Ground Breakers: Little goldie gets reporting season under way as market waits on big dogs to bark
The first reporting season for 2024 is upon us as miners lift the lid on their December numbers, and the first cab off the rank is the under the radar gold producer Alkane Resources (ASX:ALK).
Something of a little engine that could, Alkane has a recent history of outperforming the conservative guidance numbers it pumps out of the Tomingley mine in New South Wales, a small operation it hopes is the pre-cursor to the development of one of Australia’s largest gold porphyry discoveries at its Boda and Kaiser discoveries in the state of the SpeedBlitz Blues.
Tomorrow the floodgates open for the big dogs with Rio Tinto’s (ASX:RIO) numbers (where analysts say port data suggests something close to the upper end of its 320-335Mt guidance for its 2023 iron ore exports).
So consider today’s offering an hors d’oeuvres for more substantive players down the line.
Alkane’s numbers are within the field of acceptability — 13,182oz at all in sustaining costs of $2200/oz generating round $16.2m in operating cash flow. It produced 15,855oz at $2156/oz in September.
Gold sold was 14,507oz at a price of $2926/oz, with the $380m capped miner still planning to hit its FY24 guidance of 60,000-65,000oz at $1750-2100/oz and planning a new resource this quarter with 17,000m of drilling completed from underground into the Roswell orebody.
“We’ve had another good quarter at Tomingley, again meeting our production guidance. The Tomingley Extension Project is continuing with a high level of activity with the Paste Plant pad completed and over 17,000m of infill drilling occurring at Roswell during the quarter. The Roswell Resource Model will also be updated this quarter as we further development in the mining areas,” Alkane MD Nic Earner said.
And what of Boda, which as of last December boasts a low grade resource containing 6.38Moz of gold and over 1Mt of copper?
Reportedly a scoping study is not long off for Boda and the nearby Kaiser discovery, which drew a rush of explorers into the Lachlan Fold Belt, home to some of Australia’s largest gold and copper mines like Cadia, Northparkes and Cobar a few years ago.
Boda is around 110km north of Cadia, recently taken over by the world’s biggest gold miner Newmont (ASX:NEM) in its multi-billion acquisition last year of Newcrest Mining.
“The quarter also saw the release of the updated Boda Resource Model, which increased grade and metal endowment,” Earner said.
“Drilling at Kaiser remains on schedule for the release of an updated resource during the current quarter and this will contribute to the scoping study in the month or two after.”
Pilbara Minerals (ASX:PLS) meanwhile has shown China remains hungry for lithium raw materials despite cratering spodumene prices that could put rival operators on their knees.
Pilbara Minerals says it will sell up to 310,000tpa of spodumene concentrate to China’s Ganfeng Lithium from 2024-2026 under a long term supply agreement on top of the 160,000tpa it supplies annually as per a deal written up in 2017.
Pegged to market pricing, which is down around 80% in the past year, PLS will supply another 150,000t in 2024 and optionally 100,000t or 150,000t extra in each of 2025 and 2026.
It comes with PLS expecting to ramp up from a 580,000tpa capacity last year to 680,000tpa later this year and 1Mtpa by September 2025 at its Pilgangoora mine in the Pilbara.
The mine produced 144,200t and sold 146,400t at a cost of US$658/t CIF (including freight and royalties) in the September quarter. While that delivered solid cash flows at average prices US$2240/t in the three months to September 30, spot prices have since dropped to the vicinity of US$1000/t.
You would expect significantly lower prices then, when PLS reports its December report next week. Lower prices have already taken some high cost operators in China and Australia out of the supply chain, notably the pause of Core Lithium’s (ASX:CXO) Grants Pit in the Northern Territory.
PLS MD Dale Henderson told investors the demand profile for its concentrate from the EV battery supply chain remains strong.
“This increased supply with Ganfeng builds on our established partnership as we work together to further extend our position in the growing market for lithium products. This increase demonstrates the demand for Pilbara Minerals’ spodumene concentrate while preserving optionality for the Company as we assess long-term downstream opportunities in-line with our growth strategy,” he said.
“The long-term outlook for the industry remains incredibly exciting. Both Ganfeng and Pilbara Minerals remain focused on extending our respective positions as major, low-cost producers in the burgeoning lithium market. We look forward to further collaboration with Ganfeng and many more successful years working together.”
PLS is expected to make a call this quarter on a partnering process on a downstream processing initiative incorporating 300,000t of concentrate from its expanded 1Mtpa project.
Pilbara Minerals shares fell 2.5% — in line with other battery metals stocks as the materials sector dropped 0.58% in morning trade.
The stand-out large and mid-cap performers were in the uranium space, with Deep Yellow (ASX:DYL) up more than 14%, Paladin Energy (ASX:PDN) rising 9.34% and Boss Energy (ASX:BOE) up 6.88% after yellowcake prices topped US$100/lb for the first time in over 15 years last week after the world’s biggest producer Kazatomprom warned of production shortfalls.