The miner now anticipates pouring 110,000-135,000 ounces of gold at all-in sustaining costs of US$950-1050 per ounce, which sees a possible trimming of production and a modest increase in costs.
It has also announced it expects to produce 450-550t of nickel, with that key battery and steel input trading at levels not seen in a decade, however Karora has used a conservative nickel price assumption of $16,000 per tonne in its by-product forecast, substantially above the level of around $23,350 it is currently being sold for.
Its nickel forecast excludes any metal it may be able to produce from the newly discovered 50C/Gamma zone
On the cost side of the ledger, it has now budgeted A$52-65 million for growth capital, $21-24 million for exploration, and up to $15 million for sustaining capital, with upward revisions due to the higher cost environment that are impacting its Higginsville expansion and the development of a second underground decline at Beta Hunt
Executive chairman Paul Andre Huet said the company was feeling pretty good about its prospects after delivering record gold production for 2021 of 112,814oz, but it had decided to "both widen and trim" its guidance given the challenges associated with COVID-19.
Restrictions are impacting the whole Western Australian mining sector, primarily labour shortages, supply chain issues, and cost inflation - and while the border reopening will offer an easing of some constraints, it will also deliver widespread infections.
He said that nickel was becomes an increasingly important part of the Karora story.
It has been recovering small amounts of remnant material from the mine's historical nickel areas, but with the recent discoveries of 30C and 50C it can see a pathway to growth.
It hasn't added nickel guidance to its 2023 and 2024 outlook yet, and they remain unchanged for gold production, which plans increase production to between 185,000-205,000oz at costs below $1000/oz.
He said remains confident in the company's ability to deliver given its gold and nickel discovery success, with the Beta Hunt decline ahead of schedule.
Canaccord Genuity analyst Michael Fairbairn was neutral on the revised outlook, and while he chipped 2% from its earnings forecast, he noted he would not be surprised if Karora beat its revised cost guidance if COVID impacts diminish as the year progresses, particularly if the nickel price continues to remain high, helping offset inflationary pressures.
Fairbairn expects the current quarter to be the weakest.
"We reiterate our ‘buy' rating and C$6 target price," he said.
Karora shares were steady on the Toronto overnight at $5.35, valuing it at $818 million.
The stock has traded between $2.85 and $5.46 over the past year.
