Auking ASX-AKN logo.png

Auking Mining Ltd Limited

ASX:AKN

Last Price:

$0.095

Our Investment Summary

Date of
Initial Coverage

04-Feb-22

Initial
Entry Price

$0.165

Returns from
Initial Entry

-42%



Investment Memo: Auking Mining Ltd (ASX:AKN) - LIVE

Opened: 04-Feb-2022

Shares Held at Open: 1,515,152


What does AKN do?

AuKing Mining (ASX: AKN) owns 75% of a JORC copper/zinc resource near Halls Creek in WA. AKN is focused on exploring and developing this resource.

What is the macro theme?

Copper is already the third most widely used metal in the world - and with demand set to increase from things such as electric vehicles and semiconductor wiring — we see it as leveraged to the global electrification boom and anticipated commodities super cycle over the coming decade.

Why did we invest in AKN?

Metallurgical solution away from production

AKN has an already established JORC resource that sits across 2 already granted mining licenses. If metallurgical testwork is positive, then AKN can put the shallow-near surface resource into production quickly.

Established JORC with upgrade upside

A recently completed drilling program together with prospective areas have the potential to increase the resource significantly. Any additional tonnage for the resource will mean the base valuation of AKN increases.

Project acquired at a time when copper prices were depressed

AKN acquired its core asset at a time when copper prices were trading at ~US$2.60/lb, with copper now trading at US$4.49/Lb just shy of its all time high of US$4.90/Lb. If a processing solution for the Onedin deposit is found the company could quickly put the project into production selling into high copper prices.

Low enterprise value (EV) means leverage to a discovery

Company has ~75 million shares on issue with ~7 million under escrow. With a market cap of $11.6M and Cash in the bank of $2.5M the enterprise value is only $9.1M.

What do we expect AKN to deliver in 2022?

Objective #1: More drilling at the Copper-Zinc project to upgrade the JORC resource.

  • More drilling at both the Onedin and Sandiego deposits. We want to see deeper drilling at the Sandiego deposit to test the most recent mineralisation found under the known resource zone and some extensional drilling at the Onedin deposit.
  • We want to see the drilling eventuate into an upgraded JORC resource.

Objective #2: Complete metallurgical testwork on the Onedin deposit

We want to see AKN push forward aggressively with metallurgical test-work testing, this is the key to unlocking the shallow near-surface ore at the Onedin deposit.

Objective #3: Test regional prospects

We want to see AKN go in and test the Emull prospect where Northern Star Resources had previously identified an open-pittable resource of ~4.7mt @4.5% Zinc +0.33% Copper + 0.2% Lead.

What could go wrong?

Metallurgical risk

The shallow part of the JORC resource that can be quickly mined by AKN at the Onedin deposit is made up of oxide-hosted Copper mineralisation. Oxide-ore is more complex to process, and with AKN’s resource in particular, previous attempts to find a processing solution have failed. There is a chance a solution is not able to be found and this part of the resource is deemed stranded.

Commodity pricing

Copper is a highly industrial metal that is reliant on buoyant economic growth, if there is any significant decline in economic activity globally then copper prices are likely to de-rate.

Funding risk

AKN is still doing a lot of exploration work and so is reliant on financing from investors who are willing to fund high risk exploration programs. Market conditions turning negative could mean getting these type funds may be difficult.

What is our investment plan?

AKN is a new investment and this is the initial investment memo for AKN.

Consistent with all of our investments in exploration companies, we will look to partially sell some of our holdings (~20%) if the share price runs to partially de-risk our position, in line with our investment plan detailed in our 2022 investment memo.

We have in place a mandatory 90 day trading blackout on all our new investments prior to being able to sell a maximum of 20% of our position, which gives the company time to deliver some material announcement towards its plan.

Our plan is to review our investment thesis based on the progress the company makes with respect to our 2022 investment memo.


Disclosure: The authors of this article and owners of Catalyst Hunter, S3 Consortium Pty Ltd, and associated entities, own 1,515,152 AKN shares at the time of writing this memo. S3 Consortium Pty Ltd has been engaged by AKN to share our commentary on the progress of our investment in AKN over time.


Investment Milestones for AKN

Initial Investment: @16.5c
🔲 Top Slice
🔲 Free Carry
🔲 Take Profit
🔲 Price increases 300% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
🔲 12 Month Capital Gain Discount
🔲 Free Carry
🔲 Take Profit
🔲 Hold remaining Position for next 2+ years


Investor Presentation

Increases stake to 80% of flagship Koongie Park project, WA

ASX:AKN Sep 20, 2022 Announcement

Investment Memo: AKN IM-2022


Earlier today, our base metals junior Investment AuKing Mining (ASX:AKN) announced that it had increased its ownership stake of the Koongie Park base metals project in WA from 75% to 80%.

