Alkane Resources (ASX:ALK) is going underground at its Tomingley gold operation (TGO) in New South Wales after five years of open pit mining finished up in January.

But with an underground mine life of about 40 months (or 3 and bit years for those trying to do the maths, you’re welcome) Alkane is aggressively exploring for additional resources to feed the hungry 1 million tonnes a year TGO processing facility.

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The latest drilling has hit paydirt at the Roswell, San Antonio, and El Paso prospects, Alkane confirmed.

In fact, Alkane boss Nic Earner says these are the most significant exploration results in the Tomingley region since the initial discoveries by Alkane over a decade ago.

This includes gold mineralisation over a strike length of 800m at San Antonio and 350m at Roswell.

At San Antonio, intercepts included 39m grading 6.09 grams per tonne from 153m to the end of the hole.

Inside this intercept was a higher-grade section – 6 metres at 15.41 grams per tonne from 180m.

A gold deposit over 5 grams per tonne is usually considered high grade.

Alkane is going underground at Tomingley (pictured) but these new discoveries could be a game-changer.

Both prospects are open along strike and down dip, which means there’s gold going out in all directions. Drilling is currently under way to test the 300m untested strike between the two prospects.

Alkane actually wants to define a resource here ASAP and will kick off 50,000m of drilling soon to do just that.

These results are reminiscent of the discovery holes of the deposits that then became the Tomingley Gold Operations, Mr Earner says.

“With our processing plant, which is currently treating stockpiles and is soon to be processing underground material, only 4km away, we will be expediting the drilling and development of these ounces to capture value for shareholders as quickly as possible.”

This transition underground means Alkane expects to produce about 35,000 ounces at an all-in sustaining cost (AISC) of between $1300 – $1400 per ounce in FY19.

This is a 55 per cent drop in ounces and a ~38 per cent increase in costs per ounce compared to the prior year.

Still they’re in a pretty good spot, with profits of $12.2m in the December half adding to Alkane’s $80.5m cash position.

The Alkane share price over the past year.
The Alkane share price over the past year.

 

In more ASX gold news today:

 
Kin Mining (ASX:KIN) could go deeper under a historic open pit after hitting 14m at 2.5 grams per tonne, 217m from surface. The Mertondale 5 pit, which produced 37,800oz back in the day, could get a new life as part of Kin’s 1.06 million-ounce Cardinia project.

Kin wants to release an updated Cardinia feasibility study in mid-2019 ahead of a decision to mine by the end of the year.

 
Red 5 (ASX:RED) says bulk underground mining methods will boost ore production. Bulk mining at King of the Hills will increase ore production by 43 per cent to about 50,000 tonnes per month, Red 5 says.

It’s also going to be more cost effective, which is handy because the company expects to produce 100,000-115,000 ounces overall at an above-average AISC of $1,350 – $1,550 per ounce in FY19.

 

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