Alkane Resources — Kaiser takes on the World

Alkane Resources (ASX: ALK)

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Research: Metals & Mining

Alkane Resources — Kaiser takes on the World

As with Boda before it, April’s resource update at Kaiser saw substantially all of its resource promoted from the inferred to the indicated category at a materially higher grade of both gold and copper. The close-spaced nature of the drilling required to achieve this will now allow these resources to be quickly and easily promoted to reserve status for the purpose of Alkane’s scoping study – or preliminary economic assessment – to be announced later this quarter.

Lord Ashbourne

Written by

Lord Ashbourne

Director of Content, Mining

Metals & Mining

Alkane Resources

Kaiser takes on the World

Kaiser resource update and FY24 outlook

Metals and mining

20 May 2024

Price

A$0.635

Market cap

A$383m

A$1.4939/US$

Net cash (A$m) at end December 2023

46.4

Shares in issue

603.4m

Free float

68%

Code

ALKX

Primary exchange

ASX

Secondary exchange

OTCQX

Share price performance

%

1m

3m

12m

Abs

(10.1)

15.9

(25.3)

Rel (local)

(12.6)

13.4

(31.7)

52-week high/low

A$0.8

A$0.5

Business description

Alkane Resources has two main assets in Central West New South Wales: the Tomingley gold mine, where exploration to date increased the mine life by at least eight years from FY23 to FY31, and its Northern Molong project, which is developing into a tier 1 alkalic porphyry district.

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Next events

Kaiser-Boda scoping study

May/June 2024

Five-year Tomingley plan

June 2024

100koz annual production

FY26

Potential for dividend

FY26

Analyst

Lord Ashbourne

+44 (0)20 3077 5700

Alkane Resources is a research client of Edison Investment Research Limited

As with Boda before it, April’s resource update at Kaiser saw substantially all of its resource promoted from the inferred to the indicated category at a materially higher grade of both gold and copper. The close-spaced nature of the drilling required to achieve this will now allow these resources to be quickly and easily promoted to reserve status for the purpose of Alkane’s scoping study – or preliminary economic assessment – to be announced later this quarter.

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

17.3

N/A

06/23

190.5

60.6

7.10

0.00

8.9

N/A

06/24e

186.2

40.0

4.74

0.00

13.4

N/A

06/25e

247.4

67.5

7.82

0.00

8.1

N/A

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

Roswell reserves also increase

One month before its Kaiser resource update, Alkane announced that drilling at its Roswell deposit had almost doubled the underground ore reserve estimate to 237koz and increased overall reserves by 118.6koz (or 35.7%) at higher grades. This increase will give it more than enough reserves and resources to execute the Tomingley Gold Extension Project (TGEP) and almost enough reserves to execute the Roswell underground extension project as well.

Valuation: A$1.01/share, potentially A$2.95/share

We have lowered our EPS estimates for FY24 to reflect production heading towards the lower end of guidance for the year and costs heading towards the upper end after Q324 (see Exhibit 12). Due to rolling our model forward, our valuation of Tomingley remains little changed at A$0.60/share (cf A$0.60/share previously), ie almost 100% of Alkane’s share price. Combined, we value Boda and Kaiser as in-situ resources, in an increasingly narrowing range, at A$0.40–0.50/share. This range now also reconciles closely with our valuation of Boda and Kaiser as producing assets of A$0.45/share, which both cements the valuation and confers confidence in its magnitude. Liquid assets in the form of Alkane’s holdings in Calidus and Sky Metals contribute a further A$0.01/share to Alkane’s valuation to take the total for its ‘existing assets’ to A$1.01–1.11/share. This can be compared with our valuation of A$1.11/share previously, albeit now stated with materially higher confidence. In addition to these ‘existing assets’, Alkane has a number of ‘contingent assets’ that are largely dependent on future exploration success, which we estimate could add a further A$0.53/share to its valuation. Finally, we observe that the above valuations have been made at relatively conservative (real) long-term metals prices of US$1,794/oz Au and US$6,410/t Cu. At their current prices of US$2,400/oz Au and US$10,668/t Cu, our valuation rises by a further A$1.31/share to a total of A$2.95/share (±A$0.05/share). In the meantime, in Alkane, investors can buy a profitable, cash-generating company with the potential for near dilution-free development on a multiple of just US$21.25 per resource ounce (ie approximately the same as an explorer).

Recent developments

Since our last update note on 2 January, Alkane has announced:

An updated mineral resource at Kaiser of 3.74Moz AuE (1.90Moz Au plus 0.42Mt Cu) on 29 April 2024.

A Q324 production figure of 10,861oz (cf 16,641oz in Q323) on 31 March.

A 21.6% increase in reserves at the TGEP to 664koz on 27 February.

Interim results on 20 February.

