Seeking Alpha

Proactive Investor's  Instablog

Proactive Investor
Send Message
Proactiveinvestors is a leading multimedia news organization, investor portal and events management business with offices in New York, Sydney, Toronto and London. Proactiveinvestors operates five financial websites in four languages providing breaking news, comment and analysis on hundreds of... More
My company:
Proactiveinvestors
My blog:
Proactiveinvestors
  • Alkane Resources Moves Close To 1M Ounce Resource At Tomingley Gold Project 0 comments
    Nov 11, 2013 11:49 PM

    Alkane Resources (ASX: ALK) is within reach of a milestone 1 million ounce of gold resource at its Tomingley Gold Project in New South Wales after defining an Initial Resource at the Caloma Two deposit.

    Caloma Two has a Resource of 1.7 million tonnes grading 2 grams per tonne gold, or 109,300 ounces of contained gold.

    This increases the overall gold inventory at Tomingley by 13.5% to 921,000 ounces.

    In addition, the development program remains on schedule and budget to commence production in February 2014.

    Caloma Two

    The Caloma Two deposit is based immediately south of Caloma, one of three deposits that make up the Tomingley Project.

    It has been subject to extensive resource definition drilling consisting of 22,782 metres of reverse circulation drilling in 159 holes and 2,145 metres in 11 diamond holes in the last 12 months.

    The program was designed to confirm mineralisation outlined in broadly spaced drilling completed in 2010 and 2011 and to upgrade to resource status.

    The geology, alteration and mineralisation at Caloma Two are very similar to those of the other Tomingley deposits.

    Economic mineralisation is associated with quartz veining, sulphide accumulation and alteration focused within sub-volcanic porphyritic feldspar porphyry sills and adjacent volcaniclastic sediments.

    The Wyoming and Caloma deposits appear to have formed as the result of a rheological competency contrast between the porphyritic sub-volcanic sills and the surrounding volcaniclastic sediments, with the sills showing brittle fracture and the sediments ductile deformation.

    The deposits have many similarities to well documented orogenic-style gold deposits.

    Like Caloma, mineralisation at Caloma Two is relatively complex. The orientation of the mineralised zones has been determined from the vein direction data obtained from oriented diamond drill core.

    Mineralisation lies dominantly within the feldspar porphyry where there are both flat (<20°) and moderately north dipping (40°-50°) zones.

    The resources were limited by an optimum pit design to ensure that there are reasonable prospects for eventual economic extraction.

    Mineralisation that has been modelled but lies outside of the resource will be assessed by the
    Tomingley operations team for the potential extraction by underground mining methods.

    Tomingley

    Tomingley received approval by the NSW Department of Planning and Infrastructure in late July 2012, with the mining lease approved in February 2013.

    Tomingley will be profitable in the current gold price climate with C3 Cash operating costs around $1,000/oz, with EBITDA -$170 million (at a spot of $1,450/oz). CAPEX is A$107 million.

    Production is based on throughput of 1 million tonnes per annum at a head grade of 2.00g/t, with recoveries of 93%.

    Gold production is around 400,000oz over the base case life, with a life of 7.5 years, with Alkane targeting greater than ten years.

    Adding to the additional resource potential was a drill intercept of: 9 metres at 110g/t gold.

    The mining method will be open cut and underground, with commissioning anticipated for early 2014.

    Analysis

    The increased resource at the Tomingley Project further highlights the attractiveness of the project, which is just months from starting gold production.

    This makes it more than likely that the company will meet its target of greater than 10 years of mine life from the project.

    Cash flow from Tomingley will in turn fund the company's Dubbo zirconia project, a very large polymetallic resource that contains an important strategic metal mix, including 25% heavy rare earth.

    This will turn the company into a multi-commodity producer.

    Alkane is poised to start paying dividends once Tomingley begins production. Proactive Investors estimates a 6-9 month target price for Alkane of $0.49 - $0.58.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

Back To Proactive Investor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.