Dacian gets its shine back
12th July 2019
Resources Rising Stars
Dacian Gold has embarked on the road to rehabilitation, with a new long-term plan for its Mt Morgans project near Laverton (reports The West Australian).
Four weeks after being smashed by investors after a second production in three months, the fledgling miner yesterday laid out a plan to produce 1.1 million ounces over an eight-year mine life, including between 150,000oz and 170,000oz this financial year. Dacian noted its all-in sustaining costs would rise to between $1280 per ounce and $1300/oz. Production costs for the first five years would be slightly higher at between $1340/ oz and $1440/oz.
It got support from investors, who marked the shares up 11.5¢, or 22 per cent. But at yesterday’s close of 64¢, the stock was well short of the $1.58 it traded at before June’s downgrade.
Dacian executive chairman Rohan Williams acknowledged Mt Morgans had got off to a sluggish start but he said that he was confident the miner was on the right track.
“We have got three underground mines that we are starting up and an open pit, so it’s taking longer than we wanted,” he said.
“The gold’s there. Our ability to get it out is what has been a little bit challenging.
“There is nothing fundamentally wrong here. It just takes time to get the mine started and to a steady state. Month on month we are seeing all the right indicators and it’s probably taking a bit longer than we thought it would, but it’s on the right trajectory.”
Dacian finished 2018-19 with cash and bullion of about $45 million and project debt of $105.5 million.
Some $33 million of the debt is due for repayment this year, but Mr Williams said that should be well covered based on the company’s modelling and assuming a $1800/oz gold price. “This updated life-of-mine review confirms the strong production and cash flow-generating capacity of Mt Morgans over the next eight years,” he said.
“We have taken learnings from our first full year of production at Mt Morgans and applied it to the current ore reserve to deliver a high-margin gold production profile over the next eight years.”
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