What do you do if you’re within seven weeks or so of producing your first gold from a shiny new 200,000 ounce-a-year treatment plant to be fed by both underground and open-cut mines where you’ve proved up an initial 1.2m ounce mining reserve?
You go out a find a third potential source by making a significant discovery that sits between the two mines, less than 10km from the treatment plant.
And when the new discovery raises the likelihood of being able to run softer oxide material through your new plant to boost gold production in its early years, all the better.
That is what Dacian Gold (DCN) has pulled off at its Cameron Well prospect, midway between its Westralia and Jupiter mines at its Mt Morgans project, 25km south-west of Laverton in Western Australia.
Drilling at Cameron Well has now intersected good widths and grade over an area of 1.5km by up to 1km with Dacian confident the results lay the foundation for a maiden resource estimate to made.
That came through loud and clear in Dacian’s decision to start collecting data for a feasibility study into a mining operation at Cameron Well, with the extensive work done to date making it possible for a maiden reserve estimate to pop out as early as the middle of the year.
It is impressive stuff given Dacian only started reconnaissance drilling at Cameron Well in September 2016 – a time when it would have been forgiven for concentrating on getting Westralia/Jupiter in to production and nothing else.
Companies have to be careful nowadays about getting ahead of themselves on the importance of a new discovery. Dacian was suitably circumspect when it made the following statement on Cameron Well: “The company is now of the view that Cameron Well is a significant new discovery at Mt Morgans. Clearly more work is required and will be ongoing over the next few months, but it is the company’s view that Cameron Well may become the third operating mine at Mt Morgans.”
Now it has to be said that the market had been expecting some good news on Cameron Well and that some of upside was already in Dacian’s share price. That explains the low key response to the Cameron Well update during the week.
Dacian is trading at $2.84 after having been as high as $3 in late January. Like most other gold developers, what the market took away in the wake of Wall Street’s recent shakedown has yet to be given back, even if the local gold price is as strong as it can be at $1,706 an ounce.
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