Alkane and technology metals: setting an example of persistence
“Listed on ASX since 1969,” says the presentation of Alkane Resources (ASX: ALK | OTCQX: ANLKY) at last week’s 5th Annual CleanTech and Technology Metals Summit in Toronto.
And therein lies a tale: a tale that is not all that often replicated in the exploration industry.
While looking over Alkane’s presentation this week, I glanced up at the screen at Tuesday morning’s announcements on the Australian Securities Exchange. Before lunch, two more companies were now in the lithium business – Marindi Metals (ASX: MZN), hitherto a zinc explorer, and Monax Mining (ASX: MOX) which seems to have been contentedly drilling for gold, had now joined the fast-growing ranks of lithium explorers. Meanwhile, a slightly less recent addition, Kairos Minerals (ASX: KAI) had added to its ground holding.
My head is spinning: it’s hard to keep up with deluge of lithium converts. As increasing numbers of commentators are saying, the lithium field is becoming severely overcrowded.
As we have seen with uranium, rare earths, phosphate, graphite and now lithium, junior companies have tended to fly toward the brightest flame – and then move on.
Contrast that with Alkane, which has stuck to its focus for what seems forever; really, if it ever changes its name, they should think about Longevity Mining as a handle.
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Sure, Alkane has made a few detours along the way (into iron ore for example) but they have usually been in the interests of earning a buck, as happened with gold mines. Between 1996 and 2005, Alkane operated the Peak Hill gold mine in New South Wales (in 1998, for example, it was mining at A$404/oz and earning A$554/oz); the gold kept the company cashed up. More recently, cash flow has been coming from the Tomingley gold mine since February 2014; in both instances, the greater goal was the Dubbo Zirconium Project, and all along other projects have been secondary in long term purpose to the DZP.
But you sure have to give it to Alkane’s managing director Ian Chalmers for persistence and sticking it out. Back in 1998, one quarterly report noted that “since 1988 Alkane has trialled various metallurgical techniques” at Dubbo. Since 1988! These tests included selective sulphuric acid leach and examining the potential for producing an ore mineral concentrate by gravity or flotation methods. While there were all partially successful, they were not sufficiently cost-effective.
By May 2000 zirconia was being produced on a laboratory scale up to 99.1% (along with hafnium). “Samples of these products are currently being distributed world-wide to potential consumers and/or marketing agents for their analysis and comment on market acceptability and price,” the announcement added.
So, in 2016, where are we?
Last month London-based Edison Investment Research presented an update on Alkane. This followed the signing of a letter of intent with a private Vietnamese specialty metals refiner and trader relating to the toll-treatment of DZP rare earth output. The connection followed the lapsed agreement with Shin-Etsu; as Edison points out, Vietnam Rare Earth has its own rare earth and specialty metals plant in its home country, a facility that would likely cost four times as much to develop if it were in Australia.
So here is the timeline of Alkane’s deals:
- August 2012: MoU to market zirconium products in Europe and North America
- July 2013: Agreement with Treibacher Industrie to jointly process niobium into ferroniobium
- March 2016: LOI with Vietnam Rare Earth
According to the Edison note, Alkane intends to finalize agreements for its zirconium and rare earth products this year. This is critical to maintaining its development timeline and be in production in 2018 – which will surely entitle Ian Chalmers to raise a glass. Of course, there is the small matter of raising somewhere in the vicinity of A$1 billion for development, but there’s always the gold revenue in the meantime.
Edison forecasts the following breakdown of projected revenue in fiscal 2020:
- Gold 23%
- Zirconium 31%
- Ferroniobium 13%
- Light rare earths 13%
- Heavy rare earths 10%
- Hafnium 10%
In which case, Alkane could afford a company motto; something along the lines of “Persistence Pays”.
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