Alkane Resources Ltd (ASX:ALK) (OTCMKTS:ALKEF) continues to add new chapters to its gold story focused on Central West New South Wales with production at the Tomingley Gold Operations (TGO), ongoing underground development and development plans for nearby satellite deposits and exploration success at the project as well as at the nearby Boda prospect.
The company has had strong success over a number of years at Tomingley and is confident of opening up further mining opportunities at the Roswell and San Antonio deposits south of the existing operations.
TGO performs strongly
The Tomingley Gold Operations (TGO) continue to perform well in the transition from open pit to underground mining and the company is progressing the processing of underground stope material with recovery as expected.
During the December 2020 quarter, a total of 15,919 ounces of gold was poured, with about 16,613 ounces of gold sold at an average sales price of A$2,302 per ounce, generating revenue of A$38.2 million.
Guidance for FY21 has subsequently been increased to 47,000-52,000 ounces at an AISC of $1,450 to $1,600 per ounce.
Exploration success has been achieved in the past 12 months at Roswell and San Antonio adding to existing resources.
Recent drilling comprised 167 holes for a total of 37,000 metres at San Antonio and final assay results have been received with notable intercepts including:
- 17.4 metres at 1.75 g/t gold from 194.6 metres, including 5.2 metres at 4.28 g/t from 201.8 metres; and
- 10.0 metres at 6.68 g/t from 74 metres, including 3.0 metres at 17.1 g/t from 75 metres.
This comes as Alkane examines open-cut and underground mines for these deposits with the intention of development as soon as possible.
The company has started the approvals process for this development and consultation with regulators, landholders and other stakeholders while on-ground assessments needed for the Environmental Impact Statement continue.
Feasibility plans that include both options at Roswell and San Antonio are expected to be finalised in the coming quarter, once the San Antonio indicated resource is completed.
Alkane managing director Nic Earner said the final intersections from San Antonio completed the drilling program needed to confirm the resources for the next phase of growth at the producing Tomingley Gold Project.
Drilling at San Antonio is continuing for the purpose of mine development studies including geotechnical, metallurgical, sterilisation and groundwater test-work and reconnaissance exploration drilling has resumed around near-mine targets.
Extensive exploration focused on the immediate area to the south of the TGO mine has continued as part of the plan to source additional ore feed, either at surface or underground.
During the quarter the program, which focused on both increasing the drilling density within the Roswell and San Antonio prospects as well as testing strike and depth extensions, was completed.
As well as San Antonio and Roswell, the exploration expenditure focus has been on the Boda copper-gold prospect, part of the Northern Molong Porphyry Project within the Northern Molong Volcanic Belt to the northeast of TGO.
After the initial Boda broad copper-gold discovery hole which attracted strong interest to the area, the company has continued to be encouraged by ongoing results.
In accordance with its strategy of investing part of its cash balance in junior gold mining companies and projects that meet its investment criteria, namely potential investments that have high exploration potential or require near-term development funding, Alkane continues to hold its investment in gold exploration and development companies Calidus Resources Ltd (ASX:CAI) and Genesis Minerals Ltd (ASX:GMD).
Gold forward sale contracts
During the quarter, Alkane entered into new gold forward sales contracts for 8,000 ounces for delivery in the June, September and December 2021 quarters.
The average delivery price is $2,534 per ounce.
Alkane purchased put options with monthly expiry dates from January to September 2021.
This is for 2,000 ounces per month at an exercise price of $2,400 per ounce.
A zero-cost collar was also put in place for 2,000 ounces covering the September and December 2021 quarters, with a put price of $2,300 per ounce and call price of $2,910 per ounce.
The company also holds 18,000 ounces of put options priced at A$1,800 per ounce and these options have expiry dates from March 2021 to September 2021.