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Alkane Resources doubles Proved Ore Reserves of Dubbo Project

The company's gold producing asset is supported by the Dubbo Project, which remains construction ready and supported by rising prices.

map of new south wales with a pin in it
Proved Ore Reserves are 134% higher with metal grades similar

Alkane Resources (ASX:ALK) has independently re-estimated the Toongi deposit within the Dubbo Project located in New South Wales.

The new JORC compliant estimate was to account for revised estimated operating costs, product revenues and regulatory approved site layouts.

A key highlight from the re-estimate was the 134% increase in the Ore Reserve Proved category, which reflects greater confidence project economics. 

This increased Proved Ore Reserve will support an initial 20-year mine life.

The total Mineral Resource also increased by 2.7% including a 19% increase to the highest confidence Measured category.

Dubbo Project background

The Toongi deposit is a very large open pittable resource of zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements.

Over several years, Alkane has developed a flow sheet to recover all of these metals, except tantalum.

The flow sheet has been proved through a demonstration pilot plant since 2008 enabling optimisation of capital and operating costs, and supply of samples for product certification to end users.

A definitive feasibility study was completed in 2013 and a front end engineering design (FEED) in 2015

Currently, a revised modularised and staged construction concept is in progress to provide a bankable level study.

Many of these metals are required for modern advanced technologies with supply chains subject to critical issues.

Resource and Reserve statement

The new total Mineral Resource for the project is 75.18 million tonnes at 1.89% zirconium oxide, 0.04% hafnium oxide, 0.44% neodymium oxide, 0.03% tantalum oxide and 0.88% total rare earth oxides including yttrium.

The new total Ore Reserve for the project is 18.90 million tonnes at 1.85% zirconium oxide, 0.04% hafnium oxide, 0.44% neodymium oxide, 0.03% tantalum oxide and 0.87% total rare earth oxides including yttrium.

The primary differences from 2016 to 2017 statement are:

- Mineral Resources are 2.7% higher for the total, with Measured 19% higher. Metal grades are fundamentally the same;
- Proved Ore Reserves are 134% higher with metal grades similar; and
- Total Ore Reserves have been reduced 47% due to removal of the Probable Reserves – this reflects that the initial project site design and regulatory approvals, including appropriate waste storage facilities is for a start-up 20-year life.

Alkane’s gold producing asset

The Tomingley Gold Operations (TGO) is based on four gold deposits - Wyoming One, Wyoming Three, Caloma and Caloma Two located 50 kilometres southwest of Dubbo in New South Wales.

Alkane beat its production guidance for FY17 at TGO delivering 68,836 ounces of gold with A$117.3 million revenue at an all-in sustaining cash cost (AISC) of A$1,335 per ounce.

FY17 operating cash flow after development costs was A$32.7 million returning a pre-tax profit of A$17.1 million.

Guidance for FY18 stands at 65,000 to 70,000 ounces of gold at an AISC of A$1,100-1,200 per ounce.

Mineral Resources and Ore Reserves for the TGO have also been re-estimated to account for depletion, increased geological knowledge with depth and actual operating costs and conditions.

The total Mineral Resource stands at 9.23 million tonnes grading 1.7 g/t gold for 508,000 ounces.

The total Ore Reserve stands at 2.68 million tonnes grading 1.9 g/t gold for 166,000 ounces.

Quick facts: Alkane Resources Ltd

Price: 1 AUD

Market: ASX
Market Cap: $580.03 m

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