Alkane Resources Limited

This report is an updated version of the report published on 30 August 2022 on 3:52 PM GMT

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Alkane Resources Limited (ASX: ALK) is engaged in the mining operations at the Tomingley Gold Operation. Besides, the company is involved in exploration and evaluation activities on tenements and is also pursuing strategic investments in gold exploration companies.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~41.30% of the total shareholding. Gandel (Ian Jeffrey) and Van Eck Associates Corporation hold a maximum stake in the company at ~22.13% and ~3.70%, respectively.

1.4 Key Metrics:

During 1HFY22, the company recorded a current ratio of 2.20x against 2.14x of industry median. In addition, it had posted an asset-to-equity ratio of 1.33x as compared to 1.58x of the industry median. Below captured the trend of the net margin and return on equity.

Section 2: Business Updates, Financial Highlights, and Operational Summary

2.1 Insights of FY22:

2.2 Operational Summary:

During the 4QFY22, the gold production exceeded the forecast with site operating cash costs at AUD 940/oz and AISC of AUD 1,150/oz.

Section 3: Key Risks and Outlook:

Strategic Highlights: The below picture provides an overview of strategy and growth propositions:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 30, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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