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

Kaiser resource update

On 29 April, Alkane announced an update to its Kaiser mineral resource estimate, following an extensive infill drilling programme, which saw some of the best grades (eg 1m at 60.4g/t in hole KAI159 on the northern boundary of the deposit) and intersections (eg 162m at 2.13g/t AuE in the heart of the deposit) reported last. Higher grades were also encountered from surface – especially at the southern end of the deposit – while deeper drilling confirmed that it continued at depth. In general, the pattern of results for the later drill holes was towards wider, longer and deeper intersections, variously at high grades (eg hole KAI159, which recorded the highest grade of any hole at either Kaiser or Boda) when intersecting brecciated zones.

The revised estimate was based on a 1,100m strike length x 650m width (cf 1,750m strike length x 500m width at Boda) and used nominal drill hole spacing of 50m x 50m (the same as Boda), which allowed the majority of the deposit to be upgraded to the indicated category of resources, from inferred. Drilling depths averaged c 500m below surface (cf 1,000m at Boda) and ranged up to 800m. In total, the updated resource was calculated from assay results from 217 drill holes (cf 186 at Boda) for a total of 94,799m drilled (cf 145,458m at Boda), averaging 437m per hole (cf 782m/hole at Boda) and comprising 41,487m (44%) diamond core and 53,292m (56%) reverse circulation (RC) drilling. This total was almost exactly double the number of metres drilled at the time of Kaiser’s maiden resource in February 2023, and ranged in depth from a very approximate 500m above mean sea level to approximately 490m below. The detailed drilling also enabled the revision of the wireframe models. Cut-off grades of 0.3g/t AuE and 0.4g/t AuE for open pit and underground resources, respectively, were the same as those applied in February 2023. However, in the updated 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 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.

Exhibit 1 summarises the resource update at Kaiser relative to its maiden resource declared on 27 February 2023.

Exhibit 1: Kaiser updated mineral resource estimate (April 2024 cf February 2023)

Mt

Grade AuE (g/t)

Grade Au
(g/t)

Grade Cu
(%)

Contained
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

62.88

0.0

0.000

0.000

Indicated

179

0.54

0.27

0.20

3.12

1.56

0.35

24.84

38.8

0.064

0.100

Inferred

10

0.51

0.29

0.14

0.16

0.10

0.01

7.87

0.8

0.001

0.002

Total

189

0.54

0.27

0.20

3.28

1.66

0.37

23.93

39.7

0.066

0.102

Underground

Measured

0

0.00

0.00

0.00

0.00

0.00

0.00

62.88

0.0

0.000

0.000

Indicated

16

0.57

0.30

0.22

0.30

0.15

0.03

24.84

3.8

0.006

0.010

Inferred

8

0.63

0.36

0.20

0.16

0.09

0.02

7.87

0.7

0.001

0.002

Total

24

0.61

0.32

0.21

0.46

0.24

0.05

19.26

4.6

0.008

0.012

Total

Measured

0

0.00

0.00

0.00

0.00

0.00

0.00

62.88

0.0

0.000

0.000

Indicated

195

0.54

0.27

0.19

3.36

1.72

0.37

24.84

42.7

0.071

0.110

Inferred

18

0.57

0.34

0.17

0.33

0.20

0.03

7.87

1.5

0.003

0.004

Total

213

0.55

0.28

0.20

3.74

1.90

0.42

23.23

44.2

0.073

0.114

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

270

0.54

0.24

0.18

4.72

2.05

0.48

24.08

49.4

0.082

0.127

Total

270

0.54

0.24

0.18

4.72

2.05

0.48

24.08

49.4

0.082

0.127

Change (units)

Measured

0

0.00

0.00

0.00

0.00

0.00

0.00

Indicated

195

0.54

0.27

0.19

3.36

1.72

0.37

Inferred

(252)

0.03

0.10

(0.01)

(4.39)

(1.86)

(0.45)

Total

(57)

0.00

0.04

0.02

(0.97)

(0.15)

(0.05)

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 valuations of Australia-listed in-situ ounces calculated in our report Gold stars and black holes, published in January 2019.

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

The 21.1% decline in tonnage was largely anticipated and could be attributed to the constraints on the resource imposed by a notional pit shell to represent the boundary within which the resource has a reasonable possibility of economic extraction, in line with JORC code requirements (albeit this is likely to be refined in the scoping study currently underway).

In compensation for the decline in overall tonnage however, the closer spaced drilling allowed the revision of the wireframe models, which resulted in a 16.7% increase in gold grade and an 11.1% increase in the copper grade. Moreover, the classification of the vast majority of resources (90% of AuE ounces) increased from the inferred to the indicated category.

The grade of the deposit, in particular, may be compared with the width-weighted averages calculated by Edison for the 201 holes for which it has data, as follows:

Exhibit 2: Kaiser drill hole assay results

From
(m)

To
(m)

Average aggregate intercept
(m)

Average gold grade
(g/t)

Average Cu grade
(%)

201 holes

0.0

1,177.0

171.1

0.26

0.18

Source: Edison Investment Research, Alkane Resources. Note: Multiple intersections amalgamated and grades averaged according to the width of the individual intersections.

