007 strikes it rich

Alkane Resources 23 April 2020 Update
Download PDF

Alkane Resources

007 strikes it rich

Exploration and
quarterly update

Metals & mining

23 April 2020

Price

A$0.685

Market cap

A$397m

A$1.5776/US$

Net cash (A$m) at 31 December 2019

78.4

Shares in issue

580.0m

Free float

78%

Code

ALK

Primary exchange

ASX

Secondary exchange

OTC QX

Share price performance

%

1m

3m

12m

Abs

23.4

0.7

191.8

Rel (local)

13.6

38.4

251.2

52-week high/low

A$1.04

A$0.20

Business description

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 now transitioning to underground operations and expects to produce around 32,000oz of gold pa.

Next events

Boda drilling results

May 2020

Dubbo demerger shareholder meeting

Q2 CY20

Analyst

Charles Gibson

+44 (0)20 3077 5724

Alkane Resources is a research client of Edison Investment Research Limited

In recent weeks Alkane has announced drilling results from its Boda prospect in the Northern Molong Porphyry Project, a maiden (inferred) resource at its Roswell and San Antonio prospects south of Tomingley and its interim results. In addition, Export Finance Australia (Australia’s export credit agency) has confirmed its interest in participating in the financing of Alkane’s Dubbo rare earth project in Central West New South Wales. Each has the ability to add to our valuation of Alkane, although by far the largest in terms of magnitude are the drilling results from Boda.

Year end

Revenue (A$m)

PBT*
(A$m)

EPS*
(A$)

DPS
(A$)

P/E
(x)

Yield
(%)

06/18

128.8

31.5

0.05

0.00

14.1

N/A

06/19

92.5

26.2

0.05

0.00

14.5

N/A

06/20e

67.3

21.3

0.03

0.00

24.9

N/A

06/21e

76.9

27.5

0.04

0.00

19.3

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

Boda drilling results

Holes KSDD005–8 at Boda increased both the width and (variously) the grade of the porphyry mineralisation identified by hole KSDD003 (calculated at 658.8m at 0.41g/t Au and 0.18% Cu), including the high-grade gold-copper chalcopyrite core. From the exploration conducted at Boda to date, we can see the mineralisation extends to about 1km in depth and the width of mineralisation is several hundred metres. Combined with an estimate of 712m for the strike length of the mineralisation and with the assumption that the orientation of the deposit is close to vertical, we can estimate that the size of the Boda deposit could be in the order of 738Mt at a grade of 0.35g/t (0.51g/t gold equivalent) containing up to 8.3Moz gold and potentially worth up to A$0.55/share to Alkane shareholders (±75%).

Roswell and San Antonio maiden resources

Roswell and San Antonio’s maiden inferred resources approximately treble Alkane’s resource base at Tomingley and could potentially add up to 15 years to the life of operations there. However, assuming 60% conversion, their combined resources may be expected to convert into a reserve of 9.0Mt and to add approximately nine years to production. As an in-situ resource, we value Roswell and San Antonio at 5.9 Australian cents per share. For each year that they add to Tomingley’s life, our valuation of Alkane increases by c 3c (initially).

Valuation: 97c confirmed plus up to 73c contingent

Our updated valuation of Alkane now attributes 25c/share in value to its Tomingley asset plus cash and 52c for its Dubbo asset. To this should then be added 14c for its investments in Calidus, Genesis and Ziron Tech (see our note, Alkane Resources: Genesis of a golden opportunity, published on 24 September 2019) and at least 6c for its maiden Roswell and San Antonio resources. To this total of 97c can then be added up to a further 73c in value from contingent assets, the final valuation for which will depend on future exploration success (see Exhibit 12).

Recent developments

Since our last note on the company (Genesis of a golden opportunity, 24 September 2019), Alkane has announced a number of developments:

Additional drilling results at its Boda prospect within the Northern Molong Porphyry Project.

Resource definition drilling updates at Roswell and San Antonio.

Initial inferred resources at Roswell and San Antonio.

Quarterly activities report to 31 December 2019.

Raised A$40.7m via a placement and non-renounceable rights offer.

Export Finance Australia confirming its interest in financing the Dubbo project.

Each is considered in turn, below.

Boda drilling results

On 13 February, Alkane reported the assay results of drill hole KSDD005 at its Boda prospect and, on 23 March and 22 April, the results of holes KSDD006, KSDD007 and KSDD008. The drilling was part of a 5,974m diamond core exploration programme to test the depth and strike extensions to the porphyry gold-copper mineralisation at Boda, which has now been completed with only the results of hole KSDD009 (100m south of KSDD007) outstanding (anticipated in May).

