Alkane Resources Limited

Thank you for standing by. This is the conference operator. Welcome to Alcon Resources' first quarter fiscal year 2026 financials and operating results conference call and webcast. As a reminder, all participants on the telephone are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the Q&A queue, you may press star then 11 on your telephone keypad. Participants on the webcast may type your questions in the Q&A feature of the webcast. Now, let me hand the call over to Natalie Chapman, Alkind's Corporate Communication Manager. Please go ahead.

Hello, everyone. Thank you for joining our call today. Some housekeeping items to note. The accompanying presentation for today's call is available for download from the company's website at alkres.com. Yesterday's press release, the financial statements and the MD&A are all posted on our website and CEDA+. Those of you on the webcast can move through the presentation slides as directed by our presenters. Please move on to slide two. Please note that this conference call contains forward-looking information that is based on the company's current expectations, estimates and beliefs and may also use terms that are non-IFRS performance measures. Please review Alkane's quarter one fiscal year 2026 disclosure material for the risks associated with this forward-looking information and the use of non-IFRS performance measures. Please note that all dollar amounts mentioned on today's call are in Australian dollars, unless otherwise noted. Also, as management reviews the quarter results, please remember that Alkane has a June 30 fiscal year end. So the quarter ending September 30, 2025 is our first quarter of the 2026 fiscal year. And as we close the merger with Mandalay Resources on August 5th, our results in this transitionary quarter, particularly the accounts, only include two months from the Costafield and Yorkdale mines, and a full three months of results from Tommy Lee. Please move on to slide three. Today's speakers from Alkane Resources are Nick Erner, Managing Director and Chief Executive Officer, and James Carter, Chief Financial Officer. I will now hand the call over to Nick Burner. Please go ahead, Nick.

