Alkane Resources, here's our storyBy RichrichieARU faces a 9 to...

Alkane Resources, here's our story

By Richrichie

ARU faces a 9 to 12 month delay to their BFS completion eventually delaying their projected production timeframe, LYC facing Malaysian protests on the plant impacting local environment with a UN body doing an enviromental impact investigation.

What about ALK? Well here we go, unlike LYC and ARU which are purely light rare earth companies, we are a multi-commodity company, with zirconium, niobium, yttrium , heavy rare earths, gold, and copper based in central NSW.

Are there environmental concerns? We expect little to none. Our flagship Dubbo Zirconia Project (DZP) is 66km about south of the regional centre of Dubbo. 66km is like the distance of the Sydney CBD to the Blue Mountains or further.

What makes ALK different to Molycorp, LYC, and ARU? We are diversified in commodities, rather solely focused on one commodity classed as rare earths. Rare earths is distinguished into light RE and heavy RE. Molycorp, LYC, and ARU are heavily focused on light RE, which isn't really rare in the world. ALK on the other hand is heavily focused on heavy REs. Also we have exposure to zirconium, niobium, yttrium, gold, and copper.

What are the timeframes to production of REs? Well:
- Molycorp is expected to be in production sometime in 2011
- LYC was expected to be in production by end of Q2. But looks like its going to be delayed due to protests and IAEA investigation
- ALK due end of Q3/Q4 2013 subject to completion of DFS (scheduled on time); financing arrangements and regulatory environmental approvals
- ARU originally due roughly the same time as ALK, but a 9-12 month delay in the completion of the BFS is very likely to carry onto the production timeframe.

What about ALK's other commodities?
Well the Tomingley Gold Project is expected to be in production from late next year. Though cash costs are around $900 per oz. In my opinion that is fair given the current levels of gold prices and hopeing they stay these levels or go higher, which is likely looking at the poor situations of the US, Europe, and Japan debt markets. In my opinion a cash cost at $US200 or lower is perfect (only MML is a company that has that), a cash cost lower than $450 is terrific (RMS's Wattle Dam has that), a cash cost of $800 and under is ok (SXG, SLR, SAR). So $900 is just acceptable. Any cash cost over $1000 like AXM is looking uneconomical and concerning.

The McPhillamy's project (51% Newmont, 49% ALK), if Newmont covers all expenditure to the completion of the BFS will get 75%. ALK also has a number of other gold-copper exploration projects.

Conclustion: recent falls in ARU and LYC and delays to their projects will see their holders switching to our ALK share register.