Alkane Resources (AX:ALK) reports a second cash-flow-positive quarter after the high amounts of waste required to be mined during H215 made the TGO cash flow negative. Gold production remains on track for 60-70koz by end FY16, with AISC costs in a range of A$1,200-1,300/oz ytd. Costs compare to an Australian dollar gold price of c A$1,570/oz. Progress on developing the DZP is also highlighted, with the key mining lease achieved during the quarter. We maintain our view that the DZP, through its diversified product suite and very advanced stage of engineering and product offtake arrangements, remains the strongest non-Chinese contender for exposure to the strategically important REE (and other speciality metals) space.
TGO: AISC costs up q-o-q, but guidance still intact
During Q216 the TGO produced 15,347ozs (Q1: 19,789ozs) of gold at an AISC production cost of A$1,316/oz, up 6.6% over Q116 (A$1,234/oz) and sold 14,250ozs at an average gold price of A$1,583/oz (Q1: 21,000ozs at an average gold price of A$1,565/oz). Revenues continue to be aided by the US$/A$ exchange, which saw the A$ strengthen 4.2% from US$0.70 to US$0.73 during Q216. The TGO post-development capex and opex maintained positive cash flow of A$2.45m. Alkane’s FY16 guidance of 60-70koz of gold produced remains intact (we forecast 69koz), with H116 gold production totalling 35,136ozs.