Alkane Resources (ALK)

Business description

Alkane Resources is a multi-commodity explorer and developer, with projects in the central west region of New South Wales in Australia. Alkane owns the Tomingley Gold Operation and DZP rare metal and rare earths projects (both 100%).

Stock data

Market cap.A$144.2m
Last closeA$0.29
High / Low (52 weeks)A$0.4 / A$0.2
Stock market listingAU
Forecast net debt (A$m)316.7
Forecast gearing ratio (%)82
TeamResources - Mining
SectorMining

Price performance

%1m3m12m
Actual(6.6)(6.6)14.0
Relative *(7.3)(3.8)12.3

* % Relative to local index

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Company news

Y/E Jun Revenue (A$m) EBITDA (A$m) PBT (A$m) EPS (c) P/E (x) P/CF (x)
2016A 109.6 40.9 11.0 2.2 13.0 3.2
2017A 117.8 61.3 18.0 4.5 6.3 2.7
2018E 108.5 31.8 (42.3) (3.8) N/A 12.9
2019E N/A N/A N/A N/A N/A N/A

Last updated on 25/03/2018

Investment summary

Alkane's H118 results indicate its TGO gold mine performance has improved markedly over the course of 12 months. The gold grade has improved 56%, driving recovery up 3% and incidentally reducing AISC by 48% (Note: 31%, or c 1Mt, less waste was mined, while ore mining rose 18% or c 35kt). These improvements, alongside a stable gold price of A$1,688/oz (H117: A$1,649/oz), resulted in H118 gross profit of A$18.3m (H117: -A$5.6m). After central costs of A$5.9m, attributable profit was A$13.5m.

Last updated on 06/04/2018

Industry outlook

With regard to the Dubbo project, general broad price increases across its future product base continue to support the development of this, Alkane’s flagship project. Further, with continued noise regarding protectionist economic policies and the potential for tariffs barring the trade of commodities (the US already has WTO disputes with China over REEs), the strategic nature of Dubbo may well force its development and in doing so secure a non-Chinese supply of these critical products, many of which are used in the defence industries, along with their myriad of uses in technology applications. Our forecasts are under review pending release of the DP's execution plan document and also the TGO's UG mine plan.

Last updated on 06/04/2018

Key management

Ian Gandel, Chairman
Nic Earner, MD
Ian Chalmers, Technical director

Company address

65 Burswood Road
Burswood
WA 6100
Australia
+61-8-92275677
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