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Australian Strategic Materials demerger from Alkane Resources unlocks shareholder value

Australian Strategic Materials Limited (ASX: ASM | ASMMF) (“ASM”) is the result of  Alkane Resources Ltd. (ASX: ALK | OTCQX: ALKEF) demerging their Dubbo rare earths and poly-metallic project in late July 2020 to form a new listed company. The combined market cap of Alkane Resources and ASM now exceeds its previous value as a single company, showing that the demerger achieved its goal of unlocking shareholder value.

The key assets of the newly-listed Australian Strategic Materials (“ASM”) include:

  • The Dubbo Project (flagship) is a 100% owned ‘construction ready’ poly-metallic and rare earths project with potential to become a key global supplier of specialty metals and rare earths. The Dubbo deposit is a proven, large deposit of Zr, REE, Nb and Hf minerals
  • Metals Technology Business – ASM is investing in new technologies related to the separation, purification and metallisation of oxides. Their JV pilot plant with ZironTech is now in operation.
  • Toongi Pastoral Company – The company owns 3,500 hectares of freehold and leasehold land 25kms south of Dubbo, NSW, Australia.

What’s happening now with Australian Strategic Materials

ASM’s strategy is to not only produce rare earths concentrate but to go further up the value chain and produce various strategic metals. Should ASM succeed, it would place them in that exclusive club in the mining industry of being an alternative strategic high value metals producer outside of China.

To achieve this goal of producing metals from their Dubbo Project, ASM is working with their Joint Venture (JV) partner, South Korea’s Zirconium Technology Corporation (“ZironTech”). The JV is now advancing a pilot project to produce various metals by combining their proprietary process with ZironTech’s metallisation technology. ASM has exclusive global commercialization rights under the licence. The pilot plant is now up and running in South Korea.

 

Australian Strategic Materials plans to move up the rare earths and strategic materials value chain

Source

The latest progress in pilot testing the extraction of strategic metals:

July 2, 2020 – ASM/ZironTech JV produces titanium metal alloy with a 45% power saving. The commercial pilot plant was commissioned on time and on budget, with ~30kg of titanium metal alloy produced. A subsequent run of the pilot plant produced another 22kg of titanium metal alloy, with up to 50% less energy than current commercial production methods. Then in August ASM reported that their JV produced 9.16kg titanium (Ti) metal powder assaying 99.83%.

July 13, 2020 – ASM/ZironTech JV produces high quality neodymium (Nd) metal alloy, with successful laboratory production of ~1kg of neodymium metal alloy.

ASM & ZironTech produce a ~1kg of neodymium (87%) metal alloy using their 45% more efficient reduction process at their pilot plant

Source

August 19, 2020 – JV produces second key permanent magnet metal, praseodymium (Pr). Commercial pilot plant produces 5.3kg Pr metal assaying 99.3%. JV announces a forward plan for commercial pilot plant production of neodymium, praseodymium and dysprosium metal in August.

ASM & ZironTech produce 5.3kg of high purity praseodymium metal (99.3%)

Source

“This is a major milestone in ASM’s integrated strategy that includes clean metal production for all products from the development of the Dubbo Project in Central West NSW”, according to ASM’s Managing Director, David Woodall. “This integration of metal production into ASM’s business is consistent with the Australian Government’s objective of adding value within Australia, while ensuring supply security and stability of these critical materials to global and domestic Australian manufacturing sectors.”

The Dubbo Project is a large resource of zirconium, hafnium, niobium, and rare earths (including praseodymium, neodymium, and yttrium). It is the most advanced poly-metallic project of its kind outside China. The Project has an estimated 70-year mine life and can be an open pit design. The Project is ready for construction with all major state and federal approvals and licenses in place. The 2013 DFS resulted in a pre-tax NPV8% of A$1.235 billion, and a pre-tax IRR of 19.3%. The Company has since proposed a two stage production start up so as to lessen the first stage CapEx from an estimated US$930 million to US$480 million. A follow up FS plans to incorporate the new and improved processing techniques from their ZironTech JV.

Closing remarks

Rare earths are not rare in the earth’s crust, however extracting and purifying them is the challenge that has traditionally been an expensive and polluting process, mostly done in China. What ASM and their JV partner ZironTech are doing is revolutionizing the process of rare earth metals production, using much more energy efficient methods that are also less harmful to the environment. It is still early days with their pilot plant testing however results so far with titanium, neodymium, and praseodymium appear to be highly promising.

Effectively ASM is working towards becoming a vertically integrated (“mine to metal”) western producer of high purity strategic/critical and valuable metals. Subject to further testing and funding the plan is to have clean metal processing plants in Korea and Australia. More efficient processing techniques should significantly improve the economics of ASM’s Dubbo Project as well as opening up the opportunities for wider commercialization of their breakthrough technology.

The market seems to agree. Australian Strategic Materials’ stock price has doubled so far in August and ASM is now trading on a market cap of A$264m.




Winners flying high as gold hits US$2,000/oz

A look at some winners and who might be the next

Gold just hit a new all-time record high, breaking through the US$2,000/oz mark as the gold bull run continues in 2020. Gold started 2020 at US$1,498, and as I write this article is at US$2,013, for an impressive 37% gain YTD. Many gold miners are up much more than that due to their leverage to the gold price. Today we look at some of the strong performers and some others that may soon play catch up.

Gold breaks through US$2,000/oz to hit a new record high

Source: Trading Economics

Looking at the gold companies we follow at InvestorIntel, here are the past 1 year performances:

Alkane Resources had the best year of the above group as they continued to produce good volumes of gold in a rising gold price environment. Harte Gold had the least impressive year of the group as their mine had start up issues and a COVID-19 interruption. They also had higher operating expenses (OpEx) as they have not yet dug deep enough to reach the high grade gold.

Reviewing the top 5 performers yesterday on InvestorChannel’s Gold Watchlist Update, we see Granada Gold doing the best, up an impressive almost 35% on no news.

The top 5 gold performers yesterday as gold broke through US$2,000/oz

Source: InvestorChannel’s Gold Watchlist Update

Just last month I wrote “Granada Gold looks to be ‘underestimated’ by the market as drilling continues” and it looks like the market agreed with this yesterday.

Looking ahead, it is abundantly clear that those gold miners that can deliver will be handsomely rewarded. Investors need to always review the management to see if they have a good track record. Certainly if a gold miner can either increase their production and profits, grow their resource, or discover more gold (ideally high grade above 5 g/t), then at US$2,000/oz the shareholders will likely be very well rewarded.

Of the seven gold stocks InvestorIntel covers above, all look promising in a strong gold price environment.

Even the laggards Angkor Resources and Harte Gold can turn things around very fast. In the case of Angkor the current market cap (C$14m) looks cheap considering their numerous gold, silver, base metals, oil & gas exploration assets in Cambodia. With Harte Gold it is more just a matter of patience as the mine gets deeper they can access the higher grade gold, thereby reducing operating costs and increasing profits. This means investors willing to give the Company another 1-2 years may be well rewarded at the current reduced market cap (C$132m). Quebec Precious Metals is probably the most unloved and under the radar gold miner of the group covered, explaining their 0% one year return. With some good past drill results (1.15 g/t over 80.1 m, 14.20 g/t Au over 2 m, 5.05 g/t Au over 5.06 m, and 4.66 g/t Au over 3.50 m) and further results expected soon, a maiden resource estimate at the Sakami Project due by late 2020/early 2021, and with a market cap of just C$18m, this is one to get excited about. You can read more in my recent article “Quebec Precious Metals announces a ‘very promising gold discovery’ in James Bay.”

Of the recent winners – namely Alkane Resources, Euro Sun Mining, Granada Gold Mine, and West Red Lake Gold Mines – I would probably say Granada Gold Mine appears to have the most exciting potential given their existing ~1.2m I&I gold Resource, some exciting high grade drill results (including 11.45 g/t gold over 33 meters), and a market cap of only C$27m. West Red Lake Gold Mines also continues to look very promising after the one year +126% return. That’s because West Red Lake’s 3,100 hectare property has a 12 km strike length and 3 former gold mines, and contains 1.1 million inferred ounces of high-grade gold (7.57g/t) open at depth. The market cap is still only C$30m.

What a wonderful time to be following the gold miners. Let’s hope the Bank of America forecast comes true and I am writing about US$3,000/oz gold in the near future.

Disclosure: The author Matthew Bohlsen owns shares in Harte Gold, Eastmain Resources and Granada Gold. The information in this article is general in nature and should not be relied upon as personal financial advice.




Jack Lifton with David Woodall on Alkane’s rare earths demerger and ASM’s ‘game changer’ technology for strategic minerals

“We had an AGM with Alkane where shareholders voted 99.95% in approval to de-merge. The rationale is very simple. The market likes to have pure plays. So, Alkane which went into rare earths and then into gold, will be purely a gold focused company and ASM will be purely a strategic minerals company.” States David Woodall, Managing Director of Australian Strategic Materials Limited (ASX: ASM), in an interview with the InvestorIntel’s Jack Lifton.

David went on to say that ASM will be producing key strategic minerals like neodymium, dysprosium, zirconium, hafnium and praseodymium at its Dubbo Project. He also said that ASM’s strategy is to become a vertically integrated strategic materials company.

David also provided an update on ASM’s joint venture with Korean R&D partner ZironTech which he said will be a “game changer for the rare earths and strategic minerals industry”. ASM and ZironTech recently produced titanium metal alloy using 45% less energy. David continued, “The trade tensions and the COVID-19 impact on the supply chains has made people look at the modification of the global supply chain. I think ASM is well located to be able to go into that supply chain and work cooperatively with various companies.”

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738 Billion Defense Bill plus U.S. and Canadian Critical Materials Memorandum Equals Pivotal Year for Rare Earths

On Friday, we received a call from the CBC requesting more data on how the recent Fiscal Year 2020 National Defense Authorization Act (NDAA) that was passed on December 17th would impact the North American rare earths market. This combined with the recently signed memorandum of understanding (MOU) for critical materials signed on December 18th between the U.S. and Canada to reduce our dependence on Chinese rare earths and from all vantage points, Jack Lifton is correct in saying “2020 looks to be a pivotal year for rare earths”.

This timely passing of a “massive $738 billion defense authorization bill” by both the U.S. House and Senate, unquestionably holds ramifications for those of us following the North American public markets. In fact, it should mean that the leading players in this market should not only experience an increase in market valuations effective immediately, but this will inevitably result in much needed financings to achieve a successful rare earths supply chain in North America.

Jack Lifton commented that “The 2020 National Defense Authorization Act, which authorizes funding for the U.S. military, has expanded its recognition of the critical importance of the rare earths from the FY 2019’s mandate that the U.S. military only buy non-Chinese rare earth permanent magnets to the requirement that the U.S. Defense Department develop a plan and implement a strategy to discover or develop and integrate each of the necessary industrial components into a total domestic American rare earth supply chain for any and all rare earth enabled products utilized by the U.S. Dept of Defense.” He adds: “This is the greatest opportunity to revive a non-Chinese rare earth industry, since the movement to China of that industry in the last years of the twentieth century.”

In reviewing the 2020 NDAA, we have cut out the relevant excerpt from clause (c) listed under Section 850 titled “Acquisition and Disposal of certain Rare Earth Materials” for our readership.

NDAA Excerpt:

(c) REPORT ON SUPPLY CHAIN ISSUES FOR RARE EARTH MATERIALS.—Not later than 180 days after the date of the enactment of this Act, the Administrator of the Defense Logistics Agency, in coordination with the Deputy Assistant Secretary of Defense for Industrial Policy, shall submit a report to Congress assessing issues relating to the supply chain for rare earth materials. Such report shall include the following:

(1) An assessment of the rare earth materials in the reserves held by the United States.

(2) An estimate of the needs of the United States for rare earth materials—

(A) in general; and

(B) to support a major near-peer conflict as described in war game scenarios in the 2018 National Defense Strategy.

(3) An assessment of the extent to which substitutes for rare earth materials are available.

(4) A strategy or plan to encourage the use of rare earth materials mined, refined, processed, melted, or sintered in the United States, or from trusted allies, including an assessment of the best acquisition practices (which shall include an analysis of best value contracting methods) to ensure the viability of trusted suppliers of rare earth materials to meet national security needs.

While the above will inevitably be the catalyst for finally addressing the supply chain and inevitable sustainability issues in North America around these technology metals, I agree with Alkane Resources Ltd.’s (ASX: ALK | OTCQX: ANLKY) Managing Director Nic Earner who wrote “It is good to see continued moves by the US Government to establish independent supply. We look forward to seeing this lead into purchasing and commercial arrangements with US Defence suppliers in time.”

I have reached out to my favorite and most knowledgeable players in the industry with a request for them to provide practical feedback on what this means for our sector and how it will impact us in 2020. Their comments are below, and I have added everyone to the commentary section so you may respond directly to them.

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“In a complementary initiative, on December 18th, Canada and the U.S. signed a Memorandum of Understanding confirming Canada’s participation in the U.S.-led Energy Resource Governance Initiative (ERGI), part of a multi-pronged strategy by Washington to break free of China’s near-monopoly on so-called critical energy minerals essential for high-tech industries — producing everything from lithium batteries for electric cars, to smartphones and computers, wind turbines and defense assets. There are great economic benefits for Canada if our natural resource wealth and industrial capabilities can be adapted toward creating both new primary mineral supply sources and the value-added derivative products needed for electric vehicles as well as other clean technology and defense applications. I look forward to learning more about the Governments’ plans and I know that industry leaders and technical experts across the full supply chain can contribute toward creating collaborative and innovative solutions.” — Ian London, Chair, Chair, Canadian Rare Earth Elements Network (CREEN)

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This year should be the culmination of nearly 10 years of effort to move the U.S. government from endless studies and research projects to actually investing in the production of rare earth materials needed to support the Department of Defense, which should serve as a catalyst to long-term commercial viability for the industry. The DOD currently has three active Requests for Proposal to invest in establishing the capability to separate light and heavy rare earths through two new facilities, and the establishment of an inventory of NdFeB magnets. With the continued support of Congress and the Pentagon, 2020 should be the year that separates the wheat from the chaff in the prospective rare earth market, as only the most viable prospective producers of rare earths will be selected for government funding – the time for hype and pipe dreams is over as we move to an era of actual investment in production.” — Jeff Green, President, J.A. Green & Company

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These two initiatives are essential to attract and renew investment interest in the rare earth sector. Search has participated in the requests from both the US and Canadian governments, which identifies Search Minerals as a key participant in the North American rare earth supply chain. It is also helpful that Canada rare earth resources are considered ‘domestic source’ for these additional funding opportunities.” – Greg Andrews, CEO, Search Minerals Inc. (TSXV: SMY)

Dr. David Dreisinger, Vice-President, Metallurgy of Search Minerals adds: “Since our inception, we have met our objectives to have a proven processing technology which has low capital and operating costs, environmentally friendly and scalable. The new initiatives could help fund separation facilities or technologies in North America which could process our concentrate into individual oxides. Our resources contain both light and heavy rare earths required for many applications deemed critical under NDAA. The initiative allows the ability for new government funding opportunities required to advance the supply chain initiative, ie offtake agreement or direct investing.”

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The 2020 NDAA is an excellent additional step in a process that will ultimately lead to the establishment of a rare earth supply chain in the United States. Various agencies in the Department of Defense are now also beginning to put serious funding into the establishment of a domestic supply chain. Texas Mineral Resources and its funding and development partner USA Rare Earth Inc. is not waiting to take action. Rather, it has proactively established a Colorado based rare earth pilot facility that will ultimately be transported to Texas and ultimately envisions Texas as the center of a domestic rate earth and critical mineral supply chain.” — Anthony Marchese, Chairman, Texas Mineral Resources Corp. (OTCQB: TMRC)

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“The NDAA will bring focus on the rare earths sector and some much-needed funding to implement a North American strategy for rare earths. Six months is a very short time to summarize the state of the industry unless they have multiple inputs from those with knowledge of the space. Hopefully they will look at investing in the magnet supply chain, which needs rebuilding for the production of neodymium magnets (NdFeB). This initiative should build more confidence in the investment side and raise the profile for projects that can go into production in a short period of time.” – Alastair Neill, Trinity Management Ltd.

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“Trillions of dollars of all-important products are dependent on one dominant group which, in the past, has used rare earths for economic, political, social and technical gains. The United States’ most recent vocalized concern over threatened or possible disruption of rare earth supply is once again drawing attention to the potentially tenuous situation and the importance of the companies addressing this situation. Prudent business practice dictates the use of multiple suppliers particularly for key inputs. That said, the sourcing of rare earth raw materials in the United States and its allies can be arranged in the not too distant future, however, the paramount issue is establishing and implementing the technical know-how to process the raw materials into refined rare earths and then into useful applications and products. Processing capability is of paramount importance and is fundamental to unlocking supply dependency and will take considerably longer to implement due to the unique characteristics and the technical aspects of the rare earths.” — Tracy A. Moore, CEO of Canada Rare Earth Corp.

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“Lynas welcomes the U.S. Defense Department’s plan to encourage the development of a rare earth supply chain in the United States, or with trusted allies. As the world’s second largest Rare Earths producer, Lynas is well positioned to help the establishment of a sustainable and resilient rare earth supply chain from mine to magnet and to energy efficient electric motors.” – Lynas Corporation
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“Bringing together the NDAA, the Australian Government’s AUD4.4bn Defence Export Facility being made available to rare earth development projects, and joint U.S.-Australia critical minerals initiatives, it’s clear that not since the Government of Japan helped fund Lynas in 2011 to build their Malaysian process plant, have we seen Western governments, including those of the EU member states, focus, co-operate and now act on the issues that have allowed China to effectively take control of the rare earth market over the past 20 years. These efforts could result in further diversification (beyond Lynas) of NdPr and heavy rare earth supply, including by Arafura Resources, into ex-China NdPr metal-NdFeB magnet alloy/magnet manufacturing and the downstream clean energy supply chain.” — Richard Brescianini, Arafura Resources Limited
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“Medallion Resources has been focused on the development of rapid ‘go to production’ rare earth business model and proprietary extraction process using by-product monazite feedstocks. These are available throughout the Americas, Australia and Southern Africa. We recently announced the start of US site selection process for an initial REE extraction plant with capital requirements that are a fraction of traditional REE mining and processing operations.” — Donald Lay, President & CEO Medallion Resources



Trump amends Defense Production Act for Rare Earths

My first email this morning read “Game changer!” and included a link to the Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended. It reads, on July 22, 2019, US President Donald Trump stated: “By the authority vested in me as President by the Constitution and the laws of the United States of America, including section 303 of the Defense Production Act of 1950, as amended (the “Act”) (50 U.S.C. 4533), I hereby determine, pursuant to section 303(a)(5) of the Act, that the domestic production capability for Rare Earth Metals and Alloys is essential to the national defense.

Without Presidential action under section 303 of the Act, United States industry cannot reasonably be expected to provide the production capability for Rare Earth Metals and Alloys adequately and in a timely manner. Further, purchases, purchase commitments, or other action pursuant to section 303 of the Act are the most cost-effective, expedient, and practical alternative method for meeting the need for this critical capability.”

Having seen the undeniable increase in interest in rare earths as of late, we published a historical overview of the market yesterday titled The U.S. rare earths saga continues… The intent was to highlight how a similar series of events created a most memorable boom to bust cycle from 2010-2014.

This memo should provide a great short-term boost to the rare earths sector as well as a confidence boost for investors in the rare earths sector, which we will be covering. We presently cover regularly the following companies that are leaders in this sector:




Alkane’s disruptive technology to reduce metallization costs by +50%

[Note from the Publisher: This InvestorIntel interview is about the Alkane Resources Limited: Investment in Clean Metal Processing Technology news release put out on June 6, 2019 that starts: “Alkane Resources Ltd (ASX: ALK) (Alkane) through its wholly owned subsidiary Australian Strategic Materials Limited (ASM) has executed a binding agreement with Zirconium Technology Corporation (a South Korean company) (Ziron Tech) to fund the final stage research and feasibility in relation to a clean metal process to convert metal oxide – including key Dubbo Project metals – to metals of high marketable purity (Technology).”

InvestorIntel did a follow-up column titled Alkane deal with Ziron Tech to reduce metallization costs in excess of 50% for zirconium, hafnium, and titanium metals on July 15, 2019 as we deem this news to be disruptive for the overall critical materials sector.]

“It is an electrolysis process. So it uses standard electrolysis but through a solid oxide membrane rather than a carbon electrode. That is a big step because it takes carbon out of the equation. The really exciting thing for us was, the solid oxide membrane that they use is a yttria stabilized zirconia. Here are two products that we will produce from Dubbo, we can actually produce yttria stabilized zirconia used in the process, so there was an added bonus for us. The beautiful thing about the process is that it generates only oxygen as waste material and produces high purity metals” States Ian Chalmers, Technical Director of Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY), in an interview with InvestorIntel’s Tracy Weslosky.

Ian went on to say that the Ziron Tech Electrolysis Process is estimated to reduce metallisation costs by in excess of 50% and is applicable to the majority of Dubbo Project products, including zirconium, hafnium, titanium, neodymium and praseodymium. Ian also said that the process doesn’t add much to the capital and operating cost of the Dubbo Project and expects that by the end of 2020 this technology will be available to the global critical material market.

To access the complete interview, click here

Disclaimer: Alkane Resources Ltd. is an advertorial member of InvestorIntel Corp.




Alkane’s Nic Earner on the Australian gold bull market

Recently during PDAC 2019, Nic Earner, Managing Director of Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY), shared an update on Alkane’s Tomingley Gold Operations with InvestorIntel’s Tracy Weslosky.

Nic said: “Australian gold right now is $1800 an ounce. With most Australian gold mines, for instance our forecast on production this year is between $1,050 and $1,150. Think about those margins. Its really purple patch for Australian gold at the moment.”

Alkane Resources Inc. is a multi-commodity company mainly focused in the Central West region of NSW, Australia. Currently Alkane has two advanced projects – the Tomingley Gold Operations and the nearby Dubbo Project. Tomingley commenced production in early 2014. Cash flow from Tomingley Gold Operations has provided the funding to maintain the project development pipeline and has assisted with the pre-construction development of the Dubbo Project.

The Dubbo Project is a large in-ground resource of zirconium, hafnium, niobium, yttrium and rare earth elements. As it is an advanced poly-metallic project outside China, it is a potential strategic and independent supply of critical minerals for a range of sustainable technologies and future industries. It has a potential mine life of 75+ years. The Dubbo Project is development ready, subject to financing, with the mineral deposit and surrounding land acquired and all major State and Federal approvals in place.

To access the complete interview, click here

Disclaimer: Alkane Resources Ltd. is an advertorial member of InvestorIntel Corp.




Nic Earner on the state of the rare earths market

“We have a project that is State and Federal approved, mining lease is granted, we own all the farmland underneath, mines approved, so we can start developing today. This project, with finance, can be executed right now.” States Nic Earner, Managing Director of Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY), in an interview with InvestorIntel Corp. CEO Tracy Weslosky.

Tracy Weslosky: What is happening with the rare earths market right now?

Nic Earner: It is really interesting time for the market. If you go out and listen to people, they will say that we know that Lynas which supplies about 20-25% of the worlds battery materials, China has a lock on this stuff…So what you have is, the rise of a producer, Lynas, and a whole series of other projects including ourselves as one of the most advanced projects that can produce rare earths waiting for a news to say, I am going to act now to secure my supply chain. So, its quite a dynamic time and particularly as you can imagine with the Trump administration and who is doing what in trade tariffs people are really watching closely, waiting for a signal that things are starting to break.

Tracy Weslosky: Those of you out there that look at issues like sustainability and geopolitical factors, this is the kind of company to be watching. Can you give us kind of an overview on what’s happening right now with the Dubbo Project?

Nic Earner: Our project is amongst if not the most advanced non-developed project in the world. We have a project that is State and Federal approved, mining lease is granted, we own all the farmland underneath, mines approved, so we can start developing today. This project, with finance, can be executed right now. So we are in a constant and continuous push on marketing, looking for off-takes, co-investors, etc…For us we have a ready to execute project and we are really pushing to get a critical step taken.

Tracy Weslosky: Correct me if I am wrong, that outside of China, when you get this financing in place, you will be one of the largest producers of these rare earths outside of China. Is that correct?

Nic Earner: Absolutely. At the moment outside of China of any substantial nature we have Lynas Corp. digging up at the Mt Weld and shipping to Malaysia. They are the sole supply outside of China. Almost two-third of their product goes into Japan, the rest goes to China. So that’s correct we would be….to access the complete interview, click here

Disclaimer: Alkane Resources Ltd. is an advertorial member of InvestorIntel Corp.




Nic Earner on Alkane Resources’ 2019 gold investment strategy

“If you look at our gold investment strategy, we want to assist companies to come into production and therefore make money for our shareholders…” States Nic Earner, Managing Director of Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY), in an interview with InvestorIntel Corp. CEO Tracy Weslosky.

Tracy Weslosky: We want to talk about gold for the holidays. I was reading the New York Times this weekend and it said this is the one year that stuffing your cash in a mattress may have actually put you further ahead. Let us talk about gold. This would be a good time to invest in gold. Nic, what do you think?

