Alkane Resources Boosts Cash Flow with 17,657oz Gold Output, Eyes Mandalay Merger
Alkane Resources delivered steady gold production and cash flow in Q3 FY2025 at Tomingley, while announcing a transformative merger with Mandalay Resources to build a diversified Australian gold and antimony producer.
- Q3 gold production of 17,657 ounces at Tomingley
- Revenue of A$63.4 million with site cash costs at A$2,178/oz
- FY2025 production guidance maintained at 70,000-80,000 ounces
- Merger of equals announced with Mandalay Resources post-quarter
- Cash and bullion balance increased to A$50.5 million
Steady Production Amid High Gold Prices
Alkane Resources Ltd reported a solid operational quarter ending March 2025 from its flagship Tomingley Gold Operations in Central Western New South Wales. The mine produced 17,657 ounces of gold during the quarter, contributing to a year-to-date total of 50,927 ounces for FY2025. Gold sales reached 16,513 ounces, generating revenue of A$63.4 million at an average realised price of A$3,839 per ounce, reflecting the buoyant Australian dollar gold price environment.
Operating costs remained well managed, with site operating cash costs at A$2,178 per ounce and an all-in sustaining cost (AISC) of A$2,770 per ounce. These figures are slightly above the company’s full-year guidance range of A$2,400 to A$2,600 per ounce, with production expected at the lower end of the 70,000 to 80,000 ounces forecast.
Capital Projects Complete, Optimisation Underway
Alkane’s recently commissioned flotation and fine grinding circuit, alongside the new paste plant, have now completed commissioning and are performing well. Early challenges with the regeneration kiln capacity were addressed through burner upgrades late in the quarter, improving recovery rates. These capital investments are expected to enhance operational efficiency and support longer-term production stability.
Site operating cash flow was a healthy A$29.0 million for the quarter, bolstered by strong gold prices and disciplined cost control. The company also continued to reduce its debt obligations, repaying A$1.8 million in mobile equipment financing during the period.
Exploration Success and Regional Potential
Exploration drilling at Tomingley has yielded multiple ore-grade intercepts at depth, extending beyond current resource models and close to existing underground infrastructure. This promising development could underpin future mine life extensions or production increases. Additionally, a substantial regional aircore drilling program between San Antonio and Peak Hill has been completed, with results pending. Drilling continues at the Northern Molong Porphyry Project, including targets at Boda, South Boda, and Driell Creek, signaling Alkane’s commitment to growth through exploration.
Strategic Merger to Expand Footprint
Post-quarter, Alkane announced a merger of equals with Canadian-based Mandalay Resources Corporation. The combined entity will retain the Alkane Resources name and create a diversified Australian-centric gold and antimony producer with three operating mines and a strengthened balance sheet. This strategic move aims to leverage operational synergies, increase scale, and enhance cash flow generation, providing greater flexibility for growth and capital allocation in a competitive market.
Alkane’s Managing Director Nic Earner highlighted the benefits of the merger, emphasizing the enhanced scale and financial strength it will bring. The company’s cash and bullion balance rose to A$50.5 million by quarter-end, up A$11 million from the previous quarter, supported by underlying free cash flow of A$8.4 million before income tax payments.
Forward Sales and Risk Management
Alkane maintains a disciplined approach to price risk, with forward gold sales contracts covering 68,800 ounces through to June 2027 at average prices around A$2,800 per ounce. The company also holds 111,000 ounces of put options with a strike price of A$3,000 per ounce, providing downside protection amid gold price volatility.
With the Tomingley Gold Extension Project’s key infrastructure now operational and exploration programs advancing, Alkane is well positioned to navigate the remainder of FY2025 and beyond, balancing steady production with strategic growth initiatives.
Bottom Line?
Alkane’s steady operational performance and strategic merger set the stage for a more diversified and resilient gold producer in Australia’s evolving mining landscape.
Questions in the middle?
- How will the integration with Mandalay Resources impact Alkane’s operational and financial profile?
- What are the timelines and expected outcomes for the Northern Molong Porphyry Project drilling results?
- Will Alkane adjust its forward sales strategy in response to current record AUD gold prices?