Alkane Resources — Kaiser a winner

Since our last update note on 20 May, Alkane has announced:

This note updates our valuation of the company for each of these announcements.

Alkane announced the results of its scoping study on Boda-Kaiser on 10 July. It considered three mining scenarios, namely a 20Mtpa operation, a 10Mtpa operation and a 5Mtpa operation. Given that the highest value to Alkane is derived from the largest development scenario, for the purposes of this note, we have focused on the results of the 20Mtpa operation and compared it with our earlier assessment of the project based on a 15Mtpa throughput rate. Highlights of Alkane’s 20Mtpa study are as follows:

A comparison of the outcomes of all three scenarios relative to Edison’s prior estimates and assumptions regarding a ‘paper’ mine at Boda-Kaiser is as follows:

In general, the main differences between Alkane’s PEA and Edison’s previously assumed 15Mtpa operation centred on the actual open pit mining schedule (tonnes and grade), which had previously been assumed to be flat by Edison and the timing and scale of the development of an underground mine. Whereas Edison had previously assumed that the underground mine would represent a material investment to extend the life of operations of the open pit, in Alkane’s PEA, it is of a much smaller scale, developed much earlier to complement the open pit. Otherwise, it may be seen that Edison’s previously assumed mined grade for its notional 15Mtpa operation was too high, with the result that gold production was also too high. However, this was balanced by copper production that was too low, capex that was too high (including a material investment for the underground mine) and opex assumptions that were broadly in line with, or higher than, the actual outcome in Alkane’s PEA. As a result, Edison’s financial outcomes tended towards the 10Mtpa Alkane scenario outcome rather than the 20Mtpa one. Nevertheless, in our most recent note (see Kaiser takes on the World, published on 20 May 2024), Edison put a value on Boda-Kaiser as an operational mine of US$183.6m (or A$0.45/share) as at the start of July 2025 at our somewhat conservative long-term metals prices, on the basis of the discounted value of maximum potential future dividends to shareholders discounted at a rate of 10% per year.

In updating our financial model, we have brought our mining schedule and unit costs into line with Alkane’s estimates (see Boda-Kaiser Scoping Study announced on 10 July 2024). We have also quite materially reduced the proportion of gold recovered to doré and treatment costs from US$79.00/dmt to US$50.00/dmt of concentrate. However, we have also retained port handling charges and ocean freight charges in our model, as well as separate tailings storage facility (TSF) costs and surface infrastructure costs (albeit these are not material). Importantly, we have phased initial capex over three years (starting in FY29), with first production in FY32, and assumed depreciation of initial capex over 10 years. To date, potential working capital effects on cash flow have been ignored. The results of these changes and variations are shown in the right-hand column of Exhibit 1. In interpreting these results, readers are cautioned that the apparent decline in NPV7% between Edison’s updated scenario and the results of Alkane’s scoping study derive largely from the assumption of capex being phased over three years (Edison), rather than it all being incurred in Year 0. In the equivalent year (ie 2031), Edison’s comparable NPV7% is actually higher than Alkane’s at US$1,345.8m (cf US$1,205.7m).

Alkane’s scoping study calculated a pre-tax IRR on the project of 24.0% (in US dollar terms) and a pre-tax NPV7% of US$1,205.7m. Inasmuch as we are able to reconstruct Alkane’s valuation (the ‘Updated Edison 20Mtpa’ column in Exhibit 1, above), we estimate that the equivalent post-tax NPV7% is US$697.0m. With 603.4m Alkane shares in issue, this post-tax NPV estimate equates to US$1.16 (or A$1.72) per share.

Risk associated with the Boda-Kaiser project may be assumed to comprise sovereign risk, geological risk, metallurgical risk, engineering risk, management risk (possibly also including funding risk) and an overall risk of ‘commerciality’. Two of these risks – sovereign risk and overall ‘commerciality risk’ – may immediately be adjusted for.

In our report Gold stars and black holes, published in January 2019, we calculated that companies with completed scoping studies commanded valuations between -4.8% and 50.7% of attributable project NPV, with an average of 11.7% (see Exhibit 166 on page 82 of the report).

According to the Fraser Institute, New South Wales ranks almost at the top of the jurisdictions most attractive to mining investment – on a par with Brazil and only slightly below British Columbia and Idaho, but above Colorado, Ireland, Norway and Chile.

