In a June 27 news release, Alkane Resources Ltd. (ALK:ASX; ANLKY:OTCQX) announced that "the release of higher grade ore, particularly from the Caloma and Caloma Two pits, and generally clear weather" led to "gold production of over 17,000 ounces across April and May" at its Tomingley Gold Operation (TGO). The results allowed Alkane to upgrade its H2 FY/17 guidance from 31,000–36,000 ounces to 43,000–45,000 ounces and revise its full-year guidance for 2017 "to production of 65,000–67,000 ounces at an AISC of A$1,300–A$1,400." In July full details of the revisions will be released with the quarterly report.
Edison Investment Research analyst Tom Hayes stated in a June 27 report that "Alkane's strong H2 production performance at the TGO has also led the company to revise its full-year FY17 production guidance to 65-67koz Au at all-in sustaining costs of between A$1,300/oz and A$1,400/oz. This is 12% above our TGO gold production estimate for FY17 of 58koz, and slightly ahead of our AISC estimate for FY17 of A$1,469/oz."
"This positive H217 production performance sees Alkane finishing FY17 with a flourish, after a difficult H117 dominated by intense periods of rainfall, which negatively affected gold mining at the TGO," Hayes stated. He also highlighted that the higher pit grade reconciliations "bode well for the extensive exploration being undertaken over the TGO to test and increase confidence in underground resource sections."
"We expect to revise our base case valuation for the TGO, and Alkane's shares, pending its release of formal revised underground mine plans for the TGO, sometime towards the end of H118 (H2 CY17). This will follow the completion of current drilling activities and a revised resource and reserve statement for the TGO," Hayes concluded. Alkane is currently trading at $0.24 per share.
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1) Melissa Farley compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, securities of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Disclosures from Edison Investment Research, Alkane Resources, Flash Note, June 27, 2017
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