inShare Pdf Email Alkane Resources moves close to 1M ounce resource at Tomingley Gold Project
Alkane Resources (ASX: ALK)
is within reach of a milestone 1 million ounce of gold resource at its
Tomingley Gold Project in New South Wales after defining an Initial
Resource at the Caloma Two deposit.
Caloma Two has a Resource of 1.7 million tonnes grading 2 grams per tonne gold, or 109,300 ounces of contained gold.
This increases the overall gold inventory at Tomingley by 13.5% to 921,000 ounces.
In addition, the development program remains on schedule and budget to commence production in February 2014.
Caloma Two
The Caloma Two deposit is based immediately south of Caloma, one of three deposits that make up the Tomingley Project.
It
has been subject to extensive resource definition drilling consisting
of 22,782 metres of reverse circulation drilling in 159 holes and 2,145
metres in 11 diamond holes in the last 12 months.
The program was
designed to confirm mineralisation outlined in broadly spaced drilling
completed in 2010 and 2011 and to upgrade to resource status.
The geology, alteration and mineralisation at Caloma Two are very similar to those of the other Tomingley deposits.
Economic
mineralisation is associated with quartz veining, sulphide accumulation
and alteration focused within sub-volcanic porphyritic feldspar
porphyry sills and adjacent volcaniclastic sediments.
The
Wyoming and Caloma deposits appear to have formed as the result of a
rheological competency contrast between the porphyritic sub-volcanic
sills and the surrounding volcaniclastic sediments, with the sills
showing brittle fracture and the sediments ductile deformation.
The deposits have many similarities to well documented orogenic-style gold deposits.
Like
Caloma, mineralisation at Caloma Two is relatively complex. The
orientation of the mineralised zones has been determined from the vein
direction data obtained from oriented diamond drill core.
Mineralisation
lies dominantly within the feldspar porphyry where there are both flat
(<20°) and moderately north dipping (40°-50°) zones.
The
resources were limited by an optimum pit design to ensure that there are
reasonable prospects for eventual economic extraction.
Mineralisation that has been modelled but lies outside of the resource will be assessed by the
Tomingley operations team for the potential extraction by underground mining methods.
Tomingley
Tomingley
received approval by the NSW Department of Planning and Infrastructure
in late July 2012, with the mining lease approved in February 2013.
Tomingley
will be profitable in the current gold price climate with C3 Cash
operating costs around $1,000/oz, with EBITDA -$170 million (at a spot
of $1,450/oz). CAPEX is A$107 million.
Production is based on throughput of 1 million tonnes per annum at a head grade of 2.00g/t, with recoveries of 93%.
Gold
production is around 400,000oz over the base case life, with a life of
7.5 years, with Alkane targeting greater than ten years.
Adding to the additional resource potential was a drill intercept of: 9 metres at 110g/t gold.
The mining method will be open cut and underground, with commissioning anticipated for early 2014.
Analysis
The
increased resource at the Tomingley Project further highlights the
attractiveness of the project, which is just months from starting gold
production.
This makes it more than likely that the company will meet its target of greater than 10 years of mine life from the project.
Cash
flow from Tomingley will in turn fund the company’s Dubbo zirconia
project, a very large polymetallic resource that contains an important
strategic metal mix, including 25% heavy rare earth.
This will turn the company into a multi-commodity producer.
Alkane
is poised to start paying dividends once Tomingley begins production.
Proactive Investors estimates a 6-9 month target price for Alkane of
$0.49 - $0.58.
