Forum Topics ALK ALK Valuation?
Hackofalltrades
Added 4 years ago

Alkane seems like it's getting on the cheaper end at the moment. I've ended up looking at this company as I bought some ASM share (demerger from Alkane) that so far has delivered value to shareholders (no revenue yet though)


I haven't researched it properly yet, but a quick glance of their report seems to show some interesting deposits - Boda seems like it has a lot of optionality on the Gold price? There seem to be some seriously huge low grade deposits there. 


Any thoughts on this company? 

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edgescape
Added 4 years ago

Here are my thoughts

1. Boda is a huge low grade porphyry deposit in the Molong region. However Alkane is still at a early stage of exploration and are trying to get a better understanding of the size of the resource

2. Since the Boda deposit is large in depth and width, it may take years to get some estimates and economics of the discovery.

3. For the deposit to be truly economical, they need to find the high grade core of the mineralisation which has been absent from all drill results. For the high grade core, the results have to be wide and more concentrated in the region of 1% CU and >1g AU.

The closest peer is Cadia Ridgeway and that took years of drilling before they could come up with a plan to mine the desposit. They were only able to make a decision to mine once they found the high grade core.

The short side is obviously betting there is very little high grade core in the Boda discovery which means that the likelihood of mining is low. And I've seen a few negative views on porphyry deposits in general that seem to support this position.

However the trading halt on Friday seems pretty encouraging as it could mean they have got some significant drill results.

I'm still trusting in management although averaging down at 1.20 and 0.9 from my sub 0.1 entry wasn't a good move on my part.

My view is that Alkane is now trading at a market cap that only includes valuation of the Tomingley operations and the resource expansion of Roswell and San Antonio

For more info on Boda you can go here:
https://www.alkane.com.au/projects/northern-molong-porphyry-project/boda-kaiser/

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Bear77
Added 4 years ago

Summed up beautifully there by @WHISKERS and @edgescape.  Good management.  Lots of potential if they find what they're looking for at Boda.  Tomingley provides cashflow and pays the bills.  They're in my Strawman.com portfolio, but they're the second smallest position at this point.  I do not hold any in RL currently.  I do hold Pantoro (PNR) shares however and if you like Alkane then Pantoro might also interest you.  They are producing gold in WA's north (Halls Creek), and are developing a much larger project (hopefully - re-size) in WA's south, the Norseman Gold Project, where they own 50% and are the operators.  The NGP is located half way between Kalgoorlie and Esperance.  

The current Mineral Resource is 4.2 million ounces of gold with an Ore Reserve of 602,000 ounces. Pantoro announced a maiden Ore Reserve on the Norseman Project in conjunction with its Phase One DFS on 12 October 2020. Many of the Mineral Resources defined to date remain open along strike and at depth, and many of the Mineral Resources have only been tested to shallow depths. In addition, there are numerous anomalies and mineralisation occurrences which are yet to be tested adequately to be placed into Mineral Resources, with a number of highly prospective targets already identified.

The project comprises a number of near-contiguous mining tenements, most of which are pre-1994 Mining Leases. The tenure includes approximately 70 lineal kilometres of the highly prospective Norseman – Wiluna greenstone belt covering approximately 800 square kilometres.

The project is serviced by first class infrastructure at the project, local shire, and national infrastructure levels with everything required to commence mining already in place. Infrastructure is generally in good condition, however the processing plant requires reconstruction.

The reason I am mentioning them is that like Alkane, they are also a small producer developing a potentially larger project that could result in a serious positive market re-rating if they find what they think is there and the grades are good.  I hold PNR shares, but it's a smallish position, and it's been a rollercoaster ride, as market sentiment changes, and people keep reassessing the risk/reward trade-off.  If you're going to invest in developers, my thoughts are the ones with the least risk tend to be the ones that are already producing gold elsewhere, so they're actually producers first, and developers second, and there's significant upside if things go their way.  However, there are less capital raisings, as a rule, and therefore less potential dillution to existing shareholders along the way.  There will obviously be a BIG CR if they get to the FID stage (financial investment decision to build), but in the meantime they can cover most if not all of their exploration and development costs from their current gold production.

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Hackofalltrades
Added 4 years ago

Thanks heaps guys, great info there!

Edge what do you mean by "truly economical" - as in like, it might be economical if no high grade core found, but kind of marginal unless the gold/copper price increases massively? 

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edgescape
Added 4 years ago

The high grade core basically makes mining profitable since there will be less waste rock processed.

This generates cashflow while mining the larger low-grade areas. Common sense really

I think there are some porphyrys which never get mined because the high grade part is never found. Not sure why that happens but there are many theories. There is one I know of but can't remember off the top of my head. I'm no geologist so maybe someone here with that background could comment.

Have to remember ALK is one for the patient. Like playing a game of chess!

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