Boda-Kaiser

Boda-Kaiser has the potential to be in production in the early 2030s at a rate of 250–300koz AuE per year. At Edison’s relatively conservative long-term gold price of US$1,941/oz, we estimate that Alkane has the potential to accumulate A$658m in net cash by the end of FY31 (assuming a flat annual dividend of 2c/share), which equates to 39% of the total capex requirement. However, at the current (real) gold price of US$4,011/oz, we estimate that it could accumulate A$2,191m in net cash, in which case we estimate that it could self-fund the project itself.

Good value relative to history

Since FY18, Alkane has traded at an average P/E multiple of 13.4x basic adjusted EPS (within a range of 5.1–28.0x; see Exhibit 12). Applying this 13.4x multiple to our estimates implies average share prices for Alkane of A$2.42 in FY26 and A$2.30 in FY27.

Valuation: Potentially A$4.00/share

Our core, absolute valuation of Alkane has declined slightly to A$0.798/share (cf A$0.834 per share previously) reflecting both the recent strength of the Australian dollar against the US dollar and FY27 capex guidance, notwithstanding the fact that this may ultimately prove to be value adding. Moreover, this valuation is conducted at Edison’s long-term (real) gold price of US$1,941/oz (in 2026 dollar terms). At the current (real) price of gold of US$4,011/oz, it trebles to A$2.32/share, generating an EPS of c A$0.30/share from FY28 to FY34 (Exhibit 10). To this should then be added at least A$0.20/share for Boda-Kaiser, or A$1.55/share at current metals prices. Taking all assets into account, we estimate that, at the current gold price, the total value of Alkane could exceed A$4.00/share (Exhibit 13).

Q426 operational results

Alkane released its Q426 quarterly activities report on 21 July. The main highlights of the announcement were:

• Quarterly gold production of 42,491oz gold equivalent (equivalent to 169,964oz per year annualised, cf FY26 guidance of 160–175koz), which compares with 45,776oz AuE production in Q3 – a record – at an all-in sustaining cost (AISC) of A$3,011oz AuE ( US$2,137/oz /oz), of which 47,411oz AuE were sold at an average price of A$5,431/oz Au ( US$3,854/oz) after provisional pricing adjustments to generate revenue of A$257.5m.
• FY26 gold equivalent production of 168,337oz AuE (cf guidance of 160–175koz on a pro forma basis) at an AISC of A$2,925/oz AuE ( US$1,983/oz) cf guidance of A$2,600–2,900/oz.
• Site operating cash flow of A$174m for the quarter (cf A$189m in Q326).
• Cash, bullion and listed investments as at 30 June of A$454m (cf A$374m at end-Q3) after A$18m in corporate income tax payments (cf A$16m in Q3).
• A proposed maiden dividend of 2c/share for FY26.
• FY27 production guidance of 163–177koz AuE at an AISC of A$2,900–3,200/oz.

Production of gold from Tomingley and antimony from Costerfield both outperformed our expectations and, although output fell at Bjorkdal, this was only back to trend rates in the absence of a trial shipment of high-grade ore from a small, nearby open-pit mine west of Bjorkdal in Q3. As a result, production for FY26 came in at the top end of the guidance range for the full 12-month period (cf the statutory reporting period from 5 August, when the merger with Mandalay was completed), while costs sat at the top of the guidance range (albeit, note that the foreign exchange rate has tightened, from A$1.53/US$ when the guidance was made, to A$1.4278/US$ currently). A summary of Alkane’s performance relative to guidance for the pro forma 12-month period is provided in the table below. Readers’ attention is drawn to the production outperformance at Tomingley and the fact that costs were within (or below) the guidance range for each of the individual mines prior to consolidation in Australian dollar terms:

FY26 production

The main source of ore to the plant at Tomingley is now Roswell and, while only a small portion of the overall ore reserve has been mined, initial grade reconciliations from the deposit are reported to be performing well. Mine production dipped in Q2 as a result of a shortfall in development and the need to rework selective stope shapes. However, this was remediated in H2, with underground ore mined achieving a record in Q4. Milling also exceeded plan as a result of the insertion of a mobile crusher to pre-crush material prior to entering the processing circuit, which has de facto increased capacity to as much as 325ktpq. However, metallurgical recoveries declined as a result of the reduced leach residence time necessitated by the higher throughput rate combined with some downtime on individual CIL tanks periodically throughout Q4. Further optimisation is underway to balance throughput and costs. Nevertheless, ore mined, mill throughput and ounces produced all achieved records in FY26.

