News

March 24, 2009

Alkane Resources Shows Every Sign Of Re-Awakening After A Bit Of A Snooze And A Few False Starts

By Our Man in Oz

All investors like to think they can double their money in little more than a year. With Alkane Resources, a small Australian exploration-focused company, they have a better than average chance, especially if plans to re-start gold production next year run to schedule. High gold prices, and a low Aussie dollar, have added significantly to the profit margin available at Alkane’s “revival project” at Tomingley in western New South Wales. At the current Australian gold price of A$1350 an ounce Alkane’s margin is close to A$800/oz, turning the relatively small 60,000-to-70,000 ounce-a-year open pit development planned for Tomingley into a cash cow spinning off up to A$56 million a year, and delivering a capital cost payback in less than 12-months.

For long-term followers of Alkane there is more riding on Tomingley than the start of a new mine. Not only will it be the first gold production since the company mothballed its one-time flagship mine at Peak Hill, 12 kilometres to the south in 2005, but it will set-up Alkane for something much bigger in the future. That could come from more gold via what appears to be a world-class discovery in association with the big U.S. goldminer, Newmont, or in the production of a cocktail of zirconia and...