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Dacian Gold (DCN) - The More You Drill The More You Find

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Dacian Gold (DCN) raised $40m through an institutional placement at a price of $2.70ps. DCN aims to raise a further $5m via a Share Purchase Plan which is expected to close at the end of July. Funds raised will provide additional cashflow flexibility for aggressive exploration targeting higher production rates and a longer mine life at Westralia and additional resource growth at Cameron Well (CW) via a ~110km drill program over 18 months. In addition, DCN will also extinguish the uncapped royalty on parts on the Jupiter mine area at a cost of $12m. Argonaut believes this is well-timed and a prudent move aimed at enhancing the project economics via aggressive growth aspirations. DCN trades on undemanding EV/Production metrics of $3,300/oz vs the peer group averaging $6,000/oz. Once operations reach steady state and exploration gets underway, we expect that DCN’s discount to our NAV and its peer group valuation will unwind. BUY, TP $3.64ps.

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