EDITOR: | November 28th, 2013 | 1 Comment

Alkane’s rare earth and gold projects moving across strategic finishing lines

| November 28, 2013 | 1 Comment
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Alkane Resources, Ltd., listed on the ASX since 1969 (ASX: ALK | OTCQX: ANLKY), is a mining and exploration company focused on gold, zirconium, niobium and rare earths. The Company’s projects are located in New South Wales, Australia.

The $1B Dubbo Zirconia Project (DZP), with an estimated open pit mine life of 70+ years, is expected to process 1 million tonnes of ore throughput/annum. The ore body containing zirconium, yttrium, niobium, hafnium and rare earths, has a surface area of over 45 ha. When fully into production (construction scheduled to commence Q3 2014, with production forecast), the project – with 99% of product destined for overseas – will be an export generator for Australia and a constructive addition to local government tax rolls.

Well ahead of the actual event of full production, Alkane has, since 2008, been running a demonstration pilot plant in order to “prove up” commercial and technical viability. (And in doing so, helping management strengthen its customer acquisition efforts, by providing potential end-users with commercial samples.)

Rare earths fall into two distinct groups, light rare earth elements (LREEs), and the less common (and more valuable) heavy rare earth elements (HREEs). Alkane Resources believes that production at the Dubbo Zirconia Project will enable it to exploit HREEs as an important in situ resource.

Dr. Karin Soldenhoff, Mg. of Process Development Research at the Australian Nuclear Science and Technology Organization (ANSTO), says that “Rare earths are sort of like ‘salt and pepper’ elements – you use them in very small quantities in a wide range of applications.”

The Dubbo Zirconia Project will play a role in a sea change which may be in the early stages of taking place in the REE supply pipeline. Until recently, fully 95% of the global supply of rare earths has come from China – along with all the issues regarding pricing unpredictability and availability, all of which become big factors when dealing with a “one-source” supplier. And now another questionable element has clouded the supply picture, as China moves increasingly to retain more REE production for its own use.

As part of Alkane’s Big Picture Think Ahead effort to lessen the risk of finding future customers, it has been able to secure a number of off-take partner agreements. In fact, management’s stated goal is to secure 100% of its projected REE output through MOU’s and Agreements.

Alkane Resources Exploration Work

Alkane Resources Exploration Work

Proving that it’s not just a one trick pony, Alkane is earmarking its Tomingley Gold Operations (Mining Lease approved February 2013) for commissioning and gold production by early in 2014. Tomingley is described as “a medium-sized gold project with approximately 800,000 ounces of gold in the current defined resource space”. The plan is for the project to produce between 50,000-60,000 ounces per year, as the yield from an expected throughput of around 1 million tonnes of ore. Feasibility studies have indicated that an open pit operation for the anticipated 7.5 – 10 year mine life would be the most likely format.

Assuming the startup of Tomingley goes well, a salutory benefit will be the cash flow it provides for Alkane as it works towards a financing package for the Dubbo Zirconia project.

A tour of the Alkane Resources website – looking specifically at the various projects – shows considerable evidence of educating the community and seeking their input as operations move from planning to execution. In meeting minutes, the Tomingley Gold Operations (TGO) project management dispenses information on such disparate production issues as blasting, “we expect the blasts to dissipate quickly due to the ground conditions. There should be very little ground movement experienced in the town. Air blast is sometimes confused with ground movement.” TGO also pledges, that until suitable noise bunds have been constructed, only day shifts will be operated.

In March, 2013, Alkane Resources posted a news release described as a “very high grade gold intercept” at its Caloma Two Project. RC drilling produced a number of intercepts in the range of 2.4 – 11.5 g/t gold, along with interesting numbers from: PE 873 1 metre grading 821g/t gold from 196 metres within 9 metres grading 110g/t gold from 194 metres

A second historic gold production site, a heap leach operation which, during its 10 years of previous operation yielded over 150,000 ounces of gold, is under consideration for possible reopening. This project, The Peak Hill Gold Mine, which has a published Resource here at various gold cutoff levels, is being reviewed for possible action.

Management is also actively exploring several other prospective properties in the area, seeking to identify commercially viable deposits of copper-gold and gold-zinc.

As one analyst looking at Alkane put it when referring to Australian metal sector stocks, “most companies in the specialty metal sector have been unable to get beyond the “story” stage, and investors are fed up with fairy tales.”

Judging by the progress Alkane Resources, Ltd. has been making, it doesn’t look like it will take a magic wand to move them across their strategic plan finishing lines.


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Comments

  • Tracy Weslosky

    This is one of my all-time favorite companies in part — due to leadership. Management, the Board, Alkane has it all; so thank you for the update. Intriguingly David, I did not know that ALK has been trading since 69. Are you certain? What year did Ian Chalmers join as CEO? He is definitely one of the most distinguished members of the rare earth leaders and believe that their deal with Shin-Etsu for processing their REEs, plus their gold revenue coming online makes this a truly exciting multi-commodity play. You are right, they will not need a magic want….

    November 28, 2013 - 9:40 AM

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