Fund Manager Summary
The fund managers believe that the outlook for Alkane Resources Ltd is highly promising following its recent transformational merger with Mandalay Resources, which enhances its operational scale and diversifies its asset base. In their opinion, this merger significantly reduces asset-specific risk and improves overall production and earnings resilience. The Costerfield and Björkdal mines provide a balanced portfolio, with Costerfield's high-grade operations and Björkdal's long-life reserves. Furthermore, the merger allows for a more favorable position in the market, as Alkane is now part of the ASX 300 Index and has attracted increased passive investment. Despite a recent 60.1% rise in share price, they continue to view Alkane as undervalued relative to peers, supported by a capable management team.
Source: Trading View
Commentary From The Managers
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Cromwell Funds Management
27 Nov 2025
$0.98
Summary
- Alkane Resources has been a long-term holding of Cromwell Funds Management in the Cromwell Phoenix Opportunities Fund.
- In April 2025, Alkane announced a merger with Mandalay Resources, structured as an acquisition.
- Shareholders of Alkane will own 45% of the combined entity, while Mandalay shareholders will own 55%.
- This merger presented an opportunity to acquire Mandalay at a discount to the merger price and to the combined company’s NAV.
- The merger has a high likelihood of closing, supported by both boards and major shareholders.
- Mandalay has struggled for market relevance, making this merger attractive for both sets of shareholders.
- The merger transforms Alkane from a single-mine producer to a multi-mine company, reducing asset-specific risk.
- Alkane has been burdened by legacy hedging contracts, while Mandalay is unhedged, enhancing exposure to gold price movements.
- The increased scale of the merged company has attracted investor interest and passive investment inflows.
- Alkane was added to the ASX 300 Index and upweighted in the VanEck Junior Gold Miners ETF (GDXJ).
- The merged company is led by Nic Earner, respected CEO of Alkane.
- The merger was successfully closed in early August, and since then, the holding has returned almost 66% in CAD.
- The position in Mandalay was trimmed as it rose, but it remains 3.0% of portfolio assets at period end.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Cromwell Funds Management
27 Nov 2025
$0.98
- Alkane Resources has been a long-term holding of Cromwell Funds Management in the Cromwell Phoenix Opportunities Fund.
- In April 2025, Alkane announced a merger with Mandalay Resources, structured as an acquisition.
- Shareholders of Alkane will own 45% of the combined entity, while Mandalay shareholders will own 55%.
- This merger presented an opportunity to acquire Mandalay at a discount to the merger price and to the combined company’s NAV.
- The merger has a high likelihood of closing, supported by both boards and major shareholders.
- Mandalay has struggled for market relevance, making this merger attractive for both sets of shareholders.
- The merger transforms Alkane from a single-mine producer to a multi-mine company, reducing asset-specific risk.
- Alkane has been burdened by legacy hedging contracts, while Mandalay is unhedged, enhancing exposure to gold price movements.
- The increased scale of the merged company has attracted investor interest and passive investment inflows.
- Alkane was added to the ASX 300 Index and upweighted in the VanEck Junior Gold Miners ETF (GDXJ).
- The merged company is led by Nic Earner, respected CEO of Alkane.
- The merger was successfully closed in early August, and since then, the holding has returned almost 66% in CAD.
- The position in Mandalay was trimmed as it rose, but it remains 3.0% of portfolio assets at period end.
Summary
Cromwell Funds Management
30 Sept 2025
$1.15
- Long-time Fund holding Alkane Resources was the largest contributor to performance over the period.
- In April 2025, Alkane announced a transformational merger of equals proposal with Mandalay Resources.
- The transaction was structured for Alkane to acquire Mandalay, resulting in Alkane shareholders owning 45% of the combined business.
- The merger was unanimously recommended by both boards and approved by shareholders, completed in August 2025.
- Mandalay’s primary assets include the Costerfield gold and antimony mine in Victoria and the Björkdal gold mine in Sweden.
- Costerfield is an underground high-grade mine with a history of profitability and low operating costs.
- The mine has reported reserves of approximately 0.6 million tonnes grading 8.7 grams per tonne of gold.
- Björkdal is a long-life, lower-grade operation with a 10-year mine life and focus on increasing production rates.
- The merger transforms Alkane into a multi-mine company, reducing asset-specific risk.
- Alkane’s results were previously burdened by legacy hedging contracts; Mandalay is unhedged.
- The increased scale of the combined company has attracted greater investor interest and passive investment inflows.
- Alkane was added to the ASX 300 Index and received an upweight in the VanEck Junior Gold Miners ETF.
- Over the quarter, Alkane rose 60.1%, prompting Cromwell Funds Management to trim their holding while maintaining a similar weighting.
- Cromwell Funds Management continues to believe Alkane is meaningfully undervalued relative to peers.
- The positive view on the company’s board and management team remains, given their strong operating results and value-accretive decisions.
- At period end, Alkane represented approximately 4.8% of the Fund.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
Transforming from a single-mine player to a multi-mine powerhouse, Alkane Resources appears poised to redefine its market presence. The recent merger not only mitigates risks but also enhances profitability, making it a compelling prospect for investors looking to capitalize on gold's upward trajectory.
Last Updated: 27 Nov 2025
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Frequently Asked Questions
Who is investing in Alkane Resources Ltd (ASX:ALK)?
Fund managers including Cromwell Funds Management have invested in Alkane Resources Ltd (ASX:ALK).
Why do fund managers invest in Alkane Resources Ltd?
Fund managers are investing in Alkane Resources Ltd due to its recent transformational merger with Mandalay Resources, enhancing its asset portfolio and reducing operational risks. The merger converts Alkane from a single-mine to a multi-mine company, improving production resilience and attracting increased investor interest. Additionally, the combined entity's unhedged status offers better exposure to gold price fluctuations. With a significant rise in share price and inclusion in the ASX 300 Index, fund managers view Alkane as undervalued compared to peers, supported by a strong management team and solid operational history.
What happened to Alkane Resources Ltd (ASX:ALK)?
Fund managers are investing in Alkane Resources Ltd due to its strategic merger with Mandalay Resources, transforming it from a single-mine producer to a multi-mine company, which reduces asset-specific risks and enhances earnings resilience. The merger, supported by both boards and shareholders, provides access to profitable assets like the Costerfield and Björkdal mines, while eliminating legacy hedging constraints. This increased scale has attracted significant investor interest, leading to Alkane's inclusion in the ASX 300 Index and upweighting in the VanEck Junior Gold Miners ETF. Despite recent price fluctuations, fund managers believe Alkane remains undervalued compared to peers, backed by a respected management team.