Diamond core hole KSDD005 was located 200m vertically below KSDD003 and intersected an extensive (>700m true thickness) pyrite shell with chalcopyrite dominant core (c 300m thick), which is characteristic of the upper sections of an alkali porphyry mineralisation system. Lithogeochemistry conducted on the drill samples also supports this interpretation, displaying a pattern of outer propylitic and sodic alteration at the top of the hole evolving to a copper rich calc-potassic core and terminating in a propylitic chlorite and pyrite zone. Holes KSDD006 and KSDD007 were located 100m to the north and 100m to the south of the mineralisation defined by KSDD003 and KSDD005, respectively. Hole KSDD008 was located a further 100m to the south of hole KSDD007

A summary of all four holes is as follows:

Exhibit 1: Boda diamond drill hole assay results

From

(m)

To

(m)

Aggregate intercept

(m)

Average gold grade

(g/t)

Average Cu grade

(%)

KSDD005

262.0

1,415.0

720.7

0.45

0.19

KSDD006

105.0

948.0

638.6

0.25

0.13

KSDD007

59.0

1,319.1

1,197.1

0.54

0.25

KSDD008

7.3

973.0

965.7

0.22

0.11

Source: Alkane Resources, Edison Investment Research

In general, the holes recorded several significant gold-copper intercepts, within an extensive, low-grade mineralised shell similar to Cadia East. For the purposes of Exhibit 1, multiple intersections have been amalgamated and grades averaged according to the width of the individual intersections.

In each case, the stratigraphic sequence and the style of alteration and mineralisation was also reported to bear similarities to sections of the Cadia East deposit. The width of the mineralisation in hole KSDD007 is interpreted as being the result of the channelling of fluids along margins from Group 1 monzonites possibly from a deeper causative porphyry source. As well as the potential for an inner potassic bornite rich core to the system, the deposit remains open both on strike and at depth.

Northern Molong Porphyry Project background

The Northern Molong Porphyry Project is 100% owned by Alkane, covers c 115km2 of the northern Molong Volcanic Belt (MVB) and is around 80km to the north-east of its Tomingley Gold Mine, in the Central West of New South Wales (Exhibit 2).

Exhibit 2: Location of the Northern Molong Porphyry Project (NMPP)

Source: Alkane Resources

To date, Alkane’s drill results at Boda have demonstrated both a similar stratigraphic sequence as well as style of alteration and mineralisation to Newcrest’s Cadia Valley Mines 110km to the south, although it is also more structurally complex. Nevertheless, together the Cadia Valley Mines host a JORC-compliant mineral resource estimate of 38Moz Au at a grade of 0.37g/t Au, 8.3Mt of copper at a grade of 0.26% Cu and 67Moz of silver at a grade of 0.68g/t Ag and Newcrest produced 913koz of gold last year at an all-in sustaining costs (AISC) of US$132/oz Au (net of by-product credits), generating US$965m in free cash flow before tax.

The project now comprises four exploration licences – Bodangora, Boda South, Kaiser and Finns Crossing – within which Alkane has defined five magnetic anomalies interpreted to be intrusive complexes – Kaiser, Boda, Comobella, Driell Creek and Finns Crossing – all within a 15km north-west to south-east trending corridor (Exhibit 2) and all close to road, rail, gas and water infrastructure. Importantly, the Boda anomaly correlates with an historic induced polarisation (IP) survey completed by CRA Exploration (now Rio Tinto) over the Boda Intrusive Complex (BIC), which showed a strong high chargeable anomaly along the northern edge of the survey area coincident with the magnetic anomaly. As a result, Alkane has recently completed a 70 line kilometre IP survey over the 6km strike extensions of the BIC to generate further drilling targets in the area.

Exhibit 3: A map of the five magnetic anomalies

Source: Alkane Resources

Four of these targets have now been drill tested – Kaiser, Boda, Comobella and Glen Hollow. Exploration has identified the margins of major monzonite intrusive complexes that provide the primary control for porphyry and epithermal mineralisation with significant intersections being reported along the western margin of both the Kaiser Intrusive Complex (KIC) and the Boda Intrusive Complex (BIC). Specifically, gold mineralisation has been discovered at Kaiser, Boda and Glen Hollow (which is part of Comobella).

Analysis and interpretation of Boda drill results

In general, holes KSDD005–7 increased both the grade and width of the porphyry mineralisation identified by hole KSDD003 (658.8m in aggregate at average grades of 0.41g/t Au and 0.18% Cu), including the high-grade gold-copper chalcopyrite core. Hole KSDD008 increased the width of the mineralisation, albeit at a slightly lower (but still consistent) grade.

From the drill hole results a number of observations can be made:

From holes KSDD003 and KSDD008, the vertical depth before mineralisation is encountered is minimal – that is, the deposit (almost) crops out on surface.

From all holes, mineralisation extends to c 1km in depth.

From all holes, the width of mineralisation is several hundred metres.

