Alkane Resources to raise funds for gold project in New South Wales

Australia-based Alkane Resources will raise $107m in new capital for the Tomingley Gold Project (TGP) and the Dubbo Zirconia Project, estimated to cost $1bn.

Alkane is planning to develop the two key resource projects in central west New South Wales over the next two years and will use the proceeds for the construction and commissioning of the TGP.

The funds will also be used for the preparation of an environmental impact statement and continuing development of the Dubbo Zirconia Project (DZP), located south of the regional centre of Dubbo, 400km northwest of Sydney.

Alkane said the DZP is based upon one of the world's largest in-ground resources of the metals zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements.

The TGP stretches 60km from Parkes in the south, to north of Tomingley.

The Wyoming prospect, within the TGP, located north of the company's Peak Hill Gold Mine lies north of the 70,000oz gold producing Myalls United Mine.

The area is identified as one of a number of prospects and gold occurrences, including Peak Hill, located along this volcanic belt.

Alkane confirmed that TGP has substantial exploration potential and the current focus is the development of the Wyoming deposits and evaluation of numerous targets.

The company has estimated a 1Mtpa operation cost at around $43.1m and expects that the costs for the project will drop since TGP is located in an area of substantial existing infrastructure with the major Newell Highway transecting the project.

The firm will net up the proceeds through an entitlement offer and placements, and is also considering various other funding alternatives.

Alkane, in placements, will raise $44m through the issue of 40.3 million shares at $1.10 each, and $33m through the issue of 30 million shares at $1.10 per new share.