KNI Drilling 18 Days Away, Cobalt Targets Firmed Up
3 minute read
Share price when sent: $1.400
Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 2,673,167 KNI shares and the Company’s staff own 7,500 KNI shares at the time of publishing this article. The Company has been engaged by KNI to share our commentary on the progress of our Investment in KNI over time.
Our battery metals exploration investment, Kuniko (ASX:KNI), is just 18 days away from drilling a trio of big cobalt targets in Norway.
With the countdown to drilling underway, and Europe desperately needing cobalt for their EV push, KNI has now firmed up its targets using a down hole geophysics survey.
As announced today, KNI has applied modern downhole geophysics to historical drill holes at its cobalt project to identify conductive anomalies.
One of these targets was completely missed by the previous owner, while a second target was only grazed.
This means KNI can target the “bullseye” of the prospective cobalt mineralisation with its drill program starting 2nd May.
This is an added bonus as we think it will lead to a more precise drilling campaign. And the market also liked the news — the stock opened 30% higher this morning.
In this short note, we’ll share a bit on what that down hole geophysics survey turned up today, and re-emphasise how this drilling campaign fits in with our key objectives for our Investment in KNI.
This is why we hold KNI in 2022, drawn from our KNI Investment Memo:
More on today’s announcement
KNI has now completed Key Objective #1 and is on the cusp of commencing work on Key Objective #2, on schedule.
There’s also a bit of new information in this announcement regarding the work of a geophysics consultancy, GeoVista AB.
GeoVista had a look at how historic drill holes correlated with down hole geophysics anomalies, which produced the following visual:
Old drilling by the previous tenant came close to the conductor that KNI identified, but ultimately, completely missed it.
We cover previous attempts by a company called Berkut to drill this target back in 2017 before the cobalt price crashed, and how they "just missed" hitting it in this article.
Now, with better data from modern exploration techniques in hand, KNI knows where to drill.
What has KNI done so far?
Below is a complete list of our previous coverage of KNI in chronological order since our portfolio initiation:
28-Aug-2021: Recap of the KNI IPO and share price run
Our view is that KNI has done everything they said they would so far, and we’re glad they were able to get all the necessary pieces in place for the drilling program which commences in 18 days (2nd May).
As long-term holders we’ve identified the follow risks:
We think that after today’s announcement, exploration risk has been reduced due to the increased confidence KNI has in hitting cobalt mineralisation at their project.
As for funding risk, KNI has $5.7M as of 31 December, so we think they have enough cash to complete their maiden drilling campaign.
Regarding market risk, the cobalt price is still looking strong:
And below you can find our KNI Investment plan:
Our 2022 KNI investment memo
In our KNI Investment Memo you’ll find:
- Why we invested in KNI
- Why we continue to hold KNI in 2022
- The macro theme behind KNI’s project
- Key risks involved in our KNI investment
- Our KNI investment plan