Edison estimates that the strike length of the mineralisation is in the order of 712m (note that the holes drilled so far have confirmed a minimum strike of 300m and hole KSDD009 should add at least another 100m to this length). Assuming the orientation of the deposit is approximately vertical allows us to then make a very approximate estimate of its potential size, as follows:

Exhibit 4: Edison estimate of the potential size of Boda mineralisation

Characteristic (units)

Estimate

Strike (m)

712

Average estimated true width (m)

353

Average estimated true depth (m)

977

Estimated volume (Mm3)

246

Estimated density (t/m3)

3.0

Estimated tonnage (kt)

738

Estimated average gold grade (g/t)

0.35

Estimated average copper grade (%)

0.17

Estimated contained gold (koz)

8,342

Estimated contained copper (kt)

1,285

Characteristic (units)

Strike (m)

Average estimated true width (m)

Average estimated true depth (m)

Estimated volume (Mm3)

Estimated density (t/m3)

Estimated tonnage (kt)

Estimated average gold grade (g/t)

Estimated average copper grade (%)

Estimated contained gold (koz)

Estimated contained copper (kt)

Estimate

712

353

977

246

3.0

738

0.35

0.17

8,342

1,285

Source: Edison Investment Research

Note that, at prevailing metals prices, the 0.17% copper grade is the equivalent of a 0.15g/t gold grade, such that the deposit could be described as 738Mt at a grade of 0.51g/t gold equivalent containing 12,140koz gold equivalent.

Clearly such an estimate is very far from being anything close to JORC code-compliant and experience would suggest that such estimates have an accuracy of approximately ±75%. If it does prove to be in the right order of magnitude, however, it would suggest a multi-million ounce gold deposit at Boda with a potential valuation (based on the US$24.08/oz average valuation of in-situ ounces calculated in our report, Gold stars and black holes, published in January 2019) of A$0.55/share.

Once Alkane is in possession of the full data set from its drilling programme (ie including hole KSDD009), it will consolidate the results together with those from its recent IP survey in order to determine the size and scale of its next programme.

Roswell and San Antonio drilling and maiden resource

The Tomingley Gold Project covers an area of approximately 440km2, stretching 60km north-south along the Newell Highway from the Tomingley mine in the north, through Peak Hill and almost to Parkes in the south.

Over the past two years, Alkane has conducted an extensive regional exploration programme with the aim of defining additional resources that have the potential to be mined either via open pit or underground methods and fed through the Tomingley gold plant. In general, the programme has yielded broad, shallow, high-grade intercepts that demonstrate the potential for material project life extension (subject to resource confirmation, landholder agreements and regulatory approvals).

Roswell maiden resource

On 28 January, Alkane reported a maiden inferred mineral resource at Roswell. The resource was the consequence of a 60,000m drilling programme (c 10,000m diamond and 50,000m reverse circulation) designed to define an initial inferred resource at both the Roswell and San Antonio prospects with a nominal 40m x 40m drill hole spacing to a minimum 200m vertical depth. A summary of the resource is as follows:

Exhibit 5: Maiden Roswell mineral resource estimate

Category

Tonnage (Mt)

Grade (g/t)

Contained gold (koz)

Inferred

7.02

1.97

445

Source: Alkane Resources. Note: 0.5g/t cut-off grade.

The resource has been calculated on the basis of a nominal 40m drill hole spacing (albeit some drill spacing has already been infilled to 20m), a 600m strike length and an average depth of -50m RL (c 300m below the ground surface).

The Roswell deposit is approximately 3km south of Alkane’s Tomingley Gold Operation’s (TGO) mine and processing facility and the drilling is part of an extensive regional programme aimed at providing additional ore feed, either at surface or underground, in the future to TGO. To this end, New South Wales state government approval has been sought for an underground exploration drive from Tomingley to the Roswell deposit, with equipment having been purchased, personnel recruited and land acquired to facilitate rapid development of the project.

In the meantime, further drilling is underway at Roswell to reduce the drill hole spacing to 20m to convert inferred resources into the indicated and (perhaps) measured categories. The resource delineated to date is a high-grade, large tonnage zone proximal to the Rosewood fault in the southern section of the tenement. There is potential to test the depth extensions of the ore zone, while other exploration targets include the poorly constrained northern zone, where mineralisation is open to the west and at depth where grade and tonnage potential is on an improving trend. Some targets will also be tested from underground as the exploration drive from Tomingley is developed.

Roswell geology background

Tomingley’s gold deposits are interpreted as orogenic gold systems positioned within a major structural zone similar to the Archean greenstone belts of the Yilgarn Craton in Western Australia and the Paleozoic slate belts in Victoria.

In this case, the Tomingley, Roswell and San Antonio deposits are all positioned in an apparent gold-arsenic structural zone termed the Tomingley Gold Corridor that is approximately 500m wide and positioned immediately east of the Cotton Formation contact. The Tomingley Gold Corridor is approximately 30km in length, starting approximately 5km north of Tomingley and extending to the south of Peak Hill. The individual prospects and deposits are interpreted to have formed after an intense period of compression during an orogeny, which resulted in suitable volcanic host rocks acting as structural buttresses in which hydrothermal fluids were able to pond and precipitate gold.