Located in the Hall Creek mining district, Koongie Park hosts a resource of 8.9Mt, containing 1.01% copper, 3.67% zinc, 0.77% lead, 0.16g/t gold, and 26g/t silver. This is set to increase once the resource from the Emull prospect is incorporated, likely in the next few months.

AKN’s increased stake is as a result of their fully funding exploration expenditure, with joint-venture partner Astral Resources diminishing their position from 25% to now 20%. With Astral indicating it does not intend to spend further on advancing the joint venture, it is likely that their position will revert to a 1% net smelter royalty in the year ahead, with AKN ultimately moving to full ownership.

Broadly, we are fans of our investments taking bigger positions in their flagship projects, given that management has inside knowledge of the asset, and are betting on themselves to deliver shareholder value - it is a sign of confidence in what they are advancing.

AKN’s balance sheet has also improved via $556,911 cash injection via a refund in Commonwealth R&D funding last month.

The company also is presenting at the New World Metals 2022 investment conference in Sydney today, and Melbourne tomorrow - here is a link to the presentation.

Coming up, we are awaiting the commencement of follow up drilling at the Emull prospect, as well as an updated JORC resource for Koongie Park.


Critical minerals quickly becoming a priority in the EU

Sep 20, 2022

Macro: Commodities


Readers who follow our Investment Portfolios will know that we have been making strategic Investments in commodities that have made critical minerals lists for the EU, USA, Japan, India and Australia.

These minerals are considered critical to the digitisation and decarbonisation macro thematic and include lithium, graphite, cobalt, nickel and PGE’s, to name a few.

Over the weekend, the following speech from the president of the European Commission, Ursula von der Leyen, gave a speech announcing that the EU would look to pass a “European Critical Minerals Act”.

The aim is to avoid the position Europe finds itself in with oil and gas, where it relies on a single trading partner like Russia.

The act would see the EU put in place:

  1. Agreements with partners like Chile, New Zealand, Mexico, India and Australia for the supply of critical minerals.
  2. Identification of strategic projects across all along the supply chain from mine sites to processing/refining projects.
  3. The act would also see the setting up of strategic reserves of these critical minerals.

All of this bodes well for our Investments across commodities identified as “critical minerals” giving these projects strategic importance on the world stage.

To see a list of all the critical minerals in the Australian Critical Minerals strategy document, check out the following link.

Here is a snippet from that speech:


Copper demand to outstrip supply by early 2030s?

Sep 07, 2022

Macro: Copper


The following article from Bloomberg touches on copper's role in the decarbonisation thematic.

The article highlights the structural shortage expected in the copper market over the coming decade. A thesis that we tend to agree with and have been making Investments based on.

With copper already the second most used industrial metal in the world and the electrification boom likely to increase demand by multiples from where it is today we think the outlook for copper demand is expected to outstrip the supply response.

At present, we hold Investments in the following companies as copper exposure:

Kuniko (ASX: KNI) - Next Investors Portfolio

  • Zero Carbon Copper, nickel, cobalt and lithium, Exploration stage, European Union (Norway)

Titan Minerals (ASX: TTM) - Next Investors portfolio

  • TTM recently started its first ever drilling program at its copper porphyry target at its project in Ecuador.

TechGen Metals (ASX: TG1) - Catalyst Hunter portfolio

  • TG1 is currently drilling one of its copper projects in WA (Australia).

Mandrake Resources (ASX: MAN) - Catalyst Hunter Portfolio

  • MAN is currently completing the acquisition of a copper project in Chile.

Auking Mining (ASX: AKN) - Catalyst Hunter Portfolio

  • AKN is currently updating its JORC resource at its project in WA. (Australia).

Click here or on the image above to read the article in full.

Our key takeaways from the article are as follows:

  • Copper is used in wind turbines, solar modules, transmission and distribution lines that carry electricity to consumers, wiring in mobile phones and the motors that power electric vehicles (EVs).
    Energy research firm BloombergNEF thinks Copper demand will increase by more than 50% between now and 2040.
  • BloombergNEF predicts that primary copper production can increase about 16% by 2040, less than the rise in demand. The research firm predicts that by the early 2030s, copper demand could outstrip supply by more than 6 million tons per year.
  • Copper mines are not able to be put into production quickly. No new copper discoveries are expected to be operational in the next three years.
  • Miners are currently mining ore grades of 0.5% copper or lower, grades that are a quarter of what they were 100 years ago. This means the ability of the majors to increase production is limited.


Copper mineralisation at Cosmo prospect, sulphides at Onedin

ASX:AKN Aug 24, 2022 Announcement

Investment Memo: AKN IM-2022
Objective 1: Test regional prospects


Earlir today, our exploration investment AuKing Mining (ASX:AKN) delivered the latest assay results from its Koongie Park copper/zinc project in Halls Creek, WA.

