Headline numbers look poor from their TGO (Tomingley Gold Operation) - with everything down except the gold price. However, the investment thesis for ALK is all about their new Boda discovery which is the subject of an extensive drilling campaign throughout CY2020 - so we still don't know exactly how much gold they have there. They have other tenements that contain potential commercial deposits of gold as well.
The Tomingley plant was shut down for an extended maintenance period from late December (2019) through to February (2020), which impacted production. They have also transitioned from an OP (open pit) operation to a UG (underground) operation there, with low-grade stockpiled ore processed in the first half while underground mining development continued to progress. Those are the main reasons why they produced less gold in FY20 than in FY19.
ALK's NTA has increased from 21.73 to 26.28 cps during FY20. At 30-June-2020, ALK's cash+bullion+listed investments totalled $98.4m with $18.5m of that transferred to ASM when they demerged and listed in late July.
I hold ALK shares, but it's a pretty small position, as they are a small gold producer with plenty of upside, but also plenty of associated risk. One of my main risk-management tools is appropriate position sizing, meaning that low risk companies can be larger positions, and high risk companies need to be smaller positions within my potfolios.
ALK are cashed up, so that's not a big risk, and they are producing gold profitably - with FY21 production guidance of 45 - 50 koz at an AISC of A$1,450 to $1,600/oz. The mid-point of their AISC guidance is $1,525/oz, placing them at position #15 within my list of the 25 gold producing companies - in order of AISC - from lowest to highest, meaning that based on current guidance, ALK will have the 15th lowest costs of the 25 current Australian-headquartered pure-play gold producers we have on the ASX to choose from.
The main risk is that they don't live up to the hype - or the promise - that they don't find as much gold as the market expects during their current and future drilling programs. That's where the main risk lies in my opinion. And that's why they remain a relatively small position for me at this point.
04-Nov-2020: Updated Roswell Resource lifts by 50% to 660,000oz
10.1 million tonnes grading 2.04g/t gold (660,000oz)
Alkane Resources Managing Director, Nic Earner, said:
“The Roswell Resource represents the most attractive zone of broad mineralisation identified so far in the Tomingley region. This deposit, together with San Antonio, and good reserve replacement at Tomingley underground, is showing a clear pathway to achieving a further 10+ year mine life for Tomingley.
Now that resource drilling is complete at Roswell, and nearing completion at San Antonio, consultation, permitting and licencing to facilitate mining is being expedited with the relevant stakeholders and NSW government departments.”
--- click on the link above for the full announcement ---
[I do not currently hold ALK shares, but they are on my Strawman.com scorecard.]
Also, recently: 28-Oct-2020: Final Assays Received for Infill Resource Drilling Roswell
And: 21-Oct-2020: Quarterly Activities Report
These links are from the announcements page on the Alkane Resources website - see here: https://www.alkane.com.au/media-research/asx-announcements/
Alkane's Corporate Presentation at the Beaver Creek Summit on 17 September 2020 is now available for download.
[I hold ALK shares.]
04-Sep-2020: S&P DJI Announces September 2020 Quarterly Rebalance
Entering the ASX300 index as from 21-Sep-2020: ALK, CMM, DDR, DEG, EVT, REH & TPW (the following companies are being removed: FAR, IGL, JHC, MYR, REG & SGF - all out).
Entering the ASX200: AIA, AUB, RMS, WGX & Z1P. (Leaving: MMS, NHC, OML, ORE & SXL all out)
Entering the ASX100: APX & FPH. (Out: CIM & VUK).
Entering the ASX20: COL & FMG. (Out: SCG & SUN).
No Change to the ASX50 or to the ASX All Australian 50.
S&P/ASX All Australian 200 Index: In: KGN & Z1P. Out: HSN & JIN.
S&P/ASX All Technology Index: Additions: BRN, DDR, EVS, M7T, NVX, SPT, SZL, WSP.
In summary, the up-and-coming companies are mostly technology, biotechs, BNPL/fintechs, gold companies or online retailers. And an airport (AIA), an iron ore miner (FMG), a large traditional retailer (COL) and a healthcare company (FPH).
Significant Expansion to Mineralisation at Boda
In brief the drilling program has doubled the size of the target zones of gold-copper mineralisation since drilling in September last year. Grades are low, but is typical of large porphyry deposits. No higher grade core has been delineated to date.
I hold ALK
The assays are very positive, but the one that stood out the most for me was RWRC379D which returned 45.0 metres grading 6.14g/t Au (gold) from 380 metres; including 1.0 metre grading 102g/t Au from 391 metres. Yep, that's one hundred and two grams of gold per tonne of ore... I don't currently hold ALK shares, but they are on my Strawman.com scorecard, and are currently showing a +122.86% return, before today, and they're up today of course. It's another company that I WOULD hold if I had more capital to invest in real life. You can't pat ALL the fluffy dogs...