The mean Fraser Institute investment attractiveness score for all jurisdictions is 56.56, which is between the scores for Serbia and California. If this is deemed to attract an average valuation of 11.7% of attributable NPV, and the top and bottom halves of the sample are presumed to attract valuations with respect to the average and pro rata to their scores, then a company with an average project in New South Wales may be expected to attract a valuation of 24.4% of attributable project NPV. For Alkane, this would imply a valuation of US$0.28/share (A$0.42/share) for Boda-Kaiser alone and excluding any contribution from its other assets and operations.

In the same analysis (Gold stars and black holes), we calculated a statistically significant relationship between the valuation of a company and its IRR, which is demonstrated in the graph below.

On the basis of the Boda-Kaiser project’s scoping study pre-tax IRR of 24.0%, therefore, Alkane could be expected to command a valuation equivalent to 19.6% of its NPV, or US$0.23/share (A$0.34/share).

Alternatively, if a multiple regression analysis between IRR and Fraser Institute Investment Attractiveness scores and a company’s enterprise value/NPV ratio is performed and the resulting equation applied to Boda-Kaiser, a 22.5% enterprise value/NPV ratio is predicted. This implies a valuation of US$0.26/share (ie between the other two risk-adjusted valuations of US$0.28/share and US$0.23/share), or A$0.39/share.

In contrast to the Boda-Kaiser project’s official NPV based on its July 2024 scoping study, if we apply Edison’s somewhat more conservative timing, cost and metal price assumptions, we calculate a value for the project of US$174.3m as at 1 July 2024 (ie just 14.5% of headline NPV7% of US$1,205.7m), or US$0.29/share (A$0.43/share), based on the net present value of future dividends potentially payable to investors at our customary 10% discount rate:

Note that this valuation of US$174.3m equates to just US$21.04 per resource ounce of gold (excluding by-product credits) at the current time. From this level of US$0.29/share (A$0.43/share) at the start of FY25 however, we would expect the valuation of Boda-Kaiser to more than treble before peaking at US$0.91/share (A$1.35/share) on the cusp of the project’s first potential dividend to shareholders in FY37 (at Edison’s relatively conservative long-term (real) gold price of US$1,794/oz (in 2024 dollars)). At the currently prevailing gold price, of US$2,358/oz, our estimate of the current value of the project increases to US$0.62/share (A$0.92/share), while our peak value of the project increases to US$1.76/share (A$2.61/share) in FY36.

Exhibit 5, below, summarises our valuation of Boda-Kaiser on the basis of the five scenarios set out above:

While each of these valuation methods have their merits, we believe that the most appropriate of the five considered above is the discounted dividend valuation (applying a 10% discount rate) as this puts a present value on estimated future income (and costs) associated with the project, as opposed to a calculated or observed EV/NPV ratio. Nevertheless, we also believe that the four alternate methodologies provide important corroborating support for the valuation, given that they fall within a surprisingly narrow range of A$0.38/share ±A$0.04/share.

Edison’s valuations of Boda-Kaiser are adjusted for those parameters that may be readily quantified. From a qualitative perspective however, there is reason to believe that the project could attract a higher valuation, based upon its physical characteristics, which are briefly discussed below:

From an infrastructure perspective, the Boda-Kaiser Project is well served, being located close to the Mitchell Highway, which connects the major regional NSW cities of Dubbo and Orange. The project area is connected to the nearby town of Wellington by c 20km of mostly sealed road. Alkane anticipates some sections of the road will need to be upgraded or sealed to provide all-weather site access that minimises the impact on the local community. However, the road (and potentially rail) networks will be available for use for reagent delivery and concentrate transport.

In the meantime, installed plant and mine power requirements are estimated to be c 80MW for the 20Mtpa processing rate, which Alkane intends to meet from the NSW grid, with a new 132kV transmission line to be run to site. Finally, water requirements for the site are estimated to be c 7Gl per year for the 20Mtpa processing rate, which could be supplied via water access licences in the Macquarie-Cudgegong System, the Lachlan Fold Belt fractured rock aquifer and/or saline water sources to the east of the project area. To maximise water use efficiency, the residue storage facility preliminary designs will also seek to maximise water recycling. To this end, an allowance has been made for bores and water pipelines in the capital estimate, based on Alkane’s experience of the installation of water supply pipelines in NSW.