Koongie Park already hosts a JORC resource of 8.9Mt, containing 1.01% copper, 3.67% zinc, 0.77% lead, 0.16g/t gold, and 26g/t silver, all within its Onedin (shallow oxides) and Sandiego (deep sulphides) deposits. This is set to increase once the resource from the Emull prospect (shallow sulphides) is incorporated, likely within the next few months.

Today’s results are from the first nine (of 13) holes at the Cosmo prospect, confirming the presence of significant, near-surface copper mineralisation. This matters as Cosmo is quite close (only ~500 metres) to the Onedin deposit, providing easier co-development potential down the road.

Following these promising Cosmo results, AKN are planning another round of RC drilling at Cosmo later this year.

Aside from the Cosmo results, assay results were returned for the downhole electromagnetic conductor targets near Onedin, identifying a significant zone of sulphide mineralisation at depth. This is interesting as there may be the potential to consider underground development here, given that sulphide ores are easier to process than oxides.

Our latest note on AKN provides a detailed analysis of Koongie Park and these prospects including understanding the different ore types within.

Next up, we await the commencement of follow up drilling at the Emull prospect, and an updated JORC resource for Koongie Park.


Confirmation of shallow Cu/Zn mineralised system at flagship, WA

ASX:AKN Aug 12, 2022 Announcement

Investment Memo: AKN IM-2022
Objective 1: Test regional prospects


This morning, our exploration investment AuKing Mining (ASX:AKN) delivered the latest drilling results at its Koongie Park copper-zinc project in the Halls Creek region of WA.

Koongie Park already has a JORC resource estimate of 8.9Mt at 1.01% copper, 3.67% zinc, 0.77% lead, 0.16g/t gold, and 26g/t silver, all from its two most advanced prospects, namely Onedin and Sandiego.

With today’s news AKN is looking to add a third prospect to the mix and potentially increase its overall JORC resource.

Today’s assay results came from the Emull prospect, which was originally a Northern Star Resources listing asset back in 2003.

Northern Star drilled some 88 holes here, identifying an open-pittable resource of ~4.5mt @ 0.33% copper (non-JORC), but let go of the project after acquiring the Paulsens gold project.

AKN returned the following assays from eight, reverse circulation (RC) holes:

  • 74m @ 0.36% Cu, 0.71% Zn and 6g/t Ag from 106m
  • 89m @ 0.36% Cu, 1.18% Zn and 9g/t Ag from 61m
  • 25m @ 0.46% Cu, 1.55% Zn and 8g/t Ag from 34m and
  • 86m @ 0.33% Cu, 0.09% Zn and 2g/t Ag from 53m

What is most promising is that the intercepts were mostly made from shallow depths of ~100m, all of the intercepts to date also indicate that the prospect could be open at depth and along strike.

The mineralisation was found mostly in the primary zone as sulphides - similar to that at Sandiego - and hence amenable to conventional extraction methods.

Provided the mineralisation is continuous and of economic grade, which further drilling will determine, then Emull could provide a quicker path to early production, as a shallow, bulk-tonnage, open-pittable deposit.

Significant magnetic features also exist to the north-west along strike and to the south-west of the main mineralised zone, untested by drilling, and providing plenty of options for future drill targets.

Further drilling is now planned at Emull before the end of 2022.

In the meantime, we expect that AKN will look to incorporate Emull within its current MRE. This is primarily a database exercise (as they already have plenty of historic drilling data).

We wouldn’t be surprised by an updated MRE later this quarter, or else the following quarter.


Noosa Mining Investor Conference round-up

Jul 22, 2022

Macro: Commodities


Spanning three days on the pristine Sunshine Coast of Queensland, the Noosa Mining Investor Conference kicked off its 12th year on Wednesday. Attracting a diverse and large spread of corporates, brokers, retail and institutional investors, this year’s event featured over 60 companies presenting and over 1,000 people in attendance, all hosted within the coastal town's Peppers Resort.

At the event, we caught up with a number of executives from our Investment companies (including AKN, AOU, BPM and PFE) as well as companies of interest, either as potential additions to one of our Portfolios, or to gain expert insight to macro and regional headwinds impacting the markets.

The conference is held in the ideal location to mix work with pleasure, and meet a host of CEOs of ASX juniors. Each day ends with a short ‘business at the bar’ session that quickly morphs into talking tactics about where to eat and drink. On Thursday and Friday nights, many head to the Noosa Surf Club for its networking sessions, enjoying its glassed indoor area and open deck to the beach.

We look forward to providing updates on companies we met with down the road.


China considering US$1.1 trillion infrastructure stimulus

Jul 15, 2022

Macro: Commodities


China plans to make up to US$1.1 trillion in financing available for infrastructure spending, which we think will increase commodity demand. Read the following Bloomberg article for details.

