PRECIOUS METALS

COVID and rain cloud Alkane cost outlook

CASHED-up gold producer Alkane Resources hit its production targets at its flagship Tomingley operations in New South Wales, but the miner says the twin impacts of COVID-19 and heavier than usual summer rainfall are putting upward pressure on costs.

Alkane's Tomingley operations have visibility to production to 2031

Alkane's Tomingley operations have visibility to production to 2031

Production increased from 12,141 ounces in the September quarter to 16,935oz as the company was able to transition from mining lower grade areas to higher grade stopes, and it was able to drive down all-in sustaining costs from A$1961/oz to $1338/oz quarter-on-quarter.
 
However, while production has tracked to plan, and Alkane is sticking with withs 2021-22 production guidance of between 55,000-60,000oz, it has been forced to upgrade its cost guidance from $1450-1600/oz to $1500-1650/oz.
 
Workers self-isolating during the current omicron wave has seen 10-20% of the workforce unavailable for periods, and very high rainfall has occurred in western NSW, resulting in some pit wall and access ramp erosion that required remediation and stabilisation.
 
It's a relatively minor impact, given the Australian gold price is currently above $2500/oz, and operationally Alkane is in a strong position to fund new developments and its exploration activities around NSW.
 
Sales for the December quarter were 17,754/oz, generating revenue of $44 million, maintaining Alkane's cash, bullion, and investments at about $118 million.
 
That includes $18.9 million generated from the sale of shares in Genesis Minerals, where Alkane has reduced its ownership from 19.8% to 12.7%.
 
A $20 million debt facility with Macquarie Bank was repaid during the quarter. 
 
Looking ahead, Alkane anticipates delivering its highly anticipated maiden resource for its Boda copper-gold porphyry discovery later this quarter and receiving approvals for its Roswell and San Antonio developments by mid-year.
 
The proposed new mines will send ore 7km to the 1Mtpa mill at Tomingley and are part of a plan to build production towards 115,000ozpa from 2024-25.
 
Alkane shares, which have traded between 65.5c and $1.25 over the past year, closed at 86c on Friday, valuing the miner at $512 million.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

editions

MiningNews.net Research Report 2024

Access a multi-pronged tool to identify critical risks and opportunities in Australia’s mining industry.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.