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Alkane Resources (ASX:ALK) - Non Executive Chairman, Ian Jeffrey Gandel - The Market Herald
Non Executive Chairman, Ian Jeffrey Gandel
Sources: Alkane Resources
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  • Alkane Resources (ALK) closes slightly lower despite the company exceeding its annual production guidance targets
  • The company predicted it would produce between 50,000 and 55,000 ounces of gold over FY21, but Alkane ended up producing just shy of 57,000 ounces
  • For the full 2021 financial year, Alkane sold just under 56,000 ounces of gold at $2286 per ounce for $127.8 million in gold sales revenue
  • Alkane says it expects to produce between 55,000 and 60,000 ounces of gold from Tomingley over the 2022 financial year
  • Shares in Alkane closed 1.31 per cent lower at $1.13 each on July 22

Shares in gold miner Alkane Resources (ALK) closed slightly lower this afternoon despite the company exceeding its annual production guidance targets.

According to its latest quarterly report, the company produced 13,500 ounces of gold from its flagship Tomingley Gold Project over the quarter at an all-in sustaining cost (AISC) of $1669 per ounce of gold.

Moreover, Alkane sold 11,526 ounces of the yellow metal at an average of $2401 per ounce to pocket $27.7 million in quarterly revenue.

This takes Alkane's gold production for the 2021 financial year to just shy of 57,0000 ounces of gold — above its production guidance of between 50,000 and 55,000 ounces.

What's more, Alkane's average AISC of $1320 per ounce of gold came in under its predicted average AISC of between $1400 and $1550 per ounce.

For the full 2021 financial year, Alkane sold just under 56,000 ounces at $2286 per ounce for $127.8 million in gold sales revenue. This is almost 70 per cent more gold sold than the 2020 financial year during which Alkane sold just under 33,000 ounces of gold at $2199 per ounce for $72.5 million in revenue.

Alkane ended the June quarter with $19 million worth of cash and $7.7 million worth of bullion on hand. This is not including its $47.2 million worth of listed investments or a $20 million undrawn working facility with Macquarie Bank.

What's next?

Looking ahead, Alkane said it expected to produce between 55,000 and 60,000 ounces of gold from Tomingley over the 2022 financial year. As far as costs go, the company forecast AISC for FY22 of between $1450 and $1600 per ounce.

Additionally Alkane has some important forward sale contracts for the gold produced from Tomingley, to be delivered every three months from September 2021 through to June 2022.

Combined, the sales contracts will see Alkane deliver 24,000 ounces of gold at an average sale price of $2307 per ounce.

On top of this, Alkane holds several put options with monthly expiry dates from July to September this year.

The Tomingley Gold Extension Project

As well as its gold production work, Alkane is also plugging away at its Tomingley Gold Extension Project, with plans to develop the Roswell and San Antonio deposits in the area "as soon as possible".

These deposits lie between three and five kilometres from the main Tomingley deposit.

Alkane said it had kicked off the approval process for this development, with an Environmental Impact Study to be submitted during the September quarter of this year.

If all goes according to plan, this segment of the company's Dubbo assets is expected to be approved in mid-2022.

Shares in Alkane closed 1.31 per cent lower this afternoon at $1.13 each. The company has a $670 million market cap.

ALK by the numbers
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