Alkane Resources Limited (ASX:ALK)'s tangible assets now cover 136% of the company's share price, according to estimates by Edison Investment Research, up from 56% previously.
The analyst’s valuation continues to be underpinned by the Tomingley Gold Mne, which it estimates contributes A$0.57 per share to the valuation.
Liquid assets in the form of Alkane’s holdings in Calidus and Genesis contribute a further A$0.06 per share.
Where before these had been the only two tangible contributors to Alkane’s valuation, they have now been joined by Boda, which the company estimates is worth an immediate A$0.31 per share.
Together, these tangible assets (A$0.94 per share) now cover 136% of Alkane's share price (A$0.69) valuation.
Following are excerpts from Edison Investment’s research report:
Many analogues, much potential
Boda is a classic calc-potassic porphyry, analogous to nearby Northparkes and similar in size to Cascabel’s Tandayama-America deposit. However, outcropping mineralisation creates an opportunity to mine from surface and Alkane’s immediate imperative will be to define the extent of the mineralisation ahead of a preliminary economic assessment (PEA) at end CY23 or early CY24.
For the moment, our valuation of Boda remains relatively conservative.
However, it is worth noting that Newcrest paid US$806.5 million for a 70% interest in the-then 20-million-ounce gold plus 5.8 million-tonne copper resource at Red Chris in August 2019 (equivalent to US$57.61/ ounces gold or US$25.89/oz gold equivalent), on which basis Boda would be worth around US$280.8 million, or US$0.472/share or A$0.694/share.
Valuation: Tangible assets cover 136% of share price
Our valuation of Alkane continues to be underpinned by Tomingley, which we now estimate contributes A$0.57/share to its valuation.
Liquid assets in the form of Alkane’s holdings in Calidus and Genesis contribute a further A$0.06/share.
Where before these had been the only two tangible contributors to Alkane’s valuation, they have now been joined by Boda, which we estimate is worth an immediate US$125.5 million (or US$0.21/share or A$0.31/share) to Alkane either as an in-situ resource or as a development project, albeit with the proviso that the project-based valuation will now increase inexorably, both as a result of continued resource increases and upgrades and as a result of Alkane’s de-risking the project by achieving future development milestones and with the passage of time.
As such, we calculate that Alkane’s share price is now more than 100% covered by the value of tangible assets (compared with 56% previously), with up to A$0.59/share in additional upside available in the form of further exploration success in the Northern Molong Porphyry Project as well as the gold price and the ever-increasing probability that the Roswell underground extension will be sanctioned.