The mineralisation at Roswell is similar to that at Tomingley, being hosted by two brittle, phyllic altered volcanic units (monzodiorite and andesite) and is characterised by quartz-carbonate-pyrite-arsenopyrite veins. These sheeted quartz veins are orientated as moderate to steeply dipping, striking approximately 10° east of north and are typically constrained within the volcanic units. The higher grading mineralisation occurs in the southern section of the tenement, proximal to and truncated to the south by a regional northwest trending structure named the Rosewood Fault.

San Antonio

The San Antonio deposit is a continuation of the Roswell mineralised zone to the south of the Rosewood fault.

The first phase of drilling has now been completed. As at Roswell, the initial phase of drilling was conducted on a 40m x 40m grid to a minimum 200m vertical depth. Difficult drilling conditions in the southern portion of the prospect area caused the early abandonment of six holes. However, this was rectified by means of a specialist collaring and casing tool, which allowed the holes to be re-drilled and the programme to be completed. As a result, a second phase of infill resource drilling comprising a further 50,000m has been sanctioned and is underway.

Significant intercepts from the San Antonio prospect include:

15m at 4.33g/t gold including 3m at 12.4g/t;

15m at 7.43g/t gold; and

18m at 12.7g/t gold including 5m at 35.5g/t.

On 20 April, Alkane announced a maiden resource at San Antonio, as follows:

Exhibit 6: Maiden San Antonio mineral resource estimate

Category

Tonnage (Mt)

Grade (g/t)

Contained gold (koz)

Inferred

7.92

1.78

453

Source: Alkane Resources. Note: 0.5g/t cut-off grade.

San Antonio’s maiden resource will be subject to further infill and extensional drilling with a view to defining both the continuity of the mineralisation to the south and west and the high-grade zones at depth.

Some of the drill hole spacing used in the estimation is already infilled to 20m. Owing to the complexity of the geology however, the resource will be converted to indicated status only when confidence through drilling further areas of the resource to 20m spacing is completed. In contrast to Roswell, the resource at San Antonio was calculated to a depth of 12mRL (cf Roswell -50mRL), largely as a result of the RC drilling difficulties encountered at San Antonio causing early abandonment of holes. These abandoned holes are currently being diamond tailed to deepen the overall resource envelope to be included in the next round of resource calculations.

San Antonio geology background

A full description of the geology at San Antonio can be found in Alkane’s announcement of 20 April. In brief, litho-geochemistry has identified a phosphorous enriched (apatite bearing) andesite 60-70m thick with a 10m wide brecciated basal contact that appears to host the majority of mineralisation at San Antonio. A second andesite, located 50m to the west, is phosphorous poor but also hosts mineralisation. Otherwise, as at Roswell, the mineralisation at San Antonio is primarily hosted by two brittle andesite units that host structural zones generated by a competency contrast between the brittle volcanics and the ductile volcaniclastic meta-sediments.

The mineralisation at San Antonio is characterised as typical quartz-carbonate-pyrite-arsenopyrite veins hosted in phyllic altered volcanics and volcaniclastics. The mineralised zones range from 2-50m wide as shear hosted veins, sometimes becoming more stockwork in nature. As at Tomingley, the mineralisation is displaced by a swarm of post-mineralisation dolerite dykes of a similar orientation (ie dipping steeply to the north-northeast).

The mineralised bedrock lies beneath a Cainozoic alluvium overburden of 20-60m thickness and preliminary metallurgical work on San Antonio ore suggests that it has similar metallurgical qualities to the other Tomingley deposits.

Roswell and San Antonio resource analysis

Together, the Roswell and San Antonio resources comprise a 14,940kt resource at an average grade of 1.87g/t, containing 898koz gold. While the tonnage of the maiden resource at the San Antonio deposit lies between the upper and lower bands of Alkane’s exploration target, the maiden resource declared at Roswell exceeds the upper bound of Alkane’s target by 13.2% in terms of tonnage and by 17.4% in terms of contained gold at a 3.7% higher grade (at the same cut-off grade of 0.5g/t).

Exhibit 7: Roswell and San Antonio maiden resources vs target

Target

Actual

Uplift of actual vs target

Prospect

Bound

Tonnage (kt)

Grade
(g/t)

Contained
gold (koz)

Tonnage
(kt)

Grade
(g/t)

Contained
gold (koz)

Tonnage (%)

Grade
(%)

Contained gold (%)

Roswell

Upper

6,200

1.90

379

7,020

1.97

445

13.2

3.7

17.4

San Antonio

Upper

10,200

2.80

918

7,920

1.78

453

-22.4

-36.4

-50.6

Lower

7,400

2.30

547

7,920

1.78

453

7.0

-22.6

-17.2

Source: Alkane Resources, Edison Investment Research

Prior to its announcing the maiden Roswell and San Antonio resources, Alkane’s resources at Tomingley were 6,439kt of ore containing 407koz gold at a grade of 2.0g/t as at end-FY19, which converted into 1,410kt of reserves containing 89koz gold at a grade of 2.0g/t. As such, the maiden resources at Roswell and San Antonio more than treble Alkane’s existing gold resource at Tomingley and, to all intents and purposes, meet the lower limit of its exploration target at TGO including El Paso (see Exhibit 8).