Thanks, Nat, and thank you, everybody, for joining us today. This is our first quarterly conference call since we closed our transformational merger with Mandalay Resources in early August. So before getting into our quarterly results, let me take a moment to quickly provide an overview of the new Alkane resources as noted on slide four. Alkan Resources is a gold and antimony producer with a portfolio of three operating mines across Australia and Sweden, both top-tier mining jurisdictions. These wholly owned and operated mines include the Tommingley Underground gold mine in New South Wales, Australia, the Costa Field gold and antimony underground mining operation in central Victoria, Australia, and the Bjorkdal underground gold mine in the north of Sweden. we expect these three mines to produce between 160,000 and 175,000 gold equivalent ounces in fiscal 2026, consisting of 155,000 to 170,000 ounces of gold and 800 to 900 tonnes of antimony, which makes us actually one of the largest antimony producers in the Western world for this fiscal year. Our strong financial position, combined with robust free cash flow generation from our operations, Physicians now came to aggressively grow the company through exploration and capital programs at each of our mines, whilst continuing to advance the Bode-Keyser copper-gold porphyry project. Located in central western New South Wales, Bode-Keyser is a large-scale, long-life asset where we have completed the scoping study that provides us with an economic development pathway. We're currently progressing the relevant environmental studies that will allow government approval of this project in the future. The merger with Mandalay has added scale and strength across our business while simultaneously enhancing our profile and valuation in the capital markets. It also resulted in a newly formed board with deep industry experience complemented by capital markets acumen. Combined with our seasoned management team that has deep operating exploration market experience, we're well positioned to propel Alkane forward. Now, let me move on to slide five for an overview of our highlights for the quarter. On a consolidated basis, which I remind everyone includes only the August and September months for the Kosterfield and Bjorkdal mines, Alchem recorded production of nearly 30,000 ounces of gold and 124 tons of antimony, which is 30,511 gold equivalent ounces, a record for the company. The company processed over 571,000 tons of ore and an average gold grade of 2.27 grams per ton. Overall, all of our mines are operating to our expectations. Most notably, whilst we encountered some seasonality at Bjorkdal this quarter, we're poised for a full quarter production from all three mines for the remainder of the year, putting us squarely on track to meet our 2026 guidance of 160,000 to 175,000 gold equivalent ounces across all three mines over the full 12 months combined. Moving on to slide six, at Tommingley, we processed nearly 315,000 tonnes of ore at an average recovery rate of 85.78%, with an average feed grade of 2.15 grams per tonne to produce 18,335 ounces of gold. During the quarter, ore production was negatively impacted by short-term problems with explosives quality. We've engaged with the supplier to rectify and mitigate potential impacts in the future and expect these issues to be temporary only. Capital expenditure during quarter one financial year 2026 of 11 million Australian dollars was mainly for the Newell Highway realignment as works formally commenced on the diversion outside of the existing Newell Highway corridor. This is on Tommingly owned land and this started in the last week of the quarter. We expect construction, which is weather dependent, to be completed in the March quarter of 2027. This is a very high-return project which allows us to access the high-grade San Antonio deposits in two new open-cut mines. Moving on to slide seven, during August and September, Bjorkdal produced nearly 6,000 ounces of gold from 153,000 tonnes of ore mines in an average grade of 1.26 grams per tonne. During this period, processing was somewhat affected by storm-related power outages and a planned major maintenance shutdown, which was completed safely and on time. And a reminder that also during this period, our staff were on summer vacation or that was the seasonal impact we've referred to. With all of this behind us and with a program to optimize float performance, manage all variability through targeted field trials and enhanced metallurgical support, we expect Yorkdale to increase production through the remainder of the year and meet guidance. Moving on to slide eight, at Costa Field, our gold Antony mine, the operation produced 5,643 ounces of gold in the quarter and 124 tons of Antony from processing over 22,000 tons of ore, an average grade of 8.5 grams per ton of gold and just under 0.7% Antony. Costafield delivered steady operational performance during the quarter, maintained strong mining productivity, but advanced several initiatives to improve all quality and recovery. Costafield has implemented targeted improvement programs, including drill and blast optimization, with enhanced operator training, and the move to emulsion explosives is expected to improve recovery and reduce dilution. Continuous optimization of blending and recovery at the plant remains a focus. The site continues to prioritize operational consistency and grade control to underpin strong production outcomes over the coming quarters. Moving on to slide nine, exploration at Tommingley. For our cane to be able to grow organically, we need to grow our mineral resources through an aggressive exploration program, which we think will be the key to our success. The resource expansion drilling At Tommingley, it continues outside of the existing resource models and close to existing underground infrastructure. And we have further updates on this expected throughout this current quarter. Results from a regional drilling program around Tommingley, for instance, intercepted significant gold mineralisation at the El Paso deposit, 8.2 metres at 3.74 grams per tonne of gold, which included one metre at 25 grams per tonne. So a program consisting of 2,000 meters of diamond core drilling is underway to further define this exploration target at El Paso. Moving on to slide 10, at Bjorkdal there were three exploration programs advanced during the quarter. The North Zone and Eastern Extension programs continued with the aim to extend reserves at the Bjorkdal mine. Our third program, the Storheden deposit, which is not shown on this slide but comes out towards us in the page, was completed during the quarter. This program was focused on building on the recently completed inferred mineral source, and geological modeling is currently underway. Moving on to slide 11. At Costerfield, near-mine drilling continued on three main areas to expand resources. Brunswick South, Sub KC, and the Kendal area, which is just above the currently mined Ewell and Shepherd deposits. Approximately two kilometers to the west of our existing mine at the True Blue target A new vein intercepted, 11.7 grams per tonne of gold and 6.5% antimony over 4.88 metres. Moving on to slide 12, at Boda Keiser during the quarter, exploration was focused at the northern Molong Porphyry project, greater region. So results from reconnaissance drilling at Boda 2.3 and Drill Creek were released with significant gold copper mineralisation intercepted by most drill holes outside of the current Bodo-Kaiser mineral resource estimations. Additional drilling and a mobile magnetoluric survey are to commence in the second quarter, the current quarter that we're in. I hope you can see from these last three slides that exploration is a key strategic pillar that's fundamental to our organic growth objectives. We will of course be releasing exploration results as they become available. With that, I'm now going to hand over to Jim to provide a review of our financial performance. Thanks, Jim.