Readers should be aware that the uplift in grade in the updated resource relative to the average of the drill holes is typical for this type of deposit. Reserve grades are typically higher again to the tune of c 90% for gold grades and 22% for copper grades – albeit at the expense of approximately half of the deposit’s tonnage.

Valued at US$62.88 per measured gold ounce listed in Australia, US$24.84 per indicated ounce and US$7.87 per inferred ounce (see Gold stars and black holes, published in January 2019), our updated valuation of the Kaiser deposit is US$44.2m, or 10.9 Australian cents per share. On a like-for-like basis, this would imply a US$28.0m uplift relative to its valuation in February 2023, all other things being equal, albeit we had already somewhat pre-empted the upgrading of the deposit to indicated status by applying an average value of US$24.08/oz to Kaiser’s maiden resource (Exhibit 1). Nevertheless, the value of the updated resource may now be stated with a much greater level of certainty relative to that of the maiden resource. In addition, it should be noted that our valuations of US$62.88 per measured ounce, US$24.84 per indicated ounce and US$7.87 per inferred ounce were calculated in January 2019 when the gold price was US$1,208/oz. As such, they should be considered conservative in an environment in which the gold price is now approximately double that level.

The updated resource at Kaiser also adds to the existing resource of 6.4Moz (10.9Moz AuE) already delineated at Boda to give a combined total of 796Mt at 0.58g/t AuE for 14.7Moz AuE (8.28Moz Au, 1.46Mt Cu). This compares with its maiden resource and also the locally comparable resource disclosed by Newmont for Cadia and Newcrest for Cadia Ridgeway c 110km to the south as shown below:

Exhibit 3: Kaiser resource estimate cf Cadia and Boda (current vs previous)

Characteristic (units)

Kaiser
(previous)

Kaiser
(current)

Change
(%)

Cadia underground actual*

Cadia Ridgeway**

Boda

Previous Boda & Kaiser

Updated Boda & Kaiser

Estimated tonnage (Mt)

270

213

-21.1

3,196

151

583

853

796

Estimated average gold grade (g/t)

0.24

0.28

16.7

0.34

0.49

0.34

0.31

0.33

Estimated average copper grade (%)

0.18

0.20

11.1

0.32

0.18

0.18

0.18

Estimated average AuE grade (g/t)

0.54

0.55

1.9

0.84

0.58

0.57

0.58

Estimated contained gold (koz)

2,050

1,900

-7.3

34,700

2,400

6,380

8,430

8,280

Estimated contained copper (kt)

486

420

-13.6

480

1,030

1,516

1,460

Estimated contained AuE (koz)

4,688

3,740

-20.2

4,925

10,872

15,651

14,700

Source: Edison Investment Research, Alkane Resources. Note: *Newmont 2023 reserves plus underground resources. **Newcrest June 2023 resources statement.

Seen in national terms, the entire 14.7Moz AuE Boda-Kaiser complex is among the top three deposits in Australia in terms of resources and among the top 10 based on its gold inventory alone. Valued at the same US$62.88 per measured gold ounce, US$24.84 per indicated ounce and US$7.87 per inferred ounce, our updated valuation of the whole Kaiser-Boda complex is US$160.0m, or 40.0 Australian cents per share. Valued at US$24.08/oz, it is US$199.9m, or A$0.499/share. Moreover, early indications are that its metallurgy is extremely simple, requiring only a crush-grind-float-regrind-concentrate-ship flow sheet to process.

As per our note, Coming to fruition, published on 7 July 2022, assuming that 40% of its resources convert into reserves, the mineable inventory at Kaiser-Boda would be in the order of 319Mt – or 16 years of life at a mining rate of 20Mtpa, 21 years at 15Mtpa, 32 years at 10Mtpa or 64 years at 5Mtpa. At head grades of 0.49g/t Au and 0.17% Cu and metallurgical recoveries of 77.4% Au and 85.0% Cu, a processing rate of 15Mtpa would imply production of c 257koz AuE pa and EBITDA of c US$247m pa at a total initial open-pit cash cost of c US$729/oz AuE at Edison’s somewhat conservative real, long-term prices of US$1,794/oz Au and US$6,410/t Cu or c US$434m at current prices of US$2,400/oz Au and US$10,668/t Cu. Post-tax and capex (and pending the publication of Alkane’s own scoping study in May or June this year), we would value such a stream of income as at 1 July 2024 (ie the start of FY25) at US$183.6m or A$0.45/share) at our long-term prices on the basis of the discounted value of maximum potential future dividends to shareholders discounted at a rate of 10% per year.

Exhibit 4: Kaiser-Boda future cash flow, dividend and valuation profile (US$000s) at Edison long-term prices

Source: Edison Investment Research

Readers should note the similarity of this discounted dividend valuation of A$0.45/share with the resource valuations calculated in the paragraph below Exhibit 3 above, of A$0.400/share and A$0.499/share – both conferring confidence in the valuation and cementing it in the A$0.400–0.499/share range. At current metals prices, however, we value it at US$571.8m (or A$1.42/share), on a discounted dividend basis (all other things being equal):

Exhibit 5: Kaiser-Boda future cash flow, dividend and valuation profile (US$000s) at current metal prices

Source: Edison Investment Research.

