Gold boss Nic Earner lays out how explorers can become self-sufficient miners the Alkane way

Speaking with Stockhead, Alkane Resources (ASX:ALK) boss Nic Earner lays down the case for self-sufficient exploration to production with insights into his company’s journey: what to look for and what to avoid when trying to “go it alone” evolving from a junior explorer into a minted miner.

Earner’s own journey from managing the metallurgical wizardry of BHP’s (ASX:BHP) Olympic Dam processing to MD of Alkane Resources (ASX:ALK) has given him a unique perspective on developing gold and copper projects.

He emphasises the importance of understanding ore bodies and the challenges of transitioning from exploration to production through his time at one of the biggest copper project developments on the planet.

“The big thing about Olympic Dam is the size and scale of the operation for one, but particularly the mineralogical complexity of it and those multi-product streams – gold, copper, nickel and uranium,” Earner said.

“And for myself, I had roles in the automation of the entire site, production roles in the smelter and all the surface facilities.

“Then there’s getting your head wrapped around the milling, flotation, acid leaching, solvent extraction, smelting and so on.

“The most important technical lesson is that you must have a good ore body; one that you understand the structure and mineralogy of, or nothing else really matters.

“Just call the operation mining, engineering and metallurgical understanding 101.”

The Alkane way

Alkane’s development history from explorer to producer is a rarity nowadays.

The miner self-funded itself from exploration into production with the handy help of discovering both the Wyoming and Caloma deposits, securing project approvals and building a plant within budget.

It took investors along for the ride, from a share price of just 20c at the end of 2019 to trade at 54c a share at time of writing.

“I think the most remarkable thing to me is discoveries. And it is a lesson for people exploring 10 years ago, where they thought ‘oh, I found this 1-1.2g/t gold ore body… that’s not very exciting’, yet projects with those grades are making really solid money now,” Earner says.

“The question is do you, as an explorer, decide for the next few years to commit to long-term exploration and hope for a high-grade discovery?

“What you really want to do is ask ‘well, okay, but how does this fit into our 10-year time frame?’

“It’s incredibly important to understand the true cost of coming into production.”

Another thing Earner points to is that “some explorers will really wind up their resource models to attract funding, but once you’re operating in that sphere it can be a fool’s game, because you’re budgeting on the cash flow and talking about a theoretical resource.”

“Playing that kind of game you’ll need to be completely unemotionally pragmatic about the dilution and probable losses you’re going to get,” he adds.

It can be done

Lighting the candle as an explorer going it alone currently is De Grey Mining (ASX:DEG), which discovered one of the largest gold deposits Australia’s seen in more than a decade in its $1.3bn Hemi deposit, which has an expanding endowment of +10Moz gold in WA’s Pilbara region.

De Grey has batted away hostile takeovers and M&A ructions for a few years now, most recently from Canadian giant Agnico Eagle, yet its recent $600m equity raising to fund the development of Hemi is thought to have put to rest any suggestion it was embarking on any M&A talks.

Agnico Eagle owns the Fosterville mine, the largest producer of gold in Victoria. It inherited the asset when it merged with Kirkland Lake and it likes to acquire assets of scale.

Tomingley rising once again

Recent digging has unsurfaced more high-grade gold at Alkane’s flagship Tomingley gold project during FY24, culminating in an 11% increase in reserves.

The project now boasts 11.76Mt at 1.9g/t for 705,000oz, boosting its overall NSW mineral resource up to 10Moz – with over half of them in the higher confidence category.

During the September quarter, Alkane maintained FY25 guidance of 70,000-80,000oz at $2400-2600/oz at Tomingley after delivering 18,418oz at an AISC of $2182/oz, which churned out $19.2m in operating cash flow.

And with $52m in the coffers as of the end of Q3 this year, Alkane’s extension and expansion plans for Tomingley are well covered.

Ongoing regional exploration sees production continue until at least 2032 across a 440km2 swathe of land and the expansion of Tomingley’s 1Mtpa processing shop up to 1.75Mtpa by FY26 end.

Process flotation and fine grind circuit. Source: Alkane Resources.

Red metal hits

Elsewhere across its holdings, exploration at Rockley confirmed copper and base metals targets for drilling after a seven-hole program intersected high grades of the red metal in six of them.

Highlights include 62m at 0.12% copper, 0.39% zinc, 4g/t silver, including 3m at 0.44% copper, 0.64% zinc, 0.34% lead, and 29.8g/t silver; and 14m at 0.14% copper, 0.41% zinc, 0.04g/t gold, and 2.7g/t silver.

Alkane’s already started a 12-month target generation program across Rockley in efforts to become another gold-copper producing success story.

At Stockhead we tell it like it is. This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.