Alkane Resources — Boda continuing to add value

Alkane Resources (ASX: ALK)

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Research: Metals & Mining

Alkane Resources — Boda continuing to add value

Following an extensive drilling campaign, on 14 December, Alkane announced an update to its Boda mineral resource estimate to include Boda Two and Three, as expected in Q423. The result of the update was a 30% increase in the gold grade and a 22% (or 1.17Moz) increase in contained gold at Boda, which we value at US$28.2m (4.7 US cents or 7.0 Australian cents per share). The Boda deposit remains open at depth and along strike and a subsequent resource update at Kaiser is anticipated in late Q1 CY24 as well as a conceptual mine plan at the combined Kaiser-Boda deposit in due course.

Lord Ashbourne

Written by

Lord Ashbourne

Director, Energy & Resources

Alkane-Resources_resized

Metals & Mining

Alkane Resources

Boda continuing to add value

Boda resource update

Metals and mining

2 January 2024

Price

A$0.66

Market cap

A$397m

A$1.4920/US$

Net cash (A$m) at 30 June 2023

66.7

Shares in issue

601.6m

Free float

65%

Code

ALK

Primary exchange

ASX

Secondary exchange

OTC QX

Share price performance

%

1m

3m

12m

Abs

12.6

0.0

9.8

Rel (local)

7.5

3.0

12.6

52-week high/low

A$0.94

A$0.53

Business description

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 Northern Molong Porphyry project, which is shaping up to be a tier 1 alkalic porphyry district.

Next events

Q2 activities report

January 2024

H124 results

February 2024

Updated Kaiser resource

Q1 CY24

100koz annual production

FY26

Analyst

Lord Ashbourne

+44 (0)20 3077 5700

Alkane Resources is a research client of Edison Investment Research Limited

Following an extensive drilling campaign, on 14 December, Alkane announced an update to its Boda mineral resource estimate to include Boda Two and Three, as expected in Q423. The result of the update was a 30% increase in the gold grade and a 22% (or 1.17Moz) increase in contained gold at Boda, which we value at US$28.2m (4.7 US cents or 7.0 Australian cents per share). The Boda deposit remains open at depth and along strike and a subsequent resource update at Kaiser is anticipated in late Q1 CY24 as well as a conceptual mine plan at the combined Kaiser-Boda deposit in due course.

Year end

Revenue (A$m)

PBT*
(A$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

06/22

165.0

52.1

3.68

0.00

17.9

N/A

06/23

190.5

60.6

7.10

0.00

9.3

N/A

06/24e

182.1

52.6

6.13

0.00

10.8

N/A

06/25e

236.9

65.6

7.64

0.00

8.6

N/A

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

Appreciable uptick in in-situ grade

The combined Boda and Kaiser resource now stands at 853Mt ore, containing 8.43Moz of gold at a grade of 0.31g/t (up from 0.25g/t) and a gold equivalent grade of 0.57g/t AuE (up from 0.51g/t), which is more in keeping with the deposit’s peers in Ecuador, British Columbia and elsewhere in Australia. Nevertheless, exploration potential at Boda Two and Three remains high, with Alkane continuing to target high grade mineralisation, albeit within blocks dislocated by c 500m by faulting.

Tomingley has had a solid start to the year

Alkane has had a solid start to FY24 with production of 15,855oz from Tomingley in Q124 at an all-in sustaining cost (AISC) of A$2,156/oz (cf FY24 guidance of 60–65koz Au production at an AISC of A$1,750–2,100/oz). We have reduced our EPS expectations for FY24, although this reflects effectively only a reconsideration of Alkane’s depreciation charge for the year (see Exhibit 5).