In the meantime, as stated previously, Alkane is conducting its own scoping study regarding the potential future economics of a Kaiser-Boda mine. To this end, it has nearly finished costing the mooted metallurgical facility and its peripheral infrastructure. Moreover, the level of the work being conducted is such that a rapid transition to a feasibility study is possible. It also reports that it has already started the baseline process for permitting and expects to make an environmental application within the next two years.

Kaiser exploration upside

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, 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.

Exhibit 6: Three-dimensional model of Kaiser mineralisation showing faulting

Source: Alkane Resources

Northern Molong Porphyry Project background

The Northern Molong Porphyry Project (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 Kaiser-Boda 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 all-in sustaining cost (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 subsequently completed a 70-line kilometre IP survey over the 6km strike extensions of the BIC to generate drilling targets and four of these targets – namely Kaiser, Boda, Comobella and Glen Hollow – have now already been drill tested.

Exhibit 7: Northern Molong Porphyry Project regional geology

Source: Alkane Resources

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 Kaiser, Boda and Glen Hollow (which is part of Comobella), 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.

Exhibit 8: Kaiser-Boda prospect drilling cross-section

Source: Alkane Resources

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.

Boda Two, Three and Four

In the meantime, 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. 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 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 and recent drill hole results confirm that mineralisation continues for many metres to the south of Boda and possibly much further, with the potential for additional high-grade zones. 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. 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 on a par with the existing one at Kaiser and Boda could be possible.

Exhibit 9: Size of Boda Two, Three and Four mineralisation estimates cf Kaiser-Boda actuals

Source of underlying data

Alkane

Actuals

Characteristic (units)

Alkane est. dimensions

Kaiser

Boda

Kaiser plus Boda

Strike (m)

1,100

 

 

 

Ave est true width (m)

500

 

 

 

Est surface area (m2)

0.55

 

 

 

Ave est true depth (m)

623

 

 

 

Est volume (m3)

342.9

 

 

 

Est density (t/m3)

3

 

 

 

Est tonnage (Mt)

1,028.8

213

583

796

Est ave gold grade (g/t)

0.28

0.28

0.34

0.33

Est ave copper grade (%)

0.15

0.2

0.18

0.18

Est ave AuE grade (g/t)

0.47

0.55

0.58

0.58

Est contained gold (koz)

9,154

1,900

6,380

8,280

Est contained copper (kt)

1,530

420

1,030

1,460

Est contained AuE (koz)

15,628

3,740

10,872

14,700

Source: Edison Investment Research, Alkane Resources. Note: Gold equivalent resources and grades calculated at US$2,000/oz Au and US$8,646/t Cu.

Note that, 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 the mineralisation), we would value it at A$0.382/share. 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%.

At the same time, Alkane is also 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. As a result, more RC drilling is planned, focusing on the west and north-west flanks of the BSIC.

Regionally, recent exploration has also targeted the Driell Creek, Konigin and Murga prospects, all positioned within the same (inferred) 15km north-west-trending intrusive corridor.

Tomingley Gold Extension Project reserves

On 27 February, Alkane announced that grade control drilling from the underground development at the Roswell deposit had confirmed significant high-grade gold mineralisation and lifted the initial underground ore reserve estimate for Roswell to 237koz. Including the planned open cut, therefore, total ore reserves for Roswell now stand at 450koz, while the mineral resource base for the TGEP was revised to 1.17Moz with internal ore reserves of 664koz (Exhibit 11).

Exhibit 10: Roswell updated mineral resource estimate (February 2024 cf June 2023)

Resources

Reserves

Conversion ratio

kt

g/t

koz

kt

g/t

koz

%

%

%

Open pittable

Measured

0

0.00

0.0

Proven

0

0.00

0

N/A

N/A

N/A

Indicated

3,900

1.70

213.2

Probable

3,900

1.70

213

100.0

100.0

100.0

Inferred

0

0.00

0.0

Possible

0

0.00

0

N/A

N/A

N/A

Total

3,900

1.70

213.2

Total

3,900

1.70

213

100.0

100.0

100.0

Underground

Measured

0

0.00

0.0

Proven

0

0.00

0

N/A

N/A

N/A

Indicated

3,260

2.90

304.9

Probable

3,209

2.30

237

98.4

79.3

77.8

Inferred

2,290

2.50

184.1

Possible

0

0.00

0

0.0

0.0

0.0

Total

5,550

2.74

488.9

Total

3,209

2.30

237

57.8

83.9

48.5

Total

Measured

0

0.00

0.0

Proven

0

0.00

0

N/A

N/A

N/A

Indicated

7,160

2.25

518.0

Probable

7,109

1.97

450

99.3

87.6

87.0

Inferred

2,290

2.50

184.1

Possible

0

0.00

0

0.0

N/A

0.0

Total

9,450

2.31

702.1

Total

7,109

1.97

450

75.2

85.3

64.2

Previous

Measured

0

0.00

0.0

Proven

0

0.00

0

N/A

N/A

N/A

Indicated

7,512

2.00

484.2

Probable

5,356

1.94

332

71.3

97.0

68.5

Inferred

5,035

2.31

373.7

Possible

0

0.00

0

0.0

0.0

0.0

Total

12,547

2.13

857.9

Total

5,356

1.93

332

42.7

90.6

38.7

Change (units)

