Alkane Resources Ltd.

Alkane Resources Ltd. is a multicommodity mining and exploration company with a focus on gold, copper, zirconium, niobium and rare earths. Its projects and operations are located in the central west of New South Wales, in eastern Australia. Alkane commenced gold production in early 2014, after commissioning its Tomingley gold project in February, on time and on budget. The company is also developing the Dubbo zirconia project, with operations scheduled for 2016. This will position Alkane as a strategic and significant world producer of zirconium products and heavy rare earths. Several other copper-gold exploration projects in the region are being evaluated. The company is heavily committed to safe environmental practices and local community wellbeing.

Expert Comments:

Tom Hayes, Edison Investment Research (10/19/15)
"Our value of Alkane Resources Ltd.'s flagship Dubbo Zirconium project has improved by 32% based on the completed front-end engineering design (released in August 2015) and conservative (2020) product prices, when compared to the value provided in its definitive feasibility study. The three main reasons are inclusion of a hafnium revenue stream, improved metal recovery factors, providing more metal to sell, and a weakened Australian dollar aiding U.S. dollar-priced revenues against domestic-priced operating costs."

David Radclyffe, Petra Capital (9/27/15)
"The key value driver for Alkane Resources Ltd. is the world-class Dubbo zirconia project with momentum building after receiving state development consent and completion of front-end engineering design studies; these key milestones allow the company to proceed to final approvals and advance offtake/strategic investment discussions. Dubbo is a robust strategic metals project capable of generating >AU$300M/year in EBITDA."

Tom Hayes, Edison Investment Research (8/3/15)
"Coupled with a significantly weaker Australian dollar and well-managed costs, Alkane Resources Ltd.'s Tomingley gold operation generated AU$23.7M in cash flow in FY/15 (after operating and development costs). . .in our view, the market's slight negative reaction to the company's Q4/15 results relates to a broad pessimism toward commodities and a view on quarterly financials rather than considering the full year performance data, which show the Tomingley gold operation to be a solid, profitable gold mine operating in line with expectations."

Tom Hayes, Edison Investment Research (6/25/15)
"Australian Zirconia, the wholly owned subsidiary of Alkane Resources Ltd., has been granted the long-awaited planning consent for its flagship Dubbo zirconia project (DZP). The market's reaction to the news has so far been moderate, underlining the importance of Alkane providing concrete offtake agreements (guaranteeing DZP revenues), as well as financing and final permitting news for its flagship project. News concerning these should start to be conveyed to the market during H2 CY/15."

Tom Hayes, Edison Investment Research (6/3/15)
"Alkane Resources Ltd.'s wholly owned subsidiary, Australian Zirconia, has been granted the long-awaited planning consent for its flagship Dubbo zirconia project. . .the planning consent now received for the Dubbo zirconia project qualitatively derisks development of the company's flagship asset, which we currently value at AU$0.68/Alkane share."

"Alkane Resources Ltd.'s Dubbo Zirconia project (DZP) is a greenfield project. The company received the last of its approvals from the New South Wales government in April. The Emerging Trends Report has long maintained that Alkane Resources is a de facto exchange-traded fund for the Australian specialty metal sector in that its Dubbo Zirconia project will produce roughly 20 of the 50 specialty metals we believe to be under long-term supply threat. Alkane also happens to own and operate the Tomingley gold project effectively as a sideline—one that is throwing off about $20M a year in free cash flow—while it pursues the development of the DZP. Exemplifying how poorly understood the specialty metal space remains, as well as the Alice-through-the-looking-glass markets today, fund managers are openly assigning a negative value to the DZP, which has resulted in Alkane trading for less than the net present value of its producing gold mine.

The simple truth is that the DZP is a difficult but arguably the most promising, and certainly the most interesting, specialty metal project on the planet. The DZP's unique trachyte volcanic intrusive ore body hosts zirconium, niobium, light and heavy rare earth elements plus yttrium in a remarkably homogenous form that is readily soluble in sulfuric acid for processing. It is a monster deposit with an 80-year mine life and a megaproject price tag of $1 billion. That makes the name something of a misnomer: zirconium and zirconia products constitute about two-thirds of Alkane's product line by volume but only approximately 33% of its projected profit stream.

I won't pretend to tell you how it dord it, but the fact that Alkane has a process that can now recover a high-purity hafnium oxide product will make Alkane the world's first primary mine supplier of hafnium. And that is a big deal. Myriad new and expanded uses await increased hafnium supply, and Alkane is uniquely positioned to become the first company to offer primary mine supply of roughly 200 tpa at the cost of little more than another circuit in its processing plant. Hafnium oxide trades for roughly half the price of the metal, or $600/kg. . .the addition of hafnium to Alkane's product suite, and its importance to the aerospace industry, may well be the catalyst that gets the DZP funding commitments across the line. And once Alkane secures funding, the rerating of the stock will be substantial and will take the market by surprise—and Alkane will become another overnight success 15 years in the making." read more >

More Expert Comments

Experts Following This Company

Gareth Hatch, Founding Principal – Technology Metals Research
Tom Hayes, Analyst – Edison Investment Research
Timothy Hayes – Davenport & Co.
Richard Karn, Founder/Editor – Emerging Trends Report

The information provided above is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.
Investing Highlights
Multi-commodity miner: gold, zirconium, niobium and rare earths
Successful mining track record
Next heavy rare earth project
catalyst Calendar