After a testing H117 at the Tomingley Gold Operation (TGO) due to high levels of rainfall that affected gold production, Alkane Resources Ltd’s (AX:ALK) third quarter results show a return to profitable operations, with net cash flow from operations of A$6.5m reducing after delayed December 2016 payments to a net A$2.0m at quarter’s end. As weather conditions improved in NSW, Q317 gold production recorded a q-o-q increase of 59%, with 18,721ozs Au produced at AISC costs of A$1,201/oz. Sales of 16,303ozs Au at an average realised gold price of A$1,694/oz resulted.
TGO exploration eyes further UG resources
Following a review of the underground (UG) resource and proposed mine plan for the TGO, Alkane has stated that it will revise its overall plan for the transition to UG mining. Previously, we assumed c 84koz would be recovered from an UG operation at Wyoming One from FY18 to FY24, supplementing ounces derived from ongoing surface mining. For now, we keep this Wyoming One UG mining schedule intact until official guidance is announced, but advise that the amount and, more importantly, the schedule for ore extraction, is likely to change as exploratory drilling completes and, so far, very favourable assay results are incorporated into a new resource and mine plan. Concerning Alkane’s broader exploration focus, drilling completed over a number of non-TGO exploration targets has so far revealed promising stratigraphic and lithological signals which, in some instances, are the same as some of the largest gold mines in the region.
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