Measured

0

0.00

0.0

Proven

0

0.00

0.0

Indicated

(352)

0.25

33.8

Probable

1,753

0.03

118.6

Inferred

(2,745)

0.19

(189.7)

Possible

0

0.00

0.0

Total

(3,097)

0.18

(155.8)

Total

1,753

0.04

118.6

Source: Edison Investment Research, Alkane Resources.

The most significant features of the update are:

The 118.6koz (or 35.7%) increase in reserves at very slightly higher overall grades.

The near doubling of underground reserves, from 119koz to 237koz.

The 24.7% reduction in overall resource tonnes, but at an 8.7% overall higher grade.

As at Kaiser, the predominant reason for the decline in the overall resource tonnage was the exclusion of any material outside the Roswell open-pit shell (hence the 100% of conversion of indicated resources to probable resources in the open-pittable portion of the resource) as well as the exclusion of any material deemed too distant from the extension of the resource below the Roswell open pit to continue to be classified as inferred (notwithstanding the fact that the material remains in situ).

As a result of the update, we may make the following observations about reserves and resources currently delineated at Roswell, San Antonio and McLeans relative to those required for the execution of the TGEP (Exhibit 11):

Combined, the Roswell, San Antonio and McLeans prospects have more than enough resource tonnage to execute both the open pit and underground mining plans of the TGEP.

They also have enough reserve tonnage to execute the open pit and underground mining plans of the TGEP.

There is more than enough resource tonnage to execute the Roswell underground extension of the TGEP. However, at the moment, there is only c 30.6% of the reserve tonnage required.

Exhibit 11: Tomingley gold extension project reserves and resources cf required (February 2024)

Resources

Reserves

kt

g/t

koz

kt

g/t

koz

Open pittable

Roswell

3,900

1.70

213.2

3,900

1.70

213

San Antonio

7,319

1.73

405.9

4,100

1.60

214

Total

11,219

1.72

619.1

8,000

1.66

427

Required for Tomingley gold extension project*

6,750

6,750

Underground

Roswell

5,550

2.74

488.9

3,209

2.30

237

McLeans

870

2.50

69.9

0

0.00

0

Total

6,420

2.71

558.8

3,209

2.30

237

Required for Tomingley gold extension project*

2,475

2,475

Ditto with Roswell underground extension*

4,875

4,875

Total

Roswell

9,450

2.31

702.1

7,109

1.97

450

San Antonio

7,319

1.73

405.9

4,100

1.60

214

McLeans

870

2.50

69.9

0

0.00

0

Total

17,639

2.08

1,177.9

11,209

1.84

664

Required for Tomingley gold extension project*

9,225

2.40

711.4

9,225

2.40

711

Ditto with Roswell underground extension*

11,625

2.39

892.6

11,625

2.39

893

Source: Edison Investment Research, Alkane Resources. Note: *From 2024 onwards.

While the overall grades of the resources and the reserves of the three deposits appear to be lower than those required for the execution of the TGEP, it is worth recalling that the mineralisation at Roswell, San Antonio and McLeans is generally hosted in narrow veins of varying thicknesses in conjunction with discrete ore pods. All three deposits have sections with grades of 5–9g/t over wide intersections in such a way that producing the head grade required should simply be a matter of diligent grade control coupled with the use of discriminating mining techniques. Within this context, it is also worth noting that the legacy operation at Tomingley has a history of producing mined grades that have exceeded those expected from its geological models.

The Roswell extension towards San Antonio is continuing to be explored from underground by Alkane and is open to the south, while additional orebodies parallel to the San Antonio orebody remain open at depth. Otherwise, vertical development has been in hand for some time and management reports that it has already fired its first 23–24kt stope underground at Roswell. The next stope will be larger and the whole underground production team at Tomingley is expected to be migrated to the new mining area within the next six months, after which time the legacy operation at Tomingley will be run down. Thereafter, the Roswell orebody will be mined in a classic chequerboard style, ramping up to a rate of 1.1–1.2Mtpa by April 2025 and 1.5Mtpa by the end of CY25, such that production in FY26 should exceed 100,000oz Au.

