Latest News Archives - Alkane Resources Ltd
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Tomingley Underground Development Approved

Alkane’s Board has approved the development of the underground mining operations at its Tomingley Gold Operations. Highlights of the development plan approved by the Board include:

  • 93,000 ounces of gold recovered over a 40-month development at cash costs estimated to be A$1,100 – $1,200 per ounce.
  • Ground support work for the portal will commence late in 2018 with development commencing shortly after in early 2019.
  • First ore is expected to be produced from underground in mid-2019 and stockpiled on the surface until processing recommences in the final quarter of 2019.
  • Cash outflow to recover first ore is estimated at A$25M. One of the first priorities underground is to establish a drill position to target further extensions along strike and at depth as geologically mineralisation is open under all three open cut pits. The Company’s cash and bullion position at the end of the previous quarter was A$80.0M.

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Alkane Delivers Profit After Tax of A$24.5 Million for FY2018

The profit before tax of A$31.3 million was the highest recorded by the company since 2012, the year in which the company sold its share of McPhillamys gold deposit.

The profit was largely driven by excellent production and cost performance at the Tomingley Gold Operation where full year guidance was met with 78,533 ounces of gold produced at an all in sustaining cost (AISC) of A$1,002 per ounce.

As at 30 June 2018 the company’s cash and bullion position totalled A$80.0 million, with A$72.0 million in cash and bullion on hand at fair value of A$8.0 million.

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Tomingley Gold Mine Breaks the Drought for Local Village with Bore Water

  • Alkane’s Tomingley Gold mine providing water from its bore source to Tomingley village
  • Tomingley at risk of running out of water due to drought
  • Avoids expensive trucking in of water for local community

The village of Tomingley, 57 km south-west of Dubbo in central west of New South Wales, was at risk of running out of water.

The village usually relies on dams filled by Gundong Creek but this ephemeral water source has remained dry since the 2016 floods.

The nearby Tomingley Gold Mine, owned by Alkane Resources (ASX: ALK), relies for its water on a 46km underground pipeline from the Narromine bore field.

The $4million bore water pipeline was constructed by Tomingley Gold for the mine partly funded by the NSW Government backed Local Infrastructure Support Fund.

Tomingley Gold has pumped water into the Tomingley village dams from which Narromine Shire Council (NSC) which has enabled the delivery of a reticulated non-potable water supply to the village.

According to Tomingley Gold’s Environment and Community Manager, Mark Williams, it was an easy operation to manage and it was essential to help out the local village in this way.

“Without the bore water pipeline, NSC would be forced to truck water to the village, at great expense,” Mark Williams said.

Narromine Shire Council General Manager, Jane Redden, said “The council would like to thank Tomingley Gold Mine for working with us, and the Community, to ensure the sustainable water supply for Tomingley during the drought.”

When Tomingley Gold Mine was being established, Alkane and NSC negotiated a Voluntary Planning Agreement and supplying the bore water is part of this arrangement, allowing NSC to determine the amount of water the village will need at times like this.

Not far from Tomingley, at Toongi, 25 km south of Dubbo, Alkane is developing the A$1.3 billion Dubbo zirconium and rare earths project* which will also rely on local aquifer bore water as well as river water for its operation.

Alkane’s Dubbo Project, which has a mine life of over 75 years, is construction ready with approvals in place and is awaiting financing.

The project is one of the world’s largest in-ground resources of its combination of zirconium, rare earths, hafnium and niobium and its future production would represent an alternative source from China which currently meets the vast majority of world demand for rare earths.

* Owner and operator of Alkane’s Dubbo Project is wholly owned subsidiary, Australian Strategic Materials Ltd.

New US Defence Law Bans Magnets from China, Creates New Demand Potential for Alkane

  • New US Defence law prevents purchase of rare earth magnets from China
  • Signed into law by President Trump this week, increases defence spending
  • Alkane says this to increase interest in its rare earths project as independent supply source

United States President Donald Trump this week signed into law the John S. McCain National Defense Authorization Act which sets an increased budget for defence expenditure.

Section 871 of the act prevents purchase of rare earths magnets from prohibited countries, like China, Russia, North Korea and Iran.

Multi-commodity explorer and miner, Alkane Resources (ASX: ALK)* sees this as a boost for its A$1.3 billion Dubbo project, which contains deposits of rare earths, hafnium, niobium and zirconium, since it represents an independent supply source from China.

A principal use for rare earths metals from the project is magnets, used across the automobile, renewable energy, aerospace, robotics and telecommunications industries globally.

Currently China produces 85-90 per cent of the world’s rare earth magnets, some 90% of rare earths magnets consumed by the US military are produced by China, world demand is outstripping supply and a shortfall of rare earths magnets is predicted by 2020.