Yeah, thanks, Nick. Hi, everybody. I'll start with an overview of the key financial highlights for the quarter, which is the first quarter of our financial year 2026. So our financial year will end 30 June 2026. And I'll just reiterate, you know, this is a transitional quarter for Alkane. So results include three months of production from our Tomingley operation and two months of production from our Yorkdale and Costa Field operations. And I'll really just speak to results for the quarter, for the current quarter, given, you know, the current corresponding quarter of September 2024 was the Tomingley operation only. So, you know, we're really... talking about looking forward when we're thinking about our business now. So as you can see on slide 13, consolidated revenue for the quarter was $147 million at an average realized gold price of just under $4,900 Aussie dollars per ounce or around US $3,200 per ounce. An average antimony price of just nearly $36,000 a ton or around about US$23,000 a tonne. So that was a record quarter for Alkane when it came to quarterly revenue. Cash operating costs on a consolidated group basis was US$2,215 per gold equivalent ounce produced and an AISC of around just under US$3,000 per gold equivalent ounce or about US$1,900 per gold equivalent ounce produced. Sustaining capital there, about $15 million. Sustaining capital is mainly made up of capital decline development at our three operations. And there was some mobile equipment replacements at Yorkdale and Sweden during the quarter. Growth capital and exploration was $13 million for the quarter. This is mainly growth capital spent at Tommingley on the new highway realignment which is related to the eventual mining of the San Antonio open pit, some biodiversity offsetting projects which are associated with the same project and growth exploration expenditure which Nick touched on in the previous slides around mostly a Bode-Kaiser project. So if we turn to slide 14 So again, I'll just reiterate transition nature of the quarter with only two months of production and Costa Field and Bjorkdale in our cash flows here. But if you look at the three green bars there for Tom and Lee, Costa Field and Bjorkdale, operating cash flow from our three operations was $73 million. Underlying post-tax cash outflow, and that's highlighted with the arrow there, after paying for everything apart from those one-time costs was $33 million. So, you know, really strong quarter during a transitional period. You know, 30,000 ounces of gold sold there and just a bit over $33 million. Cash bull in enlisted investments balance at September 30 was $191 million. I'll point out that, you know, again, this balance was after paying, you know, for one-time merger costs of, $24 million, so taxes and other costs. And we repaid our Macquarie project load facility during the quarter. So this healthy and growing cash position is a testament to the strong cash flow generation capabilities of the business. So we're looking forward. And lastly, the company completed two important initiatives to improve trading liquidity during the quarter. First, we started trading on the Toronto Stock Exchange on August 8, shortly after we closed the merger with Mandalay Resources. And trading on the TSX is a commitment we made to former Mandalay shareholders and one that expands our access to shareholders and investors in North America. And on September 8, Alkane was admitted to the ASX 300 Index, which is recognition that Alkane is one of Australia's 300 largest companies. since being included in the ASX 300. We've seen trading volumes increase fourfold, now averaging around 8.1 million shares today on the ASX. So as you can see, we're in a strong financial position. This provides us with a durable foundation to fund our organic growth objectives. So with that, I'll turn the call back to you, Nick.

