Top member reports
Consensus community valuation
$1.480
Average Intrinsic Value
61.6%
Undervalued by
Active Member Straws
#Bull Case
Added 4 months ago

All about the porphyry targets! Boda prospect hit 502m at grades better than NCM's nearby Cadia mine. ALK currently undergoing drilling to test depth and strike. Program could define a resource as big as 600m (L) by 250m (W) by up to 1200m (D). Assuming SG of 2.5x and step outs are consistent with KSDD003 discovery hole, the resource could range from ~170Mt to ~450Mt of bulk Au Cu grade. This implies an EV of ~$600m to ~$2100m or SP value of ~$1.05/sh to ~$3.69/sh. SP of writing is $0.67.

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#Bull Case
Added 4 months ago

Additional analysis suggests the down dip hole will strike through a rich high grade potassic core zone in the porphyry. If the result (due Feb 20) shows as such, the grade could be 2x to 3x richer than first thought. As such my high case scenario would prove to be conservative with an estimated 12Moz Au equiv potentially being in the range of 15Moz to 25Moz Au equiv.

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#Financials
Last edited 3 months ago

Attached is a picture of my SoTP valuation for ALK. The new resource definition at Roswell and San Antonio deposits can support a reserve of 500koz+. This will provide new life to TGO and support an 80koz p.a. prdocution rate for 5yrs+. Likely to see the ore put through the mill in CY21. Revitalised TGO worth ~$0.45/sh using peer multiple comps. ASM worth about $0.15/sh. Boda implied EV is ~$0.21/sh with a probability adjusted EV of $1.60.sh. 7.6 to 1 pay off profile on Boda exploration success. Boda is a deposit, just have to show how big and economical it can be.

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#ASX Announcements
Added 2 weeks ago

08-May-2020:  Approval Received for Underground Exploration Drive

The NSW Government Resources Regulator has granted approval for Alkane Resources Limited (ASX: ALK) to develop an exploration drive from its existing Wyoming One underground operations, to the Roswell and San Antonio deposits, approximately four kilometres to the south of the mine.

This is an important milestone towards a future potential underground mine at Roswell and San Antonio that could be developed independently of an open cut operation. The exploration drive will be sized such that it could also accommodate production in the future.

Managing Director, Nic Earner, said: “Alkane has the equipment purchased, personnel recruited and land acquired to allow this development to proceed and we will now incorporate the timing of the drive development into the Tomingley Gold Operations’ budget schedules, as well as our regional exploration plans.”

“Given the prospectivity of the region around our existing operations, this approval provides Alkane with all the exploration and, in time, production options, to extend the life of mine at Tomingley well into the future.”

Tomingley Gold Project

Alkane Resources Ltd 100%

The Tomingley Gold Project (TGP) covers an area of approximately 440km2 stretching 60 kilometres north-south along the Newell Highway from Tomingley in the north, through Peak Hill and almost to Parkes in the south. The TGP contains Alkane’s operating Tomingley Gold Operations (TGO), an open pit mine with a 1Mtpa processing facility that is transitioning to underground.

Over the past two years Alkane has conducted an extensive regional exploration program with the objective of defining additional resources that have the potential to be mined either via open pit or underground operations and fed to the TGO processing facility.

The exploration program has yielded broad, shallow, high-grade intercepts that demonstrate potential for material project life extension in excess of 10 years, and show that a return to open pit mining and/or underground extension is possible with appropriate resource confirmation, landholder agreement and regulatory approvals.

--- click on link for more ---

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#Bull Case
Added 2 months ago

Southern step out hole released yesterday. Biggest and highest grade hit to date. Still haven't found the core so could get richer at depth too. Looking like another Cadia East. Going to be a monster.

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#Quarterly Reports
Last edited 4 weeks ago

29 Apr-2020:  Quarterly Activities Report

Tomingley Gold Operations

  • Now producing steady state stoped ore from the underground.
  • Gold production on forecast at 5,723 ounces.
  • Site operating cash costs were A$995/ounce with AISC(*1) of A$1,346/ounce.
  • Gold sales of 3,864 ounces for revenue of A$8.2M at an average price of A$2,126/ounce.
  • Guidance for FY20 is unchanged at 30,000 to 35,000 ounces of gold at an AISC(*1) of A$1,250 to A$1,400 per ounce.
  • The Company is expediting the move to mine development of the Roswell and San Antonio prospects. 

Exploration

  • Resource drilling continued at the Roswell and San Antonio prospects.
  • Drilling completed at the San Antonio Deposit.  Modelling (see ASX announcement 20 April 2020 for detail) demonstrates an Inferred Mineral Resource (using a 0.5g/t gold cut-off) of:
    • 7.92 million tonnes grading 1.78g/t gold (453,000oz).
  • Resources at Tomingley Gold Operations (TGO) and the exploration tenements to the immediate south including the San Antonio Deposit are now in excess of one million ounces.
  • Results from the follow up core program (for five holes ~5,000m) at Boda were received during the quarter and included the spectacular KSDD007 (ASX announcement 23 March 2020):
    • KSDD007    1,167m @ 0.55g/t gold, 0.25% copper from 75 metres
      • incl 502m @ 1.00g/t gold, 0.45% copper from 768 metres
      • incl 376m @ 1.30g/t gold, 0.56% copper from 768 metres
      • incl 96.8m @ 3.97g/t gold, 1.52% copper from 768 metres

Corporate

  • Cash, bullion and listed investments position totalled A$81.9M.
  • Shareholdings remained 13.0% of ASX listed gold developer Calidus Resources Ltd (ASX:CAI) and 15.0% of ASX listed gold developer Genesis Minerals Ltd (ASX:GMD) at end of March quarter.
  • ALK has been granted permission by the ASX to change its ASX classification from a “mining exploration entity” to a “mining producing entity” as defined in Listing Rule 19.12.  As a result, ALK is no longer lodging Appendix 5B Quarterly Cash Flow reports.
  • Alkane’s OTCQX Listing (ANLKY) using American Depository Receipts (ADRs) has been terminated. Under the terms of the Deposit Agreement with the sponsor, BNY Mellon, shareholders have until 15 January 2021 to surrender their Alkane Resources ADRs for delivery of the underlying shares.  Alkane shares continue to be quoted on OTCQX as ALKEF.

