Shares of metals miner Turquoise Hill Resources (NYSE:TRQ) were lower by 19% at roughly 2 p.m. EDT on May 13. The stock fell after the company reported earnings following the close of trading on May 12. On the surface it looked like a great report, if it weren’t for the company’s warning about the future.
Turquoise Hill’s first-quarter 2021 copper production was up nearly 30% year over year, and 9% sequentially from the fourth quarter of 2020. Gold production increased a huge 460% year over year and 66% sequentially. And silver production rose nearly 20% year over year with a 10% sequential increase. Ore grades were higher across the board.
Together with higher commodity prices, all of this helped the miner post an over 300% increase in revenue in the quarter. First-quarter 2021 earnings came in at $1.18 per share compared to $0.22 per share in the first quarter of 2020.
By all accounts, it was an extremely good quarter financially speaking. Normally you might expect to have seen a stock rise on news like this, but that clearly isn’t what happened. Weak copper and silver prices today were a bit of a headwind. However, investors were more likely downbeat because Turquoise Hill warned that the impact of a flare up of the coronavirus on its mining operations in Mongolia, combined with a mining accident in late 2020, have required a downward revision in its 2021 production guidance.
Gold production is expected to fall from a range of 500,000 to 550,000 ounces to 400,000 to 480,000 ounces. The copper outlook dimmed from a production range of 160,000 to 180,000 tonnes to 150,000 to 180,000 tonnes. This revision will clearly have a notable impact on the miner’s top and bottom lines.
Copper, gold, and silver prices have rallied over the past year, offering miners like Turquoise Hill a chance to earn outside profits. The first quarter proved that out. However, it appears that thanks to troubles at the company’s only mine, it won’t be able to fully benefit from the commodity boom. It seems completely reasonable that investors would see that news in a negative light.