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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$108.8m
Last closeA$0.22
High / Low (52 weeks)A$0.4 / A$0.2
Stock market listingAU
Forecast net cash (A$m)63.3
Forecast gearing ratio (%)N/A
TeamResources - Mining
SectorMining

Price performance

%1m3m12m
Actual(15.7)(24.6)(17.3)
Relative *(16.8)(28.8)(23.7)

* % 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 9.8 2.4
2017A 117.8 61.3 18.0 4.5 4.8 2.1
2018E 128.4 41.5 (1.3) (0.7) N/A 5.5
2019E N/A N/A N/A N/A N/A N/A

Last updated on 26/06/2018

Investment summary

A strong Q3 saw the Tomingley Gold Operation (TGO) mine generate operating cash flows of A$21.2m, driving Alkane’s (ALK) cash pile to A$60.6m with a further A$8.4m held as bullion-on-hand. Two critical path catalysts are due in Q418, the final modular costing plan for the Dubbo Project (DP) and the way forward for extending the TGO’s mine life. While financing the DP continues, we see ALK using its cash pile to extend the life of the TGO processing facility via either underground mining or potentially, exploration and development.

Last updated on 29/06/2018

Industry outlook

Zirconium products have been aided by zircon supply shortages driving prices to levels last seen in 2011. Although supply is largely controlled by CBMM, FeNb price support is being driven by the c 257% vanadium pentoxide price increase (October 2016 to December 2017). As for magnet REEs, prices have fallen since the highs of August to October 2017, although in our opinion their importance has not yet been properly accounted for in the future of electric vehicles (EV), especially as China will likely drive for its own REE magnet resources to be used for its domestic EV industry. Hafnium remains subdued by a stagnant nuclear industry, which is the traditional supplier of the metal.

Last updated on 29/06/2018

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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