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Kuniko Limited Limited

(ASX:KNI)

Current Price:

$0.930

Our Investment Summary

Date of
Initial Coverage

25-Aug-21

Initial
Entry Price

$0.200

Returns from
Initial Entry

365%


What does KNI do?

KNI holds a portfolio of battery metals exploration assets (copper, nickel, and cobalt) in Norway.

What is the macro theme behind KNI?

Copper, nickel and cobalt are all metals that are required for electrification and decarbonisation.

Copper is used in EVs and EV chargers, while nickel and cobalt are used in EV batteries, notably the NCM (Nickel, Cobalt Manganese) EV batteries that should form the foundation of the European EV push.

Commodities that can be sourced in a low or zero carbon manner, should also be favoured by end users in the EV supply chain as Europe aims to meet its net-zero emission goals.


Investment Memo: Kuniko Limited (ASX:KNI)

21-Jan-2022


Why did we invest?

Our top investment thematic: Ethical, sustainable locally sourced battery metals in Europe is our top long term investment theme. Zero-Carbon Copper, Nickel and Cobalt exposure all within the same company.

Historically producing projects: Projects are not greenfield assets, targets put together together based off historically producing mines. We know the mineralisation is there with an extensive mining history that are still to be analysed with modern technology.

Impressive management team and board: KNI has the same team as behind Vulcan, with VUL remaining 25.85% shareholders in KNI. The team has the established relationships and access to potential off-takers, major investors, bankers, technology, and advisors.

Cap structure leveraged to growth: Low number of shares on issue (39 million), with VUL retaining one-quarter, meaning that the capital structure is leveraged to success. There are no options on issue to dilute shareholders positions.

Click here to see the deep-dive on the 12 key reasons we invested

What we expect the company to deliver in 2022?

Objective #1: Results from geophysical and geochemical surveys and analysis

Detailed evaluation of the geophysics & geochemical data-sets as well as soil/rock chip sampling assays as part of target generation works for expected drilