Ann: Quarterly Activities and Cashflow Report, page-2

It is not good when the CEO issues a misleading statement that even a novice like me can pick up.  Broker analysts will also note it as misleading (well the competent ones should).  This statement on the first page (and any similar ones in the body of the report) should be withdrawn and a new quarterly report issued.

"Current ore reserves defines a 7 year production profile at 200,000 ounces per annum."

The upgraded reserves as at 1 July 2018 are 26.737 million tonnes of ore grading at 1.6 g/t resulting in a reserve of 1,389,000 ounces.

Given rated plant capacity is 2.5m tonnes per annum and assuming a gold recovery rate of 94%, the average production over the life of the reserve is only around 121k ounces per annum over 10.7 years.  However lets say the plant can operate above its rated capacity at 3mtpa, then DCN could produce 145k ounces per annum.  Clearly this not a 7 year, 200k ounce per annum project at present given the reserves and plant capacity.

To actually process the reserves over 7 years the plant would need to operate at the rate of 3.82m tonnes per annum which would result in annual production of 184.7k ounces per annum.  Looking at the LOM plan I did not find any reason to believe that they can run the plant at 3.82mtpa.

Page 17 of the DFS indicates that the plant was expected to run at 2.5mtpa with a gold recovery rate of 90.7%.  In the last thee quarters DCN has processed 601kt, 681kt, and 630kt of ore at a gold recovery rate of 90.9%, 94.9%, and 93%, respectively.  Even at its current actual best quarterly run rate its only operating at 2.724mtpa.  So it should be clear to everybody there is not a chance in hell (without a major plant capacity upgrade) that they will achieve 3.82mtpa in order to meet the claim made in todays quarterly report.

https://www.asx.com.au/asxpdf/20161121/pdf/43d1mvn06j1q5m.pdf

I think that Rohan William should amend those portions of this report that are clearly in error, before the ASX asks him to do it.  Anyone game to let Rohan that this report has issues?  Perhaps use my comments as the basis of an enquiry to him.

Nice jump in the share price - will be interesting to know what the broker analysts say about the report.

Good to read about the continuing exploration effort - they need this to deliver.

loki (the persistent party pooper)