Dacian Gold (ASX:DCN) plummeted over 67 percent on Wednesday (June 5) after it announced it is lowering its production guidance for the June quarter at its Mount Morgans mine.

The company revealed that production guidance at Westralia, an area of Mount Morgans, has been dropped to a range of 36,000 ounces to 38,000 ounces of gold, down from the original guidance of 50,000 ounces to 55,000 ounces.

The miner blamed the revision on underground contractor performance issues that caused lower productivity than Dacian had anticipated, as well as a decline in grade performance.

Additionally, the company noted that costs will increase from between AU$1,050 and AU$1,150 per ounce to an all-in sustaining cost (AISC) of between AU$1,500 and AU$1,600 per ounce.

Despite the production downgrade and increased costs, the miner believes Dacian is in a good position to improve. “Whilst the downgraded June quarter production guidance is disappointing, the company notes improvements in both equipment availability and mine development advance at Westralia are clearly evident and heading in the right direction,” Rohan Williams, executive chairman, stated.

“Many of the issues with fleet availability have already been resolved and a focus on capital development in the short term will open up more work areas, thus improving production going forward.”

Looking ahead, Dacian estimates that production for the 2020 financial year will be in the range of 150,000 to 170,000 ounces of gold at an AISC of AU$1,350 to AU$1,450 per ounce.

The miner said it will release an updated five year mine plan at the end of this month, with its preliminary review pointing to average production of 160,000 to 180,000 ounces per year.

Dacian noted that it has confidence in the success of ongoing exploration, adding that indicative production levels of the five year mine plan will continue “well beyond” five years.

Finally, the company confirmed that it has garnered numerous unsolicited enquiries from corporate entities, prompting it to begin a reviewing process where the miner will consider potential corporate and funding initiatives, which could result in a “change of control transaction.”

The Westralia deposit’s mineral resource currently stands at about 10 million tonnes at 4.7 grams per tonne for approximately 1.5 million ounces. The deposit is the culmination of over 93,000 meters of drilling that has been conducted by Dacian since 2012.

As of 10:47 a.m. EDT on Wednesday, Dacian was down 67.51 percent, trading at AU$0.52.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.