At Costerfield, production has been focused on the Youle zone in FY26, which offers higher antimony grades, and the Shepherd zone, which is predominantly gold. Tonnes mined increased by 17.5% relative to the previous quarter and, together with tonnes milled, exceeded plan. However, challenging ground conditions slowed drilling rates and restricted access in some planned mining areas. Work continues to prioritise operational consistency across all aspects of the operation, and trials to determine the potential benefits of pre-crushing ore feed to further improve throughput, crusher downtime and blend control were reported to be successful, with the continuous optimisation of blending and recovery continuing to be a focus. In the meantime, targeted improvement programmes are focusing on drill and blast optimisation, transitioning to owner operated capital development, enhanced operator training and the transition to emulsion explosives to improve recoveries and reduce dilution.

Production at Björkdal in FY26 has been derived from the Main zone, Lake zone and three levels in the lower Aurora zone. Excluding Q3 (during which a high-grade trial shipment of ore from a nearby mine was processed), both mined and processed grades have continued to improve, with slightly increased development tonnes in higher-grade areas and despite a higher mining contribution from below the marble mining areas. Capital works on lifts to the tailings dam facilities also ramped up during the quarter.

Given its performance in Q4 and guidance for next financial year, we have formulated forecasts for each of Alkane’s three operating mines in FY27, as follows (including actual numbers for FY26):

On this basis, we expect Alkane to produce 169,129oz Au in FY27 plus 970t antimony (cf 163,910oz and 1,299t, respectively, in FY26) to give total gold equivalent production of c 172,409oz AuE (cf guidance of 163–177koz AuE) at an AISC of A$2,892/oz (cf guidance of A$2,900–3,200/t).

FY26 capex and FY27 guidance

Björkdal FY26 AISC included a significant amount of sustaining capital, which will provide multi-year benefits, including increased capital development in order to access new ore, a mill re-line, new water management infrastructure, tailings dam construction and a major fleet replacement programme that will continue in FY27. Meanwhile, exploration expenditure included in-fill and extensional drilling in the North Zone, Eastern Extension, Storheden and Norrberget to build a high-grade inventory and support future mining studies. Capex will remain high in FY27 as an investment for FY28 and FY29. Once these initiatives are completed however, AISC is expected to return to more normal levels.

Growth capital expenditure at Tomingley in FY26 almost exclusively represented the realignment of the Newell Highway c 1km to the west of its existing corridor in order to accommodate open-cut mining at San Antonio. The ore from the open-cut operations will be added to underground mine production at Roswell. Construction of the diversion has now commenced, with work expected to be completed in H1 CY27, after which open-cut mining at San Antonio will begin. In the meantime, exploration has been targeting reserve and resource growth at Caloma 2, Roswell, Wyoming and McLeans. However, the focus in now beginning to shift to the broader 20km trend between Tomingley and Peak Hill, with the ultimate target of increasing life of mine reserves to over 10 years.

At Costerfield, the predominant growth expenditure has been on exploration, focusing on near-mine and regional drilling at the True Blue, Sub King Cobra (Sub KC), Brunswick South and Kendall zones to support further extensions of the mine life and potential processing expansion. While exploration at Kendall and Brunswick South has hitherto been with the goal of expanding production incrementally by one to two years, drilling at True Blue has been with the longer-term intention of replicating the entire mineralised corridor currently supporting operations approximately 2km to the west and potentially discovering an analogue to Agnico’s ultra-high-grade Swan zone at Fosterville.

In addition to its production and cost guidance for FY27, Alkane provided capex guidance. Group exploration expenditure is expected to be A$55–65m (cf our prior expectation of A$42.1m), while group growth capital is expected to be in the range A$160–190m (cf our prior expectation of A$72.7m) reflecting new initiatives, overdue investment in critical infrastructure and accelerated investment. The principal growth projects in FY27 will be the Newell Highway diversion at Tomingley, the development of Brunswick South at Costerfield, the commencement of development to Storheden and tailings dam expansion at Björkdal and mining equipment replacements across the group.

