Along with news of a strong December quarter, Dacian Gold (ASX:DCN) announced Wednesday (January 9) that commercial production has begun at its Mount Morgans gold operation.

The Mount Morgans operation, located in Western Australia, consists of two primary assets, the Westralia mine area and the Jupiter mine area and treatment plant.

Jupiter, located 15 kilometers from Westralia, is home to the asset’s open-pit operations, whereas Westralia covers underground operations as it houses the Beresford and Allanson deposits.

According to a release from the company, underground mining is officially underway at Beresford South, Beresford North and Allanson. Meanwhile, higher-grade ore in Jupiter’s Cornwall shear zone is expected to be mined in the March quarter.

“We are pleased to have achieved this important milestone — exactly when we said we would,” Dacian Executive Chairman and CEO Rohan Williams said in a statement.

“It was an outstanding quarter, with production increasing 30 percent from the September quarter. Again, this ramp-up is in line with our stated objective of materially increasing quarterly production levels over the course of FY2019,” he added.

Dacian saw gold production total 37,930 ounces during the December quarter, marking a 30-percent increase from the September quarter. The company had $85.6 million in cash and bullion at the end of the December quarter, and poured 38,479 ounces of gold during the period.

The company anticipates that continued progress at Mount Morgans will support “operational momentum,” and will be the basis for future quarterly production increases throughout 2019.

In December, Dacian increased Mount Morgan’s ore reserve by 16 percent to 1.39 million ounces.

Westralia’s ore reserve grew by 17 percent, hitting 575,000 ounces, while Jupiter’s ore reserve of 611,000 ounces remained the same.

The update also includes a 45,000-ounce maiden ore reserve for Cameron Well, the company’s third mining center. Dacian plans to apply for applicable mining permits this year for Cameron Well.

The operation is expected to have a minimum 10-year mine life at an annual production rate of 200,000 ounces per year, with resources of 3.5 million ounces on hand.

Dacian’s share price took a small hit on Wednesday, closing 3.94 percent lower at AU$2.44 on the ASX.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.