Read the full article here.

Below are our key takeaways:

  • China is making 7.2 trillion yuan ($1.1 trillion) in funds available for infrastructure spending.
  • According to Citigroup, infrastructure investment in 2022 is likely to rise by 7.7% versus 2021.
  • President Xi Jinping has called for an “all out” effort to increase infrastructure spending this year to fuel economic growth and meet a GDP growth target of around 5.5%.

The Bloomberg article touches on the impacts of China’s COVID induced lockdowns on the domestic economy.

With economic growth tipped to slow, the Chinese government is getting ready to lean on fiscal stimulus through infrastructure investment to spur economic growth.

We think this type of fiscal stimulus is likely to become a common theme in China and the West, with macro themes like decarbonisation requiring massive CAPEX.

This infrastructure spending forms part of our “commodities supercycle” investment thesis, where we see increased fiscal stimulus and CAPEX investment spurring higher demand for commodities already facing supply shortages.


⏯️ Drilling update at flagship base metals project

ASX:AKN Jul 13, 2022 Announcement

Investment Memo: AKN IM-2022
Objective 1: More drilling at the Copper-Zinc project to upgrade the JORC resource.


Earlier today, our junior base metals investment AuKing Mining (ASX:AKN) provided an update on drilling progress at its flagship Koongie Park project in the Halls Creek region of WA.

The current drilling campaign aims to expand the resource base at Koongie Park. This follows last year’s drilling campaign that led to a 30% increase in resources to 8.9Mt (from 6.8 Mt), containing 1.01% copper, 3.67% zinc, 0.77% lead, 0.16g/t gold, and 26g/t silver.

4,334m of RC (reverse circulation) drilling has now been completed, primarily at the Onedin South prospect. 1600m of diamond drilling will now follow, which will target strong conductive anomalies offset from known mineralisation at the project’s two primary deposits, Onedin and Sandiego.

We anticipate first assay results sometime in late July/ early August.


China considering US$220Bn in infrastructure stimulus

Jul 08, 2022

Macro: Commodities


The following Bloomberg article highlights China’s plan to spend up to US$220 billion to spur economic growth through infrastructure spending.

All of this new infrastructure will require more commodities.

Read the full article here.

Below are our key takeaways:

  • China’s Ministry of Finance is considering US$220 billion of infrastructure funding aimed at shoring up the country’s beleaguered economy.

  • The funding is to be brought forward from next year’s quota, marking the first time the issuance has been brought forward due to concerns around the dire state of the world’s second largest economy.

  • The funding would primarily be used on infrastructure spending to boost an economy hit by Covid lockdowns and a housing downturn.

  • Commodities rallied in European trading hours following the news, with copper moving 3.6% higher on the London Metal Exchange.

For over two years, we have been writing about an upcoming commodities supercycle brought about by infrastructure spending, following decades of underinvestment in the “real economy”.

All this investment in the “real economy” requires raw materials, which is why we think the macro backdrop for commodities over the next decade is strong.

The Bloomberg article highlights the readiness of the Chinese government to lean on fiscal stimulus to spur economic growth at a time when the Chinese economy is slowing down.

Generally, governments would try to respond to slowdowns in economic growth by cutting interest rates. With this tool exhausted after the COVID pandemic, we think infrastructure spending will become the new policy of choice for governments worldwide.

Again, this infrastructure spending will increase demand for commodities which we expect will take commodity prices higher.


VW CEO breaks down batteries and supply chain issues

Jul 08, 2022

Macro: Commodities


The following Bloomberg article showcases the moves major carmaker Volkswagen is making in the batteries industry.

Read the full article here.

Below are our key takeaways:

  • VW is pressing forward with investments along its battery supply chain, commencing construction at a new cell factory in Salzgitter, Germany, one of five facilities in Europe under the carmaker’s PowerCo subsidiary.
  • Salzgitter is home to VW’s main motor factory, and it is where the company last year opened an $80 million facility to research, develop and test EV batteries.
  • Roughly $2 billion will be invested in the new cell factory, where production is scheduled to begin in 2025.
  • VW expects its battery business to generate €20 billion in revenue by the end of this decade.
  • VW CEO Herbert Diess said, “We are invested in some startups and we are looking forward to a joint venture together with Bosch for the machine tools and equipment for those plants, so we’re really gearing up to become one of the bigger battery cell producers”.

The news is just another sign that downstream investment in battery supply chains is showing no signs of slowing down.

VW is one of the world's largest carmakers and is heavily investing in downstream production capacity. It expects this part of its business to generate over €20 billion in revenues by the end of the decade.