Updated FY26 financial forecasts

For the purposes of our estimates and forecasts, we have considered pre-merger Alkane Resources as a distinct entity until 30 June 2025, whereupon we assume the effective balance sheet merger of Alkane and Mandalay, followed by financial forecasts for the combined entity from that date. This amounts to a pro forma treatment of its results. Alkane’s statutory accounts will consolidate the two companies on 5 August and FY26 will reflect results from pre-merger Alkane for the 36 days to 5 August and combined results for the 329 days thereafter. Both forecasts are shown in the exhibit below, although for the purposes of our formal forecasts and valuations only pro forma estimates are considered so that they relate to comparable 12-month periods of time.

The two largest differences relative to our prior forecasts are provisional pricing adjustments relating to revenues (a negative variance of A$9.6m) and a A$22.0m (+5.4%) variance in costs, relating to inflationary effects within the industry generally and gold sold out of inventory.

Our resulting EPS estimates for FY26 compare to those of the broader market as follows:

Longer-term exploration and development initiatives

Tomingley

For the moment, we have not incorporated any additional exploration upside into Tomingley’s mine plan beyond FY34, although we note that, a) including all sources, there remains a further c 4.4 years of potential resource life available to the operation once reserves are depleted, and b) Alkane has always been successful in the past in drilling up new resources and then converting them into reserves (NB see Alkane’s announcement, dated 3 November 2025, regarding the discovery of new mineralisation at McLeans as well as the exploration disclosures of its Quarterly Activities Reports on 29 October, 27 January and 15 May). Recent exploration at Tomingley has concentrated on extension drilling into new structures underground at Wyoming Three below the open cut and testing the potential of the northern extension to the andesite that is host to the majority of the Caloma gold resource at Caloma North. However, focus in now beginning to shift to the broader 20km trend between Tomingley and Peak Hill with the ultimate target of increasing life of mine reserves to in excess of 10 years. In particular:

• Resource expansion drilling at McLeans (see Alkane announcement: Tomingley Drilling Discovers New Mineralisation at McLeans, on 3 November 2025), where results included:
  • 26m at 4.36g/t Au including 3.3m at 22.8g/t Au.
  • 8m at 4.38g/t Au including 0.2m at 12.6g/t Au.
• Drilling to confirm the reinterpretation of El Paso and to assess its potential to host a gold resource that could be accommodated at the Tomingley processing plant only 6km distant and where results included:
  • 8.2m at 3.74g/t Au including 0.1m at 25.0g/t Au.
• Testing the potential for deep copper-gold porphyry mineralisation and a source feeder zone beneath the (refractory) Peak Hill epithermal deposits.
• Electrical geophysical targeting and subsequent drill testing for low-sulphidation epithermal gold quartz veins at Glen Isla, c 6km east of Tomingley.

Exploration drilling in H226 specifically tested a seismic reflector feature beneath the Roswell deposit as well as near-mine prospects such as El Paso. The drilling at Roswell intersected deep, gold-arsenic enriched hydrothermal breccias and veining at the identified seismic reflector c 400m below the current resource. Further drilling is planned to test where this structure intersects the andesite and monzodiorite (favourable hosts at Roswell). At the same time, eight drill holes were completed at El Paso resulting in the reinterpretation of the geological model, and a drilling programme to test the new model is now planned. In the meantime, underground drilling has continued at Roswell, focusing on improving confidence in the inferred resource, with significant intercepts (approximating true width) in the Western Monzodiorite domain including 5.9m at 31.0g/t Au including 2.1m at 78.4g/t Au and 17.4m at 4.30g/t Au including 2.5m at 21.1g/t Au (see announcement dated 24 February 2026, Deep Drilling Identifies Gold Bearing Structure at Tomingley). Additional underground drilling has now commenced to accelerate the infill programme.

In Q4, drilling at Tomingley focused on prospective targets both near mine and regionally. The northern extension of Caloma was tested as well as the potential southern extension to the Roswell deposit. Drilling also commenced testing the areas between the Roswell and Wyoming One deposits. More distantly, exploration continued to work up regional targets in the surrounding exploration licences, as well as drilling on the mining leases testing the Wyoming Three deposit and other near mine targets. The regional drilling targets being progressed include the Patons, Tomingley One and Two, Peak Hill and Glen Isla prospects.