In terms of mine life, at a milling rate of 1Mtpa, Tomingley’s existing FY19 resources and reserves were sufficient to support production for 6.4 and 1.4 years, respectively. Roswell and San Antonio’s resources therefore could potentially add more than 14 years to the life of Tomingley’s operations. Pro-rata with Tomingley’s existing operations, Roswell and San Antonio’s resources should convert into a reserve of 3.3Mt at 1.86g/t containing 195koz gold and therefore should be sufficient to support an additional 3.3 years of production. However, a reserve estimate performed solely on this basis may be unduly conservative. Whereas the Roswell and San Antonio resources are stated ‘pre-mining’, the Tomingley resource reflects a mature mine that has already mined out its open pit reserves and has started to mine its underground ones. On a similar, pre-mining basis, the resource at Tomingley was c 921koz, of which c 400koz have now been mined, with 407koz (see above) remaining and 170koz included in the underground mine plan – which suggests that a more appropriate conversion factor would be c 60% (c 570/921), in which case, Roswell and San Antonio’s reserves combined could prove to be in the order of 9.0Mt, containing 539koz gold at a grade of 1.87g/t, and sufficient to support production for an additional circa nine years (cf Alkane’s target of 10 years, with exploration still ongoing).

In our report, Gold stars and black holes, published in January 2019, we calculated an average value of in-situ resources quoted in the Australian market of US$24.08/oz, on which basis we would value the Roswell and San Antonio deposits (combined) at US$21.6m, or A$34.1m, or 5.9c per share. Our current valuation of Alkane is based on the present value of future dividends potentially payable to shareholders based on the execution of the Tomingley and Dubbo mine plans. If we increase the life of the Tomingley operation by one year, our valuation (based on discounted dividends from Tomingley and Dubbo) increases by 3c per share (see ‘Valuation’ section on page 10) and for each year of additional life thereafter until the fifth year, when the valuation increases by 2c for each year of additional life thereafter until the seventh year, when the valuation increases by 1c for each year of additional life thereafter (exhibiting the effect of discounting). Hence, increasing the life of Tomingley by nine years adds 19c to our valuation cf our 5.9c per share in-situ valuation, which approximates to only two additional years’ worth of mining (ie below the bottom end of what might reasonably be expected given historical reserve to resource conversion ratios at Tomingley).

Exhibit 8 demonstrates the value that Alkane may immediately add to its operations via success at all of its prospects to the south of Tomingley (ie including El Paso) if it hits its exploration targets:

Exhibit 8: Alkane exploration targets’ potential value (US$m, A$m, A$/share)

Tonnage
(kt)

Grade
(g/t)

Contained gold (koz)

Valuation (US$/oz)

Valuation (US$m)

Valuation
(A$m)

Valuation
(A$/existing share)

Total*

Upper

23,800

2.19

1,678

24.08

40.4

63.7

0.110

Lower

15,800

1.81

920

24.08

22.1

34.9

0.060

Source: Alkane Resources, Edison Investment Research. Note: *Comprises Roswell, San Antonio and El Paso.

These valuations are based purely on the in-situ value of the resources that Alkane is targeting for delineation. Self-evidently, these valuations are subject to increase to the extent that these resources are subsequently upgraded to reserves and included in the Tomingley mine plan.

Q220 operational results

TGO continued to process predominantly low-grade stockpiles in Q220, pausing processing in late December to accommodate an extended maintenance shutdown before restarting in mid-February. Encouragingly, during the quarter the first underground stope material was processed, with both grade and metallurgical recoveries performing as expected. At the same time, underground development has been progressing on schedule.

Highlights of the quarter were:

Above forecast gold production of 6,929oz.

Site operating cash costs of A$1,024/oz (US$700/oz at average FX rates) and AISC of A$1,441/oz (US$985/oz).

After having upgraded its guidance after a better than expected output in Q120, after Q220 Alkane left its annual gold production forecast for FY20 unchanged at 30–35koz at an AISC of A$1,250/oz (US$792/oz at prevailing forex rates), which we calculate is consistent with the following operating parameters over the remainder of the year.