Valuation: A$1.11/share, potentially A$2.36/share

Following the Boda resource update, our valuation of Tomingley remains ostensibly unchanged at A$0.60/share. Liquid assets in the form of Alkane’s holdings in Calidus and Genesis contribute a further A$0.01/share, with Boda and Kaiser estimated at a combined A$0.50/share (cf A$0.44/share previously). Together, these assets represent a total value to Alkane of A$1.11/share (cf A$1.06/share previously). In addition to this, we also estimate a potential A$0.48/share additional upside in the event of further exploration success in the Northern Molong Porphyry Project. Including all other contingent assets (and using current metals spot prices cf our more conservative long-term prices), this potentially takes our valuation of Alkane to as high as A$2.36/share (cf A$2.27/share previously). In the meantime, in Alkane investors can buy a profitable, cash-generating company on a multiple of just US$21.39 per resource ounce (approximately the same as an explorer).

Updated Boda resource

On 14 December, Alkane announced an update to its Boda mineral resource estimate, following an extensive drilling programme, as expected in Q423.

The revised estimate was based on a 1,750m strike length x 500m width and used nominal drill hole spacing of 50m x 50m around the Boda deposit, broadening to c 100m x 100m at Boda Two and Three. Drilling depths averaged c 1,000m. In total, it used assay results from 186 drill holes for a total of 145,458m (average 782m/hole) comprising 102,282m (70%) diamond core and 43,176m (30%) reverse circulation (RC) drilling. The resource was calculated from a very approximate 500m above mean sea level to an approximate 500m below mean sea level.

A number of features of the updated resource estimate are important:

For the first time, it included resources drilled in the Boda Two and Boda Three prospect areas.

The resource increased, not only in metal endowment, but also in grade. Moreover, the classification of the majority of resources increased from inferred to indicated.

A summary of the resource update – relative to the maiden resource (released in May 2022) – is as follows:

Exhibit 1: Boda updated mineral resource estimate (December 2023 cf May 2022)

Mt

Grade AuE (g/t)

Grade Au
(g/t)

Grade Cu
(%)

Containe
AuE (Moz)

Contained
Au (Moz)

Contained
Cu (Mt)

In-situ value (US$/oz)*

In-situ value (US$m)

In-situ value (US$/sh)

In-situ value (A$/sh)

Open pittable

Measured

0

0.00

0.00

0.00

0.00

0.00

0.00

24.08

0.0

0.000

0.000

Indicated

191

0.59

0.36

0.17

3.65

2.22

0.32

24.08

53.5

0.089

0.133

Inferred

42

0.51

0.29

0.16

0.68

0.38

0.07

24.08

9.2

0.015

0.023

Total

233

0.58

0.35

0.17

4.33

2.60

0.39

24.08

62.7

0.105

0.156

Underground

Measured

0

0.00

0.00

0.00

0.00

0.00

0.00

24.08

0.0

0.000

0.000

Indicated

151

0.61

0.34

0.20

2.97

1.64

0.30

24.08

39.5

0.066

0.099

Inferred

198

0.58

0.34

0.18

3.67

2.14

0.35

24.08

51.6

0.086

0.129

Total

350

0.59

0.34

0.18

6.63

3.78

0.65

24.08

90.9

0.152

0.227

Total

Measured

0

0.00

0.00

0.00

0.00

0.00

0.00

24.08

0.0

0.000

0.000

Indicated

342

0.60

0.35

0.18

6.63

3.86

0.63

24.08

93.0

0.155

0.232

Inferred

240

0.56

0.33

0.17

4.35

2.53

0.41

24.08

60.8

0.102

0.152

Total

583

0.58

0.34

0.18

10.92

6.38

1.03

24.08

153.6

0.257

0.383

Previous

Measured

0

0.00

0.00

0.00

0.00

0.00

0.00

24.08

0.0

0.000

0.000

Indicated

0

0.00

0.00

0.00

0.00

0.00

0.00

24.08

0.0

0.000

0.000

Inferred

624

0.50

0.26

0.14

10.10

5.21

0.90

24.08

125.4

0.210

0.313

Total

624

0.50

0.26

0.14

10.10

5.21

0.90

24.08

125.4

0.210

0.313

Change (units)

Measured

0

N/A

N/A

N/A

0.00

0.00

0.00

Indicated

342

0.60

0.35

0.18

6.63

3.86

0.63

Inferred

-384

0.06

0.07

0.03

-5.75

-2.68

-0.49

Total

-41

0.08

0.08

0.03

0.82

1.17

0.13

Source: Edison Investment Research, Alkane Resources. Note: Tables use rounded numbers; hence, small differences may result if the calculations are repeated using the tabulated figures. *Based on the US$24.08/oz average valuation of Australian-listed in-situ ounces calculated in our report Gold stars and black holes, published in January 2019.

