Take this as musings from an old fool if you like.Think some of...

Take this as musings from an old fool if you like.
Think some of you might find value in this nonetheless.
If not scroll on my friends.

Reading the room there's lots of scared, pissed off ALK investors out there right now.

Fight and flight response is human nature.
Group think is human nature.
We see a group running for their lives (large volume seller) and we naturally gravitate to joining them in a type of herd like response.
We see something out of the ordinary and naturally think worst case scenarios.
Being a big buyer when the market is dominated by sellers dumping into the ask is an inherently unnatural thing to do.
However, I've found situations just like this is where I've made most of my money.

Buying when the herd is selling is easier when you have confidence in what you're buying.

Why am I confident?
I'll use a basketballer analogy.
I'm the fanatical guy who throws down hoops for a couple of hours after training while my teammates have long since gone.
Those extra 2 hours 4 to 5 times per week create a level of unconscious competence.

Just when stress levels are peaking, muscle memory aka unconscious competence kicks in.
There's two seconds on the shot clock and your team is 1 point down. Swoosh!!

Yesterday my muscle memory kicked in.
This might be an air ball.
This might be a swish.
The probabilities (I believe) are in my favour as I doubt there are many around who've put more hours into researching ASX listed gold producers and Alkanes comparatively low intrinsic value to price position amongst this peer group.

What do I like?



I'm a very mathematically driven person. Entering data into my own spreadsheets gives me a sense of the underlying businesses health.
Above is a heat map, green indicates improvement QoQ, red indicates the opposite.

Let's look at the previous quarter's results (note the sea of green on the left hand side of the table).

# Margin $5 off ATH.
# Accumulative Growth and Exploration expenditure since Dec 2020 $254 million (current market cap 265m)
# Operating Cash Flow 19.4m when subtracting Growth Capex (more than enough to cover CAPEX requirements.
# Mined underground tons at record highs.
# Record high quarterly revenue.
# Stockpiled ore tonnage increased by 25,000t over the quarter.
# Stockpile grade increased from 0.86gt to 1.1gt.
# Milling rates lower than previous quarter indicates plenty of potential upside once plant is optimisation completed (10%.
# Best mill recovery rate since March Q 23.
# Highest Head Grade since March Q 23.
# Processing cost per ton dropped almost $300 per ton.
# Lowest AISC since March Q 23.
# Hedged sales reducing by 1.500oz next quarter.




This looks on the surface like a prime example of a panicky sentiment driven disconnect between price and intrinsic value!

Most importantly if you extrapolate the 20 million in operating cashflow over the next 2 years one can see the capex requirements should be comfortably covered by FCF and the 58.3 million current liquidity.

Still plenty more to add about ALK competitive cost advantage (non FIFO work force etc).
Too busy to finish this right now...
To be cont...

DYOR
GLTA