Why Gatos Silver Stock Lost 64% of Its Value at the Open Today

Shares of precious-metals miner Gatos Silver (NYSE: GATO) plunged at the open of trading on Wednesday, losing nearly two-thirds of their value in a matter of minutes. The news that precipitated this painful decline was released after the close on Jan. 25, and clearly, it was pretty shocking to investors.

Gatos Silver basically discovered what it called "errors" in a technical report related to its Los Gatos Project in Mexico. These errors may reduce an important mineral-reserves estimate at the mine by somewhere between 30% and 50%. The miner stated, "At this time, the Company cannot accurately quantify the exact magnitude of the reduction, and the mineral resource and reserve estimates in the 2020 Technical Report should not be relied upon."

This is a huge issue at the company's main asset and brings into question the long-term value of the Los Gatos Project. It's little wonder that investors reacted so negatively and so quickly. And, not surprisingly, there were analyst downgrades as well.

Source Fool.com