This is a situation where investment in midstream/downstream (manufacturing/battery industry) is far ahead of upstream investment (mining), this leads to the supply/demand imbalances for the raw materials required to produce batteries only becoming worse.

The imbalance comes from the timing of these mega projects. Building a downstream / midstream facility could take 1-4 years whereas it takes around 7 years on average to bring a new resource discovery into the production stage.

As a result, we think that raw materials prices will remain high for at least the next decade whilst the mining industry catches up to demand.


Updated investor presentation

ASX:AKN Jun 23, 2022 Announcement


Investment Memo: AKN 2022

General: Investor presentation


This morning our exploration Investment Auking Mining (ASX: AKN) released a new investor presentation.

The slide deck was put together ahead of a presentation the company made at the Gold Coast Investment Showcase Conference.

The presentation highlights the ongoing exploration activities AKN are currently undertaking and also provides an update on the metallurgical testwork that is ongoing at the Onedin deposit.

To check out the updated investor presentation click here, alternatively click on the image below:


AKN: Flagship base metals project progress update

ASX:AKN Jun 22, 2022 Announcement


Investment Memo: AKN 2022

Key Objective #2: Metallurgical testwork progress


Earlier today, our junior base metals investment AuKing Mining (ASX:AKN) provided an update on recent activities at its flagship Koongie Park project in WA.

Koongie Park has an existing JORC resource of 8.9Mt at 1.01% copper, 3.67% zinc, 0.77% lead, 0.16g/t gold, and 26g/t silver, with drilling programs planned to expand this further.

The latest drilling campaign began on 24 May, and has now completed 16 RC (reverse circulation) holes for 2694 metres, primarily at the Onedin South prospect. Another 8 holes totalling at least 1000 metres is planned for the nearby Emull prospect. We can expect first assay results sometime in late July/ early August.

In addition, AKN provided some encouraging news on the metallurgical testwork for the oxide and transition ores at Onedin, quoting directly from today’s ASX announcement:

  • “An ammonia leach in conjunction with certain reagents has shown that some copper (and, to a lesser extent zinc) is releasing from the iron oxide/hydroxide material that is prevalent in the upper sections of the Onedin oxide zone; and
  • There exists a supergene blanket beneath the oxide zone that contains high grade copper oxide minerals (such as cuprite and native copper). Based on testwork utilising an ammonia leach solution combined with certain reagents, AKN has established a likely commercial recovery for these copper minerals in the supergene blanket zone.”

Whilst more met testwork is required, today’s news bodes well that a solution can be found that can ultimately result in the economic recovery of the valuable commodities within AKN’s flagship. This is what we want to see next from AKN, along with our #2 Objective from our AKN Investment Memo, namely the met results:

Next items we’re keeping our eyes open for are assay and further met testwork results in the next quarter.


Withdrawal from PGE rights acquisition deal

ASX:AKN May 26, 2022 Announcement


Investment Memo: AKN IM

Corporate: Transaction update


Today, our Catalyst Hunter base metals exploration investment AuKing Mining (ASX:AKN) announced its withdrawal from an agreement with Astral Resources (ASX:AAR, formerly called Anglo Australian Resources) to acquire the PGE (platinum group elements) right and remaining 25% interest not already owned of its flagship Koongie Park project in WA.

The reason for the withdrawal is that the $6M funding required for the acquisition fell through. AKN announced a $7.1M capital raise in March, with a placement completed raising $3.61M, and the remainder to be raised via a rights issue that was fully underwritten by Vert Capital. However, there were clauses that allowed for termination of the underwritten amount, which Vert Capital has exercised - in essence, the stock market has crashed, along with AKN’s share price.

Whilst the acquisition deal is now dead, we still like that AKN secured substantial funding to progress exploration activity, and were keen to move to full ownership of its flagship, as it points to management’s confidence in the asset - especially as we await the next catalyst and key milestone, i.e results from the metallurgical testwork. We consider this to be the key to unlocking the value in AKN’s JORC resource - with results likely in the next few weeks.

As at 31 March 2022, AKN had cash reserves of $1.127M. With the recent placement raising north of $3.6M, AKN is in a healthy position to fund progression of Koongie Park for the remainder of the year.


AKN: Early metallurgical results promising

ASX:AKN May 10, 2022 Announcement


Our junior base metals investment AuKing Mining (ASX:AKN), which has a sizable resource at its flagship Koongie Park project in WA, today provided an update on the project’s Onedin deposit.

Koongie Park has an existing JORC resource of 8.9Mt at 1.01% copper, 3.67% zinc, 0.77% lead, 0.16g/t gold, and 26g/t silver, with drilling programs planned to expand this further.

The key question is whether AKN can liberate the valuable commodities here, as the metallurgy is complex. This is what we want to see next from AKN, along with our #2 Objective from our AKN Investment Memo, namely the met results:

Today, AKN provided a progress update on the met results for its most advanced deposit at its flagship, Onedin.

