Alkane Resources (ASX:ALK) - Flat Ounces, Rising Cash Flow & Gold-Antimony Resource Growth

Nic Earner (0:00)

G'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.

SPEAKER_2 (0:14)

That's a lot, isn't it? That's a lot. That puts you up there, doesn't it?

Nic Earner (0:18)

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.

SPEAKER_2 (0:27)

It's hardly big fish, small pond. It's pretty big.

Nic Earner (0:30)

Yeah, it's good.

SPEAKER_2 (0:30)

Give yourself some credit. Right, we're here in Colorado Springs, one of the best conferences on the calendar, for sure. What are you hoping to get out of it?

Nic Earner (0:42)

Yeah, so typically at this conference, I meet institutional shareholders that are here, and maybe one or two new funds that have been checking us out, and then checking with banking relationships, particularly corporate finance and transactional M&A stuff. Just talking about globally M&A opportunities.

SPEAKER_2 (1:04)

Yeah, well I think that's the big surprise for me. I kind of thought there would be more M&A this year.

Nic Earner (1:09)

I thought so too.

SPEAKER_2 (1:10)

And I certainly, you know, most banker friends hope they would be able to get more over the line, because it's a good environment, but that doesn't necessarily mean there's necessarily good projects out there.

Nic Earner (1:20)

I think there's plenty of good projects, but I just think... Are you missing any? Yeah, quite a few, but I think they have the capacity to get funded without becoming part of a larger group.

SPEAKER_2 (1:30)

That's a really good point.

Nic Earner (1:32)

And so if we think about just the uplift for their shareholders, assuming they're successful, assuming they raise enough money, all the other stuff, then, yeah, that traditional trade-off 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 in a production and settle, but it's a few years away. And logically, there should be an uplift for their shareholders along the way that's more significant than M&A potentially. Yeah.

SPEAKER_2 (2:03)

Look, we'll get on to your company in a second, but this M&A thing is quite intriguing to me. So I appreciate that. Okay, there will be, maybe an overstatement, 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 batting it.

Nic Earner (2:17)

So, I mean, we look for particular things, but certainly I do think that now that funding is available, we'll call funding available as a broad truth, right? Yep. Now that funding is available, I think-

SPEAKER_2 (2:30)

For what?

Nic Earner (2:31)

For a developer.

SPEAKER_2 (2:32)

Right, okay.

Nic Earner (2:32)

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.

SPEAKER_2 (2:46)

Right, okay. Yeah, we were being recruited last week, and we saw a few guys, a few producers, and they're saying some of the stuff that they looked at was, the quality of the study is not quite what they would need to accept. And I don't know if that's a bargaining position as part of the discussion, but I think there's some truth to that.

And I'm wondering if that's part of the lack of M&A.

Nic Earner (3:16)

I think so. I mean, obviously, there's a risk, you know, price trade-off.

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 represented that immanent. But on your own work, you find, oh, actually, these are more complex, then that will push you away.

SPEAKER_2 (3:45)

Okay. Now, okay, here's the thing, just I'm going to come at you with this. I'm looking at your guidance for this year.

You're there or thereabouts in terms of that, but you're also indicating similar guidance for next year. So some people, some folks might look at that and go, you know, on paper, that's not a growth year. But there's a few more variables.

Nic Earner (4:07)

There are more variables. So we do have some analysts that cover us, who quite rightly say from an ounce production perspective, 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 a sense, in terms of ounce growth, that's correct. But, I mean, obviously, there's swings and random outs in the way you consider stuff. You know, if you look at our capital allocation this year, you know, we're spending over 150 million Australian dollars on capital, which includes things like finishing the road diversion at Tomingley to allow those open pits to start.