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Alkane Resources focused on growing gold bounty through exploration and strategic investments

The company’s near-term plans include developing its Tomingley Extension Project, exploration of the Boda disocvery as well as strategic gold investments.

Alkane Resources Ltd - Alkane Resources focused on exploration and strategic investments for FY21
A 30,000-metre drilling program is underway at Boda

Alkane Resources Limited (ASX:ALK) is focused on growing its gold bounty through increasing production at Tomingley Gold Operations (TGO), pursuing organic growth through targeted exploration and development, and strategic investment.

The reliable, existing production from Tomingley met FY20 guidance with 33,507 ounces of gold produced and the company has estimated FY21 guidance at 45-50,000 ounces at an AISC of A$1,450 to A$1,600 per ounce.

The focus is now on production growth through the Tomingley Corridor via exploration at the San Antonio, Roswell ad El Paso targets and further exploration at the recent Boda discovery.

Tomingley Extension Project

Exploration at Tomingley Gold Operations (TGO) to date includes the completion of infill drilling at 40-metre spacing at the Roswell and San Antonio targets with a further 20-metre program underway.

An exploration drive is planned from the existing Wyoming One decline at TGO with drilling positions and bulk samples between Wyoming and Roswell.

The maiden resource at Roswell is 7.02 million tonnes at 1.97 g/t gold for 445,000 ounces and as the underground extension is the priority for the company with the indicated resource update expected in late quarter three/early quarter four of 2020.

San Antonio's maiden resource is 7.92 million tonnes at 1.78 g/t gold for 453,000 ounces and the exploration target at El Paso is around 5.1 to 7.4 million tonnes at a grade range of 1.3 to 1.6 g/t.

These three targets bring the total resource for TGO and the Tomingley extension project to 25.4 million tonnes at 1.9 g/t gold for 1.616 million ounces.

Boda discovery

The company has encountered significant gold-copper mineralisation in RC drilling at the Boda discovery to the northeast, which has similar characteristics to Newcrest Mining Limited’s (ASX:NCM) Cadia Valley Operations 110 kilometres to the south.

There are strong indications of a large system at Boda, including intercepts of:

  • 689 metres at 0.46 g/t gold and 0.19% copper; and
  • 1,167 metres at 0.55 g/t gold and 0.25% copper.

A further 30,000-metre drill program is in progress over FY21, targeting the high-grade core plus prospective areas in the corridor.

Other regional targets presented by IP and data review will also be tested.

Strategic demerger

As of June 30, 2020, the company had $98.4 million in cash, bullion and listed investments.

Additionally, significant value was created through the demerger of Australian Strategic Materials (ASX:ASM) on July 29, 2020.

Pre-demerger, Alkane closed at $1.18, post demerger the share price has traded in a range of $1.04 to $1.31.

Alkane believes the demerged entity closing at $1.40 on the first day, implies a $167 million market cap and ASM trading at $2.19 at close on September 17, 2020, represents $0.44 in Alkane terms.

A major drill program of 30,000 metres is currently underway at Boda.

Gold investments support growth

Alkane’s vision is to become a multi-mine Australian gold producer, anchored by its Tomingley Gold Operations and strong regional NSW exploration portfolio.

The long-term growth of the company is planned via strategic investments and future M&A.

Notably, Alkane owns around 19.9% of Genesis Minerals Ltd (ASX:GMD) which has a market cap of around $160 million and 1.28 million ounces of high-grade gold resource in Western Australia.

Genesis has recently made a strategic acquisition, has strong exploration potential and is seeking a path to production.

The company also owns about 13% of Calidus Resources Ltd (ASX:CAI) which has a market cap of around $155 million and is on track to develop a 100,000 ounces+ per annum gold project in Western Australia from its 1.25 million ounce resource.

Looking forwards

Alkane’s key priorities to December 2020 are:

  • Follow-up drilling of Boda and nearby porphyry targets;
  • Updating of Roswell/San Antonio resources;
  • Finalisation of UG and OC plans for both approvals and financial evaluation; and
  • Progress of Tomingley Corridor Exploration Drive.

Quick facts: Alkane Resources Ltd

Price: 1.315 AUD

ASX:ALK
Market: ASX
Market Cap: $782.94 m
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