Dacian Gold (ASX: DCN) has pulled up multiple thick and high-grade gold intercepts while undertaking drilling at its wholly-owned Mt Morgans gold operation near Laverton in Western Australia.
The thick and high-grade intersections were discovered north of the existing Westralia mine which has an existing reserve of 1.4 million ounces of contained gold.
According to Dacian, the intercepts have revealed a new zone which measures 500m by 250m, with mineralisation remaining open to the north.
Notable results were 1.7m at 127 grams per tonne gold from 297m; 31m at 6.3g/t gold from 208m; and 14.3m at 12.7g/t gold from 284m.
“This is a significant discovery which supports our strategy of bringing forward asset value through accelerating exploration activity at Mt Morgans,” Dacian executive chairman Rohan Williams said.
He noted that the discovery showed strong potential via the “excellent grades” and thickness and continuity of mineralisation.
“Importantly, the best results have been returned on the northernmost section with the mineralisation remaining completely open to the north along the known north-trending high-grade zones seen throughout the mine.”
“The combination of these results and their location immediately below and along strike from an historic open pit shows there is excellent potential for new, additional production opportunities,” Mr Williams added.
The drilling program that led to the discovery comprised 25 diamond holes for 9,200m, with further drilling to continue along strike. Infill drilling will then be carried out with a maiden mineral resource for the new mineralisation planned to be released before the end of the year.
Drilling at Mt Marven and Maxwells prospects within the project is also ongoing to evaluate shallow open pit mining opportunities.
Mt Morgans gold operation
Dacion declared commercial production at Mt Morgans in January this year, which has contained gold resources of 3.5Moz.
During the March quarter, Dacion produced 35,000oz of gold from Mt Morgans at an all-in-sustaining cost of $1,488/oz.
However, the company’s share price took a beating earlier this month when Dacion revealed a lower production guidance for the June quarter of 36,000-38,000oz – down from the previous forecast of 50,000-55,000oz.
Following the news, Dacion’s share price plunged from $1.585 prior to the announcement to bottom out at $0.38 a few days later – shedding more than 76%.
The reduced guidance was a result of underground contractor performance issues leading to lower than expected productivity. Additionally, mined grade was also less than anticipated and the operation’s ball mill motor suffered a failure and the company lost three days of gold production while it was replaced.
This morning’s news helped Dacian regain some of its losses from earlier this month, with its share price up almost 12% to $0.61 by mid-morning.