Cut-off grades of 0.3g/t AuE and 0.4g/t AuE for open pit and underground resources, respectively, were the same as in May 2022. However, in the most recent case, the resource was further refined via the application of a notional pit shell to determine which resources were open pittable and which were instead amenable to underground mining. In addition, there was a slight adjustment by Alkane to metals prices – from US$1,770/oz Au and US$9,750/t Cu to US$1,950/oz Au and US$8,600/t Cu – for the purposes of calculating gold equivalent (AuE) grades and metal contents.

Of particular note, nevertheless, are the 30% increase in the deposit’s gold grade and the 22% (or 1.17Moz) increase in its contained gold mass, despite a 7% decrease in the orebody’s tonnage, which has resulted in a US$28.2m (4.7 US cents or 7.0 Australian cents per share) increase in our valuation of the deposit (see Exhibit 1).

The Boda deposit remains open at depth and along strike to the south and drilling continues to define the overall system, with extensions being tested south and at depth at Boda Two and Three, and north-west towards Kaiser, in addition to in-fill drilling at Kaiser. At the same time, Alkane is continuing exploration at the Boda Four prospect. Composed of two linear magnetic highs approximately 800m long and up to 200m wide, this prospect is located 1km south and along strike to the Boda Intrusive Complex and is named the Boda South Intrusive Complex (BSIC). Recently a total of 912m across three RC drill holes were completed at the northern and central section of the BSIC at the Boda Four prospect, which intersected low-grade copper-gold mineralisation. As a result, more RC drilling is planned next year, focusing on the west and north-west flanks of the BSIC in a similar prospective position as observed at the other Boda deposits.

Boda mineral resource estimate cf prior expectations

The updated mineral resource estimate at Boda (including Boda Two and Three) compares with the previous (maiden) resource at Boda and our estimate of the mineral endowment at Boda Two and Three, derived from drilling results, as follows:

Exhibit 2: Edison estimates of the potential size of Boda Two and Three mineralisation

Characteristic (units)

Previous Boda

Prior Edison Boda 2-3 estimate

Previous Boda (incl Boda 2-3) estimate

Updated total Boda (incl Boda 2-3)

Variance

(%)

Maximum Boda 2-3**

Boda & Kaiser

Strike (m)

1,006

1,100

Average estimated true width (m)

122

500

Est surface area (m2)

0.12

0.55

Average estimated true depth (m)

587

623

Estimated volume (m3)

71.9

342.9

Estimated density (t/m3)

3.0

3

Estimated tonnage (Mt)

624

216

840

583

-30.6

1,029

853

Estimated average gold grade (g/t)

0.26

0.28

0.26

0.34

+28.5

0.28

0.31

Estimated average copper grade (%)

0.14

0.15

0.14

0.18

+24.5

0.15

0.18

Estimated average AuE grade (g/t)

0.51

0.48

0.50

0.58

+16.7

0.47

0.57

Estimated contained gold (koz)

5,210

*1,935

7,145

6,380

-10.7

9,154

8,430

Estimated contained copper (kt)

900

*314

1,214

1,030

-15.1

1,530

1,516

Estimated contained AuE (koz)

10,100

3,312

13,412

10,872

-18.9

15,628

15,651

Source: Edison Investment Research, Alkane Resources. Note: *Previous Edison estimate of gold equivalent resource inventory and grades calculated at US$2,000/oz Au and US$8,464/t Cu. **Based on Alkane Resources’ estimate of the potential dimensions of Boda Two and Three.

