Dacian Gold in focus as open pit mining ends

Dacian Gold describes itself as an Australian gold miner focused on high-margin, sustainable production and organic growth from its highly prospective land package in Western Australia. Picture: AFP

Dacian Gold is believed to be working with corporate advisory firm Treadstone Partners as it moves to navigate its way through its current financial challenges and potentially engage with buyers.

The company describes itself as an Australian gold miner focused on high-margin, sustainable production and organic growth from its highly prospective land package in Western Australia.

Its market value has shrunk to $89m – about half the level at the start of this year.

It told the market on June 17 that it would discontinue open pit mining operations at its Mt Morgans Gold project in Western Australia because of the rapid change in the operating environment over the past six months.

The period had seen significant inflationary pressures which had resulted in an increase in cost base, prompting a review of the operating strategy, Dacian said at the time.

It suspended its open pit mining operations at Jupiter last month. Underground operations are continuing until the previously developed stopes have been mined in the first quarter of the 2023 financial year.

Dacian said it would pivot to exploration.

The company said it would focus on what it saw as significant potential beneath and alongside the Jupiter open pits.

Chief executive Leigh Junk has resigned and has been replaced by Dale Richards.

The company is seen as an obvious takeover target, given its large operating mill in the resource-rich West Australian gold mining area is worth about $175m – almost double its current market value.

Raleigh Finlayson’s Genesis Minerals is seen as the obvious buyer. A tie up between Genesis Minerals and Dacian was flagged as likely to be on the cards by DataRoom in April.

The $320m Genesis Minerals is trading reasonably strongly compared to other stocks in the sector, so a deal would be within its grasp.

Dacian had previously announced a production downgrade after the company overestimated the quality of its deposits.

One of its problems has been that its mill has been over-engineered, and the company has been losing money.

Dacian’s Mt Morgans is about 100km from Leonora, broadly within trucking distance of Genesis’ deposits.

Other miners operating in the area that could be interested in the asset include St Barbara, Red 5, KIN Mining and Saturn Metals.