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 MDA are all posted on our website and SEDAR+. 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 1 Fiscal Year 2026 disclosure materials 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 AUD 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 closed the merger with Mandalay Resources on August 5, our results in this transitionary quarter, particularly the accounts only, include two months from the Costerfield and Björkdal mines and a full three months of results from Tomingley. Please move on to slide three. Today's speakers from Alkane Resources are Nic Earner, Managing Director and Chief Executive Officer, and Jim Carter, Chief Financial Officer. I will now hand the call over to Nic Earner. Please go ahead Nic.
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. 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, Alkane 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 Tomingley underground gold mine in New South Wales, Australia, the Costerfield gold-antimony underground mining operation in central Victoria, Australia, and the Björkdal underground gold mine in the north of Sweden.
Together we expect these three mines to produce between 160,000 and 175,000 gold equivalent ounces in fiscal 2026, consisting of 155,000 ounces-170,000 ounces of gold and 800 tons-900 tons 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 positions Alkane to aggressively grow the company through exploration and capital programs at each of our mines whilst continuing to advance the Boda-Kaiser copper-gold porphyry project located in central western New South Wales. Boda-Kaiser is a large-scale, long-life asset where we have completed the scoping study that provides us with an economic development pathway. We are currently progressing the relevant environmental studies that will allow government approval of this project in the future.
The merge 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 and 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 Costerfield and Björkdal mines. Alkane 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 at 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 Björkdal 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 160,000-175,000 gold equivalent ounces across all three mines over the full 12 months combined. Moving on to slide six, at Tomingley we processed nearly 315,000 tons of ore at an average recovery rate of 85.78% with an average feed grade of 2.15 grams per ton to produce 18,335 ounces of gold. During the quarter, gold production was negatively impacted by short term problems with exposures quality. We 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 AUD 11 million was mainly for the Newell Highway realignment as works formally commenced on the diversion outside of the existing Newell Highway corridor. This is on Tomingley 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. Between August and September, Björkdal produced nearly 6,000 ounces of gold from 153,000 tons of ore mined at an average grade of 1.26 grams per ton. 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.
A reminder that also during this period our staff were on summer vacation ore. That was the seasonal impact we've referred to. With all of this behind us and with a program to optimize float performance, manage ore variability through targeted field trials and enhanced metallurgical support, we expect Björkdal to increase production through the remainder of the year and meet guidance. Moving on to slide eight at Costerfield, our gold-antimony mine. The operation produced 5,643 ounces of gold in the quarter and 124 tons of antimony from processing over 22,000 tons of ore at an average grade of 8.5 grams per ton of gold and just under 0.7% antimony. Costerfield delivered steady operational performance during the quarter, maintained strong mining productivity, and advanced several initiatives to improve ore quality and recovery.
Costerfield 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 Tomingley. For Alkane 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 Tomingley, 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 Tomingley, for instance, intercepted significant gold mineralization at the El Paso deposit.
8.2 metres at 3.74 grams per ton of gold, which included 1 metre at 25 grams per ton. A program consisting of 2,000 metres of diamond core drilling is underway to further define this exploration target at El Paso. Moving on to slide 10 at Björkdal. There were three exploration programs advanced during the quarter. The North Zone and Eastern Extension programs continue with the aim to extend reserves at the Björkdal mine. Our third program, the Storeheaton 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 modelling 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 Youle and Shepherd deposits. Approximately 2 km to the west of our existing mine at the True Blue target, a new vein intercepted 11.7 grams per ton of gold and 6.5% antimony over 4.88 metres. Moving on to slide 12 at Boda-Kaiser. During the quarter, exploration was focused Northern Molong Porphyry Project greater region. Results from reconnaissance drilling at Boda 2-3 and Driell Creek were released, with significant gold-copper mineralization intersected by most drill holes outside of the current Boda-Kaiser mineral resource estimations. Additional drilling and a mobile magnetotelluric 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 Nic. 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. Our financial year will end the 30th of June 2026. I'll just reiterate, you know, this is a transitional quarter for Alkane. Results include three months of production from our Tomingley operation and two months of production from our Björkdal and Costerfield operations. I'll really just speak to results for the quarter, for the current quarter, given the corresponding quarter of September 2024 was the Tomingley operation only. We're really talking about looking forward when we're thinking about our business now.
