Why the Dacian Gold (ASX:DCN) share price is soaring 15% higher today

The Dacian Gold share price is up more than 15% today following the company's preliminary September quarter update. Here's what was said…

| More on:
rocketing asx share price represented by man riding golden dollar sign speeding through clouds

Image source: Getty Images

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 Ltd (ASX: DCN) share price is rocketing higher today, up 15.15% in afternoon trading (at the time of writing). The rise in the Dacian share price follows on the company's preliminary September quarter update, released to the ASX earlier in the day.

Today's gains will come as welcome news to shareholders, who saw the Dacian share price plummet 71% from 6 January through to 21 July.

Since that low, the share price has regained nearly 27%, but still remains down nearly 61% in 2020. By comparison, the All Ordinaries Index (ASX: XAO) is down almost 10% year to date.

At the current price of 38 cents per share, Dacian Gold has a market capitalisation of $211 million.

What does Dacian Gold do?

As the name implies, Dacian Gold is a gold producer, based in Western Australia. The company's 100% owned Mount Morgans Gold Operation is located in a region containing numerous multi-million-ounce gold mines. Gold production at the mine commenced in March 2018. Mount Morgans is supported by Westralia, consisting of the Beresford and Allanson underground mines, and the company's Jupiter open pit operation.

What's causing the Dacian share price to rocket?

Dacian's preliminary September quarter update stated the company had produced 32,799 ounces of gold for the September quarter. It noted this tracks well against its 2021 financial year guidance of 110,000-120,000 ounces. Most of the gold was sourced from Dacian's Jupiter open pit mine.

Dacian also paid down $25 million of debt in the September quarter. Its total cash and gold on hand as at 30 September stood at $38.5 million. With the company still having a total outstanding debt of $39.1 million, this brings its net debt to $600,000.

Additionally, Dacian's hedge commitment fell by 23,101 ounces, bringing its hedged position to a total of 61,488 ounces at an average price of $2,114 per ounce. That's still considerably below the current market price for gold of $2,657 per ounce, but it's higher than the average price of the company's previous outstanding hedge position.

Addressing the results, Managing Director, Leigh Junk stated:

This is a great start to the financial year and positions Dacian favourably to meet its annual targets during FY2021. The strong operating performance has translated into a much-improved financial position with total debt and hedge commitments further reduced. I'd like to thank the team for their excellent effort and look forward to continuing the momentum at Mt Morgans.

With the company well on track to meet its production targets, and gold forecast to remain strong, the Dacian share price will be one to watch.

Motley Fool contributor Bernd Struben 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

Businessman smiles with arms outstretched after receiving good news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another strong showing from the share market today.

Read more »

Three miners looking at a tablet.
Resources Shares

Own ASX mining shares? Experts say an upswing in commodity prices has begun

HSBC economists Paul Bloxham and Jamie Culling explain why global commodity prices are rising.

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why Brambles, Lifestyle Communities, Northern Star, and Select Harvests shares are sinking

These shares are having a tough session. But why?

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop
Share Market News

Will the Reserve Bank wait for the US Fed to cut interest rates first?

Here's when AMP thinks interest rates will be cut in the US, Australia, New Zealand, Canada and the Eurozone.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Healthco Healthcare, Medadvisor, Ramsay Health Care, and Tamboran shares are rising

These shares are having a strong session. But why?

Read more »

drug capsule opening up to reveal dollar signs signifying rising asx share price
Share Gainers

If you invested $6,000 in Mesoblast shares a month ago you'd have $15,636 now!

Mesoblast shares have been on a tear this past month. But why?

Read more »

Gold bars on top of gold coins.

Is it too late to buy gold as an investment in 2024?

Can we still take advantage of gold at new record highs?

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Mergers & Acquisitions

Wesfarmers shares baulk on fresh acquisition gossip

A healthcare company gone nowhere in a decade might be on Wesfarmers' radar.

Read more »