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Alkane Resources (ASX:ALK) - Managing Director, Nic Earner - The Market Herald
Managing Director, Nic Earner
Source: HotCopper
  • Alkane Resources (ALK) experienced a significant increase in gold production and revenue from its Tomingley Gold Operations in the June quarter
  • 13,358 ounces of gold was poured, compared to just 5723 ounces in the March quarter
  • The miner sold 12,992 ounces of gold at an average of $2327 per ounce, which generated $30.2 million in revenue
  • This is a considerable increase compared to the previous quarter's 3864 ounces of gold, sold at an average of $2126 per ounce for just $8.2 million in revenue
  • Alkane also conducted extensional drilling and other activities at Tomingley which garnered high-grades, extended mineralisation and led to a maiden inferred resource at the San Antonio deposit
  • Tomingley now hosts four deposits that contain over one million ounces of gold
  • Alkane also completed the demerger of its subsidiary, Australian Strategic Materials (ASM)
  • Now, ASM is focused on developing the Dubbo Project into a clean metals processing operation
  • Company shares are up 3.29 per cent and trading for $1.18 each just after midday trade

New South Wales-based explorer Alkane Resources (ALK) has released its quarterly report for the June 2020 quarter.

Tomingley Gold Operations

Tomingley Gold (TGO) covers approximately 440 square kilometres and is located near the village of Tomingley, which lies around 50 kilometres southwest of Dubbo in New South Wales.

The project contains Alkane's Tomingley Gold Operations (TGO). TGO began as an open-pit mine with a one million tonne per annum processing facility that has now transitioned underground.

During the June quarter, TGO continued performing well and processing underground stope material.

Financials

13,358 ounces of gold was poured which is a significant increase from the 5723 ounces poured in the March quarter.

In the March quarter, operations were slower due to the restart of operations in February.

For the entire 2020 financial year, Alkane poured 33,507 ounces of gold with an all-in sustaining cost (AISC) of $1357 per ounce. The total production aligned with the company's guidance of 30,000 to 35,000 ounces.

The miner sold 12,992 ounces of gold at an average sales price of $2327 per ounce which generated revenue of $30.2 million. Total revenue for FY20 hit $72.5 million.

Again, this is an impressive increase from the 3864 ounces of gold previously sold at an average sales price of $2126 per ounce and resulted in just $8.2 million in revenue for the March quarter.

Site operating cashflow came in at $21.8 million for the quarter and $36.3 million for the whole of the 2020 financial year.

Exploration activities

Along with standard grade control drilling and underground sampling, Alkane conducted extensional drilling inside the existing resource base to target potential mineralisation.

This drilled extended mineralisation south along strike in the Wyoming 1 Hanging Wall Zone. Drilling also identified other ore lodes that'll be the focus for future extensional drilling.

Diamond drilling infilling the main Wyoming 1 ore lodes has been extended and successfully found several stacked ore shoots within the main Wyoming 1 porphyry ore body.

The largest pit mined at TGO was the Caloma 1 deposit. The company has previously received approval for a cut-back of this pit and it has been confirmed that the cut-back fits into the scheduled milling capacity.

Establishment work will start in September and major ore movement will commence in the 2022 financial year.

Guidance for FY21 is between 45,000 and 50,000 ounces at an AISC of $1450 to $1600 per ounce.

The first year of Alkane's three-year plan will include the development of the Caloma 2 underground and the commencement of the eastern cut-back of Caloma.

Roswell and San Antonio

The Roswell and San Antonio deposits are located immediately south of TGO.

While the three-year plan doesn't include the Roswell and San Antonio deposits, Alkane intends to develop them through open-cut and underground mining once the approval process has been finalised.

At the start of the June quarter, Alkane completed a 60,000-metre resource definition drilling program at the deposits.

In late June, results became available for almost 10,000 metres of reverse circulation (RC) and core drilling. These results confirmed the continuity of mineralisation and highlighted multiple thick, high-grade intercepts.

One hole at Roswell returned 69 metres at 9.12g/t gold from 218 metres, including 6.7 metres at 28g/t gold from 207.3 metres, including one metre at 104g/t gold from 274 metres.

Another hole returned 71 metres at 3.56g/t gold from 111 metres, including five metres grading 19.2g/t gold from 118 metres.

At San Antonio, results include; 14 metres at 2.57g/t gold from 167 metres, including two metres at 14.1g/t gold from 175 metres and seven metres at 7.67g/t gold from 186 metres and two metres at 10.9g/t gold from 217 metres.

On April 20, the company calculated a maiden inferred resource for the San Antonio deposit. The resource now sits at more than 7.9 million tonnes at 1.78g/t of gold for 453 ounces of gold.

However, approximately 7500 metres of an infill program is still underway and is aimed at converting the resource to the indicated category.

The Roswell deposit has a mineral resource of 7.02 million tonnes at 1.97g/t gold for 445,000 ounces of contained gold.

Dubbo Project

The Dubbo Project remains construction-ready with all approvals in place.

Australian Strategic Materials (ASM) is the holding company of the Dubbo Project. 20 years after being established, ASM was preparing for a demerger from Alkane Resources.

Now, ASM is continuing with its plans for the Dubbo Project, which is aiming to deliver clean metals, such as zircon, rare earths and other high-purity metals, and the June 2018 FEED Study. This study is expected to be completed by the end of this year.

At this stage, flotation test work is being advanced to insert a flotation circuit to the Dubbo Project design, which is set to lower overall capital and operating costs.

Northern Molong Porphyry Project

Initial drill testing of the Boda prospect was completed early in the quarter after its market-interrupting discovery. On May 19, the drilling demonstrated continuity to the south of the broad gold-copper mineralised envelope.

Results include; two metres at 1.14g/t gold, 0.18 per cent copper from 677 metres, and 152.1 metres at 0.18g/t gold.

The mineralisation remains open to the north, south and at depth, which further supports Boda as a genuine prospect for a significant gold-copper alkalic porphyry deposit.

Alkane has recently commenced an RC and diamond core 30,000-metre drilling program.

This drilling tests the controls and dimensions of the high-grade pod and extensions to the large, low-grade mineralised envelope.

Drilling will also target induced polarisation (IP) anomalies and known gold-copper mineralisation within the Kaiser-Boda corridor.

Company shares are up 3.29 per cent and are trading for $1.18 each just after midday trade.


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