Ready to develop with more value to come
Our value of Alkane Resources' (AX:ALK) flagship DZP project has improved by 32% based on the completed FEED design (released in August 2015) and conservative (2020e) product prices, when compared to the value provided in its 2013 DFS. The three main reasons are inclusion of a hafnium revenue stream, improved metal recovery factors, providing more metal to sell, and a weakened A$ aiding US$-priced revenues against domestic priced operating costs. When remaining off take agreements and project permits have been received, Alkane will aim to finalise its long-established financing strategy to fund development of this unique (A$1.3bn) diversified-commodity project. This note focuses solely on the DZP, with the Tomingley Gold Operation referenced only in our SOTP valuation.
Outotec on-board for construction
Alkane has appointed the multinational mining services provider Outotec to undertake an Early Contractor Involvement (ECI) process to find further value in the project design contained within the Front End Engineering Design completed by Hatch Engineering in August 2015. Outotec will execute the process design on an EPC basis, the next step in costing the Dubbo Zirconium Project's construction.
DZP as a gold mine – 382koz AuE per year
Considering the DZP’s unique planned output of speciality metals, it is difficult to conceptualise exactly what size of mine Alkane looks to finance. Translating the mine's varied product mix into gold equivalent terms at a US$1,100/oz Au price, the DZP would produce c 382kozpa AuE at C1-C2 equivalent cash costs of US$468/AuEoz.
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