Exhibit 9: Tomingley quarterly operating results, Q120–Q420e

Q120

Q220

Q320e

Q420e

FY20e

Ore milled (t)

289,282

231,493

150,000

289,282

960,057

Head grade (g/t)

0.96

1.21

1.45

1.45

1.24

Contained gold (g/t)

8,929

9,006

6,990

13,480

38,404

Recovery (%)

87.4

88.3

88.3

88.3

84.6

Gold poured (oz)

7,497

6,929

6,172

11,903

32,500

Gold sold (oz)

6,997

9,143

6,172

11,903

34,214

Gold price (US$/oz)

1,474

1,483

1,581

1,696

1,558

Forex (A$/US$)

1.4593

1.4627

1.5282

1.5826

1.5082

Average realised price (A$/oz)

2,151

2,084

2,416

2,684

2,334

C1 site cash costs (A$/oz)

1,000

1,024

980

665

886

AISC (A$/oz)

1,268

1,441

1,391

993

1,241

Source: Alkane Resources, Edison Investment Research. Note: Forecast average realised gold price in Q320 and Q420 excludes forward sales over 9,990oz at an average price of A$1,847/oz.

A summary of Alkane’s half year results within the context of both the quarterly results (above) and recent half-year periods, together with our updated forecasts for H220 and FY20, is as follows:

Exhibit 10: Alkane HY20 results vs H119 and H219 plus H220e forecast (A$m, unless otherwise indicated)

Income statement

H119

H219

H120

H220e

FY20e

Revenue

52.352

40.161

34.098

33.240

67.338

Cost of sales

(28.829)

(24.918)

(16.500)

(16.554)

(33.054)

Gross profit

23.523

15.243

17.598

16.686

34.284

Other net income

1.759

0.097

0.844

0.844

1.688

Administration expenses

(4.797)

(3.508)

(5.693)

(5.693)

(11.386)

Exploration and evaluation expenditure expensed

0.000

(0.582)

0.000

0.000

0.000

EBITDA/(LBITDA)

20.485

11.250

12.749

11.837

24.586

Depreciation

(5.990)

(1.175)

(1.397)

(2.332)

(3.729)

EBIT/(LBIT)

14.495

10.075

11.352

9.505

20.857

Interest income/(cost)

(0.258)

1.320

(0.109)

0.522

0.413

PBT/(LBT)

14.237

11.395

11.243

10.027

21.270

Income tax

2.047

0.292

3.753

2.507

6.260

Marginal tax rate (%)

14.4

2.6

33.4

25.0

29.4

Profit/(loss) for the year

12.190

11.103

7.490

7.520

15.010

Basic adjusted EPS (A$/share)

0.0241

0.0219

0.0146

0.0130

0.0275

Source: Alkane Resources, Edison Investment Research.

Gold poured in H120 was 41.7% less than in H119, at 14,426oz (cf 24,745oz in H119) as a result of operations transitioning from the cessation of open cut operations at Tomingley to underground mine development and the consequent processing of low-grade stockpiles. While H120 results, in general, showed declines compared with H119, they were very much in line with H219, with the exception of a higher marginal tax rate. On the basis of these assumptions, we have increased our revenue forecast for Alkane for FY20 from A$63.7m to A$67.3m, although we have also increased our cost forecast from A$26.7m to A$33.1m. While the consequence of these changes to our forecast for profit before tax is relatively immaterial (ie A$1.4m or 6.2%), the consequence of the increase in the first half tax rate has resulted in an 11.8% decline in our forecast for FY20 profit after tax (see Exhibit 13), from A$17.0m to A$15.0m.

Dubbo developments

As per its press release on 5 March 2020, Alkane announced that Export Finance Australia (EFA) has confirmed its interest in financing Alkane’s Dubbo project.

EFA is Australia’s export credit agency, with a mandate to support Australian business and develop new export markets. Within that context, the EFA has confirmed in writing to Alkane that:

It would be pleased to be a part of the financing consortium in providing the required financial support for the development of the Dubbo project, subject to the finalisation of normal due diligence, acceptable financing structures and the resulting transaction meeting the EFA’s eligibility and credit requirements.

The Dubbo project closely aligns with the recently announced initiative by the Australian government to develop its ‘critical minerals’ sector.

The EFA has provided a letter of support to strengthen Australian Strategic Materials’ (ASM is a 100% owned subsidiary of Alkane) ongoing discussions with potential strategic investors, other government financiers and offtake parties for the Dubbo project.

Alkane is in the process of studying a potential demerger of its Dubbo project into a separate listed entity – to which end it is in the process of scheduling a shareholder meeting later in Q2 CY20. Either way, ASM will seek to escalate its engagement with strategic investors and offtake parties with EFA support and the potentially lower cost of overall financing that it will bring.

Capital raising

In November/December 2019, Alkane raised A$40.7m via a placing to institutions (A$20.0m) and a non-renounceable, non-underwritten one for eight rights issue (A$20.7m), both priced at A$0.55 per share. Together, the two actions involved the issue of 73.9m shares and took the total at Alkane from 506.1m to 580.0m.

Alkane had originally sought a fund-raising of A$54.8m, with A$34.8m from the rights issue. In the event, the take-up rate of its rights offer of 59.4% raised A$20.7m. While it then had the capacity to place the shortfall, it stated that it ‘has no present need or intention to seek placement of these [shortfall] shares’.

