Alkane Resources is pleased to provide the Q4FY20 Activities Report.

Tomingley Gold Operations

Gold production on forecast for the quarter at 13,358 ounces, with site operating cash costs at A$981/oz and AISC of A$1,368/oz.

Gold sales of 12,992 ounces for the quarter for revenue of A$30.2M at an average price of A$2,327/oz.

FY2020 gold production was 33,507 oz (guidance 30,000 oz to 35,000 oz) with AISC of $1,357/oz (guidance $1,250/oz to $1,400/oz).

The Tomingley Gold Operations (TGO) FY2021 plan has been updated to take into account the sustained higher gold price.

The plan incorporates extensive grade control and infill drilling conducted in the Wyoming 1 and Caloma 2 resources, changes to the cut-off grade within the underground, and a cut-back of the Caloma pit.

Guidance for FY2021 is 45,000 to 50,000 oz at an AISC of A$1,450 to A$1,600 per ounce.

This is a significant increase in production over the Board-approved plan to commence underground mining in September 2018, and confirms the geological upside expected during underground mine development at TGO. The modest increase in forecast cost per ounce reflects the incorporation of lower grade material into the schedule that is now profitable at higher gold prices.

The TGO Mine Plan does not yet incorporate mining of the Roswell or San Antonio deposits, located to the immediate south of TGO. Approval of the developments at Roswell and San Antonio would further increase production, with a lower cost base. The process of securing approvals with the NSW Government is underway.

Exploration

Infill drilling within the Roswell and San Antonio Inferred Resources south of TGO continued and a number of thick, high grade gold intercepts were recorded, such as: RWRC180D 69.0 metres grading 9.12g/t Au from 218 metres; incl 6.7 metres grading 28.0g/t Au from 207.3 metres; incl 1.0 metre grading 104.0g/t Au from 274 metres.

Assay results were received for the final diamond core drill hole of the initial Boda program and modelling of all the results indicated a +0.2g/t AuEq subvertical zone of significant gold-copper mineralisation; approximately 500 metres north-south strike length, 400 metres wide and >1100 metres vertically.

Within this envelope is a +3.0g/t AuEq high-grade pod approximately 150 metres long, 100 metres wide and >500 metres vertically. Both zones remain open along strike and at depth

A 30,000 metre follow up drill program at Boda has recently commenced

Corporate

Cash, bullion and listed investments position totalled A$98.4M.

Shareholding remained at 12.7% of ASX listed gold developer Calidus Resources Ltd (ASX:CAI) at end of June quarter.

Shareholding of ASX listed gold developer Genesis Minerals Ltd (ASX:GMD) was 15.5% at end of June quarter. GMD has recently made a strategic acquisition and announced a parallel fundraising. Alkane was a sub-underwriter in the rights issue component of that fundraising and as a result has potential to own 19.9% of Genesis on completion of the rights issue (subject to Genesis shareholder approval).

Alkane's Board has committed to the demerger of ASM and shareholders will vote on the demerger at an EGM on 16 July 2020.

Dubbo Project

The construction and start-up of commissioning of the commercial pilot plant in Daejeon, South Korea to produce high purity metals with low emissions was completed on time and budget. Initial focus of the JV is production of zirconium, titanium, rare earths for permanent magnet alloys (Nd, Pr).

During the quarter the Korean Government awarded a US$4.5 million grant to ASM's research and development partner ZironTech, as part of the Korean Government's US$5 billion Industrial Technological Program (ASX Announcement 4 June 2020).

The commercial pilot plant has successfully produced a titanium metal alloy ultilising 45% less power than current industry methods (ASX Announcement 2 July 2020). Neodymium alloy was also produced (ASX Announcement 13 July 2020).

Work on completing flotation test work to deliver an increased ore feed grade to the solvent extraction plant continued during the quarter. The integration of flotation into the proven flowsheet is a key part of targeting a reduction in the capital and operating costs for the development of the Dubbo Project.

