Alkane Resources (ASX:ALK) surprised on Tuesday with a downgrade of its 2023-24 gold production and cost estimates for its Tomingley mine, even though the shares failed to reflect the news with an early session rise.
Alkane blamed the slow ramp-up of its Rosewell underground expansion, stating it was not “sufficiently rapid to allow the original guidance to be met.”
This means the company will miss out on many of the benefits from the second-half surge in world gold prices, which saw the $A price rapidly rise past and remain well above $A3,000 an ounce.
The shares were up 2 cents despite the company revealing that full-year gold production from the mine in the central west of NSW would not be in the range of 55,000 to 58,000 ounces, down from the previous range of 60,000 to 65,000.
The sluggish ramp-up saw the All-In Sustaining Cost (AISC) rise from an estimated $A1,750 to $A2,100 an ounce to $2,150 to $2,350 an ounce.
Alkane said Tomingley had produced 49,158 oz of gold in the 11 months to May 31.
Tomingley produced 70,253 ounces in the year to June 30, 2023, so the shortfall this financial year will be substantial.
The shares eased after the early rise to be steady just after 11 am.
Despite the weakened end to the year for the mine, CEO Nic Earner was confident Tomingley will deliver from the Roswell underground project.
“The Roswell ramp-up has not been sufficiently rapid for us to meet our original FY24 guidance, particularly given the recovery issues experienced in February from a discrete mining area in Caloma Two, as highlighted in our March quarterly report.”
He said Tomingley was “now performing well, and the paste plant and flotation circuit upgrades remain on schedule.”
Mr. Earner said Alkane will shortly release an updated five-year expansion plan for Tomingley.