Otherwise, Edison’s funding and capex forecasts remain the same as those set out in our Outlook note, Cashed up and hungry for investments, published on 12 February 2019, and subsequently updated throughout the year.

COVID-19

Since February, Alkane has been acting in response to information supplied by state and federal authorities and complying with recommended measures to combat COVID-19. These include heightened cleaning protocols, social distancing, stringent hygiene practices and health screening.

TGO is a predominantly a residential operation and only personnel and contractors essential to the safe operation of the mine are permitted on site. All non-essential travel has ceased.

At present, operations continue as planned and TGO is expected to exceed the minimum guidance production of 30,000oz gold in FY20. There remains approximately 250,000 tonnes of low-grade ore stockpiles on the surface, in addition to the underground ore resource.

However, COVID-19 has the potential to interrupt operations in the event of any of the following:

despite the extensive measures taken, sufficient employees test positive for COVID-19 and the majority of any crew is unable to attend while they self-isolate;

despite increasing inventory from suppliers and continuing to liaise closely with them, their capacity to supply critical parts and reagents is compromised; and/or

the New South Wales State government introduces regulations that inhibit suppliers or employees from attending beyond a skeleton crew.

Valuation

Our valuation of Alkane is based on the present value of our forecast life of operations dividend stream to investors as a result of the execution of the Tomingley and Dubbo mine plans (discounted back to present value at a rate of 10% per year), excluding exploration expenditure.

In the aftermath of the 14.6% increase in the number of shares in issue entailed by the capital raising (above), our valuation of Alkane is A$0.77/share, of which A$0.25 is accounted for by Tomingley and cash and A$0.52 is accounted for by Dubbo. All other things being equal, this valuation may be expected to rise to A$1.70/share on the cusp of the company’s first material (steady-state) dividend distribution to shareholders in FY31. A graph of our expectations for Alkane’s EPS, DPS and valuation from the present to FY43 is as follows:

Exhibit 11: Alkane life of operations’ forecast EPS and (maximum potential) DPS (A$/share)

Source: Edison Investment Research

Note that the DPS columns in Exhibit 11 represent theoretical, maximum potential dividends payable, rather than actual dividends forecast and are used solely for valuation purposes. In reality, we would expect any dividend that could be payable (in FY20 for example) to instead be re-invested into the business, either in the form of exploration expenditure or investment to develop the Dubbo project.

A summary of our valuation of Alkane within the context of the above developments is therefore as follows:

Exhibit 12: Alkane Resources’ valuation summary

Asset

Existing assets’ valuation (Australian cents per share)

Contingent assets’ valuation (Australian cents per share)

Potential total
(Australian cents per share)

Tomingley plus cash

25

25

Dubbo

52

52

Sub-total

77

77

Investments in Calidus, Genesis, Ziron Tech

14

14

Roswell and San Antonio maiden resources

6

10–19

19

El Paso and ongoing TGO exploration

5

5

Boda exploration

55

55

Total

97

70–79

170

Source: Edison Investment Research. Note: Totals may not add up owing to rounding.

Exhibit 13: Financial summary

A$000s

2017

2018

2019

2020e

2021e

2022e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

117,792.0

128,799.0

92,513.0

67,337.9

76,850.9

73,749.8

Cost of Sales

(57,073.0)

(51,304.0)

(53,747.0)

(33,053.6)

(36,627.6)

(30,418.2)

Gross Profit

60,719.0

77,495.0

38,766.0

34,284.3

40,223.2

43,331.6

EBITDA

 

 

49,333.0

67,403.0

30,461.0

22,898.3

31,918.2

35,026.6

Normalised operating profit

 

 

7,607.0

30,932.0

25,152.0

20,857.3

26,317.3

26,185.6

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

Share-based payments

0.0

0.0

0.0

0.0

0.0

0.0

Reported operating profit

7,607.0

30,932.0

25,152.0

20,857.3

26,317.3

26,185.6

Net Interest

(1,035.0)

572.0

1,062.0

412.9

1,171.5

1,273.4

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

(40,140.0)

(188.0)

(582.0)

0.0

0.0

35,397.4

Profit before tax (norm)

 

 

6,572.0

31,504.0

26,214.0

21,270.2

27,488.8

27,459.0

Profit before tax (reported)

 

 

(33,568.0)

31,316.0

25,632.0

21,270.2

27,488.8

62,856.4

Reported tax

4,631.0

(6,845.0)

(2,339.0)

(6,259.8)

(6,872.2)

(15,714.1)

Profit after tax (norm)

11,203.0

24,659.0

23,875.0

15,010.4

20,616.6

11,744.9

Profit after tax (reported)

(28,937.0)

24,471.0

23,293.0

15,010.4

20,616.6

47,142.3

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

11,203.0

24,659.0

23,875.0

15,010.4

20,616.6

11,744.9

Net income (reported)

(28,937.0)

24,471.0

23,293.0

15,010.4

20,616.6

47,142.3

Basic average number of shares outstanding (m)

