Alkane Resources share price gains 62% in June quarter amid increasing gold production

Alkane Resources Ltd (ASX:ALK) (OTCMKTS:ALKEF) (FRA:AK7) shares gained nearly 62% in the June quarter, as the company beat its own gold production forecasts. ALK shares closed the month of June at A$1.15, a 61.9% gain on the A$0.71 they were fetching in early April. The share price run came on the back of strong gold production, sales and exploration at its Tomingley Gold Operations (TGO) 50 kilometres southwest of Dubbo in central NSW. Strong production and sales Gold production was above forecasts for the quarter at 13,500 ounces, with site operating cash costs at A$1,199/ounce and all-in sustaining costs (AISC) of A$1,669/ounce. Alkane sold 11,526 ounces for the quarter, bringing in A$27.7 million in revenue at an average price of A$2,401 an ounce. Gold, gold and more gold at TGO Alkane managing director Nic Earner said Tomingley continued to meet, and regularly exceed, the company’s expectations. “This demonstrates why it is a great asset managed by a highly professional and committed operations team,” he said. “With an updated mine plan that extends the life of Tomingley to at least 2031, at increased production rates, we remain buoyant about the longer-term prospects both at Tomingley and at our Boda exploration tenements.” Strong FY21 performance When looking at the 2021 financial year as a whole, TGO produced 56,958 ounces, comfortably exceeding Alkane’s guidance of between 50,000 and 55,000 ounces - even after that guidance was lifted earlier in the year. The AISC to produce that gold fell to A$1,320/ounce, well below the guidance of between A$1,400 to A$1,550/ounce. Alkane is now forecasting 55,000 ounces to 60,000 ounces for the 2022 financial year, at an AISC of between A$1,450 and A$1,600/ounce. Tomingley extension project Alkane has bigger plans yet for Tomingley. It is particularly excited about two gold deposits just south of TGO, Roswell and San Antonio, the mining of which will see the Tomingley mine life extended until at least 2031. The life of mine plan forecasts production of approximately 745,000 ounces during that time, with processing ramping to a 1.5 million tonnes per annum feed rate. To develop the Roswell and San Antonio deposits, the Newell Highway will need to be diverted onto land which Alkane has purchased; the company estimates the diversion, together with plant upgrades, will cost about $87 million, with the bulk of that cost to land in FY23 through operating cashflow and debt. Alkane has completed detailed plans and initial consultation and is preparing to submit an Environmental Impact Statement in the September quarter; it hopes to begin work at the deposits mid-next year. Exploration at Boda Separately, Alkane wholly owns the Northern Molong Porphyry Project (NMPP) to the northeast of Tomingley. The Boda prospect at NMPP is particularly exciting, with assays in May showing further continuity of the high-grade breccia at Boda as well as showing extensions to the mineralised system to the south at Boda Two, approximately 1 kilometre from the main Boda target zone. One diamond core hole intersected the sulphide cemented breccia down dip with assay results of 383.2 metres grading 0.80 g/t gold and 0.31% copper from 775 metres which included: 204 metres at 1.40 g/t gold and 0.51% copper from 776 metres; 101 metres at 2.47 g/t gold and 0.83% copper from 824 metres; and 70 metres at 3.04 g/t gold and 0.92% copper from 829 metres. Assay results for porphyry pathfinder elements such as antimony, arsenic, molybdenum and zinc were anomalous, and in addition to intersecting low grades of gold and copper, confirms the prospectivity of the target with further exploration planned. Further results from other holes are forthcoming, while a reconnaissance drill program of 75 aircore drill holes for 1,354 metres was completed along nominal 400-metre spaced drill traverses across an untested 2 kilometres in strike length magnetic anomaly at Murga Prospect (Finns Crossing), about 12 kilometres northwest of Boda. Books looking healthy Alkane’s foundations are solid ahead of the 2022 financial year kicks off, with its cash, gold bullion and listed investments totalling A$73.9 million. It has a 9.7% shareholding in ASX-listed gold developer Calidus Resources Ltd (ASX:CAI), and it invested a further A$2.2 million in fellow ASX-listed gold developer Genesis Minerals Ltd (ASX:GMD), taking its hold of GMD to 19.8%. Alkane's market cap sits at approximately A$681.7 million. - Daniel Paproth