Not the news the market wanted to hear from Dacian Gold.
Just as world gold prices sit near eight-year highs, Dacian has cut its outlook for 2020-21 gold production, news which sent the shares down more than 20% at one stage yesterday.
Dacian said on Monday it expects to produce between 110,000 to 120,000 ounces of gold from its mine near Laverton, WA, in the 2020-21 financial year, down from the 120,000 to 130,000 ounces previously forecast.
It said it plans to cease activities at the mine in August, four months before previously planned
2019-20 production came in at 138,814 ounces in the year to June which was at the lower end of its full-year guidance, a point that also didn’t help investor confidence.
The shares ended down nearly 19% at 32 cents.
Dacian said stopping open-pit mining in August while there is 195,000 ounces of gold still left in the Westralia mining area would allow it to develop a holistic underground strategy for the four projects it has in the area.
The company said that at June 30 it had total debt of approximately $64.1 million following a $5.9 million repayment during the quarter. Total cash and equivalents at June 30 was $57.3 million.
“The Company anticipates making a repayment of $25 million towards its project loan facility during the September quarter from cash on hand and operating cash flows,” Dacian said yesterday in the update.
“Following this repayment, the project loan facility will have reduced to a balance of $39.1 million which positions the Company to complete a refinancing to a corporate-style debt facility during 1HFY2021,” the company said.
Dacian’s total hedge commitments at June 30 “continued to be reduced, now standing at 84,589oz at an average gold price of $A2,055/oz, reflecting 25% of the Company’s three year outlook.