21-Oct-2020: Alkane Resources Quarterly Activities Report
ALK are on my Strawman.com scorecard - currently with a circa +150% gain - however I sold my real life ALK shares some time ago. In an email I recently received from Goldnerds.com, which I subscribe to (for access to their brilliant spreadsheet of all ASX-listed companies in the gold space), they provided a number of graphs comparing our Australian-listed gold producers to each other, and ALK had - by far - the highest enterprise value per reserve ounce (@ A$4,485/ounce), the highest market capitalisation per production ounce (@ A$15,433/ounce, based on ounces produced in the last 12 months), and also had the highest "Total Cost of Ownership", which is in-ground cost plus mining cost (EV plus outstanding construction costs per mineable AuEq ounce, plus average AISC for the last 12 months) - @ A$2,219/ounce of gold. Companies like DEG, who are even more expensive, were not included, because they are not yet producers. What this highlights is that ALK are clearly being priced on future potential rather than what they have right now and/or what they have produced in the past 12 months. That's fine, if they live up to that potential. However, if they don't, there is significant downside (for their share price) from these levels - I would expect.
Tomingley Gold Extension Project Consultation Plans
I hold ALK
Resource and Reserve StatementsFY20
Bottomline is that the total poject mineral resources are 25.4Mt at an average grading of 1.9 g/t of gold. This is 1.616Moz of gold. This does not yet include the Boda prospect.
I hold ALK
28-Aug-2020: High Grade Depth Extensions Identified at Roswell
High Grade Depth Extensions Identified at Roswell Below Current Inferred Resource
Alkane Resources Managing Director, Nic Earner, said: “It is great to see these significant high-grade intercepts below the existing Inferred Resource at Roswell. These show the potential for an underground mine that continues to extend at depth, with impressive grades continuing.
“Our community, stakeholder and regulatory engagement on developing Roswell and San Antonio is well underway and will continue as rapidly as practicable. The next big step is updating the Inferred Resource at Roswell to Indicated, and we’re expecting to get this completed in October.
“The progress being made at Roswell and San Antonio further demonstrates our objective of creating shareholder value by extending the production mine life at Tomingley, in combination with strategic exploration and acquisition.”
--- click on the link above for the full announcement ---
[I hold ALK shares].
For some reason this has not uploaded yet to Commsec despite being added to the ASX announcements platform at 8:41am this morning. It is available on NABtrade, and on the ASX site however, and I guess Commsec will add it some time over the weekend.
These are not bonanza grades but they're still good grades of gold and importantly they've been found below the existing Inferred Resource at Roswell, so it will extend the Inferred Resource (they expect to complete this update in October) - meaning that they will have significantly more gold to mine there. This is an example of where the results actually DO match the hype, the potential, and the expectations. We expect them to keep finding more gold, and they actually do. It doesn't always work out this way, but it's good when it does.
Alkane Resources Ltd (ALK) is pleased to announce its Tomingley Gold Operations in central west New South Wales have met its FY2020 production guidance of between 30,000 oz to 35,000 oz.
The Operations produced 33,507 oz of gold for the 12 months to 30 June 2020 with preliminary all in sustaining costs (AISC) of $1357/oz produced, which fell within cost guidance ($1,250/oz to $1,400/oz) for the same period. The strong 12 month performance at Tomingley has coincided with a 25 per cent appreciation in the gold price and the Company’s progress towards a demerger of Australian Strategic Materials Limited (ASM) to become a separate ASX listing, allowing Alkane to focus exclusively on its gold projects.
The Group’s unaudited cash, bullion and listed investments position at 30 June 2020 totalled A$98.4M, comprising $66.9M cash, $5.8M of bullion in hand and $25.7M of listed investments.
Alkane Managing Director, Nic Earner, said:
“The team at Tomingley Gold Operations continues to perform very well, consistently meeting or exceeding guidance. With an updated mine plan soon to be released and the great potential being shown very close to the mine, through our exploration at Roswell and San Antonio, we remain buoyant about the longer-term prospects at Tomingley. The Board and management acknowledge and thank the team at Tomingley for their strong and continued safety and production performance.”
ABOUT ALKANE - www.alkane.com.au - ASX: ALK
Alkane is a gold production company with a multi-commodity exploration and development portfolio. Alkane’s projects are predominantly in the Central West region of NSW, but extend throughout Australia through investments in other gold exploration and mining companies.
Alkane’s gold production is from the Tomingley Gold Operations (TGO) which has been operating since early 2014 and it’s most advanced gold exploration projects are in the 100% Alkane owned tenement area between TGO and Peak Hill and have the potential for sourcing additional ore for TGO.
Alkane has other 100% owned exploration tenements in the Central West NSW prospective for gold and copper. The recently announced significant porphyry gold-copper mineralisation intersected at Boda is an example of this potential.
