Dacian Gold (ASX:DCN) share price falls despite solid update

The Dacian Gold Ltd (ASX: DCN) share price is slumping lower during today's trade despite the gold miner's solid quarterly result.

| More on:
Gold bear and bull share market

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 slumping 1.9% lower in today's trade despite a solid quarterly update from the Aussie gold miner, as gold prices retreated overnight.

Why is the Dacian Gold share price slumping today?

Dacian reported a strong net cash position for the quarter ended 31 December 2020 (Q2 FY2021). The Aussie gold miner produced 27,162 ounces of gold at an all-in sustaining cost (AISC) of $1,430 per ounce in the December quarter.

The mining group reported first half production of 59,961 ounces at an AISC of $1,356 per ounce. That means Dacian is on target to meet its full year guidance of 110,000 to 120,000 ounces at an AISC of $1,400 to $1,550 per ounce.

The Dacian Gold share price slumped lower in early trade following the update as gold prices retreated from a nearly two-week high. Today's update comes after strong quarterly results from competitors Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR) were also released this week.

Both the Saracen and Northern Star share prices jumped higher in early trade before retreating to below their opening prices.

Dacian reported cash and gold on hand at 31 December 2020 of $37.9 million. Total debt was $23.4 million after repaying $15.7 million in the quarter. That gave Dacian a net cash position of $14.5 million, a $15.1 million quarter-on-quarter improvement.

A new merger announcement, which came on 16 November 2020, was the big news for Dacian during the quarter. Dacian announced an all-scrip merger with NTM Gold Ltd (ASX: NTM) which saw the NTM share price rocket 44% higher. The $96.4 million merger is set to close in mid-March 2021 with the aim of creating a $285 million gold company.

Dacian Managing Director Leigh Junk said it was a "robust" result that has "significantly improved" the financial position for the company. Mr Junk said a stronger balance sheet and the merger will help Dacian to "explore regional consolidation" and leverage its significant infrastructure in the Laverton goldfields in Western Australia.

Foolish takeaway

The Dacian Gold share price slumped lower in early trade before paring back some of those losses in the late morning. That's despite a solid quarterly update that confirmed Dacian was on track to meet its full-year guidance as gold prices edged lower.

The S&P/ASX 200 Index (ASX: XJO) has edged 0.2% lower to 6,804.50 points at the time of writing.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Gold

A woman wearing a gold top and carrying a gold bar gives the thumbs down signal as she leans against a wall with a sombre look on her face as the Kingsgate share price goes lower
Earnings Results

Guess which ASX 200 gold stock is crashing on US$2.5b loss

This gold miner's results haven't gone down well with the market.

Read more »

plummeting gold share price
Share Fallers

How has this ASX 300 gold share managed to crash 50% today?

Investors have just lost half of their money with this stock.

Read more »

A woman holds a gold bar in one hand and puts her other hand to her forehead with an apprehensive and concerned expression on her face after watching the Ramelius share price fall today

Guess which ASX 200 gold stock is crashing 15% on a disappointing update

Investors aren't happy with the gold miner's update.

Read more »

Calculator and gold bars on Australian dollars, symbolising dividends.

Guess which ASX gold shares are sinking after announcing a ~$2.3b merger

Management believes this potential merger will be 'an exciting inflection point' for shareholders. Shareholders don't appear to agree.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.

Guess which ASX 200 gold share Bell Potter says is a buy with almost 30% upside

Golden returns could be on the cards for owners of this mining share.

Read more »

rising gold share price represented by a green arrow on piles of gold block

Gold Road shares rebound 7% as brokers scramble to upgrade ASX 200 gold stock

ASX 200 gold stock Gold Road Resources is enjoying a massive rebound today.

Read more »

Gold bars with a share price chart in the background.

After soaring 15% in 2023, what's ahead for the gold price in 2024?

ASX 200 gold stocks received some heady tailwinds in 2023 from a surging gold price.

Read more »

plummeting gold share price

Why is this leading ASX 200 gold stock crashing 14% today?

The ASX 200 gold miner is coming under heavy selling pressure today.

Read more »