Doray improves production, costs

Perth-based Doray Minerals has confirmed solid growth in gold production and disclosed lower costs in the December quarter, as it moves toward completing its takeover of Mutiny Gold.

The company's quarterly report was in line with previous monthly production data, with a record volume of 20,963 ounces at nine grams per tonne.

It reduced C1 cash costs to $633 per ounce, while its all-in sustaining cost was $1,110 per ounce.

Doray said the quarterly results were in line with the revised annual guidance issued last month; it upgraded production guidance to 85,000 to 90,000 ounces, while reducing its cash cost forecast to $600 to $700/oz.

Its share price has made a strong recovery since plummeting after announcing the Mutiny Gold takeover proposal in October last year.

It reached a low of about 28 cents per share in December, but recovered after announcing high-grade gold results at its Andy Well mine, which confirmed the potential of mine life extensions.

GMP Securities said in a research note that "much of today’s results were expected as Doray has diligently updated investors on monthly production performance".

"However, the costs performance (C1 $A633/oz) exceeded our expectations of $A755/oz significantly. However, AISC of $A1,110/oz was largely in line with our expectations."

GMP remains positive on Doray's prospects, with "low costs expected to continue, promising exploration upside and growth and diversification to come from the acquisition of Deflector".

PCF Capirtal is also positive, and has recently lifted its December 2015 price target to 86 cents per share.

Meanwhile, Doray's ongoing takeover of Mutiny reached a milestone today, with Mutiny appointing Doray nominees Peter Lester as non-executive chairman of the company and Allan Kelly as non-executive director.

Previous non-executive chairman Allan Brown remains on the board as a non-executive director.

Mutiny managing director Tony James said the appointment of Doray nominees to the Mutiny board followed the takeover offer for Mutiny shares and listed options having been declared unconditional last week.

“Further Mutiny board changes will occur when Doray has received acceptances under the offer that give Doray a relevant interest of at least 90 per cent,” he said.

“We encourage Mutiny shareholders who have not yet accepted the offers to accept them without delay to enable Doray to proceed to 90 per cent and compulsory acquisition.

“The sooner it is achieved the sooner the Deflector project can proceed under new management and focus,” he said.

Doray currently holds a 86.7 per cent interest in Mutiny.

Shares in Doray were 2 cents lower at 54 cents at the close of trade.