Alkane Resources reports its Q1 FY2026 interim results, highlighting the integration of Mandalay Resources and key operational developments across its global mining portfolio.
- Completion of Mandalay Resources acquisition contributing $68.2 million revenue
- Full repayment of $45 million Macquarie loan facility in August 2025
- Fair value adjustments on inventories and derivatives impacting earnings
- Commitment to sell Chilean exploration asset Minera Mandalay Limitada
- Hedging strategy expanded with new put options for 2026 production
Mandalay Acquisition Drives Revenue Growth
Alkane Resources Limited has released its unaudited interim financial statements for the quarter ended 30 September 2025, marking a significant milestone with the successful acquisition of Mandalay Resources Corporation. Completed on 5 August 2025, the acquisition has already contributed $68.2 million in revenue for the quarter, with management estimating a pro forma contribution of $94.9 million had the deal closed at the start of the fiscal year. This strategic move expands Alkane’s footprint and resource base, reinforcing its position in the gold and antimony mining sector.
Financial Position and Borrowings
In a notable financial development, Alkane fully repaid the outstanding $45 million principal on its Macquarie Project Loan Facility in August 2025, reducing the facility limit to a nominal amount. The company continues to service equipment loan facilities at its Björkdal mine in Sweden and Tomingley mine in Australia, with balances of $6.2 million and $11.5 million respectively. Additionally, the Lupin reclamation project in Canada is supported by a $4 million equipment loan facility, reflecting ongoing investment in site rehabilitation and operational sustainability.
Inventory and Derivative Valuations Impact Earnings
Alkane recorded a fair value adjustment of nearly $53 million on work-in-progress and stockpile ore related to the Mandalay acquisition, with $27.2 million expensed during the quarter as stockpiles were sold. The company’s derivative portfolio, including commodity put options and gold derivative contracts, showed mixed results. While unrealized gains of approximately $9 million were recognized on listed equity investments, realized losses of $3.3 million were incurred on settled gold derivatives. The firm’s hedging strategy remains active, with new put options purchased in October 2025 to cover 42,000 ounces of Björkdal production for 2026.
Operational Highlights and Asset Management
Segment reporting reveals varied performance across Alkane’s operations. Tomingley and Björkdal mines generated gross profits of $17.7 million and $22.6 million respectively, while Costerfield reported a loss of $9.9 million for the quarter. The company also announced plans to divest its Chilean exploration asset, Minera Mandalay Limitada, classifying it as held for sale. Rehabilitation expenditures of $2.14 million were incurred at the Lupin site, underscoring Alkane’s commitment to environmental responsibilities and site closure obligations.
Looking Ahead
While the acquisition accounting for Mandalay remains provisional and subject to adjustments over the next 12 months, Alkane’s interim results reflect a company in transition, balancing growth through acquisition with disciplined financial management and operational execution. The integration of Mandalay’s assets and the ongoing hedging activities position Alkane to navigate commodity price volatility and capitalize on its expanded resource base.
Bottom Line?
Alkane’s Q1 results underscore a pivotal integration phase, with market watchers keen on how acquisition accounting and asset sales shape future performance.
Questions in the middle?
- How will final adjustments to Mandalay acquisition accounting affect Alkane’s financials?
- What is the timeline and expected impact of the Minera Mandalay Limitada asset sale?
- How effective will Alkane’s expanded hedging strategy be amid fluctuating gold prices?