Gold Road Resources Ltd (ASX: GOR) shares are having a tough time on Tuesday.

In morning trade, the ASX 200 gold stock is down 5% to $2.32.

Why is this ASX 200 gold stock sinking?

Investors have been selling the gold miner's shares today after it released its guidance for FY 2025 and an updated three-year production outlook for its Gruyere operation.

Gold Road owns 50% of the Gruyere operation, with Gold Fields owning the balance and managing and operating day to day activities.

As a reminder, the ASX 200 gold stock recently revealed that Gruyere's annual production totalled approximately 287,270 ounces in 2024. This was slightly below its guidance of 290,000 – 305,000 ounces.

According to the release, in FY 2025, Gold Road is expecting Gruyere production of 325,000 to 355,000 ounces with an all-in sustaining cost (AISC) of between A$2,400 and A$2,600 per ounce. This represents a production increase of 13% to 23.6% year on year. The company's share of this production is 162,500 ounces to 177,500 ounces.

As a comparison, Bell Potter is forecasting 173,800 ounces in FY 2025. The market may have doubts that this will be achieved given its production issues in FY 2024.

Nevertheless, management sounds confident. It notes that the substantial increase in production follows the successful stripping down of the Stage 4 pit in 2024 to gain full access to the ore body. This allows the delivery of higher grade run-of-mine ore from the mine to the process plant.

Its ASIC guidance compares to A$2,551 per ounce in the third quarter. It includes cost inflation, higher gold related royalties, the cost of conveyor upgrades and other plant improvements, among other items.

Medium term outlook

Looking beyond 2025, the ASX 200 gold stock revealed that it is targeting production of 335,000 and 375,000 ounces of gold per annum.

This is expected to be delivered by higher mill head grades and improving plant throughput rates, following the commissioning of a third pebble crusher in late 2023 and further upgrades to the processing plant circuit planned in 2025.

The good news is that this production outlook requires minimal growth capital and substantially benefits from the planned increased material movement rates.

At the same time, Gold Road advised that it will continue to advance its Yamarna Mine Readiness Project (Gilmour), which offers further future ore source optionality.

Management also revealed that it believes production can continue through to 2032 at Gruyere. It said:

The Gruyere Life-of-Mine plan reaffirms sustainable mine production through to 2032. The Life-of-Mine plan for Gruyere incorporates an ongoing seven-stage open pit (with Stages 1, 2 and 3, and parts of Stages 4 and 5 already mined). The plan incorporates an open pit Ore Reserve of 77 million tonnes at 1.29 g/t Au for 3.19 million ounces

Gold Road shares remain up 70% over the past 12 months.