Between FY20 and FY23, Alkane invested at least A$20m pa in exploration – a figure that will now fall materially as it returns to greenfields exploration and cheaper RC drilling. Nevertheless, during the mineral resource exploration programme at Kaiser, in particular, two significant reverse faults were located, which dislocated the main zone of mineralisation. As such, there is potential for further extensions to higher-grade mineralisation on the down thrust at the Kaiser west zone of mineralisation, south-west of the Kaiser fault, and east of the Solar fault, where mineralisation is statistically said to be ‘nuggety’. Exploration upside in these areas is supported by the results of earlier holes, including hole KAI090 (which intersected a bornite-chalcopyrite crackle breccia, including 122.4m at grades of 0.40% Cu and 0.42g/t Au from 576.6m and 28m at 0.84% Cu and 0.92g/t Au from 646m) and extra drilling will aid in improving the confidence of these domains to convert remaining resources from the inferred to the indicated category.

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

The Kaiser geology and mineralisation style is almost identical to Boda and possibly represents a deeper part of the system thrust over the shallower-level Boda deposit. In addition, Alkane’s drill results at Boda-Kaiser have shown a similar stratigraphic sequence and style of alteration and mineralisation to Newmont’s Cadia Province mines 110km to the south. The Cadia complex hosts a mineral resource of 35.2Moz Au at a grade of 0.34g/t Au (including stockpiles and open pit resources – source: Newmont) plus copper, silver and molybdenum, and produced 597koz of gold in Newcrest’s FY23 at an AISC of US$45/oz Au (net of by-product credits) to generate US$1,897m in total revenue and US$1,306m in EBITDA.

The NMPP now comprises five exploration licences: Bodangora, Boda South, Kaiser, Finns Crossing and Comobella (from Sandfire), covering 180km2, within which Alkane has defined five magnetic anomalies interpreted to be intrusive complexes, denoted Kaiser, Boda, Comobella, Driell Creek and Finns Crossing, all within a 15km north-west to south-east trending corridor (Exhibit 7) and all close to road, rail, gas and water infrastructure. Significantly, the Boda anomaly correlates with a historical induced polarisation (IP) survey completed by CRA Exploration (now Rio Tinto) over the Boda Intrusive Complex (BIC). This survey showed a strong, high-chargeable anomaly along the northern edge of the survey area coincident with a magnetic anomaly. As a result, Alkane completed a 70-line kilometre IP survey over the 6km strike extensions of the BIC to generate drilling targets. In late 2023, an airborne gravity survey was also flown over the entire NMPP. Subsequent 3D inversion modelling and interpretation of the data confirmed a 35km2 intrusive complex, termed the Comobella Intrusive Complex (CIC). Peripheral to the CIC, there are also several smaller intrusive complexes, each of which also have the potential to be significantly mineralised. Six of these targets – namely Kaiser, Boda, Comobella, Glen Hollow, Murga and Konigin – have now also been drill tested.

To date, exploration has identified the margins of major monzonite intrusive complexes that provide the primary control for porphyry and epithermal mineralisation, with significant intersections reported along the western margin of both the Kaiser Intrusive Complex and the BIC. Within these, gold mineralisation has been discovered at all six targets (see below), with recent drilling identifying multiple phases of monzonite to monzogabbro intrusion that are plumbing a north-west structural corridor hosting extensive (calc-)potassic alteration and significant gold-copper mineralisation.

Exploration around the Boda-Kaiser area within the NMPP has defined a 3.5km corridor of extensive calc-potassic alteration associated with gold-copper porphyry mineralisation. The corridor trends north from Boda Three to Boda for approximately 1km, where it rotates to the north-west from Boda to Kaiser for a further 2.5km.