Yeah, thanks, Jim. Moving on to slide 15. Let me take a moment to provide some insights into our outlook and our plans for the rest of this fiscal year. Given the financial strength just mentioned by Jim, we're going to be aggressive in growing our company whilst also looking to reduce costs through the business. Our production guidance for Tommenley and from August the 5th onwards for Bjorkdal and Costafield is 155,000, 160,000 gold equivalent ounces. And I'll note again that if we look at this on 100% basis for the full 12 months of Yorkdale and Costa Field, our full year guidance is the 160,000, 175,000 gold equivalent ounces that we talk about. We're expecting consolidated oil and sustaining costs to be between 2,600 to 2,900 Aussie per gold equivalent ounce or between 1690 to 1885 US dollars per gold equivalent ounce. We're going to be pretty aggressive in growing the company organically and we expect to invest $78 to $88 million Australian in growth capital and exploration expenses. Growth capital expenditures at Tommingley include the previously mentioned realignment and associated site infrastructure services on the Newell Highway. Our exploration focus at Tommingley includes targeting reserve and resource growth. At Costa Field, our predominant growth expenditure is on exploration, focusing on near mine and regional drilling to support further extensions of wildlife and potential processing expansion. At Bjorkdal, exploration expenditures include infill and extensional drilling. We want to build high-grade imagery and support future mine studies there. And we believe that this guidance demonstrates the strength and the potential of our business. If we move on to slide 16, I just want to recap on the merger itself. We're well positioned not only to meet our guidance, but more importantly, to pursue growth opportunities. And this is primarily as a direct result of the merger between Alcan and Mandalay. When we announced our merger of equals last North American spring, we clearly outlined the rationale and what we believe would be key drivers of growth. So let me provide a quick recap of what we promised and where we stand against that. We have a company with a combined production of 155,000 to 168,000 gold equivalent houses on the basis I talked about. And we expect to grow that to more than 180,000 ounce gold equivalent run rate before the end of 2026. We've definitely got an improved position in capital markets, benefiting from the greater trading liquidity. We've got a much more diverse shareholder base and a much larger free float. And our inclusion in the ASX 300 has certainly driven both additional demand and liquidity of our shares. And it's this re-rating that is underpinned by the significantly higher training volumes. We certainly have a stronger platform to pursue the board's shared vision for growth. This has manifested itself in the stronger balance sheet and cash flow generation capability to fund organic growth opportunities, including setting up the longer-term optionality offered by Boda Kaiser. And finally, we expected, as a management team and board, combined boards, to re-rate our shares, and this is clearly underway, and as a result, We're very happy with progress to date, but we definitely want to see that rewriting continue further, which would allow us to pursue other growth opportunities. In summary, what we told the market we'd do with this merger, we've delivered on. It's been just a few months since closing the transaction, and a fair bit's been done. But I've got to admit, what really excites me and the people I talk to as I present to investors all over the globe is what's on the horizon. When I look ahead, I see growth. quite a few opportunities to continue driving value creation across the business for all the shareholders. So I'd like to thank all the staff across all three sites in the corporate office for their hard work as we've transitioned Mandalay and Alkane into the new Alkane resources. I'd like to thank the new board for their leadership and guidance during the merger. We've set a course for Alkane that's all ready and will continue to create value for shareholders and stakeholders. With that, I'll hand the call back to the operator and we can start some Q&A. Thanks, operator.

Thanks, Nick. As a reminder, to ask a question, please press star 1 and 1 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. I see there's no questions at the audio side for the moment. Natalie, would you like to go through the webcast questions?

Sure, no problem. Can you please comment on the grade being mined and milled at Tommingley Gold operations? Is there any deliberate usage of lower grades while POG is high?

Yes, I can answer that question.

Yes, but I need to give that a fair bit of context for people to understand the answer. So we have continued, as many operators have, to re-look at our cut-off grades to make sure that we're not leaving economic mineralisation behind. And so our cut-off grades, which were about 1.4-something, have dropped to 1.3 over the period of time. So there's not a significant amount of ore that is being recaptured because... you know, largely the mineralisation is either economic or non-economic. There's not sort of this drifting halo effect around our vein system. But certainly at the end of drives, we are taking some cuts at the ends of all drives that we would not have expected to take 18 months ago when we put together the life of mine plan. I hope that answers the question.

Can you comment on the recovery percentage and whether grade is affecting it and whether it is yet optimal with the fine grind?

Yeah, I presume we're talking about tomingly.

Yes, sorry, follow up on that.

