It was an eventful reporting season for emerging gold/copper miner Alkane – it turned in a solid half-year profit for the six months to December, finally got approval for an extension of its central Western NSW Tomingley goldmine and provided confirmation that it has on its hands one of the largest copper gold deposits in the country.
Alkane’s future is now clearly centred on the increasingly productive central west of NSW where some of the best mines in the country are to be found, such as Newcrest’s Cadia mine, Evolution’s Cowal mine and the Northparkes mine of China Molybdenum and Sumitomo.
But the expansion at Tomingley is just the first act to what could be a very different new mine for Alkane and the area.
Alkane has already outlined a huge potential deposit at a prospect called Boda. This week, it revealed the first reserve estimate for the Kaiser deposit and it’s big – 270 million tonnes of ore at 0.54 grams to the tonne gold equivalent – that’s around 480,000 tonnes of copper and 2.05 million ounces of gold.
Alkane has previously said Boda has an initial estimated resource of 624 million tonnes with an inferred resource of 5.2 million ounces of gold and 900,000 tonnes of copper.
The Kaiser Resource is located 500 metres northwest of the Boda deposit within Alkane’s Northern Molong Porphyry Project (and Magmatic Resources Corvette prospect is all but next door.
“The average grade for Kaiser is slightly higher than Boda largely due to the higher copper grade. As a result, the value of the contained copper now exceeds the value of gold for the Boda-Kaiser resources,” Alkane explained
“Drilling continues to define the overall Boda-Kaiser system with extensions being tested south of Boda at Boda Two and Boda Three and northwest of Boda towards Kaiser. The Kaiser deposit remains open at depth and along strike, and west of the Kaiser Fault.
“Additional infill drilling of the Inferred Resources at Boda and Kaiser is underway to improve confidence to reclassify to Indicated status. Updated resource estimations for Kaiser and Boda are expected at the end of the 2023 calendar year.”
“Drilling continues to test mineralised zones outside of the Boda Deposit resource envelope at Kaiser, Korridor (Boda North) and Boda Two/Three prospects.
Alkane CEO Nick Earner said in the announcement:
“This addition of the Kaiser resource to Boda further demonstrates the significant potential of the Northern Molong Porphyry Project and Alkane’s large tenement package.
“Kaiser and Boda together now approaches 15 million gold equivalent ounces, and after adding Kaiser, copper now exceeds the value of gold in the system.
“We expect the resource to grow further as we continue to test extensions south of Boda and we’ll also conduct infill drilling to update Kaiser and Boda to Indicated resource classification before the end of the year.
“Alkane is also continuing the preliminary work that is required to further understand mining and processing options for the future and are looking to wrap these into a concept study as the Indicated Resource is released.”
Alkane said thee more areas of interest called Comobella, Driell Creek and Finns Crossing are to be examined in a 15-kilometre corridor.
The company also pointed out that “The Kaiser geology and mineralisation style is largely identical to Boda and possibly represents a deeper part of the system thrust over the shallower level Boda Deposit.
“There is negligible post-mineral cover on the Kaiser deposit. Weathering and oxidation of the mineralised bedrock extends on average approximately 15m from surface.”
That means there’s potential for a large open cut mine. Alkane also said that drilling will be done this year to see if there is a continuation of mineralisation at depth under two big faults in the area.
“Further deeper drilling around higher grading intercepts within the Kaiser East and Kaiser West zones will improve confidence for the classification for an underground resource estimation,” Alkane explained in the report.
Since late last year, Alkane’s drilling program extended over three kilometres from Kaiser, through Korridor and Boda, down to Boda Two and Boda Three. Tomingley lies to the southwest of these areas which are closer to the central western NSW town of Molong.
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The update for the new prospect came after a key NSW government department last month approved a $50 million plus extension of Alkane’s Tomingley gold mine.
The existing mining operations produced around 66,000 ounces of gold last financial year and the company has plans to boost this to 100,000 a year with the new mining plan.
Approval of the extension project by the NSW Minister for Planning means the mine will happen, subject to final feasibility and cost analysis. Alkane will now apply for the environmental protection licence and a mining lease, which cannot be refused following the Minister’s approval.
Current operations at Tomingley involve four gold deposits in the site, which include open-cut and underground operations. The new operation will be to the south of the existing mine.
However, the planned extension is for an open-cut mine at the two nearby deposits, Roswell and San Antonio, with underground mining also approved for Roswell.
