Alkane Resources

AU: ALK

Market CapAU$482.3m

Last Close AU$0.81

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 52,500oz in FY21.

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Investment summary

On 16 August, Alkane published the assay results of 10 more holes drilled at Boda. While our estimate of the overall mineralised inventory at Boda has changed little as a result of this set of holes, probably their most significant consequence is the increase in the potential resource contained within the high-grade sulphide cemented breccia from c 2.1Moz gold equivalent (AuE) to c 3.5Moz AuE above 3.0g/t AuE. This is as a result of the extension of this structure to at least 800m (cf 500m previously) from the interpretation of the assay results of holes KSDD034 and 034W2, KSRC038D and KSRC042 and, in particular, KSRC043, which returned an intersection of 31m from surface at a grade of 2.94g/t.

Y/E Jun
Revenue (A$m)
EBITDA (A$m)
PBT (A$m)
EPS (c)
P/E (x)
P/CF (x)
2020A 72.5 29.4 20.6 2.56 31.6 N/A
2021A 127.8 70.5 46.3 5.35 15.1 N/A
2022E 134.3 52.9 28.4 3.34 24.3 N/A
2023E 130.8 59.9 34.1 4.01 20.2 N/A
Industry outlook

Our most recent valuation of Alkane attributes 32c/share in value to Tomingley plus net cash (cf 18c previously). To this may then be added 1) 5c for the eventual development of the Roswell underground extension, 2) 13c given the current level of the gold price, 3) 4c for residual resources, 4) 3c for ongoing exploration success, 5) 8c for ALK’s investments in Calidus and Genesis and 6) up to 60c for exploration at Boda (where drilling has recently identified shallow, high grade cemented breccia plus a potential feeder structure to the porphyry system).

Last updated on 16/09/2021
Content on Alkane Resources
Alkane Resources – Boda and Tomingley continue to deliver
Metals & mining | Update | 1 September 2021
Alkane Resources – Revealing the fruits of its labours
Metals & mining | Outlook | 9 July 2021
Alkane Resources – Boda bodes well
Metals & mining | Update | 8 December 2020
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Sector
Metals & mining
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Share price graph
Balance sheet
Forecast net cash (A$m) 24.2
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (13.8) (23.6) (40.2)
Relative* (12.8) (24.8) (52.6)
52-week high/low A$1.5/A$0.7
*% relative to local index
Key management
Ian Gandel Chairman
Nic Earner MD
Ian Chalmers Technical director