Good day. I'm Nic Earner. I'm the managing director and CEO of Alkane Resources. We have three operating mines, two in Australia, one in Sweden. Large project as well in Australia. And we produce about 170,000 ounces a year. Great to see you, mate.
That's a lot, isn't it? That's a lot. That put that puts you up there, doesn't it?
Uh it certainly puts us sort of I guess a mid-tier Australian producer globally. Obviously that's still very small but yeah it's good. It's good.
It's hardly big fish small pond is it's pretty big.
Give yourself some credit.
Right. Um we're we're here in Colorado Springs. Um one of the best conferences on the for sure. Um what are you hoping to get out of it?
Yeah. So typically at this conference I meet uh institutional shareholders that are here. Um and maybe one or two new funds that have been checking us out.
And then checking with banking relationships, particularly well banking, I mean sort of corporate finance um and transactional M&A stuff.
Just talking about globally M&A opportunities.
Yeah.
Well, I I think that's the um big surprise for me. I kind of thought they were doing more M&A this year.
I thought so, too. Yeah. And and I certainly, you know, most banker fans hope they would be able to get more over the line because it's it's a it's a good environment, but that doesn't necessarily mean there's necessarily good projects out there.
I think there's plenty of good projects, but I just think you seen any.
Yeah, quite yeah, quite a few. But I think they have the capacity to get funded without becoming part of a large point. And then and so if we think about just the uplift for their shareholders, assuming they're successful, assuming they raised enough money, all the other stuff.
Then um yeah, that that traditional trade-off of a of a de-risking being part of a larger group or consortium versus going alone. Now obviously those companies will have a stagnation growth point once they come up into production and settle but it's a few years away.
And logically there should be an uplift for their shareholders along the way. It's, you know, sign more significant than M&A potentially. Yeah.
Yeah. I look, we'll get on to your company in a second, but this M&A thing is quite intriguing to me. So, um, I appreciate that. Okay. There will be maybe an overstatement, but they're they're not all bad, but they're not all good either, right? So, when you kind of have stuff thrown at you by bankers, you're going to be better.
Yeah. So, so I mean, we look for particular particular things, but certainly I do think that now that funding's available, we'll call funding available as a broad truth, right? Yeah. Now that funding is available, I think for what? For a developer. Right. Okay. Right. I think some things that have been represented as development ready, we're finding aren't in fact development ready. There's a critical issue whether it's permitting, supply chain, things like that. And so I think that's a factor as well.
Right. Okay. Yeah. Yeah, we we we come ac we were being recruited last week and we saw a few few guys few few producers um and they're saying some of the stuff that they looked at was you know the the quality of the study is not quite what they would need to accept and I don't know if that's as a bargaining position as part of the discussion but I think there's some truth truth to that. Um and um I'm wondering if that's part of the the lack of M&A.
I I I think so. I mean, obviously there's a risk, you know, um, price tradeoff, but I do think if you're a company looking to push the button on something.
And, you know, your due diligence shows that there's actually three critical permits that the company is, you know, that you were looking to acquire has representative are imminent, but on your own work, you find, oh, actually these are more complex, right? Then that will push you away. Yeah.
Okay. Now, okay. Here's thing just going to come at you with this. Um, looking at your your your guidance for this year, you're you're you're there thereabouts in in terms of that, but you're also indicating a similar guidance for next year. So, some people some folks might look at that and go, you know, on paper on paper. That's not a growth year, but there's a few more variables.
There are more variables that like So, we do have some analysts that cover us who quite rightly say from an ounce production perspective. Yeah. compared to last year we did like 168 odd equivalent ounces across the 12 month period. You know the middle of our range is 170 odd. So they sort of saying we're post growth in in a sense in terms of ounce growth that's that's correct. Um but however you I mean obviously there's there's you know swings and roundabouts in the way you consider stuff. Yeah. You know, if you look at if you look at our capital allocation this year, you know, we're we're spending over 150 million Australian dollars on capital, which includes things like finishing the road diversion at Tomingley, allow those open pits to start, um, you know, ex significant tailings dam expansion at Boddington, starting mining to a new mining area, Storliden at Boddington, development to a new mining area called um, where Brunswick West of Costar. So you get new mining in Storliden and it will go into a new mining area at Boddington and then uh Brunswick South at um Costarfield in Australia. So these are the places we're putting capital and then we're spending you know plus $50 million on exploration as well.
one extending resources but in an ideal world you find significant enough resources that allows you to expand your production.