Within this, the Kaiser porphyry system manifests itself in a series of near-vertical, north-west striking, intrusive related breccias hosted within a thick sequence of andesite lavas. Magmatic-hydrothermal breccias appear to be the focus for the calc-potassic alteration and gold-copper mineralisation at Kaiser, where the highest gold and copper grades are related to the transition from intrusive breccias to hydrothermal breccias. The majority of brecciation is found as ‘crackle breccia’, which can either have a hydrothermal matrix typically composed of calcite + actinolite + pyrite + magnetite + chalcopyrite + bornite or an igneous matrix. Copper mineralisation is also observed throughout the prospect outside the magmatic hydrothermal breccias within calcite + quartz + epidote dominant veins and as disseminations and patches, often intergrown with epidote. Locally, copper has been identified along the Kaiser fault zone in thicknesses up to 10m wide. As shown in Exhibit 6, two significant reverse faults bound and dislocate the main zone of mineralisation at Kaiser, where the west-dipping Solar fault thrusts the Kaiser main zone over the Kaiser east zone. Located immediately north-west of Boda, the east Kaiser zone comprises potassic to inner propylitic alteration with up to 10% pyrite by volume, which can be found to hold gold grades over tens of metres and can average 0.2–0.3g/t in grade with occasional thin intervals of >10g/t Au.

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 to the south and at depth at Boda Two and Three, and north-west towards Kaiser. Exploration at Boda Two and Three continues to demonstrate many similarities to 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 thrust 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) and recent drill hole results confirm that mineralisation continues for many metres to the south of Boda and possibly much further. They also demonstrate an extensive zone of low-grade gold-copper porphyry mineralisation with breccias that zone to higher grades. These breccias are in the process of being targeted. For example, at Boda 2–3, the high-grade hydrothermal breccia intersected by drill hole BOD094 was recently tested along strike by two diamond core holes. A chalcopyrite cemented breccia was intersected 40m north and along strike of BOD094 by BOD159 and a more distal hydrothermal breccia was intersected 120m north along strike by BOD158. Results included:

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 BIC and is named the Boda South Intrusive Complex (BSIC). A total of 912m across three RC drill holes have been completed at the northern and central section of the BSIC at the Boda Four prospect, which intersected low-grade copper-gold mineralisation. More recently, assay results were received for one rock chip sample taken from an outcropping hydrothermal epidote-calcite breccia with chalcocite and secondary copper (malachite) mineralisation showing propylitic alteration assemblages very close to the collar of hole BOD134. The sample returned elevated and anomalous grades of:

Given narrower intersections encountered to date, our estimate of the total mineral inventory at Boda 2-4 is currently 2,779koz, of which we estimate 1,935koz is already included in the existing Boda resource (see Exhibit 9, below). However, if intersections in this area ultimately increase to those implied by the deposit’s apparent 1,100m x 500m coincident gold-copper soil and magnetic high footprint with separate conductive IP anomalies, we calculate that a resource of 9,959koz is possible (ie on a par with the existing Kaiser and Boda resource). In this case, we would value the additional mineralisation at Boda 2-4 at an incremental A$0.476/share to Alkane. As before, readers are cautioned that such estimates are very far from being JORC code-compliant and experience would suggest they have an accuracy of approximately ±80%.

Further surface and near surface exploration is planned at Boda 4, including detailed soil sampling and air-core drilling with bottom of hole litho-geochemistry focusing on the west and north-west flanks of the BSIC. In addition, high-definition ground gravity is planned, also extending over the Boda 2–3 and Boda deposits.

Recent regional exploration has targeted the Driell Creek, Konigin and Murga prospects, all positioned within the same (inferred) 15km north-west trending intrusive corridor. Results from nine RC and one diamond core drill holes at Driell Creek, located north-west of Boda-Kaiser, identified porphyry style alteration and mineralisation, including:

Drilling also occurred at the Konigin and Murga prospects. Results indicated that the geology there is favourable for porphyry type environments. However, individual drill results showed weak mineralisation and further drilling at these targets is now considered a lower priority than at Driell Creek. Edison’s summary of the drilling completed to date by Alkane at each of its NMPP prospects illustrates the point:

With the exception of Boda 2–4, given the apparent thinning of the mineralisation (sometimes also at lower grades), we believe that the potential resources contained within Alkane’s other regional prospects – as implied by its drilling results – is, at the moment, fairly negligible. However, given the paucity of drill data, this could change substantially on the basis of even a single new drill hole and we will keep Alkane’s drilling results under review in this respect.