As you can see on slide 13, consolidated revenue for the quarter was AUD 147 million at an average realized gold price of just under AUD 4,900 per ounce or around $3,200 per ounce, an average antimony price of just nearly AUD 36,000 a ton or around about $23,000 a ton. That was a record quarter for Alkane when it came to quarterly revenue. Cash operating costs on a consolidated group basis was AUD 2,215 per gold equivalent ounce produced and an AISC of around AUD 3,000, just under AUD 3,000 per gold equivalent ounce or about $1,900 per gold equivalent ounce produced. Sustaining capital there about AUD 15 million. Sustaining capital is mainly made up of capital decline development at our three operations and there was some mobile equipment replacements at Björkdal and Sweden during the quarter. Growth capital and exploration was AUD 13 million for the quarter.
This is mainly growth capital spent at Tomingley 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 Nic touched on in the previous slides around mostly Boda-Kaiser project. If we turn to slide 14. I will just reiterate transitional nature of the quarter with only two months of production in Costerfield and Björkdal in our cash flows here. You know, if you look at the three green bars there for Tomingley, Costerfield and Björkdal operation, operating cash flow from our three operations was AUD 73 million . Underlying post tax cash outflow, and that is highlighted with the arrow there after paying for everything apart from those one time costs, was AUD 33 million . Really strong quarter during a transitional period.
30,000 ounces of gold sold there and just a bit over AUD 33 million cash bullion and liquid investments. Balance at September 30 was AUD 191 million . I'll point out that again this balance was after paying for one-time merger costs of AUD 24 million. Taxes and other costs. We repaid our Macquarie project loan facility during the quarter. This healthy and growing cash position is a testament to the strong cash flow generation capabilities of the business. Looking forward to, 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. Trading on ASX, sorry, 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.
On September 8th 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 per day on the ASX. As you can see, we're in a strong financial position. This provides us with a durable foundation to fund our long-term organic growth objectives. With that, I'll turn the call back to you, Nic.
Yeah, thanks Jim. Moving 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 Tomingley and from August 5th onwards for Björkdal and Costerfield is 155,000-160,000 gold equivalent ounces. I will note again that if we look at this on a 100% basis for the full 12 months of Björkdal and Costerfield, our full year guidance is the 160,000-175,000 gold equivalent ounces that we talk about. We're expecting consolidated all-in sustaining cost to be between AUD 2,600- AUD 2,900 per gold equivalent ounce or between $1,690-$1,885 per gold equivalent ounce.
We're going to be pretty aggressive in growing the company organically and we expect to invest AUD 78 million-AUD 88 million in growth capital and exploration expenses. Growth capital expenditures at Tomingley include the previously mentioned realignment and associated site infrastructure services on the Newell Highway. Our exploration focus at Tomingley includes targeting reserve and resources growth. At Costerfield, our predominant growth expenditure is on exploration, focusing on Near mine and regional drilling to support further extensions of mine life and potential processing expansion. At Björkdal, exploration expenditures include infill and extensional drilling. We want to build high grade inventory and support future mine studies there. 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. This is primarily as a direct result of the merger between Alkane 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. 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 155,000-168,000 gold equivalent ounces 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.
Our inclusion in the ASX 300 has certainly driven both additional demand and liquidity of our shares. It is this rerating that is underpinned by the significantly higher trading 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 all organic growth opportunities, including setting up the longer term optionality offered by Boda-Kaiser. We expected as a management team and Board combined for us to rerate our shares. This is clearly underway. As a result, we are very happy with progress to date. We definitely want to see that rerating continue further, which would allow us to pursue other growth opportunities. In summary, what we told the market we would do with this merger, we have delivered on.
It's been just a few months since closing the transaction and a fair bit's been done. 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 quite a few opportunities to continue driving value creation across the business for all the shareholders. 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 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, Nic. As a reminder to ask a question, please press star one and one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star one and one again. I see there are 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 Tomingley 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. We have continued, as many operators have, to relook at our cutoff grades to make sure that we're not leaving economic mineralisation behind. Our cutoff grades, which were about 1.4 something, have dropped to 1.3 over the period of time. 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. Certainly at the end of drives, we are taking some cuts at the ends of ore 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.
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. Presume we're talking about Tomingley.
Yes, sorry.
Yes. Like most flotation circuits, the tail is broadly fixed and so the higher the head grade, the higher the recovery. That is not the primary impact that we have on the recovery at the fine grain circuit at Tomingley. Everything that we have there is running very, very well, except for we have found that the IsaMill typically, whilst we could grind down to 12 micron, the wear rates within that mill shell are quite excessive. We are engaged with the supplier on that and have been trialing a whole heap of different opportunities and circumstances, and that has impacted the recovery slightly. To mitigate that, what we have done, but it was only late in the quarter so we will not see that flow through. We will 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. Certainly I think there's still further upside in the recovery at Tomingley.
