How Did Alkane Resources Double Production After Mandalay Buyout?
Alkane Resources reports a strong first quarter for FY2026, driven by its recent acquisition of Mandalay Resources, boosting gold equivalent production and revenue significantly.
- Gold equivalent production rises to 30,511 ounces in Q1 FY2026
- Revenue nearly doubles to $147.2 million post-acquisition
- Operating costs increase due to expanded operations and acquisition accounting
- Free cash flow turns positive at $17 million despite acquisition costs
- FY2026 guidance reaffirmed with production of 155,000–168,000 ounces at AISC of $2,600–$2,900
Strong Start to FY2026 Post-Mandalay Acquisition
Alkane Resources Limited has kicked off FY2026 with a robust first quarter, reflecting the transformative impact of its acquisition of Mandalay Resources completed in August 2025. The integration of Mandalay's Costerfield and Björkdal mines has propelled consolidated gold equivalent production to 30,511 ounces, a substantial increase from 18,418 ounces in the same quarter last year.
The acquisition has not only expanded Alkane's operational footprint across Australia and Sweden but also significantly boosted revenue, which nearly doubled to $147.2 million. This surge was supported by both higher production volumes and an improved average realised gold price, underscoring the strategic value of the Mandalay assets.
Operational and Financial Highlights
Tomingley, Alkane's flagship operation in New South Wales, maintained steady gold production at 18,335 ounces despite some short-term challenges with explosives quality. Meanwhile, the newly integrated Costerfield and Björkdal operations contributed 6,189 gold equivalent ounces and 5,987 ounces of gold respectively, albeit over two months of production due to the timing of the acquisition.
Operating costs rose to $104.9 million, reflecting the enlarged company scale and provisional acquisition accounting adjustments, including a $27.2 million fair value uplift of stockpiles at the acquired sites. Cash operating costs per ounce increased to $2,215, influenced by higher processing expenses such as the rental of a mobile crusher at Tomingley and the cost structures of the new operations.
Capital Investment and Cash Flow
Capital expenditure for the quarter was $28.6 million, with $6 million directed towards growth projects like the Newell Highway realignment at Tomingley and $7.2 million invested in exploration drilling across the portfolio. Sustaining capital increased to $15.3 million, driven by development and equipment replacement at Björkdal and Costerfield.
Despite incurring $25 million in acquisition-related costs, Alkane generated positive free cash flow of $17 million, a marked improvement from the $19 million outflow in Q1 2025. The company also fully repaid a $45 million project finance facility during the quarter, strengthening its balance sheet, which closed with $191.3 million in cash, bullion, and liquid investments.
Outlook and Exploration
Alkane reaffirmed its FY2026 attributable production guidance of 155,000 to 168,000 gold equivalent ounces at an all-in sustaining cost range of $2,600 to $2,900 per ounce. Exploration efforts continue to be a priority, with drilling programs underway at all three operations and regional projects such as the Northern Molong Porphyry Project and the Boda-Kaiser Project showing promising results.
The company’s strategic focus on integrating Mandalay’s assets while advancing growth initiatives positions Alkane well to capitalize on its expanded resource base and market opportunities.
Bottom Line?
Alkane’s successful integration of Mandalay sets a strong foundation, but sustaining cost pressures and currency risks warrant close monitoring.
Questions in the middle?
- How will Alkane manage rising operating costs amid expanded operations?
- What impact will currency fluctuations have on future earnings and reporting?
- Can exploration successes translate into meaningful resource growth to extend mine life?
