Alpha Recommendation: Buy Gold Road (GOR)

Gold Road Resources (ASX: GOR) Revises 1Q25 Production Forecast Amid Operational Challenges

Gold Road Resources (ASX: GOR) has reported a decline in gold production at its Gruyere gold mine for the March quarter, citing two conveyor belt failures and unexpected primary crusher maintenance. The company expects output to range between 70,000-73,000 ounces, a significant drop from the 91,631 ounces produced in the December quarter.

Despite the lower-than-expected first-quarter production, Bell Potter has maintained its Buy rating and a $2.95 price target. The broker remains optimistic that Gold Road will meet its FY25 production guidance of 325,000-355,000 ounces, noting that the company could recover lost output later in the year through higher ore grades and processing plant upgrades.

Macquarie, however, has revised its 2025 EPS forecasts downward by 18%, following Gold Road’s preliminary production update. The brokerage firm highlighted that the reported output was 18% below its estimates and 16% below consensus, attributing the shortfall to operational disruptions at the Gruyere mine.

In contrast, UBS has reaffirmed its Buy rating with a $3.10 price target, keeping its financial projections unchanged. The firm remains confident in Gold Road’s ability to deliver on its full-year guidance and notes management’s positive outlook, with production expected to increase by 20% over the next three years.

Meanwhile, Ord Minnett has taken a more cautious stance, downgrading Gold Road to Hold from Buy and lowering its price target to $2.50. The brokerage cited FY24 underlying net profit falling 6% below its forecast, primarily due to higher-than-expected depreciation and amortisation costs.

While the near-term outlook presents operational challenges, market sentiment remains mixed, with several analysts anticipating production recovery in the latter half of the year.