Alkane Resources has acknowledged an $80 million annual incentive to begin mining gold at Tomingley and processing metals including zirconium at Toongi.
In the company’s annual report, chairman John Dunlop says the Tomingley Gold Project should generate $30 million and the Dubbo Zirconia Project at least $50 million a year.
He also highlights the importance of gold found at the ‘Caloma’ prospect to the Tomingley Gold Project and that the Dubbo Zirconia Project could run for 200 years based on demand for metals in a world-class Toongi resource.
Perth-based Alkane Resources, a multi-commodity explorer and miner working mostly in NSW, is yet to complete its investigations into the resource and economic feasibility of launching the separate projects.
But Mr Dunlop is telling shareholders that the company has made “major advancements” in the DZP and “getting the company back into gold production and cash flow”.
Through a rights issue to shareholders, they have backed Alkane’s ambitions to the tune of $12.8 million.
“These funds will enable Alkane to fully progress its two development projects during 2008 and establish a strong future for the company,” Mr Dunlop says in the annual report.
The TGP, about 14 kilometres north of the company’s Peak Hill gold mine, has been bolstered by the discovery that ‘Caloma’ can “do more than provide the extra tonnes needed to proceed with the operation”.
‘Caloma’ was about 500 metres from the 600,000-ounce ‘Wyoming’ deposits that previously formed the basis of the TGP resources, the chairman said.
A scoping study is indicating more gold per tonne at ‘Caloma’ than its sister prospect across the Newell Highway, which Mr Dunlop says would have a “substantial impact on the project economics”.
“The conceptual TGP development has firmed to a one million tonne per annum open pit mining operation…to produce an average of 70,000 ounces of gold per year for a minimum of five years,” the chairman said.
“At current gold prices (A$1000/oz) this production should be capable of generating cash flows of around $30 million a year.”
Mr Dunlop confirmed that the demonstration pilot plant of the DZP had been commissioned after frustrating delays.
It would provide “potential end users” with products such as zirconium, niobium and yttrium from the rare metal and rare earth resource at Toongi.
The chairman reported that the price of niobium had more than doubled because of growing international demand.
China’s “ change in attitude” towards the exporting of “rare earths” had seen their prices triple.
The call for neodymium, dysprosium and terbium, used in the making of magnets and batteries for hybrid vehicle electric motors, was also getting louder.