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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 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.

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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.

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