In the meantime, planned regional exploration in the NMPP for the next 12 months will focus on further drill testing of Driell Creek. Other exploration will comprise target generation work composed of mapping, soil sampling, IP, ground gravity and air-core drilling using bottom-of-hole litho-geochemistry, focusing on the Haddington, Windora, Ballimore, Comobella North and Boda 4 prospects and forming part of Alkane’s c A$6m exploration budget for FY25.

On 4 July, Alkane announced that Tomingley had produced 17,319oz Au in the June quarter of FY24 to make a total of 57,217oz Au for the year (cf updated guidance of 55–58koz Au) at a preliminary AISC estimate within the expected guidance range of A$2,150–2,350/oz). At the same time, it declared an unaudited cash, bullion and listed investments position at 30 June 2024 A$54.5m. As a result, we have updated our Q424 and FY24 operational expectations to those shown below:

While production was less than our prior forecast as a consequence of a slower-than-expected ramp-up at Roswell, Alkane’s revised cost guidance suggests that C1 unit costs were unchanged relative to our prior expectations in dollar per tonne terms at A$90.40/t. In addition, Alkane’s earlier estimate of the amount of gold mined in Q424 suggests that the grade of material mined could have been as high as 2.54g/t – significantly above both the grade of material processed and our prior estimate (auguring well for the future).

As a consequence of this outcome for the year, we have adjusted our financial forecasts for FY24 to those shown below in Exhibit 12.

At the same time, Alkane observed that the value of its shareholding in Calidus Resources had declined to zero since receivers and administrators were appointed to the latter on 29 June. This change in value for Calidus shares will be reflected in Alkane’s full year FY24 non-cash financials, although it has been excluded from our forecasts (above and in Exhibit 18) on account of its ‘exceptional’ nature.

On 24 June, Alkane announced its five-year plan for Tomingley, reflecting ostensibly the first update to the life of mine (LOM) plan originally announced in June 2021. The major features of the updated five-year plan are as follows:

Notwithstanding the ‘five-year’ title of the announcement, readers should note that resources at Tomingley extend beyond this five-year plan and remain open at depth and along strike at the Caloma, Caloma Two, Roswell and San Antonio deposits and that underground resources at Caloma and Roswell and a cutback at San Antonio will almost certainly extend mining to at least 2032 (the current limit of statutory mining approvals, subject to future extensions).

In general, Alkane’s outlook reflects lower, earlier production than Edison’s prior forecasts, but higher, later production, albeit at higher overall costs. Exhibit 13, below, shows the variance in Alkane’s updated guidance relative to Edison’s prior assumptions:

Note that the relatively high cost in the first financial year of the five-year plan reflects the fact that the original plan anticipated mining just 40% of ore from underground sources in the early years of its execution, whereas the updated plan assumes 100% of ore from underground sources until at least FY27. Consequently, the sustaining capital required for decline development in the early years is now included in the estimate of AISC.

Since the approval of the exploration drive to Roswell in mid-2020 Alkane has:

These upgrades were needed to 1) continue the existing operation, 2) commence mining at Roswell and 3) prepare to increase total mine production in the future. Completion of the programme will also allow seamless transition to steady-state production at Roswell underground.

In order to commence open cut mining at San Antonio, the Newell Highway will be relocated c 1km to the west of its existing corridor. This is a substantial body of work that has been through several design iterations over a number of years to receive full approval from Transport for NSW. The ore from the open cut operations will be added to the underground mine production at Roswell to provide sufficient ore to expand the processing plant capacity with a throughput upgrade to c 1.5Mtpa (from the existing c 1.1Mtpa). Expansion will be facilitated by the installation of an additional mill, thickener and electrowinning circuit. The analysis of the tenders for the relocation of the Newell Highway are nearing completion with the intention of making a recommendation to award a contract by the end of this month (July). At the same time, the next stage of engineering for the plant upgrade is commencing, with the majority of work on these two projects anticipated to last until the end of CY25, after which open cut mining at San Antonio will start in H1 CY26.

Prior to the submission of the Environmental Impact Statement for approval, Alkane prepared an LOM plan incorporating the Roswell and San Antonio resources, which considered the development of an underground mine at Roswell and simultaneous open cut mining at Roswell and San Antonio. At a high level, these plans remain unchanged. However, several minor changes to this plan have been made over the last three years in response to numerous factors that include the gold price, cost changes since the pandemic, approval requirements and grade control.

