Alkane Resources (ASX:ALK) - Gold Producer Targets ~80koz Production Amid Booming Price Environment

Feb 20, 2025

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Interview with Nic Earner, Managing Director of Alkane Resources Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/alkane-resources-asxalk-fully-funded-growth-plan-exploration-upside-for-potential-re-rating-6182

Recording date: 18th February 2025

Alkane Resources, an ASX-listed gold producer operating in New South Wales, is capitalizing on record-high Australian gold prices of around A$4,600 per ounce. The company has positioned itself for strong performance with recent operational improvements and a strategic hedging approach.

For FY2025, Alkane expects production to be in the lower range of its 70-80,000 ounce guidance, with all-in sustaining costs (AISC) between A$2,400-2,600 per ounce. Production is projected to be closer to 80,000 ounces in FY2026, with AISC expected to decrease to around A$2,000 per ounce after completion of development work in the new mining area.

The company has recently completed significant infrastructure investments, including a flotation and fine grinding circuit that has increased gold recoveries by 7%, along with a new pace carbon-in-leach plant. While these investments have resulted in higher near-term costs, they are expected to improve long-term operational efficiency.

Alkane's hedging strategy leaves two-thirds of its production exposed to current high gold prices, with only one-third hedged at A$2,850 per ounce through June 2027. At current spot prices, this results in an average realized gold price of approximately A$4,000 per ounce.

The company's flagship Tomingley Gold Operations, including its underground mine and satellite deposits of Roswell and San Antonio, demonstrate significant exploration potential. Since 2013, the operation has exceeded initial expectations, having mined about 650,000 ounces from an initial 370,000-ounce mine plan, with substantial reserves still remaining.

Financially, Alkane maintains a strong position with A$40 million in cash and bullion as of December 2024, expected to increase in the current quarter. The company's debt structure includes A$45 million in bank debt, with A$5 million scheduled for repayment by June 2025.

Looking ahead, Alkane is developing a new open pit mine alongside its underground operations, which should provide additional operational flexibility. The company's growth strategy is supported by extensive exploration upside, with its underground operations and satellite deposits remaining open at depth.

The broader market environment appears favorable for Alkane, with gold prices at record highs in Australian dollar terms, driven by global economic factors including monetary stimulus, inflation concerns, and geopolitical tensions. As an Australian producer, Alkane benefits from both the high gold prices and the stability of operating in Australia's established mining jurisdiction.

View Alkane Resources' company profile: https://www.cruxinvestor.com/companies/alkane-resources