While we had estimated that the inclusion of Boda Two and Three could increase the mineral resource over the whole of Boda by 1.935Moz gold (37%), it in fact increased it by 1.170Moz (22%). Nevertheless, this is well within the ±80% that we allow for our own estimates, based on drilling results.

Drilling at Boda Two and Three demonstrates many similarities with Boda, including an extensive zone of low-grade gold-copper porphyry mineralisation with breccias that zone to higher grades. However, it is dislocated by a series of imbricated thrust faults, resulting in deep distal propylitic altered volcanics with minor gold-copper mineralisation in the west being thrust over a central block of broadly calc-potassic altered volcanics with extensive gold-copper mineralisation. These blocks are further thrusted over the preserved upper level of the Boda Two and Three porphyry system in the east. Exploration potential remains to target high grade mineralisation within these blocks that can be dislocated by up to 500m. The most recent rounds of drill hole results confirm that the mineralisation continues for many metres to the south of Boda and possibly much further with the potential for additional high-grade zones. If the ultimate resource delineated at Boda 2-4 expands to 9,154koz (our estimate of the maximum reasonably possible, based on Alkane’s estimate of the potential dimensions of Boda Two and Three; see Exhibits 2 and 3), we would value it at A$0.550/share; this is a A$0.480 (or near eightfold) increase relative to its current size.

Boda background

In general, the Boda porphyry system is a series of near vertical, north-west striking, intrusive related breccias hosted within a thick sequence of shallowly east dipping andesite lavas. These magmatic breccias are hydrothermal and zone towards higher gold-copper grades when associated with a chalcopyrite ± pyrite dominant cement. The deposit is truncated to the north-west by the north striking Solar Fault (Exhibit 3), a 65° west dipping reverse structure, over which significant post-mineral displacement has occurred.

Exploration via deep core diamond drilling continues to define significant mineralisation down plunge to the north-west of the Boda prospect towards Kaiser.

Exhibit 3: Drilling and deposit locations of Boda (including Boda Two and Three) and Kaiser

Source: Alkane Resources

At the same time, more regional exploration will occur in the coming months targeting the Driell Creek, Konigin and Finns Crossing prospects, which are all positioned within the 15km north-west trending intrusive corridor (see Alkane’s full announcement).

Quarterly and FY24e operational results and forecasts

After achieving its updated production guidance figures in FY23, Alkane began FY24 with production of 15,855oz in Q124 at a site operating cash cost of A$1,322/oz and AISC of A$2,156/oz (cf FY24 guidance of 60–65koz production Au at an AISC of A$1,750–2,100/oz). Gold sales for the quarter amounted to 16,090oz, generating revenue of A$46.6m at an average price of A$2,897/oz.

A summary of Alkane’s recent quarterly results plus our estimates for Q2–Q424e and FY24e in the light of Q124 results is provided in the table below:

Exhibit 4: Tomingley quarterly operating results, Q123–Q424

Q123

Q223

Q323

Q423

Q124

Q224e

Q324e

Q424e

FY24e

Ore milled (t)

270,618

239,078

277,225

282,410

276,645

275,000

275,000

275,000

1,101,645

Head grade (g/t)

2.75

2.56

2.26

2.14

2.09

2.07

2.07

2.07

2.07

Contained gold (g/t)

23,927

19,678

20,144

19,431

18,589

18,275

18,275

18,275

73,414

Recovery (%)

87.0

84.6

84.6

80.5

82.1

85.5

85.5

85.5

85.4

Gold poured (oz)

19,489

18,301

16,641

15,822

15,855

15,625

15,625

15,625

62,730

Gold sold (oz)

18,344

17,855

19,163

15,136

16,090

15,625

15,625

15,625

62,965

Gold price (US$/oz)

1,727

1,689

1,891

1,976

1,926

1,968

2,000

1,822

1,929

Forex (A$/US$)

