Alkane Resources Ltd (ASX:ALK) has received a share price upgrade to A$1.08 from Edison Investment Research following confirmation of its initial inferred resource for the Kaiser deposit within the Northern Molong Porphyry Project in NSW.
The analyst believes that the initial Kaiser estimate would offer an additional value of $US50.2 million or A$0.14/share to Alkane, resulting in the share price upgrade.
The company’s initial inferred resource estimate of 4.7 million ounces of gold equivalent at Kaiser, adds to the existing 10.1 million ounces of gold equivalent already delineated at its nearby Boda resource.
The estimate is based on data from 49,400 metres of drilling, using a 0.3 g/t gold equivalent cut-off deemed suitable for potential open-cut mining.
Following are excerpts from Edison Investment’s research report:
MRE summary
Following the recent approval of Alkane’s Tomingley Gold Extension Project, the company has now confirmed the initial inferred mineral resource for the Kaiser deposit, situated within the Northern Molong Porphyry Project via a 49,398-metre exploratory drill program achieved over 130 drill holes.
Estimated at 270 million tonnes grading at 0.54 g/t AuEq for 4.7 million ounces AuEq (480,000 tonnes of copper, 2.05 million ounces of gold), the value of the contained copper now exceeds the value of gold for the Boda-Kaiser resources with a combined total of 894 million tonnes at 0.52 g/t AuEq for 14.8 million ounces AuEq (7.26 million ounces gold, 1.38 million tonnes copper).
Kaiser's maiden resource estimate of 2.05 million ounces materially exceeds our July 2022 estimate of 700,000 ounces (albeit our estimate was based on only a portion of the drill data) and adds to the existing resource of 5.2 million ounces (10.1 million ounces AuEq) already delineated at Boda.
Kaiser resource
After a review of comparable Australian deposits, a 0.3 g/t AuEq cut-off grade was agreed for the prospect, using an open-cut mining method due to the shallow nature of the ore body.
The resource remains open along both depth and strike, and further drilling will be undertaken with a view to define the continuity of the mineralisation at depth and to improve the confidence in the mineral resource.
Valuation
All things being equal, this resource estimation will alter our valuation.
As per our valuation method for Boda, we estimate that the inferred resource at Kaiser would offer an additional value to Alkane of $US50.2 million (US$0.08/share or A$0.14/share).
Therefore, Alkane’s share price continues to be more than 100% covered by the value of tangible assets underpinned by Tomingley at A$0.57/share to Alkane’s valuation.
Liquid assets in the form of Alkane’s holdings in Calidus and Genesis contribute a further A$0.06/share, with Boda estimated at US$125.5 million (US$0.21/share or A$0.31/share) to Alkane, either as an in-situ resource or as a development project.
This represents a total value estimation for Alkane of A$1.08/share (cf A$0.94/share previously).
Also, up to A$0.48/share in additional upside is available in the form of further exploration success in the Northern Molong Porphyry Project.
We will review our forecasts and valuation in due course.