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Aug 2017 - Dacian Gold Limited

Dacian Gold Limited (DCN) – Accelerating to >200kozpa of New Gold Mine Production at Mt Morgans

  • Dacian remains on track for gold production from MQ 2018, being in the main construction stage of their wholly owned 2.5Mtpa rated hard rock plant at Mt Morgans ~25km west of Laverton with expected commissioning and completion in Feb/March 2018.
  • The commissioning stockpile has been estimated at ~200kt from underground (Beresford South expected to blast its first stope in November 2017, followed by Beresford North), plus ~250kt from the Heffernans Stage 1 open-cut at Jupiter from ~December 2017. Hence [ERA view] the rated throughput of 2.5Mtpa could be achieved by the end of June 2018. (Being the 80th percentile rate, an increase to ~3Mtpa could [ERA view] be achievable).
  • Initial grades could be much higher than average expectations as in Dec/Jan 2018 the second 2280 Level stopes may be cut in Beresford’s “high grade” area that had reported intercepts of 3.3m @ 84g/t, 16m @ 11g/t & 13m @ 14g/t (which could realise a stope grade [ERA view] of >8g/t). Allanson is also targeting an initial high grade area [in SQ 2018], while Heffernans focuses on grade and a lower SR in its Stage 1 open-cut (for faster payback).
  • Dacian’s November 2016 DFS expected to underground mine ~492koz (3.3Mt @ 4.6g/t) over ~4 years from Beresford and Allanson through its 2.5Mtpa plant (plus ~643koz from Jupiter & 65koz from Transvaal). Due to the underlying resources behind the reserves used in the DFS, Dacian also suggested that a potential upper case appeared likely in which 938 koz was mined from Westralia underground resulting in production of 1.65Moz over 9 years, with an average of 197kozpa in the first 7 years, and an AISC of ~A$975/oz.
  • (Note in comparison : Avoca’s DFS in Dec 2006 expected to mine ~581koz [3.4Mt @ 5.3g/t] underground from Trident at Higginsville over 3.5 years from mid-2009 in a 1Mtpa plant, but Trident [& Chalice] has so far produced ~1.2Moz [>double] over 8 years [>double] at up to ~1.35Mtpa [35% higher] in the plant).
  • The game changer for Dacian could be Cameron Well, which does have some similarities to the early stages of the Heffernans discovery, except that Cameron Well appears to be ~1.1km in diameter, partly exposed on surface. The initial focus in July 2017 was on a potential NE/SW structure, & whether it may resemble the Cornwall Shear Zone at Jupiter.

Other Key Points: :

  • DCN has a 5% NPV of ~A$3.22 at US$ 1250/oz (~A$1563/oz at A$/US$0.80). The NPV rises by ~A$0.35 per US$50/oz (or 7Ac per US$10/oz) increase in the gold price.
  • Initial capex has been reduced by ~$23m saving $7m on the 2nd hand camp for $14m installed, and $16m on other infrastructure.
  • The possible depth extensions to Westralia are expected to be drill-tested in the second half of CY 2017.
  • Higher throughput rates may be realised from a number of possible oxide resources, mostly south and east of Heffernans, above Allanson, and above and north of Cameron Well.
  • Regional exploration in the coming year expected to focus on the other BIFs such as Maxwells and Rainbow Bore, plus the other syenites of Rosetta, and the Wallaby Basin Margin area.
  • Written by: Keith Goode
  • Tuesday, 01 August 2017

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