Alkane Resources Ltd (ASX:ALK, OTC:ALKEF) has outlined a five-year plan for its Tomingley Gold Operations in the Central West of New South Wales that incorporates annual gold production of more than 100,000 ounces and resulting strong cash flow.
Planned production during the next five financial years totals 455,000 to 505,000 ounces sourced from underground and open pit mining while all-in-sustaining costs (AISC) are expected to average A$1,900 to $2,100 per ounce with costs to reduce over time as the development capital requirement decreases.
Large components
Major components of the plan are the relocation of the Newell Highway around the operations and expanding the existing processing plant to a nominal 1.5 million tonnes per annum rate.
The company estimates that these two projects will cost approximately A$89 million which in addition to current capital expenditure of ~$43 million, are expected to be funded from cashflow and debt with a final investment decision to be made early in 2025.
As resources at Tomingley extend beyond this plan and remain open at depth and along strike at the Caloma, Caloma Two, Roswell and San Antonio deposits, Alkane is confident that the future at the operations extends beyond the five years.
“A big future”
Alkane managing director Nic Earner said: “Tomingley has a big future ahead of it. Our five-year plan details the capital program that develops the open cut operations, expands the plant and moves the operation to deliver above 100,000 ounces of gold per year.
“The underground at Roswell has begun production and we expect to produce over 70,000 ounces of gold next year. The paste plant and the flotation/regrind circuit are under construction with commissioning expected later this year.
“The deposits across Tomingley are open at depth and along strike and our known resources extend beyond this immediate five-year plan. We’re looking forward to delivering on this plan."
Tomingley background
Tomingley Gold Operations, which is a wholly-owned subsidiary of Alkane, is near the village of Tomingley, about 50 kilometres southwest of Dubbo.
The gold processing plant was commissioned on time and budget in January 2014 and has been operating at the design capacity of 1 million tonnes per annum since late May 2014.
Mining was originally based on four gold deposits - Wyoming One, Wyoming Three, Caloma and Caloma Two - and open cut mining from the four deposits occurred from late 2013 until early 2019, with a further cutback in Caloma from 2021 to 2023.
Development of an underground beneath Wyoming One began in late 2018, with first stope ore production occurring in late 2019. The Tomingley underground extended under Caloma Two and Caloma and continues to operate.
Following exploration and a substantial drill program over the 2018 to 2022 period resources and reserves were defined at the Roswell and San Antonio deposits south of the existing mine.
Expansion program
The NSW Government Resources Regulator granted approval in mid-2020 for the development of an approximately 2.5-kilometre exploration drive from the underground Wyoming One operation to the Roswell deposit.
Approval was granted for the underground and open cut development of the Roswell and San Antonio deposits, including relocation of the Newell Highway in early 2023, with first stope ore subsequently produced from Roswell underground in April 2024.
With development of Roswell underground, the next five years will see the development of the approved open cut operations commencing at San Antonio.
This requires the prior relocation of a section of the highway and generates sufficient ore to justify upgrading the process plant to increase annual throughput to a nominal 1.5 million tonnes.
Since the exploration drive to Roswell was approved in mid-2020 Alkane has:
- Purchased the land across the mining leases;
- Conducted extensive resource drilling;
- Constructed the ~2.5-kilometre exploration drive, including two vent rises;
- Constructed a new residue storage facility;
- Obtained project approvals for the expansion activities including the relocation of the Newell Highway;
- Established underground mining and facilities at Roswell;
- Replaced much of its underground mining fleet with new equipment;
- Purchased the culverts required to move the Newell Highway;
- Commenced construction of a paste plant above Roswell;
- Commenced construction of a flotation and regrind upgrade to the existing process plant; and
- Upgraded the site’s incoming high-voltage power system.
These upgrades were needed to continue the existing operation, commence mining at Roswell and to prepare to increase total mine production in the future.
Highway relocation
In order to commence open cut mining at San Antonio, the Newell Highway will be relocated ~1 kilometre to the west of the existing highway corridor.
This is a substantial body of work that has been through several design iterations over a number of years to receive full approval from Transport for NSW.
The ore from the open cut operations will be added to the underground mine production at Roswell to provide sufficient ore to expand the processing plant capacity. Expansion will be facilitated by the installation of an additional mill, thickener and electrowinning circuit.
Analysis of the tenders for the relocation of the Newell Highway are nearing completion with the intent to make a recommendation to award by the end of July and the next stage of engineering for the plant upgrade is commencing.
Most of the work on these two projects will occur through calendar 2025, with open cut mining at San Antonio subsequently occurring in the first half of calendar 2026.