Alkane Resources

ASX: ALK

Market CapAU$365m

Last Close AU$0.61

Alkane Resources has two main assets in Central West New South Wales: the Tomingley gold mine, where recent exploration has increased the mine life by at least eight years, from FY23 to FY31, and its Boda prospect at Northern Molong, which is shaping up to be a tier 1 alkalic porphyry district.

Investment summary

Alkane exceeded its guidance range in FY22 by 11% at an all-in sustaining cost (AISC) of A$1,460/oz with FY23 guidance set at 55–60koz at A$1,650–1,900/oz. Exploration at San Antonio and Roswell has already led to an increase in Tomingley’s life from CY23 until CY31 at production levels up to 115koz pa at A$1,350–1,450/oz AISC. Subsequent exploration has increased the Roswell resource by 37% as well as delineating a maiden resource of 5.2Moz Au or 10.1Moz AuE at Boda.

Y/E Jun	Revenue (A$m)	EBITDA (A$m)	PBT (A$m)	EPS (fd) (c)	P/E (x)	P/CF (x)
2021A	127.8	70.5	46.3	5.30	11.5	5.0
2022A	165.0	87.5	52.1	3.63	16.8	2.6
2023E	140.1	69.2	37.8	4.39	13.9	5.3
2024E	N/A	N/A	N/A	N/A	N/A	N/A

Industry outlook

Our valuation of Alkane continues to be underpinned by Tomingley (A$0.57/share). Liquid assets contribute a further A$0.06/share and Boda a further A$0.31/share. As such, we calculate that Alkane’s share price is now more than 100% covered by the value of tangible assets, with up to an additional A$0.59/share available in the form of further exploration success at the Northern Molong Porphyry Project as well as the gold price and the ever-increasing probability of the Roswell underground extension going ahead.

Last updated on 30/11/2022