The company lowered its March quarter guidance last month to 36,000-38,000 ounces of gold at all-in sustaining costs of A$1400-1500 an ounce.
The actual figures came in at 35,000oz at $1488/oz in what was the first quarter of commercial production at the new operation near Laverton in Western Australia.
The result was due to the underperformance of a high-grade stoping block at Beresford North.
"Despite some one-off challenges associated with the ramp-up of underground mining at Westralia, we continued to make strong overall progress towards achieving our key operational targets at Mt Morgans during the quarter," Dacian executive chairman Rohan Williams said.
Dacian said there had been a "significant turnaround" in performance in the month of March, with a big jump in tonnes mined and the plant running at an annualised rate of 2.9 million tonnes per annum.
"New production records, which relate to underground mining, open pit mining and throughput, availability and gold recovery in the treatment plant, were set for the month of March - demonstrating a strong all-round performance for a project which is still in ramp-up phase," Williams said.
The company maintained its June quarter guidance of 50,000-55,000oz at AISC of $1050-1150/oz, as well as its revised full-year guidance of 150,000-160,000oz.
"The ramp-up of production from Allanson will continue until it contributes approximately one-third of Westralia underground production - compared with just 2% of the combined Westralia production in the March quarter," Williams said.
Dacian made a $10 million debt repayment during the quarter, lowering the balance to $123.5 million.
The company closed March with cash and equivalents of $70.2 million.
"Our strong financial position also means we can continue to progress a multi-pronged exploration effort, aimed at unlocking the significant exploration upside at Mt Morgans," Williams said.
"We remain very positive on this potential, and recent results from two locations at Westralia - as well as at Cameron Well and the new and exciting Basin Margin Prospect - support this view."
Argonaut Securities analyst James Wilson maintained his buy recommendation for the stock but put his price target of $3.54 under review.
"We maintain our buy recommendation as the stock trades cheaply versus its peer group of mid-tier producers and production has ramped up strongly from stoping underground, but grade has fallen short of expectations," he said.
"We will look to remodel our outlook with a more conservative view given the recent issues encountered in equipment and in grade underperformance."
Shares in Dacian rose 0.5% to $2.11. The stock has traded in a range of $1.95-3.08 over the past 12 months.