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Alkane Resources Delivers Gold Revenues Of A$23.6M For March Quarter

Apr. 27, 2015 12:32 AM ET
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Alkane Resources (ASX:ALK) has reported cash flow of A$2.64 million for the quarter ended 31st March 2015 from its Tomingley Gold Operations in New South Wales.

This was on revenue of $23.6 million on gold sales of 16,000 ounces at an average price of A$1,472 per ounce.

Gold production of 13,947 ounces is down from 19,175 ounces in the previous quarter due to the transition from oxide to fresh ore.

Production is expected to stabilise in the current quarter.

Total cash operating costs of A$1,588 per ounce reflected the transition though financial year to date costs of A$1,162/ounce are near budget.

The company has a gold hedge of 27,500 ounces at A$1,540 per ounce.

Speaking exclusively to Proactive Investors, managing director Ian Chalmers noted that Tomingley is forecast to produce between 65,000 and 70,000 ounces of gold in the financial year ended 30th June 2015.

AISC is expected to remain in the A$1,000 to A$1,100 range during the current quarter and FY2015.

"We will maintain about a hedge of 25,000 to 30,000 ounces, taking new positions as others are sold into and taking advantage of price spikes," he added.

Dubbo Zirconia Project

At its Dubbo Zirconia Project, Alkane has progressed the Front End Engineering and Design process with tender packages being released to the market.

These are of sufficient detail to allow rapid finalisation of contracts once Project Approval and financing are in place.

Engineering design is now almost complete in all disciplines, with several significant process improvements included in the design.

The company also developed a conceptual recovery process for hafnium, which has growing applications in the aerospace sector, that does not impact on existing flow sheet.

A major marketing effort is underway in US and Europe for hafnium, rare earths and zirconium.

In February, the company received conditional approval from the NSW Planning Assessment Commission for the project.

Following finalisation of Consent Conditions with the Department of Planning and Environment, the application should proceed to PAC for determination in the coming month.

Financing led by Sumitomo Mitsui Banking Corporation is progressing with a focus on achieving a small strategic sale at Project level and attracting the support of Export Credit Agency funding.

Tomingley Gold Operations

Mining occurred in both the Caloma and Wyoming Three pits at the Tomingley Gold Operations.

In the Caloma pit the mined sections, accelerated as a result of the wall stability works, reconciled less than the resource model as the ore transitioned from oxidised to fresh rock and included a scheduled lower grade ore zone.

The recently defined Caloma Two resource is being incorporated into the open pit development schedule, combined with a site strategic review to maximise the financial return and mine life.

This will include potential for underground operations on all resources.

Alkane has $16.1 million in cash as at 31st March 2015. It also had $5.5 million in gold bullion at hand and $2.6 million worth of shares in Regis Resources (ASX:RRL).

Analysis

While gold production in the March quarter was down from 19,175 ounces in the previous quarter to 13,947 ounces due to the transition from oxide to fresh ore, Tomingley Gold Operations production is expected to stabilise in the current quarter.

Indeed, Alkane Resources has forecast FY2015 production to be between 65,000 and 70,000 ounces of gold.

The company will also seek to maintain its hedge position by taking new positions as others are sold into while taking advantage of price spikes.

Key catalysts for the Dubbo Zirconia Project include securing financing and approval .The addition of hafnium output will also provide further support.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.

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