Half-year results and FY24 guidance

Since our last update note, Alkane has announced financial results for H124 and operational results for Q324. Guidance for FY24 is for production of 60–65koz Au at an AISC of A$1,750–2,100/oz. Production in Q3 was lower than expected at Caloma 2. Despite being higher grade, the material mined had a higher than anticipated carbon content, which resulted in lower metallurgical recoveries owing to preg-robbing in solution. However, while unexpected, this transient phase in mining is now in the past. In future, the majority of ore processed will be derived from Roswell at a higher grade. In addition, Alkane has resampled the surrounding area at Caloma 2 to ensure that there is no repetition of the same phenomenon. As a result, Alkane has left its FY24 guidance intact and Exhibit 12 below demonstrates the minimum performance that we calculate will need to be achieved in Q4 for guidance for the year to be met.

Exhibit 12: Tomingley quarterly operating results, Q422–Q424e

Q422

Q123

Q223

Q323

Q423

Q124

Q224

Q324

Q424e

FY24e

Ore milled (t)

262,264

270,618

239,078

277,225

282,410

276,645

287,550

296,644

300,000

1,160,839

Head grade (g/t)

3.23

2.75

2.56

2.26

2.14

2.09

1.84

1.69

2.44

2.02

Contained gold (g/t)

27,236

23,927

19,678

20,144

19,431

18,589

17,011

16,118

23,511

75,229

Recovery (%)

84.9

87.0

84.6

84.6

80.5

82.1

77.9

67.6

85.5

79.8

Gold poured (oz)

23,091

19,489

18,301

16,641

15,822

15,855

13,182

10,861

20,102

60,000

Gold sold (oz)

21,135

18,344

17,855

19,163

15,136

16,090

14,507

10,385

20,102

61,084

Gold price (US$/oz)

1,873

1,727

1,698

1,891

1,976

1,926

1,977

2,071

*2,386

2,090

Forex (A$/US$)

1.4011

1.4646

1.5223

1.4636

1.4968

1.5287

1.5362

1.5204

1.5175

1.5257

Average realised price (A$/oz)

2,481

2,547

2,618

2,787

2,884

2,897

2,926

2,933

*3,620

3,094

C1 site cash costs (A$/oz)

940

1,095

1,103

990

1,356

1,322

1,464

1,953

1,349

1,472

AISC (A$/oz)

1,150

1,191

1,323

1,805

2,174

2,156

2,200

2,454

1,801

2,100

Source: Alkane Resources, Edison Investment Research. Note: *Excludes forward sales.

At a gold price for the remainder of the financial year of US$2,441/oz, as a result of Alkane’s operational results to date and its H124 financial results, we have adjusted our FY24 financial forecasts to those shown below in Exhibit 13.

Exhibit 13: Alkane income statement, H122–H224e (A$m, unless otherwise indicated)

H122

H222

H123

H223

H124

H224e

FY24e

FY24e
(prior)

Revenue

76.911

88.099

93.465

97.062

89.060

97.125

186.185

182.139

Cash cost of sales

(35.423)

(32.104)

(34.789)

(48.707)

(53.814)

(51.920)

(105.734)

(93.945)

Gross profit before depreciation

41.488

55.995

58.676

48.355

35.246

45.205

80.451

88.194

Other net income

0.808

0.628

0.216

0.214

0.324

0.324

0.430

Administration expenses

(5.504)

(4.481)

(6.589)

(5.518)

(4.970)

(4.970)

(9.940)

(12.107)

Exploration and evaluation expenditure expensed

0.000

0.000

0.000

0.000

Exceptional item

48.334

0.000

0.000

0.000

0.000

0.000

Gain/(loss) on disposal

0.000

(13.909)

0.000

0.000

0.000

0.000

Share of profit/(loss) of associates

(0.020)

0.000

0.000

0.000

0.000

Depreciation

(14.171)

(20.942)

(17.715)

(18.393)

(14.597)

(15.403)

(30.000)

(24.876)

EBIT/(LBIT)

70.935

17.291

34.588

24.658

16.003

24.832

40.835

51.642

Interest income/(cost)

(1.318)

(0.344)

0.236

1.105

0.868

(1.700)

(0.832)

1.001

Loss after tax from discontinued operations

0.000

0.000

0.000

0.000

PBT/(LBT)

69.617

16.947

34.824

25.763

16.871

23.132

40.003

52.643

Income tax

21.122

4.927

10.131

8.006

4.446

6.940

11.386

15.793

Effective tax rate (%)

30.3

29.1

29.1

31.1

26.4

30.0

28.5

30.0

Profit/(loss) for the year

48.495

12.020

24.693

17.757

12.425

16.193

28.618

36.850

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

48.495

12.020

24.693

17.757

12.425

16.193

28.618

36.850

Basic adjusted EPS (A$/share)

0.0814

0.0202

0.0412

0.0297

0.0206

0.0268

0.0474

0.0613

Source: Alkane Resources, Edison Investment Research.

