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Treasure Chest: ASX’s Next Mid-Cap Gold Producer

Treasure Chest | Jul 28 2017

Dacian Golds’ June quarter report showed solid construction progress and encouraging drilling results.

– Mt Morgans on track
– Beresford results encouraging
– Cameron Well offers mine life extensions


By Greg Peel

Construction at Dacian Gold’s ((DCN)) Mt Morgans development in Western Australia is progressing as planned. Accommodation and offices are in place, mine infrastructure is advancing and early progress has been made on the mill. Management has reaffirmed guidance for first gold expected in the March quarter next year.

Underground mining at the company’s Beresford project commenced in the quarter and is ahead of schedule. Drill testing continues and Dacian reports high grade results both inside and outside the reserve area, supporting analyst views that further extensions to the mine are likely.

Encouraging test results are also reported from the Cameron Well prospect. Cameron Well is located only 9km away from Dacian’s processing facility.

Canaccord Genuity notes the stock is trading on a price to net asset value multiple of 0.59x and an enterprise value to forecast earnings multiple of 2.3x, which are well below producing peer averages.

Macquarie is particularly interested in Cameron Well, suggesting exploration success offers a short term investment case and potentially more significant mine life extensions from bedrock mineralisation.

Deutsche Bank notes that with its projects fully funded, Dacian Gold is on track to be the ASX’s next mid-cap gold producer.

Macquarie and Deutsche are the two FNArena database brokers covering Dacian. Macquarie has an Outperform rating and $3.00 target and Deutsche a Buy rating and $3.10 target (last trade $1.97).

Canaccord is not a database broker but has a Speculative Buy rating and $3.30 target.


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