The ‘Sleeping Giant’ in Alkane’s Portfolio
Boda-Kaiser is one of the biggest discoveries in Australia of the past decade
Alkane Resources (ASX/TSX: ALK) managing director Nic Earner says the company’s strong track record of delivery put it in good stead for the development of the large Boda-Kaiser project in New South Wales.
Alkane, which merged with Canada’s Mandalay Resources Corp last year, operates the Tomingley gold mine in NSW, the Costerfield gold-antimony mine in Victoria and the Björkdal gold mine in Sweden.
Group sales for the 12 months to June 30 were 165,196 ounces of gold and 1364 tonnes of antimony, or 169,827oz of gold equivalent.
“Apart from one year, where we missed by 2000 ounces, as a company, we’ve hit our guidance every single year for a decade,” Earner told a Melbourne Mining Club event this week.
While there’s exploration upside across all three of Alkane’s operations, the company’s big growth prospect is Boda-Kaiser, which is one of Australia’s largest undeveloped gold deposits.
Discovered in 2019, the project has indicated and inferred resources of 796 million tonnes at 0.33 grams per tonne gold and 0.18% copper, or 0.58g/t AuEq for 8.28Moz of gold and 1.46Mt of copper, or 14.7Moz of AuEq.
A 2024 scoping study into a A$1.8 billion, 20Mt per annum operation outlined production of 159,000oz of gold and 35,000t per year over the first five years of a 17-year life at all-in sustaining costs of A$630 an ounce including copper by-product credits.
At metal prices of A$3500 per ounce of gold and A$15,000 per tonne of copper, the project has a pre-tax net present value of 24% and would generate free cashflow of A$4.3 billion over the first 10 years.
At A$4600/oz of gold, those figures rise to 36% and A$8.2 billion, respectively.
Today, metal prices are roughly A$5700/oz of gold and A$19,300/t for copper.
“This is an economic deposit, right? So, it all becomes, how do you get this approved?” Earner said.
“We’ve drilled the lights out of this thing – this is all about the permitting. This is all about acquisition of land.
“People don’t realise, but in my time with the company, which is coming up 13 years, I’ve been involved in over 30 land transactions, and it continues. We’ve done four in the last year alone.
“Unfortunately, in the Australian context, in east coast Australia, if you want to be a miner, you also need to be a farmer, and you also need to be very astute in terms of your transactions.”
The perception of getting a project permitted in NSW has taken a hit in recent years due to the blocking of Regis Resources’ (ASX: RRL) shovel-ready McPhillamys development.
However, that decision was made by a federal minister, on the grounds of Aboriginal heritage, after the project had already been approved by the NSW government.
Alkane has permitted three projects in NSW in the past decade.
Earner said it was important to start environmental studies early and understand land requirements.
“You need to be doing all of that well and way more in advance than you used to have to do,” he said.
“We intend to be submitting this for approval late next year, and then that would add, in its largest format, 250,000 ounces a year for nearly 20 years, in half format, 150,000 ounces a year for 30 years.
“So, this is a transformational project for us that we’ve happily done a good deal of spending on, and then we now are taking it through approvals.”
Earner described Boda-Kaiser as a “sleeping giant” which was ascribed little value by the market.
Though the development of Boda-Kaiser looms, he said Alkane would consider further mergers and acquisitions.
“What jurisdictions are we considering M&A? Australia, New Zealand, US, Canada, Scandinavia,” he said.
“Anything outside of that doesn’t match our existing shareholder base and what their risk appetite is.”
In the meantime, Earner said Alkane would continue its track record of delivery.
“We’re not the most aggressive, but we deliver on production, so if we say we’re going to do something, then it’ll be a bloody big disaster that prevents us,” he said.
“We operate underground and open cut. The benefit of that is that we can pick up any new asset and team, and it’ll work.
“We expand our mineral resources at all sites. When we first started Tomingley, it had a seven-year life. It’s now been running for 12 years with another seven ahead of it.
“We don’t just operate. We build and we build on time and on budget. We deliver permits, which is a soul-destroying and necessary part of the business.”
Earner added that Alkane made sensible and accretive corporate investments, pointing to an early investment in Genesis Minerals (ASX: GMD), which was sold for a substantial profit.
The company currently has a 4% stake in emerging Western Australian gold-copper producer Medallion Metals (ASX: MM8).
Alkane had cash of A$432 million at the end of June, a A$104 million increase in three months.
“Above all things, we just make money, which is really nice thing to be able to say that we can do,” Earner said.
“And we’ll be talking about how we would return that to shareholders in the coming couple of months.”