Dacian Gold (DCN) has released a Life of Mine plan update for its Mt Morgans Operation in Western Australia. DCN quotes FY20 production of 150-170koz at an All-in cost (AIC) of $1,400-1,500/oz and Life of Mine (LOM) production of 170kozpa at AIC $1,340-1,440/oz. The plan utilises 88% of the 2018 Ore Reserve (net of depletion). Grade Control drilling has covered 60% of the Westralia Ore Reserves over the LOM plan and 80% of FY20 planned production. Grade control reports a high level of confidence to mill output vs the more problematic reserve-to-mill reconciliation. Overall this is positive news, but this is still just a forecast. DCN aims to mitigate risk via grade control drilling, we only see a re-rate once predictable operational performance can be demonstrated. We retain our HOLD recommendation and after making changes to our model to account for DCN’s mine plan update, we revise our target price to $1.07ps (prior $1.12).
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