Dubbo Project

  • Appointed Mr David Woodall as Managing Director of Australian Strategic Materials Limited (ASM), a wholly owned subsidiary of Alkane (ASX announcement 10 February 2020).
  • Construction of the commercial scale pilot plant as part of the investment in Clean Metal Processing Technology with Ziron Tech of South Korea continued.
  • Consultation with regulators regarding the demerger and listing of ASM, together with the key transaction documents is substantially completed.
  • Alkane’s Board remains committed to the demerger of ASM, but is reviewing the timing of the demerger on a month by month basis given the very turbulent market conditions.

TOMINGLEY GOLD OPERATIONS (ALK 100%)

Tomingley Gold Operations (TGO) is a wholly owned subsidiary of Alkane, located near the village of Tomingley, approximately 50km southwest of Dubbo in Central Western New South Wales.  The gold processing plant was commissioned in January 2014 and has been operating at the design capacity of 1Mtpa since late May 2014.  Mining is based on four gold deposits (Wyoming One, Wyoming Three, Caloma One and Caloma Two).

Operations

  • TGO continues to perform very well, successfully restarting the processing plant in February after pausing processing in late December for an extended maintenance shutdown period.  TGO is now processing underground stope material with recovery performing as expected.  Ore feed is supplemented by low grade stockpiles whenever capacity permits.  TGO continues to maintain high vigilance around COVID-19 (see ASX announcement on 30 March 2020 for detail).
  • A total of 5,723 ounces of gold was poured for the quarter.
  • The site cash costs for the quarter were A$995/oz with an all-in sustaining cost (AISC) of A$1,346/oz.
  • Guidance for FY20 remains unchanged at 30,000 to 35,000 ounces of gold at an AISC(*1) of A$1,250 to A$1,400 per ounce.
  • Gold sold for the quarter was 3,864 ounces at an average sales price of A$2,126/oz, generating revenue of A$8.2M.  Bullion stocks were 1,868 ounces (fair value of A$4.8M at quarter end).
  • Site operating cash flow(*2) was A$1.8M for the quarter.

 

--- click on the link above for the entire report, which includes information on the TGO Underground Mining Development and the Tomingley Project Extension ---

(*1) AISC = All In Sustaining Cost comprises all site operating costs, royalties, mine exploration, sustaining capex, mine development and an allocation of corporate costs, calculated on the basis of ounces produced. AISC does not include share based payments or net realisable value provision for ore inventory.

(*2) Operating cashflow = As prescribed by AASB 107 Statement of Cashflows where exploration outflows and development outflows are grouped under investing cashflows.

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#Assay/drilling results
Last edited a month ago

22-Apr-2020:  Further Extensive Porphyry Au-Cu Mineralisation at Boda

Either the market was disappointed by the low grades of gold in these assay results or/and there was some profit taking today, as ALK were down -17% to 68.5c today, but they're still up +37% from their March low of 50 cps.

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#Initial SA Inferred Resource
Last edited a month ago

20-April-2020:  Initial San Antonio Inferred Resource

Initial San Antonio Inferred Resource Lifts Tomingley Corridor Resources To Over 1 Million Ounces of Gold

  • The drilling completed at the San Antonio Deposit has been modelled and demonstrates an Inferred Mineral Resource using a 0.5g/t gold cut-off of:  
    • 7.92 million tonnes grading 1.78g/t gold (453,000oz) 
  • Resources at Tomingley Gold Operations (TGO) and the exploration tenements to the immediate south of the mine that include the San Antonio Deposit (4km from TGO) are now in excess of one million ounces of contained gold:
    • Tomingley Underground: 1.36 Mt @ 3.8 g/t Au for 165 koz
    • Roswell Deposit: 7.02 Mt @ 1.97 g/t Au for 445 koz
    • San Antonio Deposit: 7.92 Mt @ 1.78 g/t Au for 453 koz
    • Peak Hill Underground: 1.02 Mt @ 3.29 g/t Au for 108 koz 
  • The Resources are now being prepared into conceptual mine plans that can be used to progress mining approvals that would allow ore from the Roswell and San Antonio Deposits to be fed into the TGO one million tonne per annum processing facility.  Alkane is seeking to demonstrate a continued mine life at TGO in excess of 10 years. 
  • NSW State Government Approval has already been sought for an underground exploration drive to the Roswell Deposit, with equipment purchased, personnel recruited and land acquired in order to facilitate rapid development on approval. 
  • Further drilling at San Antonio and Roswell is underway to reduce the drill hole spacing in order to convert Inferred Resources to Indicated and Measured status. 
  • Scope exists to expand the San Antonio Resources at depth with the drilling only defining resources to 250m from surface due to drilling difficulties. 
  • Exploration Drilling is continuing in the prospective gold corridor to the south of San Antonio. 

--- click on link above for more ---

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