WITH production well and truly underway at Dacian Gold’s Mt Morgans project in WA, the company was now turning its attention to exploration to grow mine life.
After an “excellent” December quarter, Dacian Gold declared commercial production at its flagship Mt Morgans project in January.
The mine, 37km south of Laverton, presented Dacian with 200,000 ounces of gold over an estimated 10-year mine life, and a clear path to mid-tier status through its organic growth options; the Westralia underground operation, open cut Jupiter mine, and new discovery Cameron Well.
Dacian Gold executive chairman and chief executive Rohan Williams said the company achieved its commercial production milestone in January exactly when it said it would.
“We have now been producing for almost a year and are well on the way to being Australia’s next mid-tier gold miner,” Mr Williams said.
“[The three months ending December] was an outstanding quarter, with production increasing 30 per cent from the September quarter.
“Again, this ramp-up is in line with our stated objective of materially increasing quarterly production levels over the course of FY19.”
Gold production for the December quarter totalled 37,930 ounces and was expected to reach between 180,000 to 210,000 for the financial year.
But, due to underground equipment availability issues, in late March the company reduced guidance for the March quarter to between 36,000 and 38,000 ounces, which had subsequently bought it’s guidance for FY19 down to between 150,000 to 160,000 ounces.
In a statement, the company said that it had resolved the issue, and that “production for the June quarter was expected to be in the range of 50,000-55,000/oz at an AISC of $1050-$1150, representing an annualised production run rate of over 200,000 ounces”.
Mining at Mt Morgans was now underway across all three declines at Westralia – Beresford South, Beresford North, and Allanson – as well as Jupiter’s Cornwall shear zone.
Increased production in the coming quarters would be achieved via higher grade ore from the Jupiter open pit and the Westralia underground mine.
Exploration
Exploration was also a key focus for the company moving forward.
In August 2018, shortly after construction phase of Mt Morgans was completed, the company launched an aggressive $25 million 110,000 metre accelerated exploration campaign.
Mr Williams said its exploration program was “going well”.
“Not every exploration play turns up a new gold mine and we were lucky that we found two new large gold mines at Westralia and Jupiter pretty much off the bat,” he said.
“The new exploration projects at Cameron Well and Basin Margin will take time to better understand, but we are optimistic that Cameron Well will become our third mining centre at Mt Morgans as it is quite an advanced exploration story.
“Basin Margin is a much earlier exploration story but it is situated in a very interesting area and there is gold around so we are keeping our fingers crossed.”
On 21 February, Dacian revealed 25,000 metres of drilling had been completed, which focussed on extending the mineralisation zone at Westralia and Cameron Well.
“The results include outstanding intersections from several areas at Mt Morgans, all within 15km of the processing plant, and highlight the huge scope for organic growth,” Mr Williams said.
At Westralia, high-grade results from ongoing drilling outside the planned mining areas continued to point to further increases in mineral resources.
The company had completed about 16,000 metres of drilling outside the current ore reserve and mineral resources boundary at Westralia.
The initial focus was on a 350 by 300 metre test area between the north end of Beresford North and the south end of the Allanson ore reserve.
The mineralisation identified could lead to the development of a fourth decline for the Westralia resource.
“In addition to the growth potential around Allanson, ongoing drilling at Cameron Well has confirmed the continuity of shallow mineralisation beyond the optimised open pit ore reserve,” Mr Williams said.
About five kilometres south-west of Dacian’s processing plant, the Basin Margin project overlies the structurally complex geological contact which separates the Wallaby conglomerate and the mafic package.
Follow up drilling at the Basin Margin project commenced in late March 2019.
Outlook
Mr Williams said the company was on its way to achieving a 10-year mine life via these exploration ventures.
“We currently have a 1.4 million ounce ore reserve that we know will give us seven years of about 200,000 ounces per year,” he said.
“We know we have extensions of inferred resource to Westralia that is not included in the ore reserve and we are very confident these extensions will continue and will grow the resource base.”
Mr Williams added the company was optimistic Cameron Well would be its third mining centre, and expected the resource and ore reserve to grow over time, along with Basin Margin.
“With seven years effectively in the bank today, and known extensions and likely new discoveries, it doesn’t take too much of a stretch to be able to argue this could be a 10-year gold mine, and personally I think it has every chance of being much more than 10 years,” he said.
“But there’s a lot of work to be done first.”
For the remainder of 2019, Mr Williams said the company would be ramping up production to reach nameplate capacity, and paying down debt from operational cashflow.
He said Dacian was also examining new technologies that could add value to the operations.
“We are certainly watching the new technology developments that are entering the mining space but we will bed down those milestones we have set for 2019 before we enter that fray,” Mr Williams said.
“Areas of new technology that I want to investigate for Mt Morgans include ore-sorting technology, 3D seismic and where we can improve mining productivities.”
