One of the best performers on the All Ordinaries index on Monday was the Dacian Gold Ltd (ASX: DCN) share price.
Despite the S&P/ASX All Ords Gold index sinking 2.8% lower, this gold miner’s shares rose a massive 17% to $1.32.
Why did the Dacian Gold share price rocket higher?
Investors were scrambling to get hold of the company’s shares on Monday after it provided an update on its Mt Morgans Gold Operation (MMGO), which is located near Laverton in Western Australia.
According to the release, key operational benchmarks improved during July compared with the June quarter. This led to total ore movement rates across both the underground and open pit stabilising at planned levels in July.
As a result, total mined ore grade at the Westralia underground site increased to 3.5g/t, versus 2.5g/t in the June quarter, as underground productivities across Beresford South, Beresford North and Allanson met expectations.
Looking ahead, management expects MMGO production to be 150,000-170,000 ounces in FY 2020, weighted approximately 45%/55% between the first half and the second half.
Its all in costs are forecast to be between A$1,400 to A$1,500 an ounce, which means that MMGO will be a highly profitable operation if the gold price stays around these levels.
Dacian Gold’s executive chairman, Rohan Williams, said: “It is pleasing to start the FY2020 year with a plus 16,000-ounce month, positioning us to meet expectations set with our recently updated Life-of-Mine. Importantly the mill to claimed production reconciliation was excellent at 102%, again confirming the good correlation between grade control models and mill production.”
Overall, I’ve been very impressed with the way Dacian Gold has ramped up production and feel it is a decent alternative to gold mining giants Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST).
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Motley Fool contributor James Mickleboro 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.