1.4646

1.5223

1.4636

1.4968

1.5287

1.5350

1.4920

1.4920

1.5119

Average realised price (A$/oz)

2,547

2,618

2,787

2,884

2,897

3,020

2,984

2,719

2,905

C1 site cash costs (A$/oz)

1,095

1,103

990

1,356

1,322

1,360

1,360

1,360

1,350

AISC (A$/oz)

1,191

1,323

1,805

2,174

2,156

1,917

1,919

1,911

1,977

Source: Alkane Resources, Edison Investment Research

As a result, we have adjusted our FY24 financial forecasts to those shown below in Exhibit 5:

Exhibit 5: Alkane underlying income statement, H121–H223 and FY24e (A$m, unless otherwise indicated)

H221

H122

H222

H123

H223

FY23

FY24e

FY24e

(prior)

Revenue

62.581

76.911

88.099

93.465

97.062

190.527

182.139

172.421

Cash cost of sales

(21.226)

(35.423)

(32.104)

(34.789)

(48.707)

(83.496)

(93.945)

(87.880)

Gross profit before depreciation

41.355

41.488

55.995

58.676

48.355

107.031

88.194

84.541

Other net income

3.015

0.808

0.628

0.216

0.214

0.430

0.430

0.430

Administration expenses

(4.778)

(5.504)

(4.481)

(6.589)

(5.518)

(12.107)

(12.107)

(12.107)

Exploration and evaluation expenditure expensed

0.000

0.000

0.000

0.000

0.000

-

Exceptional item

0.000

48.334

0.000

0.000

0.000

0.000

0.000

-

Gain/(loss) on disposal

(0.955)

0.000

0.000

0.000

0.000

0.000

0.000

-

Share of profit/(loss) of associates

(0.397)

(0.020)

0.000

0.000

0.000

0.000

-

Depreciation

(12.028)

(14.171)

(20.942)

(17.715)

(18.393)

(36.108)

(24.876)

(10.875)

EBIT

26.212

70.935

31.200

34.588

24.658

59.246

51.642

61.989

Interest income/(cost)

(2.246)

(1.318)

(0.344)

0.236

1.105

1.341

1.001

1.001

Loss after tax from discontinued operations

0.000

0.000

0.000

0.000

0.000

-

PBT

23.966

69.617

30.856

34.824

25.763

60.587

52.643

62.991

Income tax

7.018

21.122

9.100

10.131

8.006

18.137

15.793

18.897

Effective tax rate (%)

29.3

30.3

29.5

29.1

31.1

29.9

30.0

30.0

Profit/(loss) for the year

16.948

48.495

21.756

24.693

17.757

42.450

36.850

44.093

Non-controlling interest

(0.189)

Minority interest (%)

(1.1)

Adj. profit/(loss) for the year attributable to shareholders

17.137

48.495

21.756

24.693

17.757

42.450

36.850

44.093

Basic adjusted EPS (A$/share)

0.0288

0.0814

0.0365

0.0412

0.0297

0.0710

0.0613

0.0734

Source: Alkane Resources, Edison Investment Research

Although we have reduced our earnings forecasts for Alkane for FY24, the sole reason for the reduction is an adjustment to the depreciation charge, which we believe must decline as Tomingley’s legacy assets become fully depreciated, albeit not as quickly as we had previously anticipated. While this reduces our estimate of basic adjusted EPS in FY24, it actually acts to increase our valuation of the Tomingley component of our group valuation as it provides a larger tax shield against which to offset profits.

Tomingley valuation

As previously, our valuation of Tomingley is based on the present value of our forecast life of operations dividend stream to investors in Alkane as a result of the execution of the Tomingley mine plan (including Roswell and San Antonio) discounted back to present value at a (real) rate of 10% per year, excluding exploration expenditure. In the wake of Q124 operational results and after updating our A$/US$ forex assumptions to reflect current exchange rates, our valuation of the dividend stream potentially available to Alkane shareholders from its immediate Tomingley operations is now A$0.546/share (cf A$0.550/share previously). This increases to A$0.603/share once the value of residual resources, which we now estimate at 945koz (cf 832koz previously) with a current value of US$22.7m (A$34.0m), or A$0.057/share, is also included.

