Alkane Resources’s Tomingley Gold Operations Obtain Green Light For Underground Development

Sep 2018
First underground ore is expected to be produced in the middle of next year with processing to begin in the final quarter of 2019.
Open pit at Tomingley project

Mineralisation is open under all three open cut pits at Tomingley

Alkane Resources Limited’s (ASX:ALK) Board has given the green light for underground mining development at Tomingley Gold Operations in Central West NSW, paving the way for recovery of a further 93,000 ounces.

Ground support work for the portal will begin by the end of 2018 with development starting shortly after in early 2019.

First ore is expected to be produced from underground in mid-2019 and stockpiled on the surface until processing recommences in the final quarter of 2019.

The gold will be recovered over a 40-month development at cash costs estimated to be $1,100 to $1,200 per ounce while the cash outflow to recover first ore is estimated at $25 million.

Alkane is well placed to execute the underground development as it had a cash and bullion position of $80 million at the end of the June quarter.

Most major equipment required has been purchased and is undergoing refurbishment while recruitment of experienced underground operators and support crew is underway.

One of Alkane’s first priorities underground is to establish a drill position to target further extensions along strike and at depth.

Geologically, mineralisation is open under all three open cut pits at Tomingley, which is southwest of Dubbo.

The underground resource stands at 1.24 million at 2.7 g/t gold for 108,000 contained ounces of gold.

Division of the material contained in the mine plan by resource classification is detailed below:

Alkane has a wider regional development strategy for the historical gold mining area that encompasses Tomingley and nearby Peak Hill with extensive exploration continuing for the remainder of the year.

Open cut operations will continue on day shift at the Tomingley operations until early 2019 as exposed ore is removed from the base of the pits.

The processing of medium grade stockpiles will continue until about April 2019 and then resume on underground ore.

Guidance for the 2019 financial year, the final year of open cut operations, remains unchanged at 30,000 to 35,000 ounces of gold at an AISC of $1,300 to $1,400 per ounce.

READ: Alkane Resources leveraged to US rare earths purchase bans which create new demand potential

Alkane has two advanced projects – Tomingley, which began production in early 2014, and the nearby Dubbo Project, a large in-ground resource of zirconium, hafnium, niobium, yttrium and rare earth elements.

Cash flow from Tomingley has provided the funding to maintain the project development pipeline and has assisted with the pre-construction development of the Dubbo Project.

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