503

506

506

546

580

598

EPS – basic normalised (A$)

 

 

0.02

0.05

0.05

0.03

0.04

0.02

EPS – diluted normalised (A$)

 

 

0.02

0.05

0.05

0.03

0.03

0.02

EPS – basic reported (A$)

 

 

(0.06)

0.05

0.05

0.03

0.04

0.08

Dividend (A$)

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

N/A

9.3

(-28.2)

(-27.2)

14.1

(-4.0)

Gross margin (%)

51.5

60.2

41.9

50.9

52.3

58.8

EBITDA margin (%)

41.9

52.3

32.9

34.0

41.5

47.5

Normalised operating margin (%)

6.5

24.0

27.2

31.0

34.2

35.5

BALANCE SHEET

Fixed assets

 

 

148,474.0

138,275.0

172,196.0

210,717.1

223,188.1

403,266.4

Intangible assets

83,107.0

93,136.0

103,894.0

118,803.0

128,803.0

118,024.2

Tangible assets

60,627.0

36,266.0

51,038.0

66,008.1

68,479.1

259,336.2

Investments & other

4,740.0

8,873.0

17,264.0

25,906.0

25,906.0

25,906.0

Current assets

 

 

54,276.0

93,306.0

76,501.0

86,322.2

94,761.5

58,363.5

Stocks

9,644.0

19,153.0

4,816.0

2,582.8

2,947.7

2,828.8

Debtors

2,445.0

2,030.0

1,998.0

5,534.6

6,316.5

6,061.6

Cash & cash equivalents

41,969.0

72,003.0

69,582.0

78,099.8

84,892.3

48,868.1

Other

218.0

120.0

105.0

105.0

605.0

605.0

Current liabilities

 

 

(19,335.0)

(27,430.0)

(21,762.0)

(16,471.7)

(16,765.5)

(55,892.3)

Creditors

(11,166.0)

(9,299.0)

(8,007.0)

(2,716.7)

(3,010.5)

(2,500.1)

Tax and social security

0.0

(6,929.0)

(9,317.0)

(9,317.0)

(9,317.0)

(9,317.0)

Short-term borrowings

0.0

0.0

0.0

0.0

0.0

0.0

Other

(8,169.0)

(11,202.0)

(4,438.0)

(4,438.0)

(4,438.0)

(44,075.2)

Long-term liabilities

 

 

(18,488.0)

(13,647.0)

(13,059.0)

(13,059.0)

(13,059.0)

(47,759.0)

Long-term borrowings

0.0

0.0

0.0

0.0

0.0

(34,700.0)

Other long-term liabilities

(18,488.0)

(13,647.0)

(13,059.0)

(13,059.0)

(13,059.0)

(13,059.0)

Net assets

 

 

164,927.0

190,504.0

213,876.0

267,508.5

288,125.1

357,978.5

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

164,927.0

190,504.0

213,876.0

267,508.5

288,125.1

357,978.5

CASH FLOW

Operating cash flow before WC and tax

10,011.0

69,027.0

31,897.0

24,586.3

33,606.2

72,112.0

Working capital

5,518.0

(9,498.0)

(5,172.0)

(6,593.7)

(853.0)

(136.5)

Exceptional & other

40,254.0

1,277.0

1,454.0

0.0

0.0

(35,397.4)

Tax

0.0

(6,845.0)

6,975.0

(6,259.8)

(6,872.2)

(15,714.1)

Net operating cash flow

 

 

55,783.0

53,961.0

35,154.0

11,732.8

25,881.0

20,863.9

Capex

(33,551.0)

(9,224.0)

(19,621.0)

(18,699.0)

(9,760.0)

(201,386.0)

Acquisitions/disposals

53.0

0.0

4.0

0.0

0.0

56,176.2

Net interest

(1,035.0)

572.0

1,062.0

412.9

1,171.5

1,273.4

Equity financing

3,471.0

(5.0)

0.0

38,632.1

0.0

22,711.1

Exploration and Evaluation

(10,154.0)

(10,969.0)

(11,578.0)

(14,909.0)

(10,000.0)

(10,000.0)

Other

2,963.0

(4,317.0)

(7,442.0)

(8,652.0)

(500.0)

39,637.2

Net cash flow

17,530.0

30,018.0

(2,421.0)

8,517.8

6,792.5

(70,724.2)

Opening net debt/(cash)

 

 

(24,455.0)

(41,969.0)

(72,003.0)

(69,582.0)

(78,099.8)

(84,892.3)

FX

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

(16.0)

16.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(41,969.0)

(72,003.0)

(69,582.0)

(78,099.8)

(84,892.3)

(14,168.1)

Source: Company sources, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Alkane Resources and prepared and issued by Edison, in consideration of a fee payable by Alkane Resources. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Alkane Resources and prepared and issued by Edison, in consideration of a fee payable by Alkane Resources. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues