Alkane Resources extends Tomingley Gold Operations life beyond 2030 with decision to mine Roswell and San Antonio deposits

Alkane Resources Ltd (ASX:ALK) (OTCMKTS:ALKEF) (FRA:AK7) decision to mine the Roswell and San Antonio satellite deposits as part of an expanded Tomingley Gold Operations in Central New South Wales will extend the mine’s life out to at least 2031.

A new Tomingley Life of Mine (LOM) plan extends the mine into the Roswell and San Antonio deposits to the immediate south of the existing mining lease, with the resources to be mined by both open cut and underground beginning in FY 2023.

The company’s share price has been as much as 4.64% intra-day to $1.015, a new 2021 high while the market cap is approximately $577.5 million.

“Ramping up production from FY25”

The current plan shows the production of around 745,000 ounces of gold for the period, with processing ramping to a 1.5 million tonnes per annum feed rate.

Alkane managing director Nic Earner said: “We’re excited to announce the planned extension of Tomingley mine life to beyond 2030.

“With existing underground and open cut operations we are well placed to incorporate the new resources defined by Alkane’s exploration team at the nearby Roswell and San Antonio deposits.

“We intend to increase our processing throughput and ramp production to over 100,000 ounces per year from FY25, whilst continuing production at the current run rate in the interim.”

The planned production profile (averaged for each period) is:

• 50,000-60,000 ounces per year for FY22 and FY23;
• Production escalating from 60,000 ounces per year through FY24 to;
• 100,000-115,000 ounces for FY25 to FY27; and,
• 55,000-65,000 ounces for FY28 to FY31.

Part of the new Project Approval will include seeking to increase the licence to 1.75 million tonnes per annum with several plant modifications to allow headroom in periods of favourable operating conditions.

Planned exploration decline from Wyoming One underground (R) to Roswell underground (L).

Roswell mineral resource

The Roswell mineral resource estimate is 7.88 million tonnes at 2.07 g/t for 524,000 ounces of gold (indicated) and 2.19 million tonnes at 1.93 g/t for 136,000 ounces (inferred) for a total of 10.1 million tonnes at 2.04 g/t for 660,000 ounces.

In May 2020 the NSW Government Resources Regulator granted approval for the development of an exploration drive from the existing underground Wyoming One operation to the Roswell deposit.

The underground mine plan prepared for the Roswell deposit will utilise this drive to enable the extraction of ore prior to the completion of the Roswell Open Cut.

Underground mining will be similar to that currently employed at Tomingley using standard long-hole open stoping, however, in order to maximise orebody recovery in the higher grade, wider sections of Roswell, it is planned to use paste fill.

Potential underground upside

Notably, substantial upside exists to extend the Roswell underground at depth, in addition to development to the resources underneath the San Antonio pits.

Around 33% of the tonnes from Roswell underground are from material currently classified as inferred, with the decision to include inferred resources in the mine plan supported by the operating experience and reconciliations in the existing Tomingley open cut pits and underground.

The expected AISC over the LOM period is A$1,350 to A$1,450 per ounces of gold.

Earner said: “With the high-grade Roswell deposit open at depth, there is real potential for further increases in production in the late 2020s.”

A substantial grade control drill program is planned prior to stoping commencing.

Open cut mining

The open cut mining plan has three pits which are expected to be mined from the south to the north, with Roswell mined in two stages.

The pit sequencing and dump location are heavily influenced by the objective of minimising biodiversity disturbance and long-term rehabilitation requirements, together with lowering costs through short ore and waste hauls.

Most of the early waste is used to backfill both the Caloma One and Caloma Two pits at Tomingley.

The final dump covers both original San Antonio pits, which will have been backfilled, leaving Roswell as the final open void.

The scheduling requirement to rapidly mine the San Antonio pits so that the waste from Roswell can be placed in them results in a large run of mine (ROM) stockpile, more than 2 million tonnes at its peak.

The interaction with a potential extension of Roswell underground should not further increase this size but would simply extend the life of the mine (and lift production via grade and throughput).

Around 2% of the tonnes from Roswell and San Antonio open cuts are from material currently classified as inferred – with the decision to include Inferred resources in the mine plan supported by the operating experience and reconciliations in the existing open cut pits and underground.

A normal grade control drill program is planned prior to mining commencing.

Alkane is currently at the ‘EIS Preparation’ stage of the project approval process.

Newell Highway diversion

The development of the Roswell and San Antonio deposits requires the diversion of the Newell Highway onto land that Alkane has already purchased.

This diversion, together with plant upgrades and other capital gives rise to a capital cost of ~$87 million, predominantly expended in FY23.

The capital cost is expected to be funded from operating cashflow and debt, and preliminary discussions are commencing with potential debt providers.

Environmental Impact Statement underway

The new Project Approval will require State Significant Development consent because the Capital Investment Value is greater than $30 million.

A single consent to incorporate all extension activities is being sought.

With detailed plans and initial consultation now complete, the Environmental Impact Statement is being prepared for submission in the coming quarter with the company anticipating Project Approval in mid-2022.

Earner said: “We expect to submit our Environmental Impact Statement for Project Approval in the coming quarter and we are continuing consultation with interested stakeholders.”

Story by ProactiveInvestors