Alkane’s result shows the Mandalay merger is now paying for itself!
Alkane Resources (ASX:ALK) has just delivered the strongest quarter in its history, posting a record A$93 million net profit on A$274 million of revenue for the three months to 31 March 2026.
The headline numbers are the kind small-cap gold producers rarely string together. Gold equivalent production hit a record 45,776 ounces, EBITDA came in at A$161 million, and operating cash flow matched that figure dollar for dollar. Free cash flow of A$128 million walked in the door against just A$7.7 million in the same quarter a year ago.
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It is easy to pin the result on the gold price, but the bigger factor is the company’s operating leverage. The Mandalay merger that closed in August 2025 is now compounding through the P&L in a way that the December quarter only hinted at. Three mines on two continents, one cost base, and a gold price that keeps doing the heavy lifting on the top line.
The market has been waiting to see whether the merger maths actually works at scale. This quarter is the clearest answer yet, and it arrives with cash, bullion and listed investments sitting at A$374 million.
The margin story is where the real signal lives
Consolidated all-in sustaining cost came in at A$2,928 per gold equivalent ounce. The average realised gold price was A$6,315. That is roughly A$3,400 of margin on every ounce sold, before the antimony contribution adds another layer at Costerfield.
Stretch that margin across the FY26 guidance range of 160,000 to 175,000 ounces and the cash generation potential becomes obvious. Tomingley alone produced 21,652 ounces at an AISC of just A$2,444, helped along by the rented mobile crusher and the paste plant commissioned in 2025.
Björkdal is the operation we would watch most closely from here. AISC at the Swedish mine fell from A$4,117 in Q2 to A$3,699 in Q3, which is real progress. It is still the highest-cost asset in the portfolio, and it is still where the next leg of operational upside sits.
Antimony is quietly becoming a second business
Costerfield produced 377 tonnes of antimony in the quarter, up from 267 tonnes in Q2 and 124 tonnes in Q1. Realised antimony price of A$34,394 per tonne kept the cash operating cost at Costerfield at just A$1,567 per gold equivalent ounce, the lowest in the portfolio.
That matters because Western antimony supply is structurally tight, and Costerfield is one of the few non-Chinese producers of meaningful scale. Demand from defence and electronics customers is not going anywhere.
Our concern is that the antimony price has been volatile, dropping from A$42,488 in Q2 to A$34,394 this quarter. Investors should not extrapolate the Q3 antimony economics in a straight line. The base business is strong enough that it does not need to.
Balance sheet now funds growth without dilution
Cash and bullion of A$362 million, plus another A$12 million in listed investments, gives Alkane the cleanest balance sheet of any small-cap producer on the ASX. Debt is effectively a rounding error.
Capital expenditure of A$46.9 million for the quarter included A$10 million on growth projects, mainly the Newell Highway realignment at Tomingley due to complete in the first half of 2027. Exploration spend of A$12.5 million was spread across Costerfield, Björkdal and the NSW porphyry ground around Boda-Kaiser.
With the operating business generating A$161 million of cash a quarter, growth capital and exploration are now fully self-funded. The Boda-Kaiser scoping study sits in the background as an option, not a funding problem.
The Investors Takeaway for Alkane Resources
The bull case here is straightforward. Three producing mines, A$362 million in cash and bullion, no debt to speak of, and a margin structure that throws off more than A$3,000 per ounce at current prices. The Mandalay merger is no longer a thesis, it is a number on the P&L.
The skeptical read is that everything looks excellent at A$6,300 gold. Strip A$1,000 off the realised price and Björkdal’s AISC of A$3,699 starts to look tight, and the consolidated margin compresses meaningfully. That is the scenario investors should be stress-testing rather than assuming.
We think the next two quarters will tell us whether management can keep dragging Björkdal’s costs lower while Tomingley sustains its current throughput gains.
Readers can find our earlier coverage of the March quarter production update at stocksdownunder, which framed the operating setup that has now delivered on the financial side.