A graph of our updated expectations for Alkane’s EPS and (maximum potential) DPS stream and valuation from the present to the end of its life of operations is shown in Exhibit 6, below.

Exhibit 6: Alkane life of operations’ forecast EPS and (maximum potential) DPS (A$/share)

Source: Edison Investment Research

Note that the DPS columns in Exhibit 6 represent theoretical, maximum potential dividends that we believe could be paid by the company, rather than actual dividend forecasts and are used solely for the purposes of valuation. In reality, we would expect a portion of any dividends that could be paid instead to be re-invested into the business, either in the form of exploration expenditure (eg at the Northern Molong Porphyry Project) or capital expenditure.

Alkane group valuation

A summary of our updated group valuation of Alkane in the light of recent developments is as follows:

Exhibit 7: Alkane Resources valuation summary (Australian cents per share)

Previous

Current/updated

Asset

Existing assets’ valuation

Contingent assets’ valuation

Potential
total

Existing assets’ valuation

Contingent assets’ valuation

Potential
total

Tomingley plus cash

60

60

60

60

Roswell underground

8

8

10

10

El Paso and ongoing Tomingley extension exploration

2

2

2

2

Investments in Calidus and Sky Metals*

3

3

1

1

Boda exploration

31

31

38

38

Additional Boda Two and Three exploration

12–52

11–52

48

48

Kaiser & Duke exploration

12

12

12

12

Spot metals prices cf long-term forecast

59

59

65

65

Total

106

81121

227

111

125

236

Source: Edison Investment Research. Note: *At prevailing share prices of A$0.200/share for Calidus and A$0.036/share for Sky Metals. Totals may not add up owing to rounding.

Financials

Alkane had A$66.7m in net cash on its balance sheet at end-FY23. As per its 25 October quarterly activities report, as at end-September 2023, it had A$77.9m cash (cf A$80.3m as at end-June) as well as A$7.6m (previously A$8.3m) of bullion on hand and A$8.9m (previously A$18.7m) in listed investments, after selling its Genesis shares in Q124. During the quarter, it invested A$24.5m in capex and exploration after generating c A$15.5m from operational cash flows and raising A$11.9m from the sale of its Genesis Minerals shareholding. Hereafter, we estimate that free cash flow from operations will continue to contribute meaningfully to capex as the Tomingley mine extension is constructed and further exploration is conducted at the Kaiser and Boda deposits. To de-risk the completion of these targets, Alkane has a A$50m debt funding facility from Macquarie Bank, together with 106koz of gold hedging at a weighted average price of A$2,822/oz, described in our last outlook note in April. Note that, for the purposes of our financial forecasts, we model hedges on a realised gains basis, such that any gains (or losses) will be intrinsically linked to both our short-term and long-term gold price assumptions. However, the time value associated with the contracts is excluded from our calculations. These profits or losses are included in the revenue line of the financial summary below.

Exhibit 8: Financial summary

2018

2019

2020

2021

2022

2023

2024e

2025e

Year end 30 June, A$’000s

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

129,973.6

93,994.9

72,549.0

127,833.0

165,010.0

190,527.0

182,139.2

236,879.0

Cost of Sales

(51,080.9)

(53,656.4)

(32,868.0)

(45,313.0)

(67,527.0)

(83,496.0)

(93,945.1)

(135,236.2)

Gross Profit

78,892.7

40,338.5

39,681.0

82,520.0

97,483.0

107,031.0

88,194.2

101,642.9

EBITDA

 

 

70,378.7

32,971.7

29,412.0

70,527.0

87,498.0

94,924.0

76,087.2

89,535.9

Normalised operating profit

 

 

