Alkane’s cash engine powers its first dividend and mine expansion

Cash generation supports Alkane’s first shareholder returns

Alkane Resources (ASX:ALK) began FY27 with the financial feature many miners want but few can take for granted: production translated into substantial cash. The gold and antimony producer generated A$102 million in mine operating cash flow during the September quarter, ending with A$440 million in cash and bullion and A$459 million including listed investments.

That balance stood after the company paid its maiden fully franked dividend of 2 cents per share. Alkane also has approval for an on-market buyback of up to A$50 million over 12 months, although the quarterly report does not state how much of the programme has been executed. The result builds on the opening FY27 cash position, which had reported A$440 million in cash and bullion as the enlarged group entered the new financial year.

Production remains on track despite a weaker Costerfield quarter

Group production reached 40,740 gold equivalent ounces at an all-in sustaining cost of A$2,805 per ounce, below Alkane’s full-year guidance range of A$2,900 to A$3,200 per ounce. Revenue was A$205.9 million from 38,348 gold equivalent ounces sold, with an average gold sales price of A$5,128 per ounce and an average antimony price of A$23,842 per tonne.

Tomingley supplied 21,506 ounces of gold and A$52 million in mine operating cash flow, while Björkdal produced 10,482 ounces at an AISC of A$3,012 per ounce. Costerfield was the softer contributor: gold equivalent production fell to 8,752 ounces and AISC rose to A$3,194 per ounce. The company attributed the operational pressure to challenging ground conditions, dilution and restricted access to some planned mining areas, even as mill throughput reached a quarterly record of 41,528 tonnes.

Guidance holds while capital spending accelerates

Alkane maintained FY27 guidance of 163,000 to 177,000 gold equivalent ounces and AISC of A$2,900 to A$3,200 per ounce. The company plans A$160 million to A$190 million of growth capital and A$45 million to A$53 million of exploration expenditure across the year, meaning the September quarter’s A$37.3 million of growth capital and A$9.1 million of exploration spending represent a meaningful early deployment of that budget.

At Tomingley, A$16 million was spent on the Newell Highway realignment, with traffic expected to move onto the new alignment in the June 2027 quarter, subject to weather. Open-pit mining is planned to begin after that switch. At Björkdal, the Nylunds open-pit pre-strip was completed, while the Storheden portal and underground development moved into the next stage.

Exploration adds depth to the operating story

The quarter also produced a long list of exploration results, particularly at Costerfield and Björkdal. Costerfield drilling advanced True Blue, Brunswick South and Cuffley, including a newly identified high-grade domain at Cuffley that has been incorporated into the mine schedule. The result follows the Cuffley high-grade discovery, which earlier reported assays including 1,360 grams of gold per tonne over 0.25 metres.

At Björkdal, drilling extended mineralisation to 762 metres below surface and identified veins as far as 600 metres beyond existing underground development. Storheden now carries an Indicated Resource of 87,000 ounces and an Inferred Resource of 125,000 ounces, with mineralisation remaining open in all directions. Alkane is also advancing its Nagambie earn-in, where drilling confirmed continuity of the gold-antimony system and extended C2 mineralisation 115 metres below its previously known extent, building on the Nagambie drilling results reported earlier in October.

Tax, hedges and antimony prices remain near-term variables

The cash position is strong, but the December quarter will carry a sizeable known outflow: Alkane expects to pay A$55 million to A$60 million in final FY26 income tax. Tomingley also has 21,150 ounces contracted for delivery through June 2027 at an average forward price of A$2,854 per ounce, while Björkdal holds put options over 33,300 ounces.

The company’s gold equivalent figures are sensitive to the commodity prices used in the calculation, and antimony’s decline during the quarter reduced Costerfield’s equivalent output and contributed to a negative provisional pricing adjustment. The immediate test is therefore less about whether Alkane can repeat a single strong quarter than whether Costerfield can restore consistency while the group funds highway works, mine development, exploration and shareholder returns at the same time.