Alkane Resources Ltd (ASX:ALK, OTC:ALKEF) earlier this week increased the Mineral Resource at its Storheden gold deposit in northern Sweden to approximately 212,000 ounces, reinforcing the deposit’s potential to supply higher-grade satellite ore to the nearby Björkdal operation.
The updated estimate comprises an Indicated Resource of 1.07 million tonnes grading 2.51 grams per tonne gold for 87,000 ounces and an Inferred Resource of 1.85 million tonnes at 2.11 grams per tonne for 125,000 ounces.
The update delivered Storheden’s first Indicated Resource, while inferred contained gold increased by around 26% from the previous estimate of 99,000 ounces.
Managing director and CEO Nic Earner said the result improved both the size and quality of the resource, with material moving into the higher-confidence Indicated category and the overall grade increasing from the previous estimate of about 1.7 grams per tonne.
“What we really like about this is we have long stated that what we’re trying to do at Björkdal is bring on supplementary ore sources that will allow us to increase the overall grade going through the mill,” Earner said.
Storheden is around 700 metres north of Björkdal’s main deposits. The location could allow the company to integrate the deposit into the existing operation, which processes approximately 1.4 million tonnes annually.
Björkdal produced slightly more than 41,000 ounces in the previous year, and Alkane Resources is seeking to lift annual output beyond 50,000 ounces. Earner said Storheden represented an important step towards that goal.
A key potential catalyst will be the commencement of development towards the deposit during FY2027. The company is advancing work from the existing operation and is targeting potential mining from around 2029, although extraction remains subject to environmental approval.
Further drilling results also represent a potential near-term catalyst. Recent work has intersected narrow, high-grade veins, including zones grading more than one ounce per tonne. Earner described the mineralisation as consistent with the existing deposit and potentially higher grade in some areas.
Additional operational investment at Björkdal includes exploration drilling, new equipment and an 18-month tailings dam expansion expected to provide another seven years of capacity.
Together, these initiatives could help lower unit costs, extend the operation’s life and support higher-grade mill feed. Further Storheden drilling and the start of development are expected to be the principal updates for investors through the remainder of the year.
Interview highlights
- Alkane Resources increased the total Storheden Mineral Resource to approximately 212,000 ounces of contained gold.
- The estimate includes 87,000 ounces in the Indicated category and 125,000 ounces in the Inferred category.
- Storheden has delivered its first Indicated Resource.
- Inferred contained gold increased by around 26% from the previous estimate of 99,000 ounces.
- The overall resource grade has risen from the previous estimate of about 1.7 grams per tonne to more than two grams per tonne.
- Storheden is approximately 700 metres north of the main Björkdal deposits.
- Alkane Resources sees Storheden as a potential supplementary ore source that could raise the average grade processed through the Björkdal mill.
- Björkdal processes about 1.4 million tonnes annually and produced slightly more than 41,000 ounces of gold in the previous year.
- The company is targeting annual production of more than 50,000 ounces at Björkdal.
- Capital has been allocated in FY2027 to begin development towards Storheden.
- Alkane Resources is targeting potential mining from around 2029, subject to environmental approval.
- Recent drilling has identified narrow, high-grade veins, including zones exceeding one ounce per tonne.
- Further drilling, development work, new equipment and additional tailings capacity could support lower unit costs and a longer operating life.
- Further Storheden drilling results and the commencement of development are expected to be key near-term news items.
Proactive: Alkane Resources has substantially increased the Mineral Resource at the Storheden gold deposit in northern Sweden, strengthening its potential to become a satellite mining area for the nearby Björkdal operation. Here to discuss the increase is managing director and CEO Nic Earner. Nic, good to see you again.
Nic Earner: Good to see you too, Jonathan.
Proactive: Thank you. It is a pleasure to have you. The updated estimate contains 212,000 ounces of gold. Talk us through the key takeaways.
Nic Earner: The first major takeaway is that Storheden is about 700 metres north of the existing main deposits at Björkdal. We have been drilling it for some time.
We have not only increased the number of ounces in the resource, but also improved its quality by moving material into the Indicated category and increasing the Inferred Resource. We have also increased the grade.
Our previous resource was at 1.7 grams per tonne, so people can see that the grade is now above two grams per tonne.
What we really like about this is that we have long stated that our objective at Björkdal is to bring on supplementary ore sources that could increase the overall grade going through the mill.
We process 1.4 million tonnes per annum there and want to move beyond 50,000 ounces of annual production. Last year, we produced a little more than 41,000 ounces. We see Storheden as an important step towards that objective.
We are allocating capital during the current financial year, FY2027, to begin developing towards this deposit. We are getting a head start on development by advancing from both the surface and underground before connecting the development.
Looking ahead, we want to be mining Storheden from around 2029. We will need an environmental permit to allow extraction.
This is very encouraging and is exactly what we were looking for. It gives us the confidence to proceed.
Proactive: You mentioned the Indicated category. It is worth noting that this is Storheden’s first Indicated Resource.
Nic Earner: Correct. We previously had only an Inferred Resource. We now have close to 80,000 ounces in the Indicated category.
When we talk about producing more than 50,000 ounces annually at Björkdal, it does not take a large number of additional ounces each year to make a meaningful contribution.
We already have a mine life of more than 10 years at Björkdal, but what we want to do is increase the overall grade. People should read this update very positively.
Proactive: Talk us through the latest high-grade drilling and what it reveals about the deposit’s potential scale.
Nic Earner: The region in Sweden around Björkdal, including Storheden and other deposits, contains narrow veins that can be very high grade. Some intersections can exceed one ounce per tonne.
Our minimum mining width for the resource is 2.5 metres. Where the mineralised body becomes wider, we connect the veins and account for dilution across that width.
These are mining widths, and our reserves are typically slightly lower grade than the resource once mining assumptions are applied.
We have very high-grade veins that are diluted to a mineable width. We group them together to achieve the most economic extraction.
It is a phenomenal orebody. Whenever these veins come together, they can produce small bonanza-grade zones.
People should interpret the drilling as being consistent with the existing deposit and potentially slightly higher grade in some areas.
Proactive: Storheden appears to support and potentially extend the Björkdal operation.
Nic Earner: Exactly. Björkdal already has a mine life of more than 10 years, and Storheden supports the potential extension of that operation.
We are making substantial investments during this financial year. We will be developing towards Storheden and continuing exploration drilling both around the existing deposits and along extensions of Storheden.
We are also raising the tailings dam to add another seven years of capacity. That is an 18-month process that has already started and is underway.
We are putting new equipment into the operation as well. Over the next 12 to 18 months, we are looking to lower unit costs and expand the operation’s life and potential.
Proactive: Very encouraging. You have largely answered the next question, but what are the main priorities, and what should investors expect over the next few weeks and months?
Nic Earner: With respect to Storheden, further drilling results and the commencement of development will be the key news for people to watch between now and the end of the year.
Proactive: Nic, there is plenty to look forward to. Thanks for your time this morning. We will speak again as further news comes out.
Nic Earner: Thanks very much, Jonathan. Good to see you.