Without a doubt, the grades are the reason it's economic, though I do still tip my hat to the plant operators and all the crew as ALK runs far more cost effectively than many W.A plants of a similar size. We basically know that the main holder of ALK is not keen on capital raisings (as his sell downs have implied he cannot afford it, nor wants it, as there have been no raisings...). This leads me to the logical conclusion that the road rerouting will be delayed (how long is a far harder projection), to enable ALK to 'steady' the ship after it's heavy capex period (not just the paste plant, but the plant recoveries and the huge development decline that is only now starting to pay off). I struggle to see how they can justify expanding the plant before having any access to the open pits... they are more constrained by tonnes, than throughput right now, so... further non-sustaining capex can be pushed out, which has the instant flow on effect of allowing ALK to drill, pay down the debt and be ready to develop the highway and plant when better financially sound.
Well done on the ALK exit btw mate, you are wise beyond your years.
All easy to type on HC of course, reality is far trickier.
I wonder if the MoM team would have a deep dive into ALK and the potential for U/G mining versus the open pits (how shallow can an U/G mine be??).
I will go one step further with my speculation about what is possible for ALK... why have I not once read that ALK not only replaced the ounces for their U/G operations but increased them in FY22 to FY23? Why to they know ever mention that these deposits could still be the backbone of the operation? I can only assume that is because Roswell is better? But they need baseload tonnes, and as long as they are profitable, it should not matter.
Sure, these are not reserves, but... 407k in MRE with 330k of that in M&I, implies... they could well be mining at Wyoming 1& 3, Caloma 1 & 2 for years and years to come, when combined with Roswell and in the near term, McLeans.
ALK have proven they are extremely profitable when producing 60-70k p.a. I would be extremely pleased with a 5 year production profile of 70k p.a at an ASIC of 1800-2000 AUD.
The unknown variables are killing any confidence in buyers for ALK (well... that is my read on it).
I am likely waaaay off, and ALK announces a 5 year plan with huge capex in years 2-4 (road + plant upgrade). which in all likelihood, could only have their balance sheet alleviated by a huge increase in POG, or.... an asset sale.
More waiting....
(20min delay)