Nic Earner: Naturally I am a bit of a gold bull. Certainly we are really happy with how the year has gone for Alkane Resources. We are in Australian gold. We have seen the rise and fall of U.S. dollar gold, certainly the Australian dollar has corrected broadly as well. Last financial year, which was finished in Australia at the end of June, we sold our gold for an average of around $1,720.00 Australian. We have seen similar price levels this year in Aussie dollars. For a cost base, for us, of below $1,000.00 an ounce Australian it has been a wonderful period of time. If you look historically, at the moment in Australian gold there has been sort of 9 or 10 quarters in real terms over the history at these price levels. Certainly it is an excellent time to have been in Australian gold.

Tracy Weslosky: Nic, in our last conversation you said at the end of September you had $82.4 million in cash and bullion and you have been accruing that cash up. Talk to me a little bit about what you are doing with your gold acquisitions that you were working on.

Nic Earner: Thanks Tracy. We have been making investments into other near-term development prospects. There were two that we were chasing in Australia. One has been successful. One has been unsuccessful. The successful one has been in Calidus Resources. The ASX ticker for that is CAI. They have got ground and reasonable prospects which are going through scoping and feasibilities at the moment up in the Pilbara region of Western Australia. We are helping them to get through to feasibility, just through. Investment they manage and we formed a technical committee to help maximize value of our investment. We really like that one. We like the size of the deposit. We like its exploration potential. We like its capacity to bring near-term development cash. With Explaurum we were looking to do a similar thing; to be part of a placement, help them go through to feasibility, but they were also subject to a takeover offer from another company called Ramelius. Ramelius increased their offer and the directors of Explaurum accepted that offer so Alkane is no longer part of that, c’est la vie. If you look at our gold investment strategy, we want to assist companies to come into production and therefore make money for our shareholders because in general you get this tension where you have raised the ounces on your resources, which you have to mine and it becomes a funding crunch point. Working through that point brings value for the next lot of investors or the same investors and we want to be part of that…to access the complete interview, click here

Disclaimer: Alkane Resources Ltd. is an advertorial member of InvestorIntel Corp.




Alkane’s Chalmers on the supply shortage of rare earths

“Surprisingly the rare earth market still has not shown the jumps that we believe it would have by now. The equity market is still very skeptical of us. I think that is a combination of things. Eventually the customers, the equity market are going to lock on or understand that if we are going down this path, which we all believe we are going, then the demand for rare earth magnets is just going to have to increase dramatically and there is not the supply around at this point in time.” States Ian Chalmers, Technical Director of Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY), in an interview with InvestorIntel Corp. CEO Tracy Weslosky.

Tracy Weslosky: Ian, the headlines everywhere, we have got U.S.-China trade negotiations happening. We have China and Canada at each other. What is happening with the rare earth market? 

Ian Chalmers: That is a good question actually. It is pretty hard to summarize in a short space of time. Surprisingly the rare earth market still has not shown the jumps that we believe it would have by now. The equity market is still very skeptical of us. I think that is a combination of things. Eventually the customers, the equity market are going to lock on or understand that if we are going down this path, which we all believe we are going, then the demand for rare earth magnets is just going to have to increase dramatically and there is not the supply around at this point in time. At some point in the not too distant future the market is going to crack and we are going to see some really, really strong interest.

Tracy Weslosky: Ian I think we are both getting our updates on what is happening with Lynas for instance from just the general news media. What is your understanding of what is happening right now? 

Ian Chalmers: My understanding, and again like you I am just getting it from the public domain, is that Lynas had been instructed that they have to come up with a solution to the radioactive waste. Now in the meantime they have stopped production. I understand it was only initially for a month while this review was completed, but they have to come up with an issue to deal with the radioactive waste that is already on site. It is a serious problem, but it is a problem I do not believe the Malaysian government cannot resolve because there is too much outside influence on the Malaysian government. There is a strong relationship between Japan and Malaysia and really a lot of Lynas’ product goes to Japan. I think I would be very surprised if the Malaysian government shut down the operation.

Tracy Weslosky: I really appreciate the update with that. Speaking of updates, considering the size and the magnitude of your critical material resource, can you give us an update on what is happening with the Dubbo Project?

Ian Chalmers: Basically the Dubbo Project is ready to go. We are continuing to work on offtake agreements. We are continuing to work on the finance. One of our major issues is our customers, particularly in the rare earth space keep wanting to see discounts. They want to see discounts to Chinese domestic price. In other words they are saying to us, yeah we will sign an off take contract, but you accept the 7%-8% vet as a discount and you put another small discount on top of that as the Chairman stated at the lead in to our annual general meeting back earlier in November…to access the complete interview, click here

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