Alkane Resources delivers solid quarterly results as merger with Mandalay Resources advances

Alkane Resources Ltd has reported strong cash generation from its Tomingley Gold Operations and significant corporate developments, including a proposed merger with Mandalay Resources Corporation during the quarter ended March 31, 2025.

“The March FY2025 quarter has delivered the increase in cash and bullion that we expected. Our paste plant is performing strongly, and our recently commissioned flotation and fine-grinding circuit increased its output through the quarter, with nearly 7,000 ounces of gold produced in March. With these capital programs behind us, we look forward to further reducing the debt and hedge book obligations and building cash in this record AUD gold spot price environment,” Alkane managing director Nic Earner said.

“Our planned merger with Mandalay Resources will allow us to leverage our combined operations to create a new, larger gold and antimony business that will have increased scale and a stronger balance sheet, generating greater cashflow and providing us with more flexibility and growth options in the future.”

Operational performance at Tomingley

Tomingley Gold Operations delivered another solid quarter, producing 17,657 ounces of gold, bringing financial year-to-date production to 50,927 ounces. Gold sales for the quarter totalled 16,513 ounces, generating revenue of A$63.4 million at an average realised price of A$3,839 per ounce.

Operating site cash costs were reported at A$2,178 per ounce, while the all-in-sustaining cost (AISC) stood at A$2,770 per ounce. Operating cash flow from Tomingley reached A$29 million for the quarter.

Alkane reaffirmed its financial year 2025 guidance for Tomingley, targeting production between 70,000 and 80,000 ounces at an AISC of A$2,400 to A$2,600 per ounce. However, management indicated production is likely to come in at the lower end of the range.

Expansion and development activities

Alkane reported that the flotation and fine grinding circuits at Tomingley, recently commissioned, are now fully operational, although recoveries were temporarily impacted during January and February due to kiln limitations. Upgrades to kiln burners have since improved performance.

The new paste plant has also exceeded performance expectations. With commissioning activities complete, Alkane expects to see operational efficiencies support ongoing cost and production targets.

Additionally, site preparation for the Newell Highway diversion is anticipated to commence during the current quarter.

Exploration efforts strengthen resource potential

Resource expansion drilling at Tomingley has delivered multiple ore-grade intercepts beyond current resource models and close to existing underground infrastructure. A significant aircore drilling program between the San Antonio and Peak Hill areas has been completed, with results under review. Further reverse circulation and core drilling campaigns are planned at El Paso and additional targets.

At the Northern Molong Porphyry Project, drilling activities continue at Boda, South Boda, and Driell Creek, with assay results pending.

Financial position and cashflow

Alkane reported a strong financial position, with a cash and bullion balance of A$50.5 million at quarter-end, up from A$39.5 million in the previous quarter. Including listed investments, total liquid assets increased to A$58.6 million.

Underlying free cash flow before income tax payments stood at A$8.4 million. During the quarter, the company made debt repayments of A$1.8 million and delivered 6,600 ounces into its forward sales contracts at an average price of A$2,804 per ounce.

The quarter also included significant expenditures on sustaining capital (A$7.0 million) and growth projects (A$3.4 million), primarily the finalisation of the paste plant and process plant upgrades. Corporate and exploration costs totalled A$5.2 million, with key exploration spend directed to the Northern Molong Porphyry Project.

Income tax payments of A$4.5 million and an investment of A$1 million in Medallion Metals Ltd were also recorded.

Forward sales and hedging

Alkane maintains a forward gold sales program, with 68,800 ounces hedged across various quarters through to June 2027 at an average price of A$2,852 per ounce. In addition, the company holds 111,000 ounces in put options with a strike price of A$3,000 per ounce, providing downside price protection.

Merger with Mandalay Resources

Post-quarter end, Alkane and Mandalay Resources announced a proposed ‘merger of equals’, which will create a diversified Australian-centric gold and antimony producer. The merged entity, to continue under the Alkane Resources name, will have three operating mines and a strengthened balance sheet, positioning it for enhanced cash generation and expanded growth opportunities.

The transaction is intended to deliver increased scale, operational flexibility, and a diversified commodity mix, complementing Alkane's current production profile and long-term development pipeline.