Yeah, so like most flotation circuits, the tail is broadly fixed. And so the higher the head grade, the higher the recovery. But that's not the primary impact that we have on the recovery at the fine-grown circuit at Tommy Lee. So everything that we have there is running very, very well, except for we have found that the isomil, typically whilst we could grind down to 12 micron, the wear rates within that mil shell are quite excessive. We're engaged with the supplier on that. and have been trialling a whole heap of different opportunities and circumstances, and that has impacted the recovery slightly. To mitigate that, what we've done, but it was only late in the quarter, so we won't see that flow through. We'll see that in the current quarter. I expect recoveries to rise. We've put additional oxygen capacity into tanks two and three, which is having a difference, so we're getting that activation a different way. So certainly I think there's still further upside in the recovery at Tommy Lee.

Excellent, thanks. And what's the long-term expectation on that? This is all still part of the one question, but I broke it up so that you could answer each bit.

Sorry, on the recovery net?

Yeah, yeah. So on what you've just answered, what's your long-term expectations, I guess?

Yeah, all of the testing and modelling in the laboratory results suggest we should get in excess of 90%. So I do believe that long-term that we will reach that goal, particularly once we've been able to rectify some of the wear issues that continue to exist inside that milling circuit.

Excellent. Thank you. Going forward, will we continue to see a gap between the two separate releases for quarterly production and financials, or will you be looking to roll these together and publish simultaneously?

Oh, that's a good question, and Jim could chip in here as well. What we're going to try to do, or what we have tried to do, is to put the verbal commentary to be as similar as possible between the two announcements. But as certainly our North American listeners will appreciate is that the big difference between this is, of course, we have financials. And not only do we have the P&L and the balance sheet, but they have involvement of auditors. So it's simply not possible in the timeframe to get those accounts prepared and audited inside a four week period and hence why the TSX has a six week period for that. So I think we will always have two separate announcements because under the ASX rule, you have to put out your quarterly results by the end of the month following the quarter that you finished. What we will continue to try and do is to have as consistent a look and feel as possible. We'll obviously be working on that, this being our first one. But no, unless the rules or regulations change in either exchange, I don't see that happening.

What is the company's view on M&A? The merger of Equals with Mandalay seems to have been well received. To that end, are you considering more transactions?

Yes, we are considering more transactions. Clearly one of the difficulties that exists in the market, which is why both companies, management and boards, are very pleased with the way this transaction has gone. It's very difficult to get similar valuations, similar price per NAV, similar real cost of capital of your business, all those sort of things for mergers. And then for transactions, You know, it's the same thing. But for clarity, what we are looking at is we are looking at mergers and acquisitions inside Australia, New Zealand, USA and Canada and Scandinavia. They're the regions we're looking in. We're looking at capacity to add somewhere in the 70 to 110 odd thousand ounce per year. Clearly profitable. We want to drive down both our average oil and sustaining costs as well as increase our production. We would like to see any transaction we do move as well into the ASX 200 for the liquidity benefits and other things that we see. We'll be prepared to develop another operation, but provided that that operation was up and running before the end of calendar 2027. So that's the broad window of opportunity that we are looking for.

Thanks. When do you anticipate the plant expansion at Tomingley?

Yeah, if people look carefully at the results, they'll see we're actually milling above 1.2 million tonnes per annum at the moment, right? And so what we're doing first is we're continuing to optimise that circuit and we're reasonably confident that we'll be able to get 1.3, 1.35 million tonnes per annum run rate within the next 12 months. One of the things we're looking at is just the way that we run the crushing circuit there. So it may well be that we do not actually end up doing that upgrade. We instead continue to run at about 1.35 million tonnes per annum and get a fair bit of that benefit without doing the upgrade. So the jury's still out on that as we try and maximise performance of the existing circuit.

Thank you. Mandalay has a big focus on exploration, particularly at Costa Field with strong results at True Blue. How does that fit into your exploration plans and how much of a priority is True Blue?

Very high priority. We're continuing the When Mandalay advanced the run rate, we haven't taken anything away from that. So we can still continue to drill as much as possible there. And we'll end up spending over 20 million Australian dollars at Costa Field in this financial year with a fair bit of that going into True Blue.

Thanks. How does Boda Kaiser fit into your long-term plans? Would you seek a partner to develop it or is it a project you can build on your own?