This development follows a statement earlier this year by Prime Minister Turnbull at the time of his visit to the United States, which indicated an intended joint cooperation with the US on rare earths and high-performance metals.

According to Alkane Managing Director, Nic Earner, US needs could not be met without investment in new rare earths projects.

“Alkane’s Dubbo project is one of the few in the world which does not have a major Chinese shareholding or offtake committed to China,” Mr Earner said.

“This US development also opens the door for Australia in the downstream value adding manufacture of rare earth magnets,” Mr Earner said.

Alkane’s Dubbo project, which has a mine life of over 70 years, is construction ready with approvals in place and is awaiting financing.

Funding of the project to date has been assisted by Alkane’s nearby Tomingley Gold Mine, which generated A$60.1 million in cash flow for the year to June 2018, and currently Alkane has cash reserves of A$80 million.

In signing the act into law, President Trump described it as “the most significant investment in our military … in modern history”.

* Owner and operator of Alkane’s Dubbo project is wholly owned subsidiary, Australian Strategic Metals Ltd.

Alkane cashed up, meets Tomingley guidance and sees rising rare earths prices

Multi-commodity miner and producer, Alkane Resources (ASX: ALK), has achieved excellent operational performance at Tomingley Gold Operations (TGO) in the June quarter with 19,1365 ounces of gold produced, taking full year production to 78,533 ounces of gold produced and meeting full year guidance.

TGO continued to generate strong cash flow for the quarter at A$16 million, taking full year cash flow to A$60.1 million. Quarterly gold sales generated revenue of A$33.2 million at an average price of A$1,735 per ounce.

Planning for underground operations continues with the appointment of a project manager to confirm the development economics and prepare a detailed execution plan for an investment decision by December 2018.

Alkane’s Dubbo Project remains construction ready and an update on the engineering, development and financials was released during the quarter. Key points of this update (released 4 June to ASX) can be found in the quarterly.

Alkane continues to work towards securing financing for the project, with the key focus on securing offtake contracts for both its products and a resultant strategic investor in the project.

Trade tensions between the US and China have heightened concerns over China’s monopoly on rare earths and zirconium chemicals. The need for alternative western supplies of these technology metals is playing a central role in Alkane’s discussions with companies regarding offtake and/or investment in the project.

Rare earths magnet prices have continued to strengthen in the past quarter as Chinese authorities continue their efforts to stamp out illegal mining and processing of rare earths across the country.

Alkane’s current cash and bullion position totals A$80 million, with A$72 million in cash. The group is debt free.

Read the Quarterly Activities Report to 30 June 2018

Dubbo Project: Engineering and Financials Update

Multi commodity miner and explorer, Alkane Resources (ASX: ALK), has completed an engineering and financials review of its zirconium, niobium, hafnium and rare earths project which confirms a viable project of significance.  The details of this review are in the following pages of this announcement and should be read in their entirety.

Among key points from Alkane’s project review are, that in circumstances where the Project is successfully funded and developed:

  • The Project could generate A$4.7 billion free cash flow at the 20 year base case with a forecast capital cost of A$1.3 billion base case build or A$808 million for the stage 1 build.
  • Internal rate of return is estimated between 16.1 to 17.5 per cent, depending on whether capital is managed to build the Project in two stages or proceeds to a single 1mtpa plant, with both alternatives confirmed viable.

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Tomingley Underground Resource, Reserve & Development  

  • Following an extensive core drilling program in 2017, Mineral Resources and Ore Reserves for the Tomingley Gold Operations below the existing open pits have been re‐estimated at a cut‐off of 2.4g/t gold:
    • Total Mineral Resources    1.45Mt grading 3.7g/t Au (175,000oz)
    • Total Ore Reserves     0.73Mt grading 3.1g/t Au (74,000oz)
  • An independent mining study has determined that via decline access from the Wyoming One and Caloma pits, the deposits can be viably mined using standard long hole stoping with rib pillars and long hole stoping using cemented rock fill.
  • Mining and grade reconciliation to date in the pits provided support to including Inferred Resources in the planned underground mining for a mineral inventory of:
    • Mineral inventory       1.24Mt grading 2.7g/t Au (108,000oz)
  • The base case development would recover 99,000 ounces of gold over a 40 month development and mining period for revenue of A$159 million at a gold price of A$1,600 per ounce. Cash costs were estimated to be A$1,150 to A$1,250 per ounce. Cash outflow to recover first ore is estimated at A$16 million.  The Company’s cash and bullion position at the end of the previous quarter was A$69.0 million.
  • The company is seeking to continue to generate cash from its gold business by:
    • Appointing a project manager to confirm the development economics and prepare a detailed execution plan for an investment decision by December 2018.
    • Continuing extensive exploration in the immediate mine area to establish further resource potential including re‐evaluation of the Peak Hill Gold Mine.
    • Evaluating investment opportunities that expand the gold business.

