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What do you do when a company issues guidance for a quarter that has just ended, then roughly five weeks later reports results that are way off?

A good place to start would be to focus entirely on the company’s actual results, as opposed to what management is saying.

That’s what Canaccord Adams analyst Wendell Zerb has done after Gammon Lake Resources Inc. (GRS) missed its own mark in the first quarter, despite issuing guidance as recently as its fiscal 2006 conference call on April 3.

The gold and silver miner said it produced 65,844 ounces of gold equivalent that was sold, compared to 75,000 expected by Mr. Zerb.

He called the misguidance “disturbing” in a note to clients, particularly because it came after the first quarter had come to an end.

Mr. Zerb also pointed out that Gammon Lake’s cash operating costs were US$575 per ounce of gold equivalent in the quarter, versus his expectation of less than US$270 for the company’s Ocampo and El Cubo projects in Mexico.

He expects it will take several solid quarters for Gammon Lake to achieve operating costs below US$300 per ounce.

Perhaps the company’s new CEO and CFO will help resolve some of these issues.

Mr. Zerb reduced his rating on the stock to “sell” from “hold,” while his price target was lowered to C$14.65 from C$22.15.

Source: Canaccord Cuts Rating, Target After Gammon Lake Resources Misses Its Own Guidance