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Discounted raising designed

to restart Dacian

acian Gold Ltd has set out the path for its long road to recovery Morgans while it worked out how best to exploit its underground
Dfollowing the announcement of a $98 million capital raising in resources.
April. “The move towards a more measured and staged approach
The raising – comprising a $70 million placement and institution- at Westralia, whilst accelerating ore production from the open
al entitlement offer and $28 million retail entitlement offer – is de- pits, will allow the company time to further optimise the strategy
signed to provide the struggling gold miner with the balance sheet to unlock maximum value for the company and shareholders,”
relief and working capital space to plan for life beyond its recently he said.
announced three-year production plan. Analysts remained cautious following release of the updated
The placement and entitlement were placed at a 79% discount strategy.
to the last trading price. “New management appears to have rebased expectations
Long-term shareholders will be hoping the capital raising is the with lower risk open pit material and this raising should reduce
final chapter in a frustrating two-year story which has seen Dacian some of the debt obligation pressure,” RBC Capital Markets said
fall from gold market starlet to major disappointment. Shares in the in a client note. “In our view, however, perceived risk around the
company have fallen more than 75% in little more than a year after asset is unlikely to wane anytime soon and Dacian is unlikely to
it admitted to reconciliation problems at its Mt Morgans gold mine find significant shareholder support until prolonged cash flows
in Western Australia. can be demonstrated.
Managing director Leigh Junk said the capital raising would en- “The steep discount [around 79%] is likely to be commensu-
able the company to reset operations and growth ambitions. rate with the risk/reward deemed appropriate by the underwrit-
“The successful completion of the offer will also allow Dacian ers in this current environment – although we would have to as-
the flexibility and opportunity to invest in the future growth of the sess the absolute impact of the large dilution to our estimates.”
Mt Morgans operation and define the various potential pathways to Dacian is the highest profile of a string of WA junior gold pro-
production beyond the three-year outlook,” he said. ducers who have stumbled despite the Australian dollar gold
The raising came a month after Dacian announced a new pro- price hitting record levels in recent years.
duction strategy for Mt Morgans focused on a lower risk open pit – Dominic Piper
production. The strategy has seen the company forgo underground
operations at the Westralia mine in favour of open pit mining at Ju-
piter and the Mt Marven open pit. The new three-year outlook to
FY2023 is forecast to produce 120-130,000oz at AISC of $1,250-
1,350/oz in FY2021 and 110-120,000oz in FY2022 and FY2023.
When Mt Morgan hit commercial rates in late 2018, Dacian was Exploring
forecasting annual production of 180-210,000 ozpa at AISC of
$1,000/oz. The mine never met those expectations with production
and guidance consistently slipping over the course of 2019 due to together for success
poor reconciliation at both Westralia and the Jupiter open pit.
Junk said the new outlook would reduce operational risk at Mt

Dacian will phase out underground mining at its Mt Morgans
gold operation after disappointing grade reconciliation

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