Why did this ASX gold share just crater 40%?

What did Dacian announce to the ASX that has its shares in a tailspin?

| More on:
plummeting gold share price

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

Key points

  • Dacian shares plummet in value by 40% to 10.2 cents today 
  • The company stated that inflationary cost pressures have forced it to make changes to its Mt Morgans operations 
  • Open pit mining operations at Jupiter will be suspended by the end of this month 

One of the worst performers on the ASX today is the Dacian Gold Ltd (ASX: DCN) share price.

The gold miner’s shares have lost 40% during midday trade to a new 52-week low of 10.2 cents apiece.

For context, the All Ordinaries Index (ASX: XAO) is down 2.32% to 6,626.5 points following heavy losses on Wall Street overnight.

What’s happened to Dacian shares?

Investors are fleeing the Dacian share price after the company delivered an update regarding its Mt Morgans operations.

In its release, Dacian advised the operating environment has rapidly changed over the last 6 months. This comes after significant inflationary cost pressures have impacted the business leading to an uptick in Dacian’s cost base.

As such, the management has been forced to conduct a review of its operating strategy with the following decisions made:

  • Open pit mining operations at Jupiter to be suspended by the end of this month
  • Underground operations to continue until the previously developed stopes have been mined in Q1 FY23
  • Open pit mining at Hub at Redcliffe to commence later in FY23 following receipt of mining approvals
  • Processing of existing stockpiles totalling roughly 5 million tonnes will begin in Q1 FY23
  • Drill testing to focus on high-priority exploration targets at Jupiter throughout FY23

Overseeing the change, Dacian general manager for geology and exploration, Dale Richards, has been appointed as CEO.

This follows outgoing managing director, Leigh Junk’s resignation after spending 3 years with the company.

Dacian non-executive chair, Mick Wilkes commented:

In light of the current high inflationary environment, the Board has taken the decision to reset the company strategy by discontinuing the current open pit mining operations at Mt Morgans.

In doing so we are pivoting to exploration and a focus on the significant potential we see beneath and alongside the Jupiter open pits. This along with the strategic value of our processing facilities and infrastructure in the Laverton Leanora gold belt underpins the company.

Dacian is forecasting cash and gold-on-hand of approximately $17 million at 30 June after a $12.75 million bank debt repayment. 

Dacian share price snapshot

It has been a rollercoaster ride for the Dacian share price, with large volatile swings over the past 12 months.

Adding to today’s losses, the company’s shares are down 60% since this time last year. This is a big difference to when its shares touched a 52-week high of 32 cents in mid-April.

On valuation grounds, Dacian presides a market capitalisation of roughly $184.46 million.

Motley Fool contributor Aaron Teboneras has no position 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 Scott Phillips.

More on 52-Week Lows

man bending over to look at red arrow crashing down through the ground
52-Week Lows

Why is the Australian Strategic Materials share price sinking 10% today?

What's got Australian Strategic Materials shares in a tailspin?

Read more »

Gold

Why is the Newcrest share price slipping to a new 52-week low on Friday?

The gold miner and its peers are having a tough end to the trading week.

Read more »

An older man wearing glasses and a pink shirt sits back on his lounge with his hands behind his head and blowing air out of his cheeks.
Financial Shares

Pendal share price slumps 10% to multi-year low amid continued outflows

The Pendal share price has hit a new low today...

Read more »

A man sits wide-eyed at a desk with a laptop open and holds one hand to his forehead with an extremely worried look on his face as he reads news of the Bitcoin price falling today on his mobile phone
52-Week Lows

Here are 3 ASX 200 shares tumbling to new 52-week lows today

It's proving a day to forget for this trio of ASX 200 shares...

Read more »

a man with a moustache sits at his computer with his hands over his eyes making a gap between his fingers so he can peek through to his computer screen.
52-Week Lows

EML share price sinks 18% amid CEO’s unexplained departure

Shares in the payments company are having a shocker of a day.

Read more »

Kid with a brown paper bag on his head which has a sad face on it sits in front of an old style computer representing falling ASX 200 tech shares today.
52-Week Lows

These 3 ASX All Ordinaries shares are hitting new 52-week lows today

Here's why these All Ords stocks are suffering on Wednesday.

Read more »

a young man sits on the floor with his back against a sofa hunched over his phone in one hand and his other hand on top of his head as though he is seeing bad news as his face looks sad and anguised.
52-Week Lows

Down 18% in a week, what’s stolen the shine from the Regis Resources share price?

The gold miner's shares have lost their sparkle over the past week. Here's why.

Read more »

Three rock climbers hang precariously off a steep cliff face, each connected to the other with the higher person holding on and the two below them connected by their arms and rope but not making contact with the cliff face.
52-Week Lows

3 high-quality ASX 200 shares trading at 52-week lows right now

The recent sell-off may have created buying opportunities for these ASX 200 shares.

Read more »