proactive investors

http://www.proactiveinvestors.com.au/companies/news/40494/alkane-resources-in-phenomenal-821-grams-per-tonne-gold-hit-at-tomingley-40494.html

Analysis

Today's bonanza gold discoveries, supported by many high grade intersections, show the potential for Alkane to significantly grow the gold resource at Tomingley - which would then allowed for an extended mine life and a large boost to the overall project economics.

Alkane has already been granted a mining lease for Tomingley which will be a 1 million tonne per annum operation producing 50,000 to 60,000 ounces per annum. This is expected to generate an EBITDA of A$217 million.

The company's plan for the cash generated is to towards the operating expenses of Alkane’s proposed Dubbo Zirconia Project (DZP) in New South Wales, as well as maintain the exploration effort on the project.

There is also a price dis-connect between the current market cap. of around $220 million ($0.58 per share), and the company's asset value.

Alkane holds $80 million in cash, along with 17.5 million shares in Regis Resources (ASX: RRL) which at their current $4.20 price are worth about another $73 million, bringing the total to well over $150 million.

These assets equate to around 70% of Alkane's market cap. and therefore the market is only placing a $70 million valuation on the company's two projects, being Tomingley and the DZP - which are expected to generate over $200 million cash flow per annum from 2016.

Therefore the recent retracement in the Alkane share price to around $0.59 from a twelve month high of $1.62 provide investors an opportunity to enter the stock at what is currently a significant undervaluation.