It's both, but my view that I've stated, and we have broad support, is that we would seek a joint venture partner for that, given the size and scale of it. So that's just under a $2 billion Australian project, and that would be milling 20 million tonnes per annum. Quite a simple processing flow sheet, but it's a sizeable operation. So certainly the view that we have, the development view that we have, is that we'd have a joint venture partner for that. The key thing, though, that we're working on at the moment is getting it approved. And certainly you can see the attractiveness to any partner or anything else is based on having government approval to progress that. So that's our big focus. We intend to do that ourselves. That's not an expensive process. It's just time-consuming and requires lots of negotiation and studies, but all in the area that we're very, very familiar with. Thanks.

What is your view on the antimony market and the outlook for 2026?

Yes, this is quite interesting, and I realize that some listeners will have very varied views to me on this. But certainly, recent news, so last weekend, recent news that the U.S. And China had come to an agreement where nominally for a year that the export bans on antimony, germanium and gallium by China had been lifted. So one could reasonably expect that would put downward pressure on the Western price market. If we look at the antimony pricing prior to those restrictions, it was circa between 18 and 25,000 US dollars per tonne. And so it suggests that were the market in balance in that period of time, remembering that generally antimony sources are slowly falling, that is a point at which it could stabilise, the market could stabilise. We also know that during this period of time, the normal thing that happens with price moves is thrifting and substitution has occurred within the, particularly the flame retardant market. So my view is that when you look ahead and you look at the projects that could come online that have been talked about and many people would know, and you look at the factors that I've just considered, I think we will see a price relaxation certainly back to, where the Shanghai metal market is much rather than the fast market's price.

Thanks. Given the company's strong cash position within the overall strength of the balance sheet and the mine's ability to generate robust cash flows, what are your capital allocation priorities?

So we have three priorities. Number one is the Newell Highway diversion that Jim mentioned. and a large amount of capital going into that for the obvious gain of new open cuts that will contain to 250,000 odd ounces. Number two is the True Blue question. So exploration at Costa Field, not just at True Blue, but all around. We want to increase the reserve life and open up the resources ahead of that. So that's a second high priority. The third priority is capital allocation at Bjorkdal that will allow additional ore sources or other things that will allow us to increase the mine rate and or grade being mined slash processed at that operation so that we can get, you know, 50,000 ounces or above, which will drive down that oil and sustaining cost. So they're the main internal capital allocations. And of course, we talked about M&A and what we're doing, that would be our external capital allocation where we defined a a target we thought added substantial value inside this current period.

Thanks. What do you see as the catalyst for share price growth as you appear to be undervalued to your ASXPs?

Well, yeah, that's a good one. I think number one is we intend to deliver on our target. So if we look at the guidance that we've put out and if you look at you know US dollar gold 4000 Aussie gold 6000 then as as some of the other questioners have noted the cash flow generation is quite substantial I don't believe that that is fully realized yet by the market and once we put out you know that cash build and the cash build rate on the quarter I believe that it will become very transparent about the lower value that we have versus our peers is that we will appear more and more uh cheaper versus our cash flow and all the other metrics um certainly by any of the analysts that cover us and and anybody that's doing any kind of uh recognition so i think the big catalysts that come are delivering on production and showing the growing cash balance despite growth despite everything the other there are other companies you know around the globe who have the aspiration to you know, the 180, 200,000 ounces that we are, but their growth demands to do that are much higher than ours. So I think it's revealing the cash flow generation that will show that.

Thanks. We have no further questions, so I'll hand the call back over to you, Nick, for closing comments.

OK. No worries. Thanks. Thanks, Nat. Well, look, thanks, everybody, for taking the time to join us today. Clearly, you've heard we've got a very busy year ahead of us. And I look forward to showing off our progress on our next call in a few months or at those of you that I meet at many of the investor conferences, briefings, and roadshowing that we're doing as a company. As always, please reach out to any of us if you have any questions. So thanks, everybody, and have a good rest of your day wherever you are on the globe.

This concludes today's conference call. Thank you for participating. You may now disconnect.