Alkane Resources

AU: ALK

AU$601.3m market cap

AU$1.01 last close

Alkane Resources is an Australian production and development company. It previously produced 70,000oz of gold per year from the open-pit operations at its Tomingley gold mine, but is transitioning to underground operations and expects to produce c 47,500oz in FY21.

Investment summary

Alkane’s Q121 production of 11.5koz (at A$1,575/oz AISC) was almost exactly in line with our expectations and FY21 guidance of 45–50koz at A$1,450–1,600/oz AISC. At the same time, exploration drilling has more than replenished reserves and resources as well as intersecting grades as high as 104g/t at Tomingley’s San Antonio and Roswell extensions. Consequently, Alkane is expecting to announce upgraded resources and preliminary mine plans at both in Q4 CY20.

Y/E Jun
Revenue (A$m)
EBITDA (A$m)
PBT (A$m)
EPS (c)
P/E (x)
P/CF (x)
2019A 94.0 33.0 25.4 4.57 22.1 N/A
2020A 72.5 29.4 20.6 2.56 39.5 N/A
2021E 105.7 35.4 23.5 2.96 34.1 N/A
2022E 126.5 42.6 27.5 3.46 29.2 N/A
Industry outlook

Post the de-merger of ASM, our most recent valuation of Alkane attributes 21c/share in value to Tomingley plus net cash (A$33.1m as at end-Q121). To this should then be added 29c for its investments and at least 5c for its maiden Roswell and San Antonio resources and up to a further 70c in value from contingent assets (mostly the Boda prospect in the Northern Molong Porphyry Project which is developing into a genuine Au-Cu alkalic porphyry target), the ultimate valuation of which will depend on future exploration success.

Last updated on 27/11/2020
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Share price graph
Balance sheet
Forecast net cash (A$m) 45.2
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (18.9) (6.5) 65.7
Relative* (25.7) (13.4) 69.0
52-week high/low A$1.5/A$0.5
*% relative to local index
Key management
Ian Gandel Chairman
Nic Earner MD
Ian Chalmers Technical director

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