News

July 21, 2009

Small Is Beautiful For Alkane Resources, As It Moves Towards Gold Production In New South Wales

By Our Man in Oz

“Small is beautiful” is a trendy catchphrase, originally popularised by the late E.F. Schumacher, an economist of some note in the 1960s and 70s. The reason Minesite readers need reminding of Schumacher’s thoughts is that they were developed in difficult times - much the same as now - when small companies can outperform bigger rivals for some unusual and interesting reasons. The latest example of small is beautiful can be found in Alkane Resources, an Australian explorer, which is on the verge of making a return to gold mining, aided by what looks to be a very profitable, albeit small mine, that can be easily funded by a single bank. Why is this important? Because, as Alkane’s chief executive, Ian Chalmers, puts it: “syndicated loans are pretty tricky right now, because there’s no trust between banks, but we’re just the right size for one bank to handle.”

In other words, Alkane has found a silver lining on the global financial crisis. Not only has the company got a project almost ready to go at Tomingley in western New South Wales, but it should find funding the A$50 million development a breeze. The plan is for the production of between 50,000 and 70,000 ounces of gold a year at a cost of around US$520 an ounce, for a minimum of eight years. Not a project to set the gold world alight, Tomingley is nonetheless just the right size for Alkane, and...