Alkane Resources (ASX:ALK) - Gold Production Growth & Exploration Upside in Top Mining Jurisdiction

Company Interviews

Interview with Nic Earner, Managing Director of Alkane Resources Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/alkane-resources-asxalk-growing-gold-production-and-advancing-copper-gold-project-3936

Recording date: 15th May 2024

Alkane Resources (ASX:ALK) presents a compelling investment case as an established Australian gold producer with a robust growth pipeline. The company's flagship Tomingley Gold Operations in New South Wales has been producing for nearly a decade, with a clear path to grow production to over 100,000 ounces per year at all-in sustaining costs below A$2,000/oz.

Alkane is nearing the end of a significant investment phase at Tomingley, with key expansion projects including a paste fill plant and flotation circuit due for completion in Q4 2024. As Managing Director Nic Earner explains, this positions the company for a step-change in production and profitability: "December quarter for us should be the inflection point of spending versus cash build again"

The potential for near-term cash generation and shareholder returns is complemented by Alkane's exceptional exploration upside. The company's Boda prospect at the Northern Molong Porphyry Project in NSW has delivered some of the world's best porphyry gold-copper drilling results in recent years. With a maiden resource of over 10 million gold equivalent ounces, Boda is shaping up as a globally significant discovery with potential for large-scale, low-cost development.

While Alkane has the technical capabilities to develop Boda independently, the scale of the opportunity may require a larger balance sheet. Alkane is completing a scoping study to assess throughput options and is open to strategic partnerships to help fund and develop the project. As Earner notes, the company will pursue transactions that recognize the value of exploration work to date and maintain an achievable development timeline.

Alkane's management and technical teams have a strong track record of discovery and development in NSW. The company has delivered several projects from exploration through to production over the past decade and has secured more mining approvals in the state than any of its peers. This in-house expertise reduces execution risk for Alkane's growth projects.

From a macro perspective, the outlook for gold is constructive with a weaker Australian dollar and persistent inflation concerns likely to support the gold price. Australian gold producers are trading at attractive valuations relative to their North American peers, with Alkane's enterprise value around A$350 million or just 0.7x its consensus net present value (P/NAV).

In summary, Alkane Resources offers a rare combination of near-term production growth, world-class exploration upside, and a proven management team. With a market capitalization of just A$359 million, the company is undervalued relative to its peers and the quality of its underlying assets. As Alkane delivers on its growth objectives and advances its exploration pipeline, there is potential for significant share price appreciation.

View Alkane Resources' company profile: https://www.cruxinvestor.com/companies/alkane-resources

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