I'll take a shot and hope few others do...
1. Is it overhyped? In my view not at all. Only production from Tomie will deliver around $500m of free cashflow over the next 5 years. Probably more the way gold prices are moving. Based on this alone ALK is undervalued in my book.
2. ALK's SS only covers the open pits and very small portion of the UG resource. Yes, I agree the metrics show the project to be marginal at this stage but one have to think where both Cu and Au prices will be in 10 years which is when NMPP will be a mine.
3. Also, ALK has options at NMPP and they can de-risk this project in 2 ways.
1. Discover another shallow (open pit) orebody with higher grades - this is harder to do and may take time unless ALK gets lucky and makes such discovery with the next follow up holes at Driell.
2. ALK has number of deeper high-grade zones that are not being tested properly aka open in several directions. This is more expensive option and will not change the metrics on the current option which is for Open Pits. But if ALK goes for it and grows the resource to above 20Moz AuEq and pushes the average grade to around 0.63g/t then ALK can release new SS covering both Open Pits and UG operation. Now metrics will look lot better and LOM will be well over 40 years. Something the giants will see as attractive. Again, this will require ALK to spend another ~ $20m.
Then again, if ALK is projecting around $500m of free cash over the next 5 years then why not spend some now and boost NMPP credentials.
Hence why I push for some extra exploration expenditure at NMPP.
Alternatively we all get lucky and Au prices explode over $4200aud in very short period of time while Cu prices stay where they are. In this case the metrics will look very sxy.
The biggest challenge I see for ALK is their ability to think strategically - how to invest all that cash and when. I mean I can't get them to commit to $1m - $2m extra exploration at NMPP.
And, in my view, this is the sole reason why instos are not interested in ALK. They don't see ALK as growth story.
hope you find this useful and this is not Fin advice - just my own view.
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