Costerfield

Costerfield is the largest antimony producer in the western world and is notable for having higher gold grades at depth and higher antimony grades near the surface. It is characterised by defined geological areas with strikes typically of 200–300m and grades measured in ounces per tonne, but over only narrow widths of c 10–15cm. Exploration at this asset is directed towards extending the life of the mine from its current, formal three years of reserve life (which, as at Tomingley, it has been consistently successful in replenishing in the past) to five to seven years of reserve life plus approximately three years of resource life.

The Costerfield mine has two portals at Augusta and Brunswick (see Exhibit 6, below) and its principal exploration focus is the True Blue corridor, where there are c 4km of shallow workings coincident with a prospective geochemical signature, and which appears to represent a parallel structure c 2km east of the current mining area, beneath which Alkane has three rigs predominantly focused on infill drilling. Alkane’s second priority after True Blue is Kendall, at which it is exploring a series of 25 veins above the currently active Youle and Shepherd mining fronts, where notable results have included 132.2g/t Au and 19.8% Sb over 1.94m with an estimated true width of 1.04m and 267.5g/t Au and 5.6% Sb over 2.3m (estimated true width 1.22m). These are believed to potentially host c 500koz systems. However, recent results appear to suggest that Kendall may be more extensive than previously expected, while True Blue may be less so. Hence, drilling is ongoing, albeit now with a focus on step-out drilling and with Kendall and Brunswick South scheduled to be accessed via development drives in FY27. Alkane will simultaneously apply for a mining licence over the True Blue area. Thereafter:

• Drilling at Brunswick South has expanded on the high-grade discovery made earlier in the year just 350m from the horizontal drive at the Brunswick mine, where grades twice those currently mined were intersected both above and below existing infrastructure. Subsequently, on 14 July, Alkane announced the results of 91 extension and infill holes, which identified a high antimony and gold grade connection between the recently discovered gold dominant zone at depth and the historical surface workings. Drilling is continuing to identify extensions to the deeper gold dominant (Kiwi) zone with recent geological interpretation indicating that the setting for mineralisation is similar to that of the Youle deposit currently being mined. In addition, parallel veining has been intercepted approximately 200m to the west of Brunswick South with follow-up drilling scheduled to commence shortly. An updated mineral resource estimate with an initial ore reserve is scheduled to be released later in the year. In the meantime,
• Brunswick South Vein assay highlights include:
• At the Brunswick South Vein:
  • 50.1g/t gold and 26.2% antimony over 2.17m (estimated true width 1.08m) in hole BD468.
  • 109.9g/t gold and 3.1% antimony over 0.65m (estimated true width 0.62m) in hole BD433.
  • 50.2g/t gold and 33.3% antimony over 0.86m (estimated true width 0.62m) in hole BD424.
  • 39.8g/t gold and 0.7% antimony over 1.3m (estimated true width 1.15m) in hole BD408.
  • 25g/t gold and 0% antimony over 1.7m (estimated true width 1.64m) in hole BD513 (Kiwi zone).
  • 21.6g/t gold and 6.7% antimony over 1.65m (estimated true width 0.92m) in hole BD496.
• Drilling at Sub KC aims to both infill and extend mineral resources below the Cuffley and Augusta workings at a depth of c 1,200m to test for additional Costerfield-type structures.

Alkane reported on the progress of the Kendall drilling programme separately in Q3, revealing that 25 individual veins have now been identified and modelled immediately above the currently mined Youle and Shepherd orebodies and surrounding the historically mined Costerfield deposit, with significant assays including 132.2g/t gold and 19.8% antimony over 1.94m (with an estimated true width of 1.04m) and 267.5g/t gold and 5.6% antimony over 2.3m (with an estimated true width of 1.22m).

During Q4, exploration activities comprised approximately 26,670m of surface and underground diamond drilling across multiple deposits and targets, focusing on resource infill, resource growth, geological model validation, and target testing. Drilling programmes were completed at Cuffley, Kendall North, Alison North, Brunswick South, and True Blue, with the Alison North resource growth programme commencing to investigate extensions around the historic Alison mining area.

