Dacian shares collapse after downgrade

Shares in Dacian Gold have plunged up to 68 per cent today after a significant downgrade of June quarter production guidance from its flagship Mt Morgans operation.

It is the second time in in just over three months Dacian lowered its production guidance.

The gold miner announced to the ASX that it estimates production for last quarter of the financial year to be between 36,000 ounces and 38,000oz at all-in sustaining costs between $1,500 and $1,600/oz.

Its previous guidance, issued in March, came in at between 50,000oz and 55,000oz at an AISC of between $1,050/oz and $1,150/oz.

The company’s production and cost guidance for the financial year anticipates production to be in the range of 150,000oz to 170,000oz at an AISC of $1,350/oz to $1,450/oz.

The company said the lower production and increased cost was due to underground contractor performance issues, lower-than-expected grade performance, and a ball mill failure resulting in a three-day production suspension at its treatment plant.

Executive chairman Rohan Williams said the downgraded June quarter production guidance was disappointing, but improvements in both equipment availability and mine development were clearly evident and heading in the right direction.

“Many of the issues with fleet availability have already been resolved and a focus on capital development in the short term will open up more work areas thus improving production going forward,” he said.

The $220 million Mt Morgan project reached commercial production in December.

In March, Dacian Gold said reduced availability of underground equipment at its Westralia deposit limited output at Mt Morgans to an anticipated 36,000oz to 38,000oz for the March quarter, at a forecast AISC of between $1,400/oz and $1,500/oz.

Although it did not elaborate on why the underground equipment availability problem had occurred, Daican said it had been resolved.

Early this week fellow gold miner Gascoyne Resources was placed into administration.

Shares in Dacian were trading at 52 cents each at the close of trade.