2019 TIP DCN - Long
(ASX: Dacian Gold LTD)
SP: $2.41
MC: $543mil
Cash: $80mil
Debt: $133.5mil
Shares: 225mil
DCN is one of Australia's newest mid tier Gold producers that is currently ramping up to commercial production this quarter.
DCN aims to be a 10 year, +200koz Gold producer with an AISC of around AU$1,000.
A recent report completed by Eagles Research Advisory has suggested DCN could in fact be a tier 1, 300koz Gold producer.
"Gold Production rate Dacian’s guidance for FY June 2019 is 180 to 210koz based on building up to 8ktpd for 2.5Mtpa of which 3ktpd is from underground (u/g), with a target of >200kozpa for >10 years. ERAs view is having achieved ~30koz in SQ18, leaves 150koz to 180koz for the remainder of FY19, and knowing that production is currently expected to be skewed to JQ19, infers potential production of possibly 60koz to 70koz in JQ19 (ie 240 to 280kozpa & that is still without Cameron Well – which implies that 300kozpa may be possible)."https://www.eagleres.com.au/reports/item/nov-2018-dacian-goldApart from the constantly rising price of Gold, DCN has many price catalyst for 2019,
- Commercial production update (due soon)
- December quarterly production (next month)
- 130,00m drilling program with constant updates and resource increases. (throughout 2019)
View attachment 1401619View attachment 1401615View attachment 1401617DCN - Daily Chart- DCN formed a solid base and accumulation zone around the $2 mark, this can be seen by the tight range and high volumes.
- DCN's price has shot up significantly over the last couple of weeks and looks to be in the process of completing a bullish flag pattern.
- Currently sitting just below the $2.40-2.50 range, the next bit of a news flow or a Gold price over US$1,290 should help push DCN above this and into full breakout on the chart.
View attachment 1401581AXGD - Daily Chart (ASX200 overlaid in pink). -AXGD has been working close to inverse to the ASX and most other equity markets, except it still goes up even when the ASX is up..
- Currently testing 104 week highs and looks set for a break out, it seems to be just waiting on a Gold price catalyst..
View attachment 1401623Gold - Daily Chart- Gold continuing to make higher highs and higher lows.
- Currently sitting just below US$1,280 resistance and looks ready to break out on any equity market weakness.
- Gold has had a fairly dramatic run up which has seen it gain $100 in a little under 3 months.
View attachment 1401637Bullish case for Gold- Gold looks set to continue rising as more and more investors move out of riskier (stocks) assets and into safer financial assets like Gold and government Bonds.
- General stock prices and market indexes are unlikely to go higher if there isn't 'demand' for their products, this world wide decline will continue until growth (demand) starts to pick up again.
- Growth is still declining on every economic data point so far, this trend doesn't look to be changing any time soon without the help of massive globalized Quantitative Easing.
Central banks & interest rates- The RBA has already announced that it will likely cut interest rates in 2019 instead of raising them.
- The central banks goal is to re-stimulate the economy by making 'credit' 'easier' to access by lowering interest rates and in process, devalues the currency.
- This devaluing process also hopes to re-inflate asset prices BUT, if there is no 'demand' for the assets (or commodity) than they are unlikely to benefit much from this devaluing...
- There is also much speculation about whether the US Fed will raise or lower interest rates in 2019.
- If you are under the impression that growth will continue to decline then you could expect the Fed to lower interest rates at some point in 2019.
- If you believe growth has finished declining then you could probably expect them to halt or continue raising interest rates in 2019.
Going by the market decline though, suggest that the last raise in December was the wrong decision.
Also the move into US bonds and Gold in the face of an interest rate increase suggests that the Fed isn't likely to raise again.
If all of the above continues to play out then it will be the perfect storm for a big bull run for Gold going forward.
Check out and compare all over sectors to the AXGD for proof that there is indeed a move away from traditional equities and into Gold/Gold producers.
All cash flow positive Gold producers will benefit from the rising Gold price and there are many on the ASX!
I believe the biggest medium term gains will be seen in the newer 'growing' Gold producers who are just starting to come online.
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