Alkane Resources - Ventis secundis

Alkane's Q225 quarterly activities report demonstrated production of 14,852oz Au via the processing of 269kt ore (cf guidance of 260-290kt) at a head grade of 2.25g/t (2.1-2.3g/t) and 84.2% metallurgical recovery (82-87%). While production was 2,148oz below target, 1,700oz of this could be attributed to an increase in gold-in-circuit as a result of reduced elution stripping over the Christmas period and was, to a large extent, offset by a 1,724oz over-sale of gold relative to production (ie gold sales of 16,576oz closely approximated what production would have been in the absence of the gold-in-circuit inventory effect). With the gold price remaining high and the Australian dollar notably weak against the US dollar, in the aftermath of its Q225 operational results, we have increased our Alkane basic adjusted EPS estimate by 43.7% since the time of our last note and our valuation by a similar order of magnitude. In the meantime, ongoing exploration drilling (eg 5.03g/t over 2m, see announcement of 21 January) suggests potential new mineable extensions to existing underground operations.

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