Yes. But if you step away from all of that and just say, "Okay, these guys are going to keep going at 170,000 ounces for a few years, right?" And just pretend that
if we when we transition out of this financial year, and we're an Australian financial year, so we run from July, right, 26 through to June 27, when when you say, "Okay, what's the following financial year going to look like?" Few interesting things. Number one, the final remaining hedges at Tomingley fall away.
That's right. Is there roughly $3,000 out of the money times 30,000 ounces left to go?
Well, well, less 20 26,000 ounces. So, there's another roughly $90 million that will just come in, all profit that will come into next financial year. So, we're talking the FY 2728 financial year. This capital program we're on, we've accelerated things that we're looking to do. So if you look at the new highway movements, if you look at uh the tailings lift at Boddington in particular, we'll keep developing at Storliden and we'll do more stuff at Costarfield that'll that'll fall away. So yeah, so the amount of cash we're going to generate were prices to remain steady state next year will automatically lift. So we will get profit growth. A lot of you know a lot of analysts anticipate that as well. So I'm not I'm not saying that yeah, you know that it's it's you know unknown but Yeah. Yeah. And so and of course we always are searching for you know uh a new discovery at all three assets right?
Yeah.
So okay so there's what's you say it was 150 or 160 million. Um
yeah plus 150. Yeah. So go and see.
Yeah.
No no I mean in terms of this the the spend the the
Yeah we're spending over 150 millionx this year. Yeah.
So that kind of falls away into in the next calendar year. Not nextan year.
Okay. Um, and what's what's the the impact of the the finalizing of the road give you specific that time?
What it gives us is access to open cut.
With 200 something thousand ounces in it. Low 200,000 ounces in it.
And so at the moment we mine from Tom Tomingley at 1.3 million tons per annum from underground.
It lets us increase our we're running the mill at about 1.4 million tons per annum at the moment. It lets us select different feed types for that. Lets us hold unit costs roughly where they are, potentially even reduce them depending on the optimization of grade.
Okay. Alternate all sources. Yeah,
that's something. Um then the things like you know um was it Cuffley is the is the extension that you were talking about earlier? Was it?
Yeah, there's Brunswick South, there's Cuffley. Yeah, there's quite a few different ones.
What what are they kind of what what are what are what are what are what you hoping they bring into the product?
Well, you know, the the the the newest one, yeah, is is you know what we have at Brunswick South, you know, there's one or two years production in that already, right, for Costarfield.
So, that looks that looks really good. Cuffley is deeper. So the big thing we're looking for there is at Costarfield the the odds are low but the success can be transformational in intersection there. So it is a mining area but with you know tens of thousands of ounces in it but what we're really after in all of these areas is finding something transformational. So something that's either got 300,000 ounces in it right like Sheeper because that would be six years mine life at Costarfield.
or Nirvana would be finding something like um Fosterville found in their Swan zone. Yeah,
everyone likes to quote that but but how do you kind of break that? Was it 40 million you said exploration budget?
Yeah, so we spend roughly 25 million Australian on at Costarfield alone. Yeah, correct.
But Nirvana territory, how much you spending on that?
where's that coming from do you think?
That's probably five million bucks goes into that space each year. So, right.
But why why do you think that's it's likely? It's like you're spending 5 million out of 40 on trying to find. Is that appropriate?
I think so. Yeah. Because we this year we're going back to and people should watch our chief geologist um Chris Davis's presentation from Beaver Creek as well because we really focused on the geology there.
We we are testing target areas around Costarfield. So we're not just doing extensional work. So we have targets along the Costarfield line.
Including stuff in our EL's, not in our MLs.
We have potential stuff that looks a little like Southern Cross's Sunday in its base structure.
Right. So dyke type structures. So we've got some of that. We have areas like Cuffley that are deep where we have complex um structures underground that might be concentrating points.
And the reason I say it's an appropriate amount of money is of course we could just bang holes in but you know we have to do the technical work to make it even worth doing. Yeah.
The reason I'm sort of asking you about, you know, the the you what you're seeking to do and with this allocation of like expiration um budget is you done some share buybacks.
You dished out a dividend modest but done it nevertheless and I'm sure everyone's got an opinion about what you should and shouldn't do with your capital. What what's your attitude to this? You seem to have done a little bit of everything rather than focus on one area.
Oh yeah. Yeah. So so number one of course is always our internal growth and sustaining path, right?
So we absolutely think we have that nailed.
