Worker shortage hurts Dacian Dacian Gold has blamed its...

Worker shortage hurts Dacian

Dacian Gold has blamed its production downgrade on an unexpected shortage of maintenance personnel, in the latest sign of labour shortages in the mining industry.

Perth-based Dacian yesterday cut production guidance for this financial year to between 150,000 and 160,000 ounces of gold, down from its previous estimate to 180,000 to 210,000 ounces.

The news triggered a sharp fall in Dacian shares on what was an otherwise strong day for gold stocks. Dacian fell more than 15 per cent after the downgrade before closing 7.3 per cent lower at $2.27.

Dacian executive chairman Rohan Williams told The Australian the production fall was the result of maintenance issues stemming from a lack of workers.

“Equipment always needs to be maintained, and in February that wasn’t up to the normal levels due to personnel shortfalls in the maintenance department from our mining contractor,” he said.

That’s been remedied, but it’s a clear indication of the industry getting quite tight.”

There have been steady signs of increased competition for mining labour in recent years, given major investments in new iron ore capacity in the Pilbara, a boom in infrastructure spending on the east coast, and a sharp drop in new mining graduates.

Mr Williams said the production downgrade and resulting share price fall also highlighted the perils of being a one-mine company and the logic of consolidation.

“All single-asset companies like ourselves, we all understand that the investors are always going to discount a single-asset company so there is every good reason why single-asset companies merge with other companies,” he said.

“Now that we are maturing and we are getting a better handle on it, that’s something that’s certainly going to come into focus for us.”

RBC Capital Markets analyst Paul Hissey said that with the medium-term outlook for Dacian still intact, the share price fall could present a buying opportunity.

“As it stands, we see no significant impediments to Dacian eventually reaching the base case outlined in the economic studies prior to construction, although we understand that this downgrade is likely to dent people’s confidence,” Mr Hissey said.

The production downgrade from Dacian is the latest in a string of hiccups, disruptions and disasters to emerge out of an Australian gold industry that had been enjoying a stellar few years.

St Barbara suffered a stunning 30 per cent fall on Friday after substantially scaling back the short and long-term production forecasts from its Gwalia goldmine, while Victorian minnow Centennial Mining appointed administrators on Friday after struggling to get its costs down.

Gascoyne Resources has been in a trading halt since last week after production fell short of expectations and has flagged “potential funding options”.

Elsewhere in the gold space, The Australian understands that industry veteran Ed Eshuys is set to return to the area where he made his name after joining the board of Leonora explorer NTM Gold. Mr Eshuys led the teams that discovered deposits including Plutonic and Bronzewing for Joe Gutnick’s Great Central Mines, before going on to senior roles at St Barbara and Apex Minerals.

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