Alkane Resources

AU: ALK

AU$215.1m market cap

AU$0.43 last close

Alkane Resources is an Australian production and development company. It previously produced 70,000oz Au pa from its open pit at Tomingley, but is now transitioning to underground operations and expects to produce around 32,000oz Au pa.

Investment summary

Gold production from the mid-grade stockpile at Tomingley continues to perform above our expectations, resulting in a second upgrade of our production estimates this year. We increase forecast gold (Au) production for FY19 to 48,000oz (from 44,000oz on 2 May 2019, previously 40,000oz on 12 February 2019). As a result, we also increase forecast gold sold to 52,800oz (from 48,800oz). The increased production levels also result in a lower all-in sustaining cost (AISC), which decreases to A$1,004/oz Au (from A$1,059/oz Au). Alkane also announced a binding agreement with Zirconium Technology Corporation to fund a pilot plant operation to convert metal oxides into metals.

Y/E Jun
Revenue (A$m)
EBITDA (A$m)
PBT (A$m)
EPS (c)
P/E (x)
P/CF (x)
2017A 117.8 49.3 6.6 2.2 19.3 3.8
2018A 130.0 68.6 31.5 4.9 8.7 3.9
2019E 92.1 34.9 28.4 4.2 10.1 7.4
2020E 57.3 21.0 7.7 (0.5) N/A 19.8
Last updated on 18/06/2019
Industry outlook

At Tomingley, we forecast the mine to produce an average of 35,000oz Au pa for the period 2019–23 and generate an average EDITDA of A$44m pa. The cash flow from Tomingley will fund ongoing exploration to potentially extend the mine life, corporate overheads and could contribute to the development of the Dubbo project. Recent assay results at Tomingley defined gold mineralisation at three prospects, located within 7km of the processing plant, and could extend the mine life. The continued escalation in international trade disputes may bode well for the REE market, with shovel-ready rare earth projects, such as Alkane’s Dubbo Project, potential beneficiaries.

Last updated on 18/06/2019
Share price graph
Balance sheet
Forecast net cash (A$m) 59.6
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 93.2 77.1 70.0
Relative* 87.7 67.4 58.9
52-week high/low A$0.4/A$0.2
*% relative to local index
Key management
Ian Gandel Chairman
Nic Earner MD
Ian Chalmers Technical director

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