- good: successful drilling now goes down to 120 m; so far deepest drilling was 100 m; adding 10-20% to the inferred resource.
Nota bene: the measured resource (which equals the reserve) is still mostly based on 50m drilling, worth 36 years of 1 MTPA production. "The Toongi deposit was drilled in 2000 – 2001 to 55 metres depth to generate a Measured Resource and several holes were completed to 100 metres depth to establish an additional Inferred Resource (Table 1)." http://www.alkane.com.au/reports/asx/pdf/20111116.pdf
- not so good but not bad either: "The drilling suggests that the Toongi mineralised trachyte is probably not a volcanic plug as previously thought but is more likely a volcanic sill or flow." Which means that 120-130 m is most likely the end of the line for Toongi.
BUT: That resource still should be good for 70+ years of production at 1 MTPA. And the deeper you get, the more expensive it becomes to mine and to get the water out. Which is why Alk has been drilling at the Railway deposit (3-5km from Toongi).
2) Railway resource drilling:
"The Railway trachyte has an approximate surface area of 27 hectares compared to the Toongi deposit at 36 hectares, and therefore could host about 75% of the main resource. While surface grades at Railway are approximately 50% of Toongi, the deposit could add to the Project’s total resource inventory."
Which means that most likely we will use Toongi as long as it makes more financial sense (50 years?) and then switch over to the Railway deposit at some point. Plenty of time to use the pilot plant to experiment on the Railway ore once Toongi is up and running.
In the alternative, they might start earlier with Railway in order to get above the 1 MTPA: Ian Chalmers: "If we ever decided to scale up production, it may make sense to mine Railway rather than mining Toongi beyond a certain depth. In Railway’s favour, it outcrops over a greater surface area than Toongi and would therefore deliver us more tonnes of ore per vertical metre." http://www.companyinsight.net.au/interview/Alkane-29-11-11
Please note: "The Railway deposit is about four kilometres away and although it is around half the grades at surface of the Toongi (DZP) deposit, it’s actually similar to grades of other projects being promoted around the world." http://www.companyinsight.net.au/interview/Alkane-29-11-11
Oh, and after Railway, there is is a third deposit on the premises (cf to the right of Railway on p 9 here http://www.alkane.com.au/reports/asx/pdf/20111116.pdf ), but I don't think I'll live to see it exploited ...
3) update on DZP process improvements before the end of May
4) "while some current individual REO prices have fallen, the important products of neodymium, dysprosium, terbium and yttrium are above the level of 12 months ago. Importantly these prices are all substantially above the values used in the DFS for the DZP published last September"
5) Tomingley:
"Responses to the submissions resulting from the public exhibition of the Environmental Assessment (EA) were sent to the Department of Planning and Infrastructure mid March. Further discussion has resolved any outstanding issues and Alkane considers that the development proposal has met all conditions and requirements."
"The Company believes that approval should be confirmed this Quarter, and subject to grant of the Mining Lease, construction should be able to commence in July. This timetable should see production commence mid 2013 at an average annualised rate of 50-60,000 ounces."
"Four diamond core holes, two at Wyoming Three and two at Caloma Two, have recently been drilled to test the potential of the deposits to host underground resources. All holes intersected mineralised structures and the results will be reported when available."
6) Bodangora and Galwadgere(copper-gold) advancing (slowly)
ALK Price at posting:
$1.34 Sentiment: Buy Disclosure: Held
(20min delay)