Alkane has secured $50 million in debt funding from Macquarie Bank together with a gold hedge covering 100,000 ounces with a weighted average price of $A2,825 an ounce.
The mine extension will see new and relocated infrastructure to support the Tomingley mine, in addition to a small upgrade of the existing processing plant.
According to Alkane, this will see production hit a maximum of 1.75 million tonnes a year by 2025.
The project will extend Tomingley’s life to 2032 when the emerging Boda and Kaiser gold copper deposits could start being mined, all being well.
“This approval is a significant milestone in the life of our Tomingley gold mine,” Alkane CEO Nic Earner said in a statement from the company.
“We can now progress our development and expansion in earnest, delivering significant and sustained production for our shareholders, employees and other stakeholders.
He said Alkane will continue to explore nearby exploration targets, including Macleans, which is immediately adjacent to our vent rise at Roswell.”
In the December half, Tomingley produced 36,199 ounces of gold.
During the year Genesis Minerals Ltd shares to the value of $5.9 million were sold. Genesis Minerals Ltd accounting treatment was changed during the prior period resulting in a one-off $48.3 million derecognition gain of equity investment.
As at December 31, 2022 Alkane had cash, bullion and listed investments totalling $119.6 million.
Net statutory profit after tax for the period was $24.69 million, a decrease of 49% over the corresponding period.
The prior period included a net gain of $48.334 million with the reclassification of Alkane’s investment in Genesis to financial assets at fair value through other comprehensive income.
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Alkane’s neighbour at Kaiser and Boda is Magmatic Resources’ Myall Giant and its increasingly attractive Corvette prospect.
The Myall Project is located around 60 kilometres north along strike of the Northparkes Mine (owned by China Molybdenum/Sumitomo). Northparkes is a series of world class porphyry copper-gold deposits, as are other mines in the region. It has been operating for 25 years.
Magmatic said late last month that has now drilled ten diamond holes totalling nearly 8,000 metres, at Myall with more than 400 metres of copper-gold intersections in those holes.
In the last update on drilling progress at the Corvette Prospect on January 30 this year, Magmatic revealed that the first hole drilled for the year (23MYDD422) had been completed at a depth of more than 1,170 metres and had intersected variable visible sulphide mineralisation over an interval of more than 950 metres down hole.
“This hole represented the biggest step out on the Corvette trend to date, located some 105 metres to the north of the Magmatic’s previous northernmost hole (22MYDD416).
“Assay results have now been received for the upper and middle portions of this hole, returning the strongest mineralised intercept to date from the Corvette Prospect,” Magmatic said in February’s update.
Magmatic CEO Dr. Adam McKinnon said in the statement that,“The latest results from hole 422 are simply outstanding. Having decided to make our biggest step out at Corvette into the untested northern part of the prospect, to intercept the strongest interval of copper-gold mineralisation so far is a great result for the program, and speaks to the massive scale of the system.”
“I am particularly pleased that, along with strong copper mineralisation, the last couple of holes have returned multiple zones with significant gold. Recent results from hole 421 have also shown very high-grade molybdenum mineralisation is present in the Corvette system, with individual grades up to 1,100ppm.”
“We are now starting to define portions of Corvette with copper-gold zones up to 600 metres wide and up to 800 metres deep, already suggesting the potential for a system with huge mineralised volumes at this early stage. Corvette continues to be open or poorly tested in all directions and I am very much looking forward to seeing what upcoming drilling to the north may yield.”
“Perhaps the most exciting part of the recent drilling success at Myall is that we have only tested a tiny fraction of the highly prospective 245 square kilometre Myall tenement.
“We know that in our region porphyry deposits of this type, including the world-class Cadia and Northparkes Mines, tend to occur in clusters of multiple deposits within several square kilometres.
“Given everything we are seeing at Myall, from the geology and geophysics to the geochemistry and alteration signatures to the large-scale mineralised intersections, I am confident Myall has the potential to develop into a Tier-1 project,” he said confidently.
Magmatic said a new diamond hole (23MYDD424) has also been completed to a depth of 744.8 metres at the Kingswood Prospect to the southwest of Corvette, with assay results still to come.
Being so close to Alkane’s two deposits, there’s potential there for rationalising the prospects into one giant mine with a lot of reserves and prospective high annual production.
As an example, Newcrest’s Cadia mine is building to a new annual output figure of 35 million tonnes a year this quarter.
