CAPITAL MARKETS

New Oz gold producer in big equity raise

New Australian gold producer Dacian Gold (ASX: DCN) is seeking to raise up to A$45 million to accelerate exploration at Mt Morgans in Western Australia and extinguish a life-of-mine royalty obligation.

Staff reporter
Drilling at Mt Morgans in Western Australia

Drilling at Mt Morgans in Western Australia

The company will conduct an institutional placement to raise about $37 million, with the ability to take oversubscriptions up to an additional $3 million.

Argonaut Securities, Canaccord Genuity and RBC Capital Markets are acting as joint lead managers.

Shareholders will also be given the opportunity to participate via a share purchase plan to raise up to $5 million.

The issue price for the offers is $2.70 per share, a 10.3% discount to yesterday's close.

Following completion of the institutional placement, Dacian will have around $92 million cash.

The company will use $12 million to extinguish a royalty covering the Jupiter pit.

At least $25 million - and as much as $33 million, depending on the amount raised - will be used for exploration after recent success at Mt Morgans.

Dacian spent up to $1 million a month on exploration while building the $200 million Mt Morgans mine, which started production on March 29.

In recent weeks, the company has released strong results from its emerging Cameron Well discovery and Westralia underground.

"We have substantially improved the exploration optionality at Mt Morgans with a new interpretation of the high grade zones at Westralia trending into areas of BIF never previously drill tested, and the new drill results at Cameron Well, which including 97m at 3.1gpt gold speak for themselves," Dacian executive chairman Rohan Williams said.  

"Our intent with this equity raising is to fast-track the value-realisation of this enhanced exploration optionality by bringing forward discovery of new mineral resources and potentially new mines and higher production levels."

Dacian will spend at least $12 million on 60,000m of drilling targeting a large area to extend Westralia, and at least $10 million on 50,000m of drilling at Cameron Well.

Another $3 million will be used to test newly recognised syenite targets analogous to Jupiter, Cameron Well and Gold Fields' 8Moz-plus Wallaby deposit, 10km away.

Mt Morgans has a current mine life of eight years, based on a production rate of around 200,000oz per annum.

The new mine produced 34,155oz of gold in the June quarter, within Dacian's guidance of 30,000-40,000oz.

It is on track to reach commercial production in the December quarter and achieve guidance of 180,000-210,000oz for the 2019 financial year.

Dacian won't report cash costs until the mine reaches commercial production. However, it remains confident all-in sustaining costs at that time will be in line with previous forecasts of $1,000 an ounce.

 

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.