Listed investments

After its most recent acquisitions and disposals of shares in Calidus and Genesis, respectively, together with its holding in Sky Metals, we estimate that, as at the time of this note, the value of Alkane’s listed holdings is as follows:

Exhibit 14: Alkane Resources listed investment holdings

Holding

Ticker

Interest
(%)

No. of shares
held

Share price
(A$/share)

Valuation
(A$)

Valuation
(US$)

Valuation
(A$/share)

Valuation
(US$/share)

Calidus Resources

ASX.CAI

7.2

54,685,118

0.135

7,382,491

4,941,757

0.0122

0.0082

Genesis Minerals

ASX.GMD

0.0

-

1.915

0

0

0.0000

0.0000

Sky Metals

ASX.SKY

2.4

9,049,307

0.034

361,972

242,300

0.0006

0.0004

Total

7,744,463

5,184,057

0.0128

0.0086

Source: Edison Investment Research, Alkane Resources. Note: Priced 20 May 2024.

Alkane/TGEP valuation

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, Q324 operational results and after updating our gold price and A$/US$ foreign exchange assumptions to reflect current market conditions etc, our valuation of the dividend stream potentially available to Alkane shareholders from its immediate mining operations is now A$0.555/share to 1 July 2024 (cf A$0.546/share to 1 July 2023 previously). This increases to A$0.599/share once the value of residual resources, which we now estimate at 734koz with a current value of US$17.7m (A$26.6m), or A$0.044/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 the life of its TGEP operations is shown in Exhibit 15, below.

Exhibit 15: Alkane life of operations’ forecast EPS and (maximum potential) DPS (A$/share)

Source: Edison Investment Research

Note that 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, either in the form of exploration or capital expenditure.

Alkane group valuation

A summary of our updated valuation of Alkane in the light of the announcement of the updated resource at Kaiser, H124 financial results and Q324 operational results is as follows:

Exhibit 16: 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 extension

10

10

12

12

El Paso and ongoing Tomingley extension exploration

2

2

3

3

Listed investments*

1

1

1

1

Kaiser & Boda

38

38

40-50

45

50

Boda Two, Three & Four exploration

48

48

38

38

Kaiser exploration**

12

12

**

**

**

Sub-total

111

60

171

101–111

98

164

Spot metals’ prices cf long-term forecasts

65

65

131

131

Total

111

125

236

101–111

229

295

Source: Edison Investment Research. Note: *At prevailing share prices of A$0.135/share for Calidus and A$0.04/share for Sky. **Now included in ‘Kaiser & Boda’. Totals may not add up owing to rounding.

A number of features of the valuation are noteworthy:

For these purposes, we have included the in-situ valuation range of the combined resource at Boda and Kaiser as an ‘existing asset’. We have included the discounted dividend flow valuation as a ‘contingent asset’ – although we note the convergence of the two, which confers confidence in the valuation and acts to cement it. In due course, however, while we would expect the Boda and Kaiser in-situ valuation to remain relatively constant – all other things being equal – the discounted dividend flow valuation of the two will inevitably rise with the passage of time and the attainment of the various milestones inherent in bringing such a deposit to account.

Alkane’s current share price of A$0.635 could be interpreted as being at least 174.8% covered by the value of ‘existing assets’, with no value whatsoever being afforded to it by investors for its ‘contingent assets’. Alternatively, Alkane’s share price could be thought of as being at an at least 42.8% discount to the value of its ‘existing assets’ with no value being afforded to it for its ‘contingent assets’.

The potential for the ‘Roswell underground extension’ to move from being a ‘contingent asset’ to an ‘existing asset’ in the event of continued exploration success underground at the TGEP.

The significant increase in the sensitivities of the valuations to current gold and copper prices (US$2,400/oz and US$10,668/t, respectively) compared to our long-term prices (US$1,794/oz and US$6,410/t in 2024 money terms), all other things being equal.

Financials

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 24 April quarterly update, it had A$28.4m in cash plus A$6.1m of gold bullion on hand and A$6.6m in listed investments as at end Q324. In addition, it had a project loan facility of A$50m provided to it by Macquarie Bank for the TGEP, which it subsequently increased to A$60m post quarter end. This facility was undrawn at the end of March as development activities up to that point had been funded from cash. However, A$23m was subsequently reported to have been drawn down from the facility in the current quarter (ie Q424).

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, lesser, c A$18m 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). Concurrently, however, free cash flow from operations will contribute meaningfully to capex as higher-grade production from Roswell is ramped up. During this period, Alkane’s revenue will be protected via 94,100oz Au sold forward at an average price of A$2,833/oz to June 2027 (fractionally re-jigged this month) and put options to sell 140,799oz Au at a price of A$3,000/oz also out to June 2027, which will protect its revenue, 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).

