It pays to be consistent but not consistently bad.
Perennial underperformer Oz Minerals this morning maintained its recent trend of disappointments when it downgraded its gold production targets.
On top of its runaway costs, it appears the company is having enormous difficulty extracting minerals from the ground.
Back in April it downgraded its copper production targets. And even then it failed to deliver. Median estimates for copper production in the quarter were estimated at 20.6 million tonnes. Instead it came in 17.4 million tonnes, a 15% reduction on the last quarter.
Costs were also higher, partly because of redundancy charges put through during the period in an effort to improve the future cost structure.
But it was the cut to gold output targets that had investors rattled. The quarterly gold production numbers, at 31,000 ounces, were well below the estimated 34.8 million ounces.
Annual gold production forecasts now have been cut to between 120,000 and 130,000 ounces. That is significantly below the guidance given just two months ago when the company forecast annual production of between 130,000 and 150,000 ounces.
Of further concern was the cut in exploration expenditure at its Prominent Hill mine.
OZ appears to be betting heavily on its Carrapateena copper gold project in South Australia which, while at an advanced exploration stage, will be quite some time before it sees any production.
The company reported a sharp drop in earnings in the December half. A significant improvement could be at least two years off (see Tim Treadgold's Resource stocks fall in the commodities price gap).