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TGO WINS “MINING OPERATION OF THE YEAR” AWARD

  • Alkane’s central west NSW gold mine wins NSW Minerals Council Suppliers award
  • Operating since January 2014, produced 69,000 ounces gold in FY17
  • Tomingley Gold employs 114 staff and 42 contractors

Tomingley Gold Mine in central west New South Wales, owned by Alkane Resources (ASX: ALK), has won “Mining Operation of the Year” in the NSW Minerals Council Suppliers Awards.

The mine is based on four gold deposits and is located 50 kilometres south west of Dubbo.

Since opening in January 2014 the operation has been an open cut mine, with this scheduled to be completed in the September quarter of 2018.

The resource has underground mining potential which Alkane is currently investigating.

Production of 69,000 ounces of gold in FY17 was achieved despite severe rains affecting first half production, with FY17 revenue at A$117.3m and profit before tax and non-recurring items of A$17.1m.

Managing Director of Alkane, Nic Earner, said the award was a tribute to Alkane’s Tomingley workforce and contractors, particularly Emeco, Maxfield Drilling, and Reveg Services, and also the extent to which the operation had become part of the local community.

“The mine employs locals, many of whom we’ve trained to be part of the operation, and we have also given importance to the local environment and community events as part of our operations,” Nic Earner said.

Among factors contributing to Tomingley’s award win were:

  • Fleet improvement and use of a mobile crushing plant to improve throughput and productivity
  • Ongoing drilling to optimise a focus on high grade ore
  • Local infrastructure improvements, including a community hall upgrade, sealing of village streets, new works at the Tomingley Racecourse & Recreation Reserve and providing top up water supply to the village from a bore water supply line
  • Upskilling of the local workforce and close working relationships with contractors

Alkane has been involved in the local region for over 30 years, as an explorer and operator of the Peak Hill Gold Mine, with cash flow from Tomingley having contributed to developing Alkane’s A$1.3 billion Dubbo zirconium, rare earths, hafnium and niobium project.

The project is development and construction ready, with project financing underway and current projected construction start in 2019.

Media Release: PM Turnbull Flags Greater Cooperation with USA on Rare Earths and Strategic Materials

  • PM flags strengthening ties with United States
  • Key components are infrastructure, trade and a Strategic Partnership on Energy
  • Energy Partnership to focus on “rare earths and high performance metals”

As Prime Minster Turnbull concluded his recent visit to the United States, he issued a statement indicating joint cooperation with the US on rare earths and high performance metals.

This has direct relevance for multi commodity explorer and miner, Alkane Resources (ASX: ALK)*, which is moving towards final commitments and financing of its A$1.3 billion Dubbo Project which contains deposits of rare earths, hafnium, niobium and zirconium.

These minerals have been designated “critical” in the US# and the Prime Minister’s statement said:

“We launched the Australia-United States Strategic Partnership on Energy in the Indo-Pacific, and intend to work together on strategic minerals exploration, extraction, processing, and research and development of rare earths and high performance metals.”

A feature of Alkane’s Dubbo Project, in central west New South Wales, is that it offers a source of critical technology metals that is independent of China and traditional titanium sands production.

According to Alkane Managing Director, Nic Earner, the governments of Australia and the United States have recognised the value of an alternative source of rare earths and high performance metals.

“As there is increasing demand for the metals that are critical for uses in aerospace, renewable energy and electric cars, Alkane as a future supplier of these metals is likely to benefit from this new government prioritisation which puts the project directly into the national interest of both countries,” Mr Earner said.

Future production from Alkane’s Dubbo Project and uses of these metals includes:

  • Rare earths – for permanent magnets for wind power turbines, electric vehicles and industrial robots, as well as applications in medical imaging and smartphones
  • Hafnium – for increasing high temperature resistance, especially in space, aerospace and separate uses in semi-conductors, with Alkane’s resource positioning it as a leading source of supply
  • Niobium – a steel strengthening agent, with aerospace applications
  • Zirconium – for ceramics, fuel cells, jet turbine coatings and medical and smartphone applications

Establishing the importance of Alkane’s independent positioning is that China currently produces more than 95% of the world’s zirconium chemicals, over 90% of high-value rare earths, with Brazil providing 85% of the world’s niobium.

Alkane’s Dubbo Project is construction ready subject to financing and has a mine life of over 70 years.

Funding of the project to date has been assisted by Alkane’s nearby Tomingley Gold Operations, which in 2017 produced revenue of A$117.5m and profit before tax and non-recurring items of A$17.1m.

* Owner and operator of Alkane’s Dubbo project is wholly owned subsidiary, Australian Strategic Materials Ltd.

# https://pubs.er.usgs.gov/publication/ofr20181021