Dacian Gold (DCN) has provided a corporate and guidance update which materially reduces production in the June Q, and for FY20-25, which subsequently drives higher costs. This is the result of underperformance of grade at Beresford and hangingwall lodes at Jupiter as well as lower productivity from underground contractors. DCN has downgraded June Q guidance to 36-38koz at $1,500-1,600/oz (from 50-55koz @ $1,050-1,150/oz) as well as preliminary FY20 guidance of 150-170koz at an AISC $1,350-$1,450/oz. DCN sees annual production over the next 5 years at 160-180koz. In addition, the Company has flagged a strategic review process is underway to consider potential funding or corporate initiatives, effectively putting the asset up for sale in our view. Overall, this is a material event which substantially tarnishes managements reputation. We move to a HOLD pending the mine plan review, we revise our valuation to $1.12 ($3.10 prior).
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