Alkane’s largest non-gold project is the Dubbo Project (DP), a large in-ground resource of zirconium, hafnium, niobium, yttrium and rare earth elements. It is a potential strategic and independent supply of critical minerals for a range of sustainable technologies and future industries. The DP is development ready, subject to financing, with the mineral deposit and surrounding land acquired and all major State and Federal approvals in place. The DP is part of Alkane subsidiary Australian Strategic Materials, which will demerge with Alkane subject to shareholder approval.
[I don't currently hold ALK, but they're on my watchlist, and they're also on my Strawman.com scorecard, and doing very well there too, having almost doubled since I added them]
Highlights from ALK ASX announcement
7 July 2020
Tomingley Gold Operations Meets FY2020 Guidance
- Tomingley Gold Operations has met FY2020 guidance, which was upgraded after the September 2019 quarter.
- FY2020 gold production was 33,507oz (guidance 30,000oz to 35,000 oz).
- FY2020 preliminary AISC was $1379/oz (guidance $1,250/oz to $1,400/oz).
- Group unaudited cash, bullion and listed investments position at 30 June 2020 totalled A$98.4M.
- The updated Tomingley Gold Operations mine plan is undergoing final review and approval and will be released along with FY2021 guidance.
Date: 2 July 2020
ASM’S JV PRODUCES TITANIUM METAL ALLOY WITH 45% POWER SAVING
•Commercial Pilot Plant Commissioned on Time and on Budget
•~30 kg of titanium metal alloy was produced during the commissioning of the Commercial Pilot Plant
•In the next phase,the alloy will be used to produce high purity (99.9%) titanium metal via the Electro refining process.
•The patented method of metal production utilizes 45% less power than current industry methods
For full announcement see the link
ASM is a wholy owned subsidiary of ALK, which will demerge into a separate ASX listed company in 2020.
An interesting Livewire article explaining the increase in share price of Alkane Resources.
Disclosure, I hold Alkane.
[I hold ALK shares]
13-July-2020: JV PRODUCES HIGH QUALITY NEODYMIUM METAL ALLOY
ASM JV PRODUCES HIGH QUALITY NEODYMIUM METAL ALLOY
Australian Strategic Materials’ (ASM) Korean research and development partner, ZironTech has completed its preliminary work on the metallisation of neodymium oxide feed producing approximately 1kg of neodymium metal alloy in the laboratory from its patented reduction process in South Korea. The JV is targeting 45% less energy use in its rare earth metallisation process than the current industrial process.
This is the first stage of the production of critical metals used in a range of sustainable technologies and new manufacturing industries such as renewable energy and electric vehicle production.
ASM, with its Korean JV partner, will continue to progress the innovative low emission, high purity metal refining technology to produce metals of zirconium, titanium, rare earths and other critical materials for the renewable energy, speciality alloys and permanent magnet markets.
As noted previously, the commissioning of the electrorefining section of the pilot plant, which will produce high purity metal, is planned in July 2020. Further pilot plant runs are planned to produce neodymium, praseodymium, and other rare earths in metallic form.
Australian Strategic Materials Managing Director, David Woodall said:
“This is a major milestone in ASM’s integrated strategy that includes clean metal production for all products from the development of the Dubbo Project in Central West NSW. This integration of metal production into ASM’s business is consistent with the Australian Government’s objective of adding value within Australia, while ensuring supply security and stability of these critical materials to global and domestic Australian manufacturing sectors.”
ASM and its JV partner continue to progress the second phase of its metallisation strategy focussing on the production of zirconium metal in July 2020, focused on delivering significantly improved economics of its Dubbo project as well as giving it an involvement in the wider commercialisation of a breakthrough technology.
--- ENDS ---
About Australian Strategic Materials – www.asm-au.com
Established as the holding company for the Dubbo Project, ASM is focused on producing specialty metals and oxides for advanced technologies. ASM is a wholly-owned subsidiary of Alkane Resources Ltd. As advised to the ASX on 17 June 2020, Alkane is holding an extraordinary general meeting of shareholders to consider demerging ASM and establishing it as a stand-alone, ASX listed company. For further information on the proposed Demerger and EGM please refer to http://www.alkane.com.au/demerger/.
Located in central-western NSW, ASM’s cornerstone Dubbo Project has a long-term resource of zirconium, rare earths, niobium and hafnium– a globally significant source of these critical materials for a diverse range of emerging and sustainable technologies.
In a joint venture with South Korea’s Zirconium Technology Corporation (ZironTech), ASM is advancing oxide separation and metallisation technologies to create a range of value-added materials from marketavailable precursors and, ultimately, Dubbo Project outputs. Construction of ASM’s pilot plant in South Korea has been completed with commissioning of the plant for each metal planned to be produced from the Dubbo Project with production of larger quantities of clean metals will commence in Q3 2020.
[I hold a small ALK position]
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.