31,658.3

25,808.8

20,171.0

49,940.0

53,821.0

59,246.0

51,641.7

65,090.4

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Reported operating profit

31,658.3

25,808.8

20,171.0

49,940.0

53,821.0

59,246.0

51,641.7

65,090.4

Net Interest

(579.0)

(418.8)

389.0

(2,741.0)

(1,662.0)

1,341.0

1,001.2

514.2

Joint ventures & associates (post tax)

0.0

0.0

0.0

(870.0)

(20.0)

0.0

0.0

0.0

Exceptionals

0.0

0.0

(646.0)

1,741.0

48,334.0

0.0

0.0

0.0

Profit before tax (norm)

 

 

31,079.3

25,390.0

20,560.0

46,329.0

52,139.0

60,587.0

52,642.8

65,604.6

Profit before tax (reported)

 

 

31,079.3

25,390.0

19,914.0

48,070.0

100,473.0

60,587.0

52,642.8

65,604.6

Reported tax

(6,919.9)

(2,266.1)

(6,569.0)

(14,503.0)

(30,222.0)

(18,137.0)

(15,792.9)

(19,681.4)

Profit after tax (norm)

24,159.4

23,123.9

13,991.0

31,826.0

21,917.0

42,450.0

36,850.0

45,923.2

Profit after tax (reported)

24,159.4

23,123.9

13,345.0

33,567.0

70,251.0

42,450.0

36,850.0

45,923.2

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

(583.0)

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

24,159.4

23,123.9

13,991.0

31,826.0

21,917.0

42,450.0

36,850.0

45,923.2

Net income (reported)

24,159.4

23,123.9

12,762.0

33,567.0

70,251.0

42,450.0

36,850.0

45,923.2

Basic average number of shares outstanding (m)

506

506

547

595

596

598

601

601

EPS - basic normalised (A$)

 

 

0.05

0.05

0.03

0.05

0.04

0.07

0.06

0.08

EPS - diluted normalised (A$)

 

 

0.05

0.04

0.02

0.05

0.04

0.07

0.06

0.08

EPS - basic reported (A$)

 

 

0.05

0.05

0.02

0.06

0.12

0.07

0.06

0.08

Dividend (A$)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

10.3

(27.7)

(22.8)

76.2

29.1

15.5

(4.4)

30.1

Gross margin (%)

60.7

42.9

54.7

64.6

59.1

56.2

48.4

42.9

EBITDA margin (%)

54.1

35.1

40.5

55.2

53.0

49.8

41.8

37.8

Normalised operating margin (%)

24.4

27.5

27.8

39.1

32.6

31.1

28.4

27.5

BALANCE SHEET

Fixed assets

 

 

138,275.0

172,196.0

129,077.0

203,161.0

257,497.0

304,826.0

373,950.5

359,075.0

Intangible assets

93,136.0

103,894.0

32,745.0

57,794.0

98,498.0

161,310.0

179,310.0

189,310.0

Tangible assets

36,266.0

51,038.0

62,322.0

99,411.0

107,386.0

111,104.0

174,128.5

149,253.0

Investments & other

8,873.0

17,264.0

34,010.0

45,956.0

51,613.0

32,412.0

20,512.0

20,512.0

Current assets

 

 

93,306.0

76,501.0

59,096.0

33,054.0

98,190.0

107,364.0

59,303.0

123,495.5

Stocks

19,153.0

4,816.0

7,647.0

11,648.0

17,952.0

21,906.0

6,986.2

9,085.8

Debtors

2,030.0

1,998.0

2,940.0

1,894.0

2,344.0

5,167.0

4,491.1

5,840.9

Cash & cash equivalents

72,003.0

69,582.0

48,337.0

18,991.0

77,894.0

80,291.0

47,825.7

108,568.9

Other

120.0

105.0

172.0

521.0

0.0

0.0

0.0

0.0

Current liabilities

 

 

(27,430.0)

(21,762.0)

(14,238.0)

(18,179.0)

