Dacian considers merger after Mt Morgans finds trouble

Dacian Gold has lowered its production guidance at the Mt Morgans operations in Western Australia, blaming the return of underground performance issues.

The company projected its June quarter production to slide from 50,000–55,000 ounces of gold at an all-in sustaining cost (AISC) of $1050–1150 an ounce, to 36,000–38,000 ounces at $1500–1600 an ounce.

Dacian reported there had been reduced underground equipment availability, caused in part by an insufficient number of maintenance personnel, hurting the company’s ability to access scheduled higher grade stopes at Westralia.

The gold producer is also considering potential corporate and funding initiatives, which could culminate in a change of control or a merger.

“Dacian Gold and RUC Mining are both committed to maintaining a highly cooperative working relationship at Mt Morgans in order to maximise the production opportunities for the benefit of both parties,” RUC Cementation Mining Contractors managing director Barry Upton said.

Mt Morgans’ equipment availabilities and reliability issues have been troubling the operation since March this year, but have improved in May thanks to a sufficient level of personnel on site.

Lower than expected grade performance on the hangingwall lodes at Jupiter have also been reported to impact Dacian’s planned production.

“Whilst the downgraded June quarter production guidance is disappointing, the company notes improvements in both equipment availability and mine development advance at Westralia are clearly evident and heading in the right direction,” Dacian chairman Rohan Williams said.

“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.”

Dacian anticipates its 2020 financial year production in the range of 150,000–170,000 ounces at an AISC of $1350–1450 an ounce. The company will release its final guidance in June.

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