Alkane Resources Ltd’s (ASX:ALK) (OTCMKTS:ALKN) (FRA:AK7) gold production for the quarter ended March 31, 2021, from its operations in Tomingley Gold Operations (TGO) in Central West New South Wales has come in above forecast at 16,040 ounces.
The company recorded gold sales of 15,844 ounces for revenue of A$34.9 million at an average price of A$2,203 per ounce.
It has again increased its financial year 2021 guidance to 50,000-55,000 ounces at a reduced all-in-sustaining cost (AISC) of A$1,400 to A$1,550 per ounce.
Operations
TGO continues to perform well and is processing underground stope material with recovery as expected.
The cutback in the northeast of the Caloma pit is on schedule and the underground portal from the base of the Caloma pit has now connected into the underground drive from Wyoming One.
Underground ore feed continues to be supplemented by low-grade stockpiles whenever capacity permits.
A total of 16,040 ounces of gold was poured for the quarter and the site cash costs for the quarter were A$803/ounce with an AISC of A$997/ounce.
Gold sold for the quarter was 15,844 ounces at an average sales price of A$2,203/ounce. Bullion stocks were 1,275 ounces with a fair value of A$2.9 million at quarter-end.
Site operating cash flow was A$22.3 million for the quarter and A$64.6 million for the financial year to date.
Global mineral resource
The global indicated and inferred mineral resource for the San Antonio Deposit to the south of the operations now stands at 7.3 million tonnes grading 1.72 g/t gold for 406,000 ounces.
This has resulted in an increase in the total global indicated and inferred mineral resource for the Tomingley Extension Project, which includes both the Roswell and San Antonio deposits. It now stands at:
- Indicated 13.8 million tonnes grading 1.96 g/t gold for 871,000 ounces;
- Inferred 3.6 million tonnes grading 1.69 g/t for 195,000 ounces; and
- Total 17.4 million tonnes grading 1.90 g/t for 1.066 million ounces.
Tomingley Gold Extension Project
Alkane plans to develop the Roswell and San Antonio deposits, 3-5 kilometres south of TGO, as soon as possible and has started the approval process.
Consultations with regulators, landholders and other stakeholders, as well as on-ground assessments needed for the Environmental Impact Statement, continue.
Feasibility plans that include both open cut and underground mines at Roswell and San Antonio are being finalised and are expected to be announced in May.
Preparation of the feasibility plans has taken longer than anticipated, with delays due to the incorporation of updated geotechnical advice, updating minor road diversion plans and pricing post-consultation, finalising waste rock locations post-consultation, as well as timing considerations between the proposed underground and open-cut ore production.
Banking facilities
The company has a A$20 million working capital facility with Macquarie Bank, which remained undrawn at the end of the quarter.
At the end of the quarter, the company had A$7.2 million of borrowings relating to mobile equipment financing arrangements.
Gold forward sale contracts
During the quarter, the company delivered into gold forward sales contracts for 5,500 ounces.
On April 1, it entered into new gold forward sales contracts for 18,000 ounces for delivery in the December 2021, March 2022 and June 2022 quarters.
The average delivery price is A$2,230/ounce.
Put options and collars
The company holds put options with monthly expiry dates from April to September 2021 for 2,000 ounces per month at an exercise price of A$2,400/ounce.
During the March quarter, 6,000 ounces of these put options were exercised at A$2,400/ounce.
A zero-cost collar is also in place for 2,000 ounces covering the September and December 2021 quarters, with a put price of A$2,300/ounce and call price of A$2,910/ounce.
The company also holds 10,500 ounces of put options priced at A$1,800/ounce, with expiry dates in June 2021 and September 2021.
Kaiser
One diamond core hole, KSDD027, at Kaiser system, 1.5 kilometres northwest of the Boda porphyry discovery at Alkane's Northern Molong Porphyry Project north of TGO, intersected two zones of gold-copper porphyry mineralisation with grades and alteration similar to Boda and strong assay results of:
- 360 metres at 0.38 g/t gold and 0.15% copper from 0 metres (Duke Zone), including 7 metres at 0.90 g/t gold and 0.26% copper from 119 metres, 6 metres at 0.90 g/t gold and 0.29% copper from 204 metres, and 6 metres at 1.71 g/t gold and 0.24% copper from 332 metres;
- 442 metres at 0.17 g/t gold and 0.11% copper from 422 metres including 27 metres at 0.31 g/t gold and 0.13% copper from 492 metres, and 58 metres at 0.28 g/t gold and 0.16% copper from 735 metres.
Results from several drill holes are being finalised and will be released in the coming weeks.
Boda and Boda Two
Three drill holes were completed in the area between the southern extension of the Boda mineralisation shell and the northern extension of the Boda Two prospect, where the target host stratigraphy is rotated from northwest striking to north-south striking.
Pervasive alteration with extensive low-grade and narrower higher-grade gold-copper mineralisation was intersected by all three drill holes.
Significant molybdenum and copper mineralisation was intersected at depth from 841 metres, suggesting a zonation of metals around a deeper magmatic source to the system.
Drill program
As well as further drilling around Kaiser, Boda and Boda Two, future drilling will test other known gold-copper mineralisation occurrences and co-incident IP anomalies within the 15 kilometres monzonite intrusive corridor that extends from Boda to Finns Crossing.
There is also currently an 800 metres gap with very limited drilling between Boda and Kaiser, and follow-up drilling is being scheduled to test this very prospective corridor.
Laboratory turnaround times continue to be longer than anticipated with results from several drill holes being finalised and will be released in the coming weeks.