Gold: For Alkane and its shareholders, Tomingley is the gift that keeps on giving
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It’s all good news this quarter for small cap miner Alkane Resources (ASX:ALK).
Alkane is currently transitioning to underground mining at its Tomingley gold operation (TGO) in New South Wales after five years of open pit mining finished up in January.
This kind of transition can often be a disruptive to a miner over the short term, impacting cashflows and overall profitability.
For example, Alkane is now processing its medium grade ore stockpiles, then its low-grade stockpile for the remainder of the year, before moving onto the underground ore.
But the change-up isn’t impacting its bottom line as much as Alkane expected.
10,669oz was poured for the quarter at impressively low all-in sustaining costs (AISC) of $956/oz.
AISC is a good guide for punters to work out whether an operation is profitable or not, because it includes all expenditures related to sustaining gold production.
And to top it off, Alkane says it will produce more gold than it thought for FY19 (42,000-47,000oz of gold at an AISC of $950-$1100/oz) because of the “continued higher than expected grade of some stockpiles”.
Low costs, and an average sales price of $1841/oz means a decent quarterly profit of $5.28 million for Alkane.
The small cap miner currently has about $72.5 million in the bank, which is pretty incredible for a company with a market cap of just $119 million.
Alkane says underground development remains on budget and schedule. 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) the company is aggressively exploring for additional resources to feed the hungry 1 million tonnes a year TGO processing facility.
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.
Today, it’s all about the gold hits, and the fact that none of these explorers can find the end of their respective deposits.
Breaker Resources (ASX:BRB) keeps expanding its exciting 1.1moz Bombora deposit, at Lake Roe in Western Australia. Last month we said Breaker was struggling to find the end of Bombora and it appears like that’s still the case.
The explorer has come out with more strong assays, like 14m at 18.86g/t from the Tura lode, the highest gram-metre result recorded from the lode to date.
Much of this drilling was designed to identify the outer limit of the open pit in preparation for finalising the pre-feasibility study – which is hard when you can’t find the end. The deposit is still open in all directions, but the explorer has now paused drilling to prep for a July resource update.
“The challenge now is to determine just how big Myhree is,” says Black Cat Resources (ASX:BC8) boss Gareth Solly. Myhree is part of Black Cat’s Bulong project near Kalgoorlie, where new, exceptionally thick, high-grade results (like 30m at 5.06g/t, four metres from surface) could boost the maiden 50,000oz resource significantly. Finding just how big this potential open pit mine is will be a priority for Black Cat, which will fast track follow up drilling to start mid-May.
Focus Minerals (ASX:FML) says all eight holes hit multiple gold zones at its ever-expanding 538,000oz Karridale deposit. The latest round of drilling extended the mineralisation by 160m and will be included in an upcoming resource estimate, due in the June quarter.
But guess what? Focus still hasn’t found the end at Karridale; the gold mineralisation is “open in all directions and continues to provide a high hit rate within its interpreted large 1700m by 800m footprint”.