Initial testwork has established the existence of secondary carbonate species in the Onedin mineralised zone, as well as the potential to achieve recovery rates above 75% for the copper, zinc and other minerals hosted within those carbonates

Although more work is required, this is promising as it supports the fundamental basis that AKN acquired Koongie Park - that much of the resource would be hosted in carbonate material. That being the case, AKN is confident of being able to leach out much of the valuable base metals.

This testwork also showed that shallower, heavily weathered Onedin material containing lower grade copper and zinc appears to be dominated by the existence of iron oxide/hydroxide material.

Traditional leaching is not very effective with this material, hence another processing path is required to recover the copper and zinc (and other minerals) here - this is a focus of current met testwork.

We anticipate the next update on met work in early June, which should shed some light on whether a processing solution can be found.


AKN: Promising geophysics ahead of new drilling campaign

ASX:AKN May 04, 2022 Announcement


Our base metals junior investment AuKing Mining (ASX:AKN) is about to commence its next round of drilling at its flagship Koongie Park project in WA.

Ahead of this, AKN today announced promising results from downhole geophysics (essentially testing for conductive sources down drill holes, as opposed to on surface) of previous holes from its two most advanced prospects, Onedin and Sandiego. The survey has identified two key zones of potential significant mineralisation which remain untested, but will be incorporated in the upcoming drill campaign, set to commence later this month.

What this means is that there could be the potential to discover extensions to the existing resources at AKN’s flagship. This matters as our initial appeal to Koongie Park is that it already has an an existing JORC resource of 8.9Mt at 1.01% Cu, 3.67% Zn, 0.77% Pb, 0.16g/t Au, and 26g/t Ag - the discovery of extensions would certainly add more value to this deposit. However, with several valuable commodities with some in oxide form, the metallurgy at the project is complex.

In a nutshell, AKN has its hands on a significant deposit that could grow further - and importantly, could transition to the mining phase fairly rapidly… IF a processing solution can be found.

Which feeds into what we want to see next from AKN - and our #2 Objective from our AKN Investment Memo, namely the met results:

The met results will provide more clarity in terms of whether the valuable commodities within Koongie Park can be processed. We anticipate that these results are a few weeks away.


AKN: Cobalt- Another in-demand commodity to be added to flagship

ASX:AKN Apr 26, 2022 Announcement


Our base metals junior investment AuKing Mining (ASX:AKN) added cobalt to the mix of commodities at its flagship Koongie Park project in WA.

Today AKN reported on the results of 10 historic holes they were able to re-assay from its Sandiego prospect, this time to include cobalt. Eight of the ten holes intersected anomalous cobalt mineralisation, including:

  • 60m @ 1.79% Cu, 5.96% Zn, 58g/t Ag & 0.1% Co from 191m
  • 21m @ 2.55% Cu, 0.18% Zn, 17g/t Ag & 0.13% Co from 289m
  • 18.4m @ 6.22% Cu, 1.02% Zn, 8g/t Ag & 0.07% Co from 108.6m
  • 8.87m @ 0.18% Cu, 9.41% Zn, 38g/t Ag & 0.14% Co from 156m

Typically grades above 0.1% Cobalt are considered good at current prices.

The market for cobalt is fairly tight, with the metal fetching over US$80,000/t on the LME of late.

On the back of these results, AKN intends to incorporate cobalt into its exploration programmes going forward.

Whilst we didn’t consider the cobalt potential of Koongie Park when we first invested (there’s plenty of copper and zinc already in place that appealed to us), adding cobalt - as well as the recently acquired Platinum Group Elements (PGE) rights - provides bonus upside should AKN be able to discover sufficient amounts.

The existing Koongie Park JORC resources of 8.9Mt at 1.01% Cu, 3.67% Zn, 0.77% Pb, 0.16g/t Au, and 26g/t Ag does not include provision for any cobalt mineralisation as yet.

AKN Rights Issue - Record Date is today

AKN is poised to be well funded for its next phase of exploration, with a further $7.1M set to be raised.

The funds will enable AKN to move from 75% to 100% ownership of its flagship Koongie Park project in WA, plus pick up the PGE rights over the ground.

There will still be a decent amount of cash left to then accelerate drilling at its most advanced prospects.

The $7.1M total raise is priced at 14 cents per share, and for each three new shares allocated will come with a free option with a 25 cents exercise price and 30 June 2023 expiry date.

The raise is roughly split 50:50 between institutional and sophisticated investors putting in ~$3.61M, and $3.5M that is planned to come in from shareholders on the register as of the record date of 7pm (AEST) Tuesday 26 April 2022 (today).

We like it when our investments increase their ownership position of their key assets, as it speaks to management’s confidence in unlocking value from those assets.

