Mining Morsels: GOR, ALK, WMC

Company News

by Glenn Dyer

The underlying metal might be having its fair share of struggles in recent times, but that doesn’t seem to be slowing down the local gold sector’s news feed in any way. Here are three more updates released during Wednesday’s ASX session.

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Gold Road Resources (ASX:GOR) shares slipped more than 4% on Wednesday in the wake of Tuesday’s sharp selloff in the metal (amongst other commodities).

The 2% slide in gold prices in New York on Tuesday was the major factor for the market in gold mining stocks yesterday and not what was a solid production performance in the three months to June at its half-owned WA mine.

The dip to $1.11, down 4.7% came after it reported a record 4th quarter performance from the 50% owned Gruyere gold mine in WA.

GoldFields holds the other half and the brief update from Gold Road confirmed it had been a good year at the highly productive mine.

But oddly, unlike the same early report a year ago for the 4th quarter of 2020-21, this year there was no information on the key statistics for every gold miner, its All In Sustaining Cost (or AISC).

Gold Road said in this year’s report “Gruyere produced a record 85,676 ounces of gold (100% basis) during the quarter (March quarter: 71,135 ounces), in line with expectations. “ (The June, 2022 figure was also around 60% higher than the 53,132 ounces reported in the June, 2021 quarter)

A year ago, Gold Road mentioned its cost performance which was better than expected.

“Gold Road delivered its June 2021 quarter production at an AISC of A$1,659 per attributable ounce, slightly better than quarterly guidance provided on 28 June 2021 of A$1,675 to A$1,800 per ounce (March quarter: A$1,386 per ounce). “

This year absence of any mention of costs in the 2022 report has led some investors to think that Gold Road, like more and more companies, has felt a hit from higher inflation, especially higher energy costs, though the company did say that so far, Covid has not had any impact on it or the Gruyere mine.

Gruyere in fact performed at record levels in the year to June, according to yesterday’s statement.

“Gruyere ore tonnes processed totalled 2.4 Mt at a head grade of 1.22 g/t Au and a gold recovery of 91.3%. The highest quarterly throughput and highest average head grade achieved at Gruyere to date. Production rates remain in line with annual guidance of 300,000 – 340,000 ounces.” (150,000 – 170,000 ounces attributable to Gold Road).

Gold Road said its 4th quarter gold sales “totalled a record 44,526 ounces at an average price of A$2,496 per ounce and included delivery of 8,700 ounces at an average price of A$1,977 per ounce into forward sales contracts.”

Last year, Gold Road said its “gold sales totalled 28,425 ounces at an average price of A$2,145 per ounce and included delivery of 10,300 ounces at an average price of A$1,823 per ounce into forward sales contracts.”

Gold Road said it ended 2021-22 “in a strong position with cash and equivalents of $161.3 million (March quarter: $138.0 million) and no debt drawn. This cash and equivalents position is after over $11 million of one-off cash payments during the quarter to fund the settlement of a DGO finance facility and DGO transaction costs following the change of control of DGO Gold Ltd.”

The takeover of DGO Gold has been completed and Gold Road now controls a 14.4% shareholding in De Grey Mining Ltd, a 6.8% shareholding in Dacian Gold Ltd, a 20.1% shareholding in Yandal Resources Ltd, and a diverse portfolio of exploration tenements.

Presumably Gold Road will accept Genesis’ takeover of Dacian by accepting the all-share offer, which will give it a small stake in the much larger and healthier Genesis.

And tucked away at the bottom of the release under the tantalising heading of Discovery, Gold Road said it “currently has four drill rigs operating at Yamarna (100%) and the Golden Highway (Gold Road 50%) as the Company continues to actively explore for a meaningful discovery. “

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On the other side of the country in central NSW, Alkane Resources (ASX:ALK) says its Tomingley mine exceeded its 2021-22 production guidance of between 55,000–60,000 ounces.

That means the mine has maintained its record of meeting or exceeding guidance in every year of operation since 2014.

Tomingley produced 66,804oz of gold for the year to June 30 while Alkane said its preliminary AISC are expected to fall slightly below guidance ($1500/oz–$1650/oz).

Helping the 12-month performance was above-forecast mined grade from several areas, as well as flexibility by staff to overcome the impact of wet weather and COVID-19.

The group’s unaudited cash, bullion and listed investments position at June 30 totalled $124.3 million, comprising $77.9 million cash, $8.2 million of bullion in hand and $38.1 million in listed investments.

Alkane managing director, Nic Earner, said Tomingley continued its outstanding performance.

“With approvals in progress to extend the life of Tomingley to at least 2031, at increased production rates, and our excellent initial Boda resource, we’re looking forward to the year ahead,” he said.

Alkane controls several highly prospective gold and copper tenements. Its most advanced exploration projects are in the tenement area between Tomingley and Peak Hill, which have the potential to provide additional ore for Tomingley’s operations.

Alkane’s exploration success includes the landmark porphyry gold-copper mineralisation discovery at Boda in 2019. With a major drill program ongoing at Boda, Alkane is confident of further consolidating Central West New South Wales’ reputation as a significant gold production region.

Unlike most other gold miners, Alkane shares ended higher on Wednesday, rising 1.4% to 68 cents.

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And finally, shares in Wiluna Mining Corporation (ASX:WMC) also edged higher on Wednesday for a different reason – they were reacting to a big set of changes on the board of the re-awakening explorer.

The company told the ASX on Wednesday that “effective immediately, Mr Rowan Johnston has been appointed Interim Non-Executive Chairman and Mr Michael Monaghan has been appointed as acting CEO. They will be supported by Mr Robert Ryan as acting COO with a dedicated team on site led by Mr Jon Pluckhahn.

“Upon mutual agreement with the Company, Mr. Milan Jerkovic has stepped down with immediate effect as Executive Chairman and resigned from the Board of Directors.

“This change in management structure comes after a successful and well supported capital raising. The renewed focus of the Company under the new team is to reset the mine plan to take advantage of the 5.5M ounce gold resource reported at the Wiluna operations.

In the statement, stand-in chair, Rowan Johnston said:

“With the new flotation plant producing saleable concentrate and operating at a higher than name-plate capacity and improved specifications, the question of metallurgy has been answered.

“The gold is there, it can be extracted and recovered. With most of the upfront capital expenditure on the WilTails project already spent and its commissioning currently being targeted for October 2022, we will have a further revenue stream coming online.

“Now we will focus on finalising a realistic, executable mine plan over the coming months that will provide a return to our shareholders, whilst also ensuring a focus on cost management. This is reflected in the addition of Mike and Robert to the executive management team both well respected and experienced in underground mining engineering. And on behalf of the Company and myself, I would like to thank Milan for his tireless efforts, belief and contribution to the Company and wish him all the best for the future.”

There was no explanation as to why these changes were immediate.

Wiluna is in the process of raising between $50 million and $84 million from shareholders and some creditors who have agreed to a debt for equity swap as part of the issue.

Wiluna shares ended Wednesday up 2.1% at 23.5 cents.

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