Simultaneously, drilling at Brunswick South during the quarter extended the high-grade gold trend at the deposit, with selected intersections including:

• 50.1g/t Au and 26.2% Sb over 2.17m (estimated true width 1.08m) in hole BD468.
• 109.9g/t Au and 3.1% Sb over 0.65m (estimated true width 0.62m) in hole BD433.
• 50.2g/t Au and 33.3% Sb over 0.86m (estimated true width 0.62m) in hole BD424.
• 39.8g/t Au and 0.7% Sb over 1.30m (estimated true width 1.15m) in hole BD408.
• 25.0g/t Au over 1.70m (estimated true width 1.64m) in hole BD513.
• 21.6g/t Au and 6.7% Sb over 1.65m (estimated true width 0.92m) in hole BD49678.

Björkdal

The Björkdal mine was started in the 1980s as an open pit and transitioned to underground mining in the early 2010s. It is a large mineralised system that is currently supporting production of c 1.4Mtpa, of which c 950ktpa is derived from the underground mine at a grade of c 1.5g/t and 450ktpa is derived from low-grade stockpiles on surface at a grade of c 0.3g/t, such that the milled grade is c 1.1g/t. It benefits from rail access and hydro-derived electricity at a price of c 2c/kWh and produces a concentrate that is sent to a nearby smelter. In contrast to Costerfield (where the focus is on tonnage), at Björkdal, Alkane’s focus is on maximising the grade of the underground mine to achieve a consistent 50–55koz in production per year and to drive down unit costs (AISC A$4,184/oz in Q426, but A$3,699/oz in Q3) closer to A$3,300/oz and cement it as Alkane’s longest-life asset (based on reserves).

The Björkdal mine is situated on a large marble structure, dipping at c 30°, where local stresses have fractured the host rock, opening it up as a pathway for mineralised fluids. As a result, the nature of the mineralisation is discontinuous such that maximising grade effectively conflates with seeking new ore sources, which, in turn, will enable Alkane to increase its development rate and to open up new areas for mining. The orebody is currently being mined with a focus on the northern and eastern depth extension. Ore production from above the marble unit is typically at a slightly higher grade, but involves drilling blind and blasting downwards, whereas mining below the unit is typically more conventional. Within this context, Alkane’s immediate exploration priorities are:

• Infill and extension drilling in the north-western continuation of the Björkdal deposit in order to extend underground mining operations within the North Zone and the separate Eastern Extension of the Bjorkdal deposit from the Main Zone (see Exhibit 7)
• The depth extension of Storheden as a precursor to developing a mine plan for the area within the next 12 months and lifting the mining rate by opening up a new mining front with a new mining fleet. Storheden has recently been modelled as a series of steep quartz zones akin to the Bjorkdal Main zone and Alkane is developing towards it via an underground cross-cut and decline over three years. In December, the results of drilling at Storheden were released, suggesting that it is very similar in its mineralisation to the areas of Bjorkdal currently being exploited and that it could itself be mined within approximately two years (subject to permitting). Highlights of the announcement included an extension of the known depth of the deposit to 464m and strike length to 2.7km with a series of Björkdal-style veins interpreted across three main target domains. Assay highlights included 142.0g/t gold over 0.60m (estimated true width 0.25m), 111.0g/t gold over 0.50m (estimated true width 0.25m) and 34.3g/t over 1.6m (estimated true width 0.68m). Alkane is also continuing to investigate its structural controls.
• Developing a satellite open-pit mine at Nylunds to the south of the existing Bjorkdal open pit. The mine would have a stripping ration of c 6–7 to one and a grade of c 0.8–0.9g/t (ie higher than the low-grade stockpile that is currently being processed) and could be in production as early as this year.
• Drilling out the extension of the potential 3g/t open-cut Norrberget resource, 5km distant from Björkdal, albeit with the caveat that mining in this area will require a new permit.

Three exploration targets were progressed at Björkdal in Q3, being a) drilling at North Zone, which moved from a growth phase to an infill stage, b) the Eastern Extension programme, which targeted the continued depth and eastward extension of the Main and Central Zones, and c) growth drilling at Storheden.

