Monsters of Rock: Alkane says monster maiden porphyry resource at Boda will get bigger
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Alkane Resources (ASX:ALK) has been around for over 50 years as an ASX-listed company, but its latest incarnation as an emerging mid-tier gold miner and explorer may prove one of its most interesting for investors.
Its fair to say Alkane has hit its straps at the Tomingley gold operations in central New South Wales, where the company last week announced the pouring of its 500,000th ounce since mining began in 2014.
Alkane expects to be digging the yellow stuff out there until after 2030 and unlike some miners who have struggled to keep operating costs in check amid inflationary pressures and declining grade profiles, the 60,000ozpa Tomingley delivered 14,635oz in the March quarter at a relatively miserly $1598/oz.
Tidy, but the real buzz around Alkane, which is up 38.75% over the past six months, is its Boda gold-copper porphyry discovery near Dubbo in the North Molong project.
Located some 120km due north of Australia’s biggest operating gold mine, Newcrest’s Cadia-Ridgway, Boda looms as another monster porphyry find for the gold heartland of Central New South Wales, with a maiden resource today of 624Mt of ore at 0.53g/t gold equivalent of 10.1Moz of gold equivalent.
In real terms that’s 5.21Moz of gold and 900,000t of copper, a large find by modern standards and well received by the market after almost three years and 71,400m of drilling since Alkane stirred interest with the initial discovery back in 2019.
While the inferred resource was a ‘big milestone’, Alkane managing director Nic Earner told Stockhead it would likely be 2023 or 2024 before formal studies are under way.
Rather the company plans to keep drilling to expand the Boda resource, where large, low-grade porphyry hits have been made along around 3km of strike from Boda 3, through Boda 2, the main Boda resource and up to Kaiser in the north-west.
The resource inventory, which includes a higher grade component potentially suitable for bulk-tonnage underground mining of 353Mt at 0.63g/t AuEq (7.1Moz AuEq), is virtually certain to grow.
Alkane says it remains open at depth and along strike to the south and north-west.
A resource is expected at Kaiser in the fourth quarter, with deeper drilling and infill drilling around the initial inferred resource also expected.
Discoveries like Boda bely the old adage that ‘grade is king’.
With some high profile exceptions they are generally less common in Australia, where production has been focused largely around higher grade orogenic gold mines.
While it is still a long way from the giants of porphyry gold mining like Cadia and the Chinese owned Northparkes mine, Earner says the Australian market is growing in its acceptance of large, low grade orebodies like Boda.
Earner said there are a number of comparisons that bode well for Alkane’s capacity to turn Boda into a successful mine down the track.
“You can see a range of different mines, particularly you look at some of the ones in South America or to get back to the Golden Triangle in British Columbia, a lot of them have large tonnage, lower grade, bulk orebodies similar to this,” he said.
“I think globally, there’s certainly that recognition. Here in Australia for some investors who are used to orogenic gold deposits with higher grade vein-like systems, I think it’ll probably take them a while to wrap their head around it.
“Northparkes is not getting reported in the Australian market and Cadia’s being reported within Newcrest just as one of its many profitable mines.
“I think people are much less familiar with the economics and scale of those, but certainly people that are keeping abreast of large deposits throughout the globe are well aware that these grades are certainly economic.”
The company says early metallurgical test work has demonstrated the potential to recover at least 85% of the gold, copper and silver metal from the Boda orebody.
As an established operating gold miner with ~$130m and investments in the bank, Earner says Alkane is in a good position because it does not need to raise additional capital or bring in a bigger partner to progress exploration and future development work on Boda.
“It’s not like we’ve got a market cap of 15 million bucks and we’re trying to develop a large porphyry,” Earner said.
“It really is a reflection of the company that we’ve become over the years, both in terms of continuing value creation through exploration, but also (having the) capacity to then go on and develop something should we choose to do that.”