(25,297.0)

(43,701.0)

(27,914.5)

(31,308.3)

Creditors

(9,299.0)

(8,007.0)

(9,425.0)

(11,082.0)

(13,708.0)

(23,508.0)

(7,721.5)

(11,115.3)

Tax and social security

(6,929.0)

(9,317.0)

0.0

0.0

(1,001.0)

(7,283.0)

(7,283.0)

(7,283.0)

Short-term borrowings

0.0

0.0

(2,090.0)

(3,294.0)

(5,930.0)

(7,371.0)

(7,371.0)

(7,371.0)

Other

(11,202.0)

(4,438.0)

(2,723.0)

(3,803.0)

(4,658.0)

(5,539.0)

(5,539.0)

(5,539.0)

Long-term liabilities

 

 

(13,647.0)

(13,059.0)

(19,522.0)

(26,471.0)

(61,516.0)

(68,492.0)

(68,492.0)

(68,492.0)

Long-term borrowings

0.0

0.0

(4,515.0)

(5,922.0)

(9,116.0)

(6,175.0)

(6,175.0)

(6,175.0)

Other long-term liabilities

(13,647.0)

(13,059.0)

(15,007.0)

(20,549.0)

(52,400.0)

(62,317.0)

(62,317.0)

(62,317.0)

Net assets

 

 

190,504.0

213,876.0

154,413.0

191,565.0

268,874.0

299,997.0

336,847.0

382,770.2

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

190,504.0

213,876.0

154,413.0

191,565.0

268,874.0

299,997.0

336,847.0

382,770.2

CASH FLOW

Operating cash flow before WC and tax

69,941.3

33,135.8

28,173.0

72,065.0

137,248.0

95,354.0

76,517.2

89,965.9

Working capital

(9,498.0)

(5,172.0)

(3,481.0)

(2,840.0)

(776.0)

(3,948.0)

(190.8)

(55.6)

Exceptional & other

1,277.0

1,454.0

3,704.0

4,632.0

(48,334.0)

3,500.0

0.0

0.0

Tax

(6,919.9)

7,047.9

(249.0)

0.0

0.0

(701.0)

(15,792.9)

(19,681.4)

Net operating cash flow

 

 

54,800.5

36,465.7

28,147.0

73,857.0

88,138.0

94,205.0

60,533.6

70,228.9

Capex

(9,224.0)

(19,621.0)

(46,122.0)

(59,477.0)

(42,581.0)

(33,695.0)

(87,900.0)

0.0

Acquisitions/disposals

0.0

4.0

(20,068.0)

1,522.0

619.0

4.0

0.0

0.0

Net interest

(579.0)

(418.8)

389.0

(2,741.0)

(1,662.0)

1,341.0

1,001.2

514.2

Equity financing

(5.0)

0.0

39,442.0

(31.0)

(4.0)

(20.0)

0.0

0.0

Exploration and Evaluation

(10,969.0)

(11,578.0)

(20,132.0)

(26,642.0)

(40,935.0)

(58,105.0)

(18,000.0)

(10,000.0)

Other

(4,317.0)

(7,442.0)

(9,522.0)

(18,129.0)

49,659.0

368.0

11,900.0

0.0

Net cash flow

29,706.4

(2,590.1)

(27,866.0)

(31,641.0)

53,234.0

4,098.0

(32,465.3)

60,743.1

Opening net debt/(cash)

 

 

(41,969.0)

(72,003.0)

(69,582.0)

(41,732.0)

(9,775.0)

(62,848.0)

(66,745.0)

(34,279.7)

FX

311.6

169.1

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

16.0

0.0

16.0

(316.0)

(161.0)

(201.0)

0.0

0.0

Closing net debt/(cash)

 

 

(72,003.0)

(69,582.0)

(41,732.0)

(9,775.0)

(62,848.0)

(66,745.0)

(34,279.7)

(95,022.9)

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 £60,000 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 2024 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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 £60,000 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 2024 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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