Why did the Dacian Gold (ASX:DCN) share price fall on Friday?

It wasn't a golden quarter for Dacian.

| More on:
Gold nugget with a red arrow going down.

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

sdf

Shares in gold mining company Dacian Gold Ltd (ASX: DCN) lost ground on Friday to close 4% lower at 22.5 cents apiece.

Dacian shares were on the move today after the company released its quarterly earnings and activities report.

Here are the details.

Dacian share price slides as production in line with guidance

Dacian outlined a number of investment highlights from the quarter, including:

  • September quarter production of 15,819oz, in line with 2H weighted guidance, but down 38% quarter on quarter.
  • All-in sustaining cost (AISC) of $2,362/oz, up from $1,742/ounce from last quarter
  • Cash and gold on hand at 30 September 2021 of $33.2 million, 38% behind the quarter prior
  • Total debt of $16.0 million following refinancing of project debt facility
  • Total forward hedge position reduced to 13,410oz at an average gold price of $2,236/oz

What happened this quarter for Dacian Gold?

Although the company came in with gold production that was largely in line with guidance for its second half, "September quarter production was slightly lower than planned".

In fact, total production came in around 40% behind the previous quarter at almost 15,820 ounces, down from 25,558 ounces.

Dacian also realised these gold sales on an AISC of $2,362, a 36% increase from last quarter. The company explained that the higher AISC came from the "lower production for the quarter, and is forecast to reduce in line with the increasing production for the remainder of the financial year".

The company wasn't immune to the effects of the pandemic either, as 'labour scarcity' had an impact on its open-pit mining rates.

It also had an effect on the recently appointed underground mining contractor's workforce, thereby hindering operations this quarter.

Aside from this, the company milled a total of 686,671 tonnes of ore at an average feed grade of 0.79g/t gold, containing 17,343 ounces.

Dacian also left the quarter with cash and gold bullion on hand of $33.2 million, which is a 21% decrease from last quarter's balance of $41.8 million.

What did management say?

Speaking on the announcement, Dacian managing director Leigh Junk said:

The tight labour market conditions continue to be a headwind for the Western Australian mining industry including our operations, however despite challenges our plan for the full year remains achievable. Our ongoing exploration investment is demonstrating the prospectivity of our land position with the recent success beneath the Jupiter open pit highlighting the potential for growth to our operations.

What's next for Dacian Gold

Production guidance of FY22 is for 100,000–110,000 ounces, on an AISC of $1,550–$1,7000 per ounce.

The company notes that "as previously guided, production remains weighed to the 2H of FY22"

FY22 also is set to see a "tiered quarter on quarter production profile over the financial year due to accessing significant ore from the shallow dipping Cornwall Shear Zone" at its Doublejay open-pit mine.

In addition, the final stage of development at Doublejay continues, "producing high-grade ore in earnest during FY2023–FY2024"

It's been more than a difficult year to date for the Dacian Gold share price, having posted a loss of over 45% since January 1.

This extends its loss over the last 12 months to 37%, well behind the benchmark S&P/AX 200 index (ASX: XJO)'s return of around 25% in the same time.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 group of three miners in hard hats and high visibility vests confer at a rocky mining site.
Broker Notes

Up 66% in a year, just how much more upside does Macquarie tip for Perseus Mining shares?

Just how much higher might Perseus Mining shares soar? Here’s what Macquarie had to say about the ASX 200 gold…

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Share Gainers

2 ASX All Ords stocks that would already have more than doubled your money this year

These ASX All Ords stocks have gained 126% and 145% year to date. But how?

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
Gold

Guess which ASX 200 gold stock is sinking 7% on five-year guidance update

Let's see what this gold miner has announced this morning.

Read more »

A man analyses stockmarket graph on his computer.
Gold

Up 132% in a year, why is the Evolution Mining share price gaining again today?

Investors are piling into Evolution Mining shares on Friday. But why?

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Gold

ASX 300 gold stock crashes 8% on guidance update

This gold miner is having a tough session on Friday. But why?

Read more »

View of a mine site.
Gold

Up 70% in a year, why this fund manager is calling time on this soaring ASX 200 gold stock

A leading investment expert foresees headwinds for this surging ASX 200 gold miner.

Read more »

A man standing in a red rock mine is covered by a sheet of gold blowing in the wind.
Gold

Up 305% in a year, what's got investors so excited about this ASX gold share?

'First gold' is imminent...

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

Why are ASX 200 gold stocks going gangbusters today?

Investors are piling into the ASX 200 gold miners today. But why?

Read more »