Excellent, thanks. What is 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. 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 it in excess of 90%. I do believe that long term 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. Jim could chip in here as well. What we're going to try to do, what we have tried to do is to put the verbal commentary to be as similar as possible between the two announcements. As certainly our North American listeners will appreciate, the big difference between this is of course we have financials and not only do we have the P&L on the balance sheet, but they have involvement of auditors. It's simply not possible in the time frame to get those accounts prepared and audited inside a four week period, you know, and hence why the TSX has a six week period for that.
I think we will always have two separate announcements because under the ASX rules, you have to put out your quarterly results by the end of, by the end of the, you know, 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 need to, we'll obviously be working on that, this being our first one. No, unless the rules or regulations change in either exchange, I don't see that, 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, you know, we're so, you know, both companies, management and boards are very pleased with the way this transaction has gone. It's very difficult to get similar valuations, you know, similar price per NAV, similar, you know, real cost of capital of your business. All those sort of things for mergers and the N for transactions, you know, it's the same thing. 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 70,000-110,000 ounce per year, clearly profitable. We want to drive down both our average all-in 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, provided that that operation was up and running before the end of calendar 2027. That is the broader 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 tons per annum at the moment. Right. And what we're doing first is we're continuing to optimize that circuit and we're reasonably confident that we'll be able to get 1.3 million, 1.35 million tons 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. It may well be that we do not actually end up doing that upgrade. We instead continue to run at about 1.35 million tons per annum and get a fair bit of that benefit without doing the upgrade. The jury's still out on that as we try and maximise performance of the existing circuit.
Thank Mandalay has a big focus on exploration, particularly at Costerfield, with strong results at True Blue. How does that fit into your exploration plans and how much of a priority is True Blue?
Oh, very high priority. We're continuing the. When Mandalay advanced the run rate, we haven't taken anything away from that. We can still continue to drill as much as possible there and we'll end up spending over AUD 20 million at Costerfield in this financial year with a fair bit of that going into TrueBlue.
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 is both.
My view that I've stated, and we have broad board support, is that we would seek a joint venture partner for that, given the size and scale of it. You know, that's just under AUD 2 billion project and that would be milling 20 million tons per annum. Quite a simple processing flow sheet, but it's a sizable operation. Certainly the view that we have, the development view that we have, is we have a joint venture partner for that. The key thing, though, that we're working on at the moment is getting it approved. Certainly you can see the attractiveness to any partner or anything else is based on having government approval to progress. 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.
All in an 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. Last weekend, recent news that the U.S. and China had come to an agreement where nominally for a year the export bans on antimony, germanium, and gallium by China had been lifted. 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, you know, between $18,000 and $25,000 per ton. It suggests that, you know, were the market in balance in that period of time, remembering that generally antimony sources are slowly falling, that that is a point at which it could stabilize, the market could stabilize.
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, 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 Fastmarkets 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?
We have three priorities. Number one is the new highway diversion that Jim mentioned and, you know, a large amount of capital going into that for the obvious gain of new open cuts that will contain 250,000 odd ounces. Number two is the True Blue question. Exploration at Costerfield, not just at True Blue but all around. We want to increase the reserve life and open up the resources ahead of that. That is a second high priority. The third priority is capital allocation at Björkdal that will allow additional ore sources or other things that will allow us to increase the mine rate and/or grade being mined, processed at that operation so that we can get, you know, 50,000 ounces or above, which will drive down that all-in sustaining cost.
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 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 ASX peers?
Yeah, that's a good one. I think number one is we intend to deliver on our targets. If we look at the guidance that we put out and if you look at $4,000 gold, AUD 6,000 gold, the N as some of the other questioners have noted, the cash flow generation is quite substantial. I do not believe that that is fully realized yet by the market. Once we put out 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, that we will appear more and more cheaper versus our cash flow and all the other metrics, certainly by any of the analysts that cover us and anybody that is doing any kind of recognition.
I think the big catalysts that come are delivering on production and showing the growing cash balance despite growth, despite everything. There are other companies around the globe who have the aspiration to approach the 190,000 ounces-200,000 ounces that we are, but their growth demands to do that are much higher than ours. I think it is 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, Nic, for closing comments.
Okay, no worries. Thanks. Thanks, Nat. 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. 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.