In Q4, drilling progressed on the northern and eastern extensions of the Björkdal mine targeting the open continuation of the deposit and on 9 July, Alkane announced that an additional 29 drill holes had been completed at these two extensions, which were completed in rolling phases of extension and infill across both target areas. This significantly enhanced confidence in the understanding of vein geometry and grade-controlling structures. Grade continuity within both areas was also supported by the drilling, with high-grade intercepts within the eastern extension extending the known mineralisation to a depth of 762m below surface (the deepest yet recorded). Current and planned exploration drilling will continue to target along-strike and down-dip extensions of the known mineralisation, with the objective of further expanding mineral resources and supporting future mine-life growth. Assay highlights from this campaign included:

• At the Eastern Extension:
  • 86.1 g/t gold over 1.25m (estimated true width 0.80m) in hole MU25-030.
  • 81.3 g/t gold over 4.40m (estimated true width 2.20m) in hole MU25-022.
  • 78.3 g/t gold over 0.30m (estimated true width 0.21m) in hole MU26-005.
  • 39.3 g/t gold over 0.50m (estimated true width 0.41m) in hole MU25-011.

• At the Northern Extension:
  • 31.5 g/t gold over 0.85m (estimated true width 0.22m) in hole MU26-002.
  • 25.2 g/t gold over 0.60m (estimated true width 0.42m) in hole MU25-027.
  • 17.1 g/t gold over 0.80m (estimated true width 0.40m) in hole MU25-016.
  • 15.4 g/t gold over 4.00m (estimated true width 1.37m) in hole MU25-032.

Alkane also commenced the skarn extension programme in Q4, targeting the depth continuation of the Lake Zone Skarn body discovered in 2025. In the meantime, drilling continued on Storheden targeting the southern portion of the deposit, approximately 800m to the north-east of Björkdal.

Northern Molong Porphyry project (incorporating Boda-Kaiser)

Alkane is undertaking water, infrastructure and flora and fauna environmental baseline studies this year at Boda-Kaiser as well as simultaneously progressing it towards a Project Approval application. Its exploration focus is:

• Exploring Boda 4 for potential southern extensions to the Boda 2–3 deposit for new copper-gold porphyry centres (which often occur in clusters).
• Drill testing the geology between Boda and Kaiser (which is assumed to be fault-displaced) for new high-grade copper-gold hydrothermal centres.
• Extension drilling immediately south of the Kaiser resource.
• Drill testing via the induced polarisation (IP) and changeability target associated with phyllic alteration for copper-gold porphyry mineralisation at Driell Creek.
• Further drill testing of the monzonite hosting copper-gold mineralisation at Glen Hollow, where previous results include 45m at 0.87g/t Au and 0.15% Cu.
• Testing an IP changeability response from the 2024 survey within the Comobella Intrusive Complex at Haddington, where historical results include 18m at 0.95g/t Au and 0.15% Cu.

During Q3, exploration on the Northern Molong Porphyry project included the continued inversion and interpretation of the Mobile Magneto-Telluric survey data that was flown over the northern half of the area in November, with the goal of identifying new conductors beneath the Gunnedah Basin as possible sulphide mineralisation. At the same time, 4,000m of reconnaissance drilling that commenced in December was concluded.

Exploration in Q4 (announced on 10 June) consisted of drilling a total of 2,555m testing areas for new Au-Cu mineralised centres, comprising:

• One diamond core drill hole and one RC drill hole were completed testing the area between the Kaiser and Boda deposits.
• Three RC drill holes were completed to the north-east of Boda-Kaiser testing targets generated from IP and surface geochemical surveys. The diamond core drill hole was reported to have intersected a magmatic root zone to an intrusive-hydrothermal breccia with two significant intercepts of 23.5m grading 0.17g/t Au and 0.14% Cu and 42.1m grading 0.16g/t Au and 0.14% Cu. Further drilling is planned to test along strike and up-dip of this breccia.
• District exploration included four RC drill holes for a total of 1,258m testing IP chargeability targets hosted by the Comobella Intrusive Complex at the Haddington and Glen Hollow prospects. The programme confirmed the chargeability anomalism intersecting monzonites with pyrite and lesser Cu-Au mineralisation, with a best intercept of 3m grading 1.74g/t Au and 0.07% Cu.

Mobile MagnetoTellurics (MMT) was flown over the project area to the north of the Boda-Kaiser deposits, which defined six high-priority targets for porphyry style systems at Driell Creek, Murga, Gollan North and two new prospects, named One Tree and Old Station, where on-ground validation has commenced.