Exhibit 17: Financial summary

2018

2019

2020

2021

2022

2023

2024e

2025e

30 June

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

186,185.1

247,397.4

Cost of Sales

(51,080.9)

(53,656.4)

(32,868.0)

(45,313.0)

(67,527.0)

(83,496.0)

(105,733.7)

(138,742.5)

Gross Profit

78,892.7

40,338.5

39,681.0

82,520.0

97,483.0

107,031.0

80,451.4

108,654.9

EBITDA

 

70,378.7

32,971.7

29,412.0

70,527.0

87,498.0

94,924.0

70,511.4

98,714.9

Normalised operating profit

 

31,658.3

25,808.8

20,171.0

49,940.0

53,821.0

59,246.0

40,835.4

67,567.4

Amortisation of acquired intangibles

0.0

0.0

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

0.0

0.0

Share-based payments

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

40,835.4

67,567.4

Net Interest

(579.0)

(418.8)

389.0

(2,741.0)

(1,662.0)

1,341.0

(832.0)

(116.8)

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

40,003.4

67,450.6

Profit before tax (reported)

 

31,079.3

25,390.0

19,914.0

48,070.0

100,473.0

60,587.0

40,003.4

67,450.6

Reported tax

(6,919.9)

(2,266.1)

(6,569.0)

(14,503.0)

(30,222.0)

(18,137.0)

(11,385.7)

(20,235.2)

Profit after tax (norm)

24,159.4

23,123.9

13,991.0

31,826.0

21,917.0

42,450.0

28,617.7

47,215.4

Profit after tax (reported)

24,159.4

23,123.9

13,345.0

33,567.0

70,251.0

42,450.0

28,617.7

47,215.4

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

28,617.7

47,215.4

Net income (reported)

24,159.4

23,123.9

12,762.0

33,567.0

70,251.0

42,450.0

28,617.7

47,215.4

Basic average number of shares outstanding (m)

506

506

547

595

596

598

603

603

EPS - basic normalised (A$)

 

0.05

0.05

0.03

0.05

0.04

0.07

0.05

0.08

EPS - diluted normalised (A$)

 

0.05

0.04

0.02

0.05

0.04

0.07

0.05

0.08

EPS - basic reported (A$)

 

0.05

0.05

0.02

0.06

0.12

0.07

0.05

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

(-2.3)

32.9

Gross margin (%)

60.7

42.9

54.7

64.6

59.1

56.2

43.2

43.9

EBITDA margin (%)

54.1

35.1

40.5

55.2

53.0

49.8

37.9

39.9

Normalised operating margin (%)

24.4

27.5

27.8

39.1

32.6

31.1

21.9

27.3

BALANCE SHEET

Fixed assets

 

138,275.0

172,196.0

129,077.0

203,161.0

257,497.0

304,826.0

401,773.9

390,602.4

Intangible assets

93,136.0

103,894.0

32,745.0

57,794.0

98,498.0

161,310.0

200,932.0

210,932.0

Tangible assets

36,266.0

51,038.0

62,322.0

99,411.0

107,386.0

111,104.0

172,572.9

151,401.4

Investments & other

8,873.0

17,264.0

34,010.0

45,956.0

51,613.0

32,412.0

28,269.0

28,269.0

Current assets

 

93,306.0

76,501.0

59,096.0

33,054.0

98,190.0

107,364.0

56,466.3

133,316.2

Stocks

19,153.0

4,816.0

7,647.0

11,648.0

17,952.0

21,906.0

7,141.3

9,489.2

Debtors

2,030.0

1,998.0

2,940.0

1,894.0

2,344.0

5,167.0

4,590.9

6,100.2

Cash & cash equivalents

72,003.0

69,582.0

48,337.0

18,991.0

77,894.0

80,291.0

44,734.1

117,726.8

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)

(28,883.4)

(31,596.5)

Creditors

(9,299.0)

(8,007.0)

(9,425.0)

(11,082.0)

(13,708.0)

(23,508.0)

(8,690.4)

(11,403.5)

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)

(100,742.0)

(116,492.0)

Long-term borrowings

0.0

0.0

(4,515.0)

(5,922.0)

(9,116.0)

(6,175.0)

(38,425.0)

(54,175.0)

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

328,614.7

375,830.1

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

328,614.7

375,830.1

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

70,835.4

99,038.9

Working capital

(9,498.0)

(5,172.0)

(3,481.0)

(2,840.0)

(776.0)

(3,948.0)

523.2

(1,144.2)

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)

(11,385.7)

(20,235.2)

Net operating cash flow

 

54,800.5

36,465.7

28,147.0

73,857.0

88,138.0

94,205.0

59,972.9

77,659.5

Capex

(9,224.0)

(19,621.0)

(46,122.0)

(59,477.0)

(42,581.0)

(33,695.0)

(91,468.9)

(10,300.0)

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

(832.0)

(116.8)

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)

(39,622.0)

(10,000.0)

Other

(4,317.0)

(7,442.0)

(9,522.0)

(18,129.0)

49,659.0

368.0

4,143.0

0.0

Net cash flow

29,706.4

(2,590.1)

(27,866.0)

(31,641.0)

53,234.0

4,098.0

(67,806.9)

57,242.7

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)

1,061.9

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)

1,061.9

(56,180.8)

Source: Alkane Resources accounts, 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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