Dacian Gold has a clear path to become Australia’s next mid-tier gold miner with expanding cash flow and organic growth from its newly opened Mt Morgans project.
IN late March, first gold was poured at Dacian Gold’s flagship $200 million Mt Morgans gold project in WA.
It was big milestone for the junior miner; for one Mt Morgans presented Dacian with 200,000 ounces of gold production over a 10-year mine life.
The project also offered organic growth through its mining centres Westralia, a 1 million tonne per annum (mtpa) underground operation; Jupiter, its 1.5mtpa open cut operation; and new discovery Cameron Well.
Dacian Gold executive chairman and chief executive Rohan Williams told The Australian Mining Review the project would remain a key focus for the company over the coming years until it was known how big the Mt Morgans gold operation could be.
“It’s all about getting to steady state, that’s the next big step for us — getting up to our 200,000 ounce run rate — which we believe we can do by the end of this calendar year,” Mr Williams said.
“We are very focused on getting to that level.”
Mr Williams said the June quarter was a great success for the company.
“When we set ourselves a target of producing gold at a particular time and we meet that target then that is a good tick for us,” he said.
“When we say we want to produce between 30,000 and 40,000 ounces in our first quarter and we do 34,000 ounces, then that’s another good tick.
“I suspect investors are quietly pleased that we are doing what we say we are going to do.”
In FY19 Dacian’s production guidance was targeting between 180,000 and 210,000oz of gold.
Dacian acquired Mt Morgans in early 2012 before raising $20 million in an IPO, which financed three years of exploration.
“We made two discoveries pretty quickly, and then over the next three years we turned those discoveries into producing gold mines,” Mr Williams said.
The two mining complexes – Westralia (Beresford and Allanson underground mines) and Jupiter – are 15 km apart.
Dacian’s third, undeveloped mining centre, Cameron Well – 9km to the north-west of the company’s new 2.5mtpa treatment plant – was also showing promise.
In September 2016, Dacian began the first round of reconnaissance drilling at Cameron Well, which confirmed it as a large, highly prospective gold target.
Mr Williams said with Westralia and Jupiter up and running, it was “getting back into exploration” at Cameron Well, with the aim of announcing a reserve for the deposit by the end of the calendar year.
“Hopefully it will become our third mine,” he said.
Mt Morgans is situated among numerous multimillion ounce gold mines within Laverton, the second highest endowed gold district in WA after Kalgoorlie.
“Exploration is important because we believe that the gold field we have at Mt Morgan’s is bigger than what it currently is,” Mr Williams said.
“It’s incumbent for us, and our shareholders expect us, to determine if our ideas are right.
“We think there is a lot more gold to be found and rather than sit on our hands and do nothing - if we find more gold, that increases the share price and increases value.”
During the June quarter, Dacian discovered two thick high-grade intersections – 3.1g/t gold from 59m and 2.6 g/t gold at 96m at Cameron Well.
“The more we drill at Cameron Well, the more we believe we are onto something very substantial here,” he said.
The prospective Laverton gold district is known to be home to syenite, which Mr Williams said “is an unusual rock type that contains gold.”
“There are very few other places in WA where you find them and there is a real concentration of them in Laverton – Cedar Island on Lake Carey to the south of Mt Morgans is one of them,” he said.
“If you have a syenite you have a pretty good chance that you’re going to find gold.
“Exploration is never successfully guaranteed but just by virtue of it being a syenite rock type it has the potential of hosting gold – and if we are really lucky Cedar Island might become our fourth mine.”
Moving into 2019, Mr Williams said Dacian had a two part goal.
“We want to maintain that production level at 200,000 ounces of gold per annum, which will give us the mid-tier status that we are looking for,” he said.
“And the second part is to find new ore reserves and look at how to improve share value by bringing them into production.”
Cameron Well is between the company’s Westralia and Jupiter mining areas at Mt Morgans.