We also like it when companies allow all existing investors to participate in new capital raises on the same terms as the institutional and sophisticated investors.

We now turn our attention to our #2 Objective from our AKN Investment Memo that we want to see the company deliver this year, namely the met results:

In essence, AKN already has its hands on a significant deposit that could transition to the mining phase fairly rapidly, especially at its Onedin prospect.

But as there is a combination of oxide material and several other metals, the metallurgy at the project is complex.

If a processing solution can be determined to extract the valuable metals within the ore, this would clear a pathway to fastrack production and cashflow generation - this is speculation, and we have invested in the hope that this can be delivered.

We should hopefully know in May following the results of the met work.

We consider AKN’s move to full ownership of the project a positive signal (i.e. if they thought that a solution was not forthcoming, it is unlikely they would increase their ownership).

We look forward to seeing what can be delivered here.

What’s coming up next

On the corporate side, the capital raise will be completed with the new shares issued by the end of May.

As we mentioned earlier, we also anticipate the met results to be delivered sometime in May - which we see as a key catalyst in the stock.

We will be tracking AKN’s progress for the rest of 2022, and May is shaping up to be a pivotal month in the company’s journey.


Raising $7.1M to move to full ownership of flagship project

ASX:AKN Apr 21, 2022 Announcement


Yesterday, our Catalyst Hunter copper exploration investment AuKing Mining (ASX:AKN) detailed its planned capital raise for upto $7.1M @ 14c per share.

The capital raise has been split into two:

  1. $3.61M to be raised via a placement.
  2. $3.51M to be raised via a one for three non-renounceable rights issue open to all existing shareholders.

Funds raised will enable AKN to move from 75% to full ownership of its flagship Koongie Park project in WA and accelerate drilling at its most advanced prospects.

The Placement is in two tranches, with the first tranche of 18.822 million shares to be settled shortly, with the remaining 7 million shares to be settled after shareholder approvals next month - this covers firm commitments that have already been received for ~$3.61M from sophisticated and professional investors.

The non-renounceable rights issue on the other hand entitles existing shareholders to purchase 1 new share @ 14c for every three AKN shares held as at the record date of 26th April 2022. This means that any new investors that invest in AKN between now and Tuesday 26th April should be eligible to participate in the rights issue.

The key dates for the entitlement offer can be seen below with the offer opening on Wednesday, 27 April 2022 and closing on Monday, 16 May 2022.

Both the placement and rights issue shares will also have one free option for every three new shares applied for. The options will be listed and will have an exercise price of 25c per share with a 30 June 2023 expiry date

The raise is priced at 14 cents per share, representing a 12.5% discount to AKN’s trading price on 13 April 2022 and a 23.5% discount to the 15-day VWAP (18.3c) - whilst the discount might seem a little steep, we like that the placement is fully underwritten, which means that AKN is guaranteed the total $7.1M.

We suspect that trading in AKN will remain near the placement price until the raise is completed.

With funding secured to move to full ownership, the next key milestone we await are the metallurgical testwork results which is the key to unlocking the value in AKN’s JORC resource - with preliminary results likely in the next few weeks.

Our detailed take on AKN’s prospects and what else we are anticipating in the year ahead can be found at our AKN Investment memo.


AKN delivers 30% upgraded JORC resource at base metals flagship

ASX:AKN Apr 07, 2022 Announcement


Today our Catalyst Hunter junior base metals investment Auking MIning Ltd (ASX:AKN) announced a substantially upgraded mineral resource estimate (MRE) at its flagship Koongie Park copper / zinc project in Western Australia.

Following last season’s drilling program, AKN delivered a 30% increase to the MRE, which now stands at:

8.9Mt @ 1.01% Cu, 3.67% Zn, 0.16g/t Au, 32g/t Ag and 0.77% Pb

This ties in with the #1 Objective we wanted to see AKN deliver this year, as per our Investment Memo.

The initial market reaction to today’s news has been lacklustre, given AKN is down ~20% to be trading at ~ 17 cents per share. Despite the resource upgrade being positive, we suspect that the touted upcoming capital raise to fund AKN’s move to full ownership of Koongie Park could be holding the share price back.

We suspect once that transaction is completed and all new shares are issued, it will provide the AKN share price a base to hopefully start moving upwards as AKN kicks more goals.

We like that the upgrade to the JORC resource has been substantial - furthermore, almost all the MRE is now in the Indicated classification (97%), improving the confidence level of the resource estimate.

The new MRE also indicates a seriously large deposit, especially for such a small company, currently capped at $15.8M.

AKN’s flagship copper project comprises several mining, exploration and prospecting licences covering over 500 km2 in the highly mineralised Halls Creek region of Western Australia.