TOMINGLEY GOLD OPERATIONS Tomingley Gold Operations Pty Ltd 100%

Tomingley Gold Operations (TGO) is a wholly owned subsidiary of Alkane, located near the village of Tomingley, approximately 50km southwest of Dubbo in Central Western New South Wales. The gold processing plant was commissioned in January 2014 and has been operating at the design capacity of 1Mtpa since late May 2014. Mining is based on four gold deposits (Wyoming One, Wyoming Three, Caloma One and Caloma Two).

Open cut mining from the four deposits occurred from late 2013 until early 2019. During that time 6,271,000 tonnes of ore averaging 1.95 g/t Au were mined, resulting in 369,000 ounces poured gold after processing (to 31 December 2019).

The open cut mining reconciliations were very positive, with 393,000 ounces gold in the ore mined from the open cut versus 353,000 ounces contained in-situ within the original total mineral resource (Inferred, Indicated and Measured) at mine commencement that fell within the final pit shells, an 11% increase.

This positive reconciliation gave the Board confidence not only in the underground resource already defined, but that expansion of that resource was possible as it was developed.

In June 2018 Alkane detailed its underground mine plan (ASX announcements 4 June 2018 and 19 June 2018) and approved its development in September 2018 (ASX announcement 24 September 2018). The mine plan was for 93,000 ounces of gold to be recovered over a 40-month development period. Development of the underground mine started in late 2018, with first stope ore production in late 2019.

Operations Performance

TGO continues to perform well and is processing underground stope material with recovery as expected. The ore feed is supplemented by low grade stockpiles whenever capacity permits. TGO continues to maintain high vigilance around COVID-19.

A total of 13,358 ounces of gold was poured for the quarter. The site cash costs for the quarter were A$981/oz with an all-in sustaining cost (AISC) of A$1,368/oz.

Gold sold for the quarter was 12,992 ounces at an average sales price of A$2,327/oz, generating revenue of A$30.2M. Bullion stocks were 2,231 ounces (fair value of A$5.8M at quarter end).

Site operating cash flow1 was A$21.8M for the quarter and A$36.3M for FY2020.

Drilling at TGO

The geology team at TGO has not only conducted the routine grade control drilling and underground sampling that normally occurs in an underground operation, but has also conducted extensional drilling inside the existing resource base. This has focused on areas identified as having potential mineralisation both in development of open cut and during underground.

The recent extensional drilling from surface at Wyoming 1, has extended mineralisation south along strike in the Wyoming 1 Hanging Wall Zone. This drilling has also identified other parallel economic ore lodes that will be a focus for further extensional drilling in the near future. Diamond drilling infilling the main known Wyoming 1 ore lodes has been extended and has successfully found several stacked ore shoots within the main Wyoming 1 porphyry ore body. These new lodes were not in the original mine plan.

Orogenic gold deposits like those at TGO often have considerable depth extent and the base to the mineralisation at Wyoming 1 has not yet been determined. The intention is to build up an internal structural model to identify more stacked lodes within the porphyry and to extend the depth of the mineralisation, which remains open.

Cut-off grade review

A review was conducted optimising stopes using a cut-off grade based on an A$2,000 per ounce gold price and only operating costs. The costs used were from the existing underground operation. The mine design was completed and then a level by level analysis was conducted to ensure that each level remained profitable.

Stopes that remain profitable after this process have been included in the mine schedule, the additional stope ore that falls within first three years of the schedule totals 780,000 @ 1.3g/t for 33,000 mined ounces.

Cut-off grade review

A review was conducted optimising stopes using a cut-off grade based on an A$2,000 per ounce gold price and only operating costs. The costs used were from the existing underground operation. The mine design was completed and then a level by level analysis was conducted to ensure that each level remained profitable.

Stopes that remain profitable after this process have been included in the mine schedule, the additional stope ore that falls within first three years of the schedule totals 780,000 @ 1.3g/t for 33,000 mined ounces.

Contact:

Tel: 61 8 9227 5677

Fax: 61 8 9227 8178

Email: info@alkane.com.au

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