Alkane Resources Ltd (ASX:ALK) is continuing production at its Tomingley Gold Operations (TGO) in Central West New South Wales and is expected to exceed minimum guidance production of 30,000 ounces gold in FY20.
Production is being maintained while the company acts in response to information from State and Federal authorities and complies with recommended measures to combat COVID-19.
These include heightened cleaning protocols, social distancing, stringent hygiene practices and health screening.
Operations “continue safely”
Alkane's managing director Nic Earner said: “This is a time of rapid change and uncertainty for our business and all of human society.
“We are working hard to protect the health of our staff and contractors and therefore the communities they live in, and to minimise the economic impacts of COVID-19.
“To date, the measures we have taken on-site, together with the regulatory environment set by the State Government have allowed our operations to continue safely, without interruption.
“We stand ready to act swiftly and communicate with shareholders if circumstances change.”
Alkane has a strong balance sheet with cash, bullion and listed investments of $91.7 million reported for the December quarter.
Strong balance sheet
The current position will be provided in the upcoming March quarter activities report.
Alkane is debt-free with a hedge position unchanged from previous communication.
Should the business experience extended interruption, Alkane’s forecast expenditure on exploration, development and the demerger may be curtailed.
At TGO there remains about 250,000 tonnes of low-grade ore stockpiles on the surface, in addition to the underground ore resource.
COVID-19 has the potential to interrupt operations if any of the following occur:
- Despite the extensive measures taken, sufficient employees test positive for COVID-19 such that the majority of any crew is unable to attend while they self-isolate;
- Despite increasing inventory from critical suppliers and continuing to liaise closely with them, their capacity to supply is reduced for similar reasons; and
- The NSW State Government introduces regulations that inhibit our suppliers or employees from attending beyond a skeleton crew.
Boda and San Antonio drilling continues
Drilling at the Boda discovery has been complete with ore cut, logged and submitted for analysis.
Results will be communicated as scheduled, provided that the laboratory continues to operate.
In addition, drilling required to calculate the initial San Antonio inferred resource has also been completed with samples sent to the laboratory and results expected soon.
Release of the San Antonio inferred resource is expected before Easter.
Infill drilling continues with the drill crews residing locally and following appropriate hygiene, health screening and self-isolation protocols.
Alkane said suspension of drilling would delay establishment of an indicated resource.
The inferred resource is likely to be sufficient to progress the state approvals for Roswell and San Antonio to the schedule previously communicated.
Demerger of Australian Strategic Materials
Alkane’s board believes that the demerger of Australian Strategic Materials (ASM) carries strategic benefits for Alkane and ASM, and is monitoring the volatility of financial markets to determine the best timing for the demerger process, which will include a shareholder meeting and listing of ASM.
Work on document preparation, internal planning and resourcing and interaction with key regulators is advanced.