Dacian Gold (DCN) reported Dec Q production of 38koz (+29% vs 29.3koz in the Sept Q, previously reported). Metrics on all fronts showed double digit growth, reflecting maturity of the operations coincident with commercial production which was declared earlier this month. Milled ore tonnes exceeded our expectations at 630kt @ 2g/t (vs Argonaut 700kt at 1.7-1.9g/t Au), largely as a result of increased underground mined grades of 4.2gt (+27% QoQ) which fed into a 43% gain in the milled head grade to 2g/t Au vs the Sept Q. Mining rates improved by 18% QoQ, removing the mine-to-mill constraints in the ramp up period. The March Q will show further gains as higher-grade zones in the Cornwall Shear Zone (CSZ) are mined at Jupiter, and first development ores from the Allanson underground are accessed. Cash increased to $85.6m (+$3.5m QoQ) and debt remained at $133.5m (unch). Operations are improving in line with expectations and the stock trades on undemanding forward multiples of 5x FY19 EV/EBITDA. BUY maintained with a target price of $3.50ps.
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