Environmental baseline studies relating to the approval of the Boda-Kaiser Au-Cu resource continued during the quarter. Hereafter, Alkane’s target timeline at Boda-Kaiser is:

• 2026–27:
  • stakeholder consultation,
  • environmental studies,
  • remaining property negotiations,
  • site selection, and
  • rail, power, road, water and windfarm negotiations.
• 2027–28:
  • project approvals’ application and receipt.
• 2028–31:
  • bankable feasibility study, and
  • financing and final investment decision.
• 2031–33:
  • construction and commissioning.

Nagambie

On 30 January, Alkane announced it had executed a term sheet comprising a conditional placement and earn-in agreement with Nagambie Resources in relation to the latter’s core gold-antimony project tenement package, located on a mining lease approximately 40km north-east of Alkane’s Costerfield operations in Victoria. To date, there has been limited deep drilling to test potential depth extensions at Nagambie, with Alkane’s proposed investment now expected to target this potential as a priority. The transaction secured Nagambie shareholder approval on 9 April, and the 12-month option period has now commenced, under which Alkane may elect to undertake sole-funded exploration and evaluation activities and related studies over Nagambie’s Mining Licence MIN 5412 and Exploration Licence EL 5511.

Under the earn-in arrangements, Alkane may elect to:

• solely fund a minimum aggregate expenditure of A$12.5m (inclusive of option period expenditure) within three years from the commencement date to earn a 60% interest in the tenements (with Nagambie retaining a 40% interest), or
• following the 60% earn-in, solely fund a further A$15.0m expenditure (to a total of A$27.5m) within five years from the commencement date to earn an additional 20% interest, increasing its participating interest to 80% (with Nagambie retaining 20%).

Joint venture formation

The parties will form an unincorporated joint venture upon Alkane earning either:

• an 80% interest in the tenements, or
• a 60% interest and electing not to continue sole-funding expenditure.

Alkane would then act as manager of the joint venture, with each party contributing to joint venture costs in proportion to its participating interest. If, following the formation of the joint venture, Nagambie’s participating interest dilutes below 10%, its interest will convert to a 2% net smelter return (NSR) royalty, subject to a cumulative NSR royalty payment cap of A$20m, on standard industry terms.

If a joint venture is formed, Alkane has agreed to make spare processing capacity at its Costerfield processing plant available for the treatment of ore from the tenements and expects to utilise its existing underground mining equipment and maintenance facilities in support of joint venture mining activities, subject to agreed commercial terms.

Q4 developments

Under the terms of the earn-in agreement, two LM90 drill rigs were mobilised to Nagambie in Q4 and a total of 527m of diamond drilling was completed in June focused on resource delineation infill drilling of lodes within the Au-Sb inferred resource below the existing pit. The initial goal of the drilling is to validate the resource. In the longer term, it is to define enough material to contribute either supplementary feed to an expanded Costerfield mill or stand-alone feed at the end of the life of the Costerfield mine. Note that Nagambie already has its own mining licence and initial metallurgical investigations suggest that its ore is compatible with the Costerfield plant at this stage.

Other growth opportunities

Strategically, and in the longer term, Alkane is also pursuing further inorganic growth opportunities. While these could come in all shapes and sizes, management has indicated that such targets are likely to be located in Australia, New Zealand, the US, Canada and/or Scandinavia and are likely to be producing (or within two years of production) at a rate of c 70–120koz per year. Ideally, any business combination would be completed as:

• a merger of equals in a share-for-share transaction (such as Alkane and Mandalay);
• the acquisition of a developer (subject to price); or
• the acquisition of an asset lacking critical capital at a discounted P/NAV ratio.

Valuation

Updated absolute valuation

Our valuation of Alkane (post-merger) is based on the present value of our forecast life of operations dividend stream to investors discounted back to present value at a (real) rate of 10% per year, excluding discretionary exploration expenditure. Taking into account Q4 operational results and our forecasts for the remainder of FY26 (Exhibits 2 and 3), our valuation of the dividend stream potentially available to Alkane shareholders from its combined mining operations is A$0.745/share (cf A$0.834/share previously), with the decline almost exclusively attributable to the increase in guided capex for FY27, notwithstanding the fact that this capex may actually prove to be value adding. This A$0.745/share increases to A$0.778/share once the value of residual resources is included and to A$0.798/share once the value of Alkane’s 2c/share FY26 dividend is also included.