AKN’s Koongie Park project


AKN’s JORC resource sits across two deposits:

  1. the “Sandiego” deposit which is at depth and would be mined using underground mining methods, and;
  2. The “Onedin” deposit which is a shallow high-grade copper deposit starting basically from surface.

The resource upgrade primarily comes on the back of drilling at these two most advanced prospects, which are within existing mining licences and granted pre Native Title Act - which will be useful for fast-tracking development.

With the upgraded MRE, the new total metal values now include:

  • 90k tonnes copper;
  • 326k tonnes zinc;
  • 46koz gold;
  • 9.1Moz silver; and
  • 68k tonnes lead.

With the upgraded MRE now crossed off our list, the next key objective we’d like to see achieved are the results from stage 1 of the metallurgical test work on the Onedin prospect.

As there is a combination of oxide material and several other metals, the metallurgy at the project is complex. Hence a metallurgical solution could unlock the shallow near-surface ore at Onedin, potentially providing an early path to production and cashflow generation.

The results are expected within the next few weeks.


AuKing to move to full ownership of flagship project

ASX:AKN Apr 05, 2022 Announcement


Today our Catalyst Hunter base metals junior investment AKN announced a deal to move to full ownership of its flagship Koongie Park project in WA.

AKN will acquire Anglo Australian Resources’ remaining 25% stake in Koongie Park for A$6M payable in 3 tranches:

  • $3M cash in May 2022;
  • $1.5M in AKN shares to be issued after shareholder approval on or before 30 June 2022; and
  • $1.5M cash by 31 October 2022.

The AKN shares will be issued to Anglo Australian at an issue price that is calculated by references to the 20 day VWAP for AKN’s shares on the ASX prior to the date of issue, and will be escrowed for 3 months from the date of issue.

Importantly, the transaction provides AKN the PGE rights to the project.

This matters as the project is next to Pantoro’s Lamboo PGE Deposit. Pantoro has delivered several outstanding platinum group element (PGE) drill results over the past year, leading to the company green lighting a further 20,000m of drilling for 2022. Pantoro is currently capped at $464M.

We like that AKN has moved to a 100% ownership prior to the important metallurgical testwork program completing, because should a processing solution for its shallow copper resource be found, AKN gets to keep 100% of it. This ties in with our Objective #2 we would like to see AKN deliver this year.

Objectives

This also should simplify development funding options down the track.

We also like the acquisition of the PGE rights, although this sits outside of our 2022 Investment memo.

We mentioned in our initial investment note that AKN’s neighbour Pantoro went from a share price of ~21.5¢ to a high of ~42.5¢ off the back of its PGE discovery next door to AKN. We also note that the market for platinum and palladium has been soaring for a while now, and further aggravated by sanctions against Russia, which formerly provided some 40% of global palladium supply.

Palladium market

We are still primarily interested in seeing the results from the metallurgical testing which AKN expects to take ~6-8 weeks to complete, with the results expected in April.

To see why we are invested in AKN and what we want to see the company achieve in 2022 click here to read our 2022 Investment Memo.

Of note, AKN proposes to conduct a rights issue to existing shareholders in order to raise most of the funds needed in order to complete the transaction. This raising will be complemented by a strategic private placement to certain sophisticated investors.


Updated JORC on the cards at copper-zinc project

ASX:AKN Mar 25, 2022


Yesterday we caught up with the CEO of our copper/zinc exploration investment AuKing Mining (ASX: AKN), Paul Williams, following his presentation at this week’s Brisbane Mining and Energy Conference.

We like that AKN’s flagship asset, the Koongie Park copper/ zinc project in WA, is well advanced.

Paul and the team echoed this, noting that Koongie Park already has a JORC resource residing across two granted mining licenses, meaning that AKN is only a few steps away from transitioning to production (and cashflow). There is a systematic approach to the further exploration, so it will be with interest that we watch for the fruits of this to flow on through more drilling and assays.

We’re keen to see how the flagship advances in the year ahead. Below are the key objectives we want to see delivered.

Objective 1 is nearing completion already, and we suspect it won’t be too long before the JORC resource update is announced to market.


Final assays from infill drilling program received

ASX:AKN Mar 02, 2022


On Wednesday AKN released the final assay results from its infill drilling program at its Onedin deposit.

With the drilling program mostly focussed on gathering samples to be used in the upcoming metallurgical testing program AKN delivered some decent copper hits as expected.

  • 66m @ 1.67% copper from 77m
  • 82m @ 0.46% copper from 98m
  • 60m @ 1.04% copper from 92m

Our key objective for our 2022 AKN Investment Memo is to see AKN get its metallurgical testwork done and see if a processing solution can be found for the shallow JORC resource at the Onedin deposit.

AKN is expecting stage 1 of the metallurgical testing to take ~6-8 weeks to complete, with the results expected in April.