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Last close As at 07/06/2023
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AUD433m
Research: Metals & Mining
Alkane continues to increase its production guidance, indicating confidence in a strong close to FY23, from 62,000–70,000oz to 65,000-73,000oz. It also lowered its expected unit costs to an AISC of A$1,550–1,700/oz, from previous guidance of A$1,550–1,800/oz. These updates follow confirmation of Q323 gold production of 16,641oz and a total for the year to date of 54,431oz, at an AISC of A$1,446/oz.
Alkane Resources |
Guidance increased again |
Updated guidance |
Metals and mining |
21 April 2023 |
Share price performance Business description
Analysts
Alkane Resources is a research client of Edison Investment Research Limited |
Alkane continues to increase its production guidance, indicating confidence in a strong close to FY23, from 62,000–70,000oz to 65,000-73,000oz. It also lowered its expected unit costs to an AISC of A$1,550–1,700/oz, from previous guidance of A$1,550–1,800/oz. These updates follow confirmation of Q323 gold production of 16,641oz and a total for the year to date of 54,431oz, at an AISC of A$1,446/oz.
Year |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/21 |
127.8 |
46.3 |
5.35 |
0.00 |
16.0 |
N/A |
06/22 |
165.0 |
52.1 |
3.68 |
0.00 |
23.2 |
N/A |
06/23e |
182.8 |
49.1 |
5.82 |
0.00 |
14.8 |
N/A |
06/24e |
166.5 |
58.5 |
6.84 |
0.00 |
12.6 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
Alkane’s Tomingley gold mine produced 16,641oz in Q323, following a strong H123, prompting the company to update its FY23 guidance to 65,000–73,000oz Au at an AISC of A$1,550–1,700/oz (previously 62,000–70,000oz Au at an AISC of A$1,550–1,800/oz). Furthermore, Alkane announced its gold sales for the quarter of 19,163oz, generating revenue of A$53.4m at an average price of A$2,787/oz with group unaudited cash, bullion and listed investments, as of 31 March 2023, totalling A$117.2m, or A$0.196/share.
Alkane’s Q323 operational results follow substantial newsflow detailed in our last note, A self-sufficient outlook. In summary, the Tomingley Gold Extension Project was approved by the New South Wales (NSW) minister for planning in February, allowing open-cut and underground mining at the Roswell and San Antonio deposits, extending the mine life to at least 2031. An initial mineral resource for the Kaiser deposit was estimated at: 4.7Moz AuE (0.48Mt Cu, 2.05Moz Au). Financing has been secured via A$50m in debt funding from Macquarie Bank, in conjunction with 100koz of gold hedging at a weighted average price of A$2,825/oz. Finally, Alkane has acquired two packages of exploration tenements in the Macquarie Arc, NSW from Sandfire Resources for 2,781,438 Alkane shares (value of A$1.9m at the time of transaction, 9 March 2023). The revised guidance for higher production and lower unit costs in FY23 continues a trend of positive news.
At the time of our aforementioned note on Alkane, our valuation continued to be underpinned by Tomingley, which we estimated contributed A$0.61/share to Alkane’s valuation. Liquid assets in the form of Alkane’s holdings in Calidus and Genesis contributed a further A$0.03/share, with Boda estimated at US$125.5m (US$0.21/share or A$0.31/share) to Alkane, either as an in-situ resource or as a development project. The inferred resource at Kaiser represents additional value to Alkane of US$49.4m (US$0.08/share or A$0.12/share). This represents a total valuation estimate for Alkane of A$1.07/share (cf A$0.94/share previously). Including all other contingent assets, this takes our estimate of Alkane’s potential valuation to A$2.22/share (cf A$1.53/share previously). In the meantime, our forecasts for FY23 and FY24 are under review in the wake of both Alkane’s guidance upgrade and the continuing strength of the gold price.
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Research: Healthcare
OpGen has announced a non-exclusive distribution agreement with Fisher Healthcare to market and distribute its Unyvero A50 platform and range of diagnostic assays in the United States. Although this is a departure from the company’s self-commercialization strategy for the region, we see merits in this decision, as it allows OpGen to scale market coverage while easing financial demands related to salesforce expansion. Funding is likely a key consideration for the company given the short cash runway (June 2023) and upcoming debt repayments. In another key milestone, OpGen announced the filing of the de novo application for its Unyvero urinary tract infection (UTI) panel, following encouraging data reported from the recently concluded clinical trials. If approved, we anticipate OpGen to launch the UTI panel in the United States in 2024, adding another revenue stream for the business. We also expect Fisher to distribute the UTI panel as well (once approved), which should support broader market coverage.
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