A graph of our updated expectations for Alkane’s EPS, (maximum potential) DPS and valuation from the present to end-FY41 (at a long-term gold price of US$1,941/oz from 2030 onwards in real 2026 US dollar terms) is as follows:

Note that the DPS columns in Exhibits 9 and 10 represent theoretical, maximum potential dividends that we believe could be paid by the company, rather than actual dividends forecast, and are used for valuation purposes only.

At the same time, it is worth noting that the valuation above is calculated at a conservative long-term (real) gold price of US$1,941/oz in 2026 US dollar terms. At the current gold price of US$4,011/oz, this valuation more than trebles to A$2.32/share.

Relative valuation

Based not only on Edison’s exceptionally conservative long-term gold price of US$1,941/oz from CY30 onwards (in real 2026 dollar terms), but also the current (real) gold price of US$4,011/oz, Alkane now commands a premium rating within the sector, as shown below:

Nevertheless, it remains cheap relative to its peers, on an enterprise value of just US$79.91 per resource ounce, despite being a profitable, cash-generating multi-asset company with the potential for dilution-free development.

Historical valuation

Since FY18, Alkane has traded within a contemporary year one P/E range of 5.1–28.0x (albeit with the proviso that the FY20 P/E coincided with the demerger of Australian Strategic Materials) and at an average P/E ratio of 13.4x basic adjusted EPS, as shown below.

Applying this 13.4x multiple to our adjusted EPS estimates for the next two years implies average share prices for Alkane of A$2.42 in FY26 and A$2.30 in FY27.

Alkane group valuation

Taking the wider group’s assets into consideration, a summary of our Alkane group valuation is as follows:

While the per share valuation of Boda-Kaiser has been diluted by Alkane’s merger with Mandalay, we believe that this is more than made up for by the combined entity’s increased cash generation potential until 2031, which has the ability to fund the project’s pre-production capex requirement in its entirety, notwithstanding its new dividend commitment (see Financials below). For the purposes of our valuation of Boda-Kaiser, we have included the in-situ valuation of the combined resource as a core asset. We have included the difference between the discounted dividend flow valuation and the in-situ valuation as a contingent asset. Whereas these were closely aligned in the past, the discounted dividend valuation of the asset is now beginning to advance ahead of the resource valuation as the prospect of dividend flows to shareholders from the project moves closer with the passage of time and with the attainment of milestones inherent in bringing such a deposit to account. In this case, they have also advanced because we have increased our long-term copper price from US$10,000/t to US$10,979/t. In the meantime, we have valued Boda 2, 3 and 4 at zero as a core asset on the basis that it has yet to delineate a resource, but at 22c as a contingent asset in the event that it is shown to be as large as the original Boda deposit (which we think is a possibility, see Alkane’s Boda-Kaiser regional exploration update).

Financials

As at end-June 2025, we estimate that Alkane had pro forma net cash of A$131.0m on its balance sheet. This had risen to A$305.6m by end-March 2026 (+A$174.6m). As at 30 June 2026, the company reported that it had A$432m in cash plus A$7m in bullion and a further A$15m in listed investments, probably offset by c A$14.5m in liabilities to give it c A$417.5m in net cash (+A$287m) after c A$567m in positive mine operating cash flows, A$159m in investment, A$53m in tax and A$68m in corporate and other payments.

Boda-Kaiser has a pre-production capex requirement of c US$1,188m, or A$1,696m at the prevailing fx rate. At Edison’s relatively conservative long-term gold price of US$1,941/oz (cf US$1,866/oz previously), we estimate that Alkane has the potential to accumulate A$658m in net cash by the end of FY31 (assuming a flat annual dividend of 2c/share) to contribute to the funding of the Boda-Kaiser project. This amounts to 39% of the total capex requirement and, in our opinion, would obviate the need for the company to either raise additional equity or seek a strategic partner to develop the project. However, at the current (real) gold price of US$4,011/oz, we estimate that Alkane could accumulate A$2,191m in net cash to contribute towards Boda-Kaiser pre-production capex, in which case we estimate that it could fund the project itself.