost of producing an ounce, were about A$4,214 an ounce. That was roughly 9% above analysts' expectations.

Managing Director Luke Creagh said the disruptions were "expected to be limited to the September quarter."

The company kept its fiscal 2027 guidance of 125,000 to 140,000 ounces, at all-in sustaining costs of A$3,400 to A$3,600 an ounce. To reach the middle of that range, Ora Banda will need to average roughly 30,600 to 35,600 ounces a quarter for the rest of the financial year, according to The Bull's analysis.

Funding growth

Ora Banda ended the quarter with about A$207 million in cash. During the quarter it spent A$133.7 million on investment, against operating cash flow of A$83.3 million.

After the quarter closed, the company increased its revolving credit facility from A$200 million to A$300 million. It said that gives it about A$507 million in total liquidity.

The funding supports Ora Banda's "DRIVE to 300" strategy, which aims to lift annual output toward 300,000 ounces. The company recently began underground development at its Waihi deposit ahead of schedule, according to market reports. Its Sand King underground mine came online earlier and helped the company deliver record production in earlier quarters.

The Davyhurst mill, about 120 kilometers northwest of Kalgoorlie, is the hub of the company's operations in WA's Eastern Goldfields.

Gold backdrop

Gold has retreated from record highs in recent weeks. Expectations that persistent inflation, fueled partly by an oil price spike linked to attacks in the Strait of Hormuz, will keep major central banks from cutting rates have weighed on the metal.

"Heightened inflation concerns suggest that major central banks of the world won't be able to ease," Jim Wyckoff, senior analyst at American Gold Exchange, said last week.

Australian gold miners have been especially sensitive to the pullback because many expanded their spending plans when prices were higher. Even so, Australian-dollar gold prices remain high by historical standards, and that continues to support margins for producers like Ora Banda despite rising costs.

What to watch

Investors will be watching whether Ora Banda's December-quarter production recovers as the company has indicated. They will also watch progress at Waihi and on the broader expansion plan.

Locally, markets are also focused on Tuesday's Reserve Bank of Australia rate decision and Wednesday's quarterly inflation figures. Both could influence the Australian dollar and, in turn, local gold prices.

This article is for information only and does not constitute financial advice.