Australian Gold Producer Alkane Resources Outlines Growth Strategy

• Alkane Resources is an Australian gold producer and explorer listed on the ASX.
• Currently operates one producing gold mine forecast to produce 70,000 ounces in FY23 at A$1,750-2,000 per ounce AISC.
• Recently approved mine life extension takes production to 2032 through new underground development. Expect to increase production to 100,000 ounces per year from FY24.
• Has a large 15 million ounce gold equivalent exploration project called Boda-Kaiser on which it has spent A$50 million. Aiming to release a preliminary economic assessment in March 2023.
• Well-funded with A$100 million cash and investments. Focused on creating shareholder value through development and strategic investments.

Alkane Resources (ASX: ALK) is an Australian gold producer and explorer focused on creating shareholder value through developing its assets. The company has been listed on the ASX for over 40 years and has a strong track record of exploration success and mine development.

Alkane Resources currently operates one producing gold mine in New South Wales forecast to produce 70,000 ounces in FY23. The Tomingley Gold Operations mine has been operating profitably since 2014, utilizing a 1 million tonne per annum underground operation. Alkane has a history of exceeding production guidance at Tomingley, which managing director Nic Earner attributes to high levels of visible gold in the ore body.

Producing 70,000 Ounces Per Year, Forecasting Production Increases

In FY22, Alkane Resources achieved all-in-sustaining-costs of A$1,602 per ounce at Tomingley. Guidance for FY23 is A$1,750-2,000 per ounce. The expected increase reflects the costs of transitioning to a new ore body at depth. However, Alkane sees a clear path to substantially increasing production.

The company recently gained approvals for a 2.5-kilometer underground drive to access new mining areas, extending the mine life to 2032. This new development will boost production to 80,000-85,000 ounces per year when it comes online in Q4 2022. Open pit expansions will then take annual production to 100,000 ounces from FY24 onwards. As managing director, Nic Earner stated:

"We have roughly two million odd ounces in Total Resource for the whole area that I'm talking about."

Major Exploration Project Represents Significant Upside

In addition to its producing mine, Alkane has an extensive exploration portfolio focused on the broader region around Tomingley. The clear standout is the Boda-Kaiser gold exploration project, which has a total resource of 15 million gold equivalent ounces.

The scale of the porphyry-style mineralization at Boda-Kaiser provides significant upside potential. Alkane has already invested A$50 million in drilling out the deposit and is working to upgrade resource classifications and release a preliminary economic assessment in March 2023.

The company sees open cut and underground mining potential, targeting a mine grade of around 0.8g/t gold equivalent. As Nic Earner explained: "Logically it will be like any other development, we'll start with an open cut, move to an underground mine, and then probably run an open cut and underground in sequence."

Well-Positioned to Create Shareholder Value

With A$100 million in cash and investments, Alkane Resources is well-funded to progress its growth ambitions. The company has a track record of creating value for shareholders through developing assets as well as strategic investments and asset sales.

Nic Earner emphasized Alkane's focus on profitability and creating value, rather than holding assets for the sake of it. The Tomingley mine life extension and potential development of the large Boda-Kaiser project put the company in a strong position to grow production and extend mine life.

For investors, Alkane Resources offers exposure to an established Australian gold producer with clear near-term growth potential. The Boda-Kaiser exploration project provides a significant upside that the market currently underappreciates, according to the managing director. With a strong balance sheet and technical capability, Alkane looks well-placed to continue its history of creating shareholder value.

The Investment Thesis for Alkane Resources

• Profitable producer with clear near-term growth potential at the operating Tomingley gold mine. Forecasting production increases to 100,000 ounces per year from FY2024 once mine life extension and open pit expansions are complete.
• Massive exploration upside through the 15 million ounce Boda-Kaiser gold project. PEA due in March 2023 to outline development potential.
• Strong balance sheet with A$100 million cash to fund growth. Proven ability to create shareholder value through mine development and strategic deals.
• Underappreciated growth pipeline not fully reflected in current share price. Offers leverage to the rising gold price.
• Experienced management team with a track record of profitability and exceeding guidance.