The most notable scope changes are the inclusion of a wet paste plant in the capital plan rather than the hire of a dry one and the installation of a flotation and fine grind circuit in the processing plant to improve gold recoveries. Simultaneously, the intervening period has seen significant cost inflation in both mining and broader industry, which has particularly affected the road construction estimate. These changes – including cost escalation – are summarised in the table below, which shows the capital programme to completion (by end of FY26).

Of the A$91m in additional capital expenditure therefore (Edison estimate), it is notable that the majority is accounted for by items that were not included in the original scope of work – namely the process plant upgrades relating to metallurgical recoveries and the paste plant – while the majority of the balance is accounted for by the cost of the Newell Highway diversion. All of the other items of capital expenditure actually appear to have come in at or below 2021’s budget.

As in previous reports, our valuation of Alkane 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 H124 financial results, H224 operational results and after adjusting for the updated Tomingley five-year plan, our valuation of the dividend stream potentially available to Alkane shareholders from its immediate mining operations is now A$0.253/share (cf A$0.555/share previously). This increases to A$0.305/share once the value of residual resources, which we now estimate at 870koz (cf 734koz previously) with a current value of US$20.9m (A$30.7m), or A$0.052/share, is 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 FY31 is shown in Exhibit 15, below.

Note that, in this case, the DPS columns in Exhibit 15 represent theoretical, maximum potential dividends that we believe could be paid by the company, rather than actual dividends forecast, and are used solely for valuation purposes. In reality, and given the likely capital requirements of the NMPP, we would expect the majority of any cash flows that could be used for dividends to instead be reinvested into the business, in the form of either exploration or capital expenditure.

In the meantime, an analysis of the change in our Alkane/Tomingley gold extension plan (TGEP) valuation, according to component is provided in the chart below:

Notwithstanding the decline in our headline valuation of Alkane/TGEP, it is worth noting that this is conducted at an ostensibly conservative long-term (real) gold price of US$1,794/oz. At the current gold price of US$2,358/oz, it increases by more than 100%, to 56.2 Australian cents per share.

A summary of our updated valuation of Alkane in the light of the announcement of H124 financial results, H224 operational results, the updated Tomingley five-year plan and the Boda-Kaiser PEA is as follows:

A number of features of the valuation are noteworthy:

Alkane had A$46.4m in net cash on its balance sheet at end H124, comprising A$57.3m in cash and A$10.9m in external borrowings. According to its 4 July production update, it had A$45.5m in cash plus A$8.7m of gold bullion on hand and A$0.3m in listed investments as at end Q424. In addition, it reported that it had drawn A$42.8m of its A$60m project loan facility provided to it by Macquarie Bank for the TGEP.

In H124, Alkane generated A$31.1m in cash from operating activities, before investing A$63.0m into tangible and intangible mining assets, as it continued to fund exploration at its Kaiser and Boda deposits to increase the size and accuracy of their resource estimates and develop the TGEP. In addition, the company generated a net A$11.8m from the sale of investments (in particular its remaining shares in Genesis Minerals).

The first phase of major capex spending on the TGEP will conclude in Q3 CY24 (ie Q125). The second phase to divert the Newell Highway and increase the plant’s throughput will now commence and is expected to conclude late in CY25. Simultaneously, exploration expenditure, which has been running at c A$20m pa, should reduce as work reverts from detailed resource delineation to greenfields in nature and drilling reverts to the cheaper RC type (cf diamond). At the same time, however, free cash flow from operations will contribute meaningfully to capex to the tune of c A$47–72m pa as higher-grade production from Roswell is ramped up. During this period, Alkane’s revenue will also be protected via 94,100oz Au sold forward at an average price of A$2,833/oz to June 2027 and put options to sell 140,799oz Au at a price of A$3,000/oz also out to June 2027. Together, these will allow for more accurate planning of marginal ounces and continue to leave the upside open to any future gold price rises (note that the intrinsic value of these derivatives has been incorporated into the revenue estimates of our financial models with reference to our gold price forecasts, but that the time value and the balance sheet value of the hedge book have not).