Dacian Gold Limited (ASX: DCN) announced its March quarter production update and revised its FY2019 guidance and maiden All-in-sustaining-cost (AISC) for its Mt Morgans project near Laverton in Western Australia.
As per the company, with one remaining gold pour for the quarter ending March 2019, it expects the production to be in the range of 36,000-38,000 ounces of gold with an AISC in the range of A$1,400—A$1,500 per ounces of gold and it will be a maiden reported AISC for the project. The new production estimates are down from the previous estimate for the quarter amid reduced availability of the underground equipment at Westralia.
Recently, the company declared commercial production results for December 2018.
Dacian mentioned that the shortfall in equipment availability peaked in February and led to a decrease in extraction rates from underground ores at Westralia including ores from Beresford South and North along with Allanson. The decline was majorly due to the availability of underground load and haul equipment which were below the expectations of the company.
The lower than expected availability of load and haul equipment led to lower production levels across the three, which in turn delayed access to higher grade stopes which were initially scheduled to be mined during the March quarter.
However, the company mentioned that the equipment availability has now returned to normalcy and has been addressed with a number of actions taken by the company such as mobilisation of two new 60 tonnes trucks and a new tele-remote loader to the project site from an underground mining contractor. The Westralia underground mine now has a fleet of six 60t trucks and three tele-remote loaders, which is expected to uptick the production guidance.
As a result of the adopted measures, Dacian Limited now expects the production level to be in the range of 50,000 – 55,000 ounces of gold from the Mt Morgans project with the AISC in the range of A$1,050 – A$1,150 per ounces for the June quarter.
The company is now confident that the productivity rates are restored to the normal levels and the issues have been largely resolved. However, Dacian slashed the FY19 guidance to 150,000—160,000 ounces of gold as compared to the previous forecast of 180,000 ounces.
Increase in grade from Heffernan:
As per the company, advancement in mining towards the thicker and higher-grade mineralised Cornwell Shear Zone led to an increase in open pit grades from Heffernan open pit, and as result of high open pit grade, June production is estimated to increase to 50,000—55,000 ounces of gold.
Dacian Limited also mentioned that the mineral grade is above the average Jupiter ore Reserve grade. As per the company, both Westralia and Jupiter are ready to operate above average tonnage rate of 1mtpa and 1.5mtpa along with the increased grade, and the company is confident to underpin the anticipated improvement in forecasted production levels.
The stock of the company traded lower today on Australia Stock Exchange and slipped by 7.347% to close at A$2.270 (as on 25th March 2019, 06:51 PM).
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