Dacian Gold share price could fall on FY19 production downgrade

The Dacian Gold Limited (ASX: DCN) share price could suffer a similar fate to that of St Barbara Limited (ASX: SBM) last week and tumble in early trade after the company revised its FY19 production and cost guidance this morning.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Dacian Gold Limited (ASX: DCN) share price could suffer a similar fate to that of St Barbara Ltd (ASX: SBM) last week and tumble in early trade after the company revised its FY19 production and cost guidance this morning.

What did management say about FY19 guidance?

The company provided an operational update for its 100%-owned Mt Morgans Gold Operation (MMG) in Western Australia with expected production of 36,000 – 38,000 ounces at an all-in sustaining cost of $1,400 – $1,500 per ounce.

The company reported lower-than-expected March quarter production due to reduced availability of underground equipment (which have now been resolved) and the company expects productivities to return to design levels by the beginning of the June quarter.

The production shortfall peaked in February and was addressed earlier this month, with the Westralia underground mine now having a fleet of six 60-tonne trucks and is on track to mine 100,000 tonnes during March.

It will be interesting to see if the Dacian share price suffers the same fate as St Barbara, which saw its share price freefall more than 20% in one day after revising its own FY19 production and cost guidance.

What did St Barbara announce?

Delays have lowered expected full-year production to 235,000 – 240,000 ounces (down from a previous 245,000 – 255,000 ounces range) at an all-in sustaining cost (AISC) of $980 – $1,000 per ounce (up from $930 – $970 per ounce in initial guidance).

The revised cost information associated with the updated guidance is expected to be released in July 2019 with FY20 guidance and its Q4 June FY19 quarterly report.

The update, alongside less-than-outstanding results from the company's Gwalia Mass Extraction (GMX) feasibility study, sent the share price tumbling lower to close the week at $3.29, down from its February peak of $5.24 per share.

Should you buy any of the ASX gold miners?

Despite promising early gains, many of the most notable ASX gold miners have seen their share prices move into the red so far this year.

St Barbara's collapse aside, both Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Ltd (ASX: SAR) have seen their share prices fall 5% so far this year to $8.76 and $2.76, respectively.

The one shining light for the gold miners so far this year has been Newcrest Mining Limited (ASX: NCM) which has seen its share price rocket 17% higher on strong quarterly production figures and a new joint venture with Greatland Gold announced last week.

For those Fools who are bearish on the gold miners, I'd suggest checking out these top growth shares to find the next returns booster for your portfolio.

Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

a smiling young woman carrying a pile of books, indicating a lifting share price for book sellers
Share Market News

Here's how the ASX 200 market sectors stacked up last week

ASX utilities shares led the 11 market sectors for a second consecutive week.

Read more »

Animation of a man measuring a percentage sign, symbolising rising interest rates.
Share Market News

Here's when Westpac says the RBA will cut Australian interest rates

Are interest rates coming in 2024 or 2025?

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A young boy sits on his father's shoulders as they flex their muscles at sunrise on a beach

Where I'd invest $10,000 in ASX growth shares right now

These are my top picks for growth.

Read more »

A man with his back to the camera holds his hands to his head as he looks to a jagged red line trending sharply downward representing the ASX tech share sell-off today
Share Market News

How likely is a stock market crash in 2024?

Stock market crashes are a painful, but inevitable, part of investing.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Resources Shares

Goldman Sachs says this ASX 200 mining share is in for a 33% whack

The top broker predicts a fairly miserable 12 months ahead for this diversified miner.

Read more »

A woman wearing a top of gold coins and large gold hoop earrings and a heavy gold bracelet stands amid a shower of gold coins with her mouth open wide and an excited look on her face.

I believe this ASX 200 stock can DOUBLE its profit in 5 years

This stock has enormous profit growth potential in my eyes, here’s why.

Read more »

Top ten gold trophy.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors endured a sour end to the trading week today.

Read more »