Source: Streetwise Reports 05/15/2018
An Edison Research report explained the crossroads this Australian multicommodity firm is at and reviewed its most recent quarter’s financials.
In a May 4 research note, Analyst Tom Hayes with Edison reported that Alkane Resources Ltd. (ALK:ASX; ANLKY:OTCQX) saw “marked improvement” at its Tomingley gold operation in the most recent quarter, Q3 FY18.
The company generated operating cash flows of AU$21.2 million (AU$21.2M). It ended the quarter with AU$60.6M in cash and AU$8.4M in on-hand bullion.
Alkane produced 18,635 ounces of gold, which was in line with management’s guidance and up 12% from Q2 FY18. Its all-in sustaining cost was down 9% from last quarter, at AU$962 per ounce. Gold sold at an average of AU$1,708 per ounce.
Looking forward, two significant catalysts are expected in the final quarter of FY18. One is Alkane’s decision on how to extend mine life at Tomingley. “With open-pit operations due to naturally end as planned in Q1/19 (the July to September quarter of 2019), the focus is to decide on whether to invest in an underground phase or potentially revert to exploration and development of the proven prospective region surrounding Tomingley and Alkane’s old Peak Hill gold mine,” Hayes explained. Alkane would likely use its own cash for whatever approach it pursues.
The other catalyst is release of the final modular execution plan for Alkane’s Dubbo project, which should outline the “exact operating cost structures and capital expenditure profile required to build out the project in stages,” noted Hayes. Financing for Dubbo, which “stands alone in the mining industry as the only viable rare metal project,” continues.
Positive for the Dubbo project is the various metals/minerals that would be mined there have had significant price increases, such as zirconium products, certain rare earth elements related to magnets, hafnium and ferro-niobium, Hayes pointed out. Prices have been driven up by supportive changes in their end markets, such as zircon supply shortages (affecting zirconium), a vanadium pentoxide price increase (pushing up ferro-niobium’s price) and a muted global nuclear industry (buoying hafnium).
Edison values Dubbo at AU$0.90 per share on a FY19 basis, which is up from its FY18-based figure of AU$0.79 per share. As for Tomingley, the firm will revalue it once its future becomes clearer. Alkane is currently trading at around AU$0.30 per share.
Read what other experts are saying about:
- Alkane Resources Ltd.
Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Alkane Resources. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
Disclosures from Edison Investment Research, Alkane Resources, May 4, 2018
This report has been commissioned by Alkane Resources and prepared and issued by Edison for publication globally. Opinions contained in this report represent those of the research department of Edison at the time of publication.
Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report.
( Companies Mentioned: ALK:ASX; ANLKY:OTCQX,
)