Gold miner Dacian Gold’s share price was hammered on Wednesday as the company revised its production guidance and announced the start of a “strategic review to consider corporate approaches”.
The operator of the Mt Morgans mine, in Western Australia, lowered its production guidance for the June quarter to a range of 36 000 oz to 68 000 oz, from a previous guidance of 50 000 oz to 55 000 oz.
The company warned that costs would increase from between A$1 050/oz and A$1 150/oz, to between an all-in sustaining cost (AISC) of between A$1 500/oz and A$1 600/oz.
Dacian said the guidance revision followed underground contractor performance issues, which resulted in lower productivity than previously anticipated. A ball mill motor also failed on Saturday which resulted in the suspension of the treatment plant for three days.
The miner said production for the 2020 financial year was likely to be in the range of 150 000 oz to 170 000 oz at an AISC of A$1 350/oz to A$1 450/oz. An updated five-year mine plan would be released by the end of June, with the company’s preliminary review anticipating average production of 160 000 oz/y to 180 000 oz/y.
Dacian said that it was confident that ongoing exploration success would continue the indicative production levels of the five year mine plan “well beyond” five years.
Meanwhile, the company confirmed that it had received several unsolicited enquiries from corporate entities and that it had started a review to consider potential corporate and funding initiatives. These might culminate in a “change of control transaction”.
Dacian’s share price crashed on the news, falling by 67.5% to A$0.52 a share, which is the lowest level since September 2015.