Gold News: Discovery At Dacian, Northern Star Upgrades Pogo Purchase

Two bits of interesting news in updates from the gold sector – WA explorer, Dacian Gold thinks it has a goer in its Cameron Well discovery at its Mt Morgans gold mine near Laverton, and Northern Star Resources has upgraded the size and quality of the gold reserves at the Pogo mine in Alaska it bought a couple of months ago.

Dacian says it will spend $28 million on proving up what it hopes will be a third mining centre at the northern Goldfields project.

Of that figure, half will be spent on drilling to test depth extensions at the Westralia underground hub. The campaign comes as Dacian lifts production from Mt Morgans, where the first gold bar was poured in March.

Up to 130,000 meters of drilling is being undertaken at Westralia and the 245,000 ounce Cameron Well deposit ahead of a reserve update later in the year.

Dacian said yesterday in its September quarter report that the 3.5 million ounce Mt Morgans development produced 29,316 ounces of gold in the three months to September.

“Gold sales for the quarter totaled 29,249 ounces at an average sale price of $1,734/oz for total revenue of $50.7 million. Unsold gold for the quarter was 5,445 ounces,” Dacian said yesterday.

Dacian hope to lift output to commercial production by the end of this year and produce between 180,000 and 210,000oz in its first full year.

Dacian executive chairman Rohan Williams said production was expected to be heavily weighted towards the March and June quarters of next year and noted the company paid off $16.5 million debt in the quarter, with $133.5 million still to go.

“In addition to the debt repayment, the Company also extinguished the life-of-mine Jupiter royalty during the quarter, paying a total of $11.5 million,“ he said yesterday.

“We are planning on delivering successive quarterly production increases throughout FY19 and maintain our production guidance of 180,000-210,000oz, weighted towards the second half of the year,” he said.

“Our strong start to production also enabled us to make our first debt repayment of $16.5 million during the quarter, which still leaves us with more than $80 million in the bank.

“This means we are well-funded for the aggressive exploration programs we have outlined recently aimed at delivering further growth in our mineral resource and ore reserve at Westralia and Cameron Well.”

Dacian reckons exploration success has paved the way to make the Mt Morgans project, which was shut in 2011 after previous owner Range River Gold went bust, a 200,000-ounce-a-year gold mine. It includes the baseload Jupiter open pit and the twin Beresford and Allanson underground developments.

Dacian shares jumped more than 5.6% to $2.26 in one of the stronger performers yesterday.

The company says it will be making a Westralia Ore Reserve Update and a Cameron Well maiden Ore Reserve in November or December.

Meanwhile, Northern Star Resources revealed it had audited and upgraded gold reserves at the Pogo mine in Alaska it bought from Japanese interests in August.

The company told the ASX yesterday that the resource at the mine 8.8 million tonnes at 14.7 grams per tonne (gpt) for a total of 4.15 million ounces.

“This estimate excludes the 765,000oz in Pogo satellite deposits which were included in the 4.1million ounce oz non-JORC resource at the time of Northern Star’s acquisition,

“As a result, the in-mine Resource is now 24 percent higher than at the time of the acquisition. This increase is predominantly through interpretation and remodeling of known mineralisation.

“The JORC-compliant Resource includes Indicated Resources of 3.3 Mt at 15.7gpt for 1.7M oz and Inferred Resources of 5.5Mt at 14.1gpt for 2.5Moz.

Northern Star also confirmed, that as announced last month, it has increased equity ownership of the Central Tanami Project (CTP) to 40% via a $20 million option exercise. Equity Resources in the CTP now total 12.3 Million tonnes @ 2.8 grams per tonne for 1.1 million ounces.

“Following the Pogo Resource and the increased CTP ownership, Northern Star’s Group Resources stand at 188 million tonnes at 3.4 grams per tonne for 20.5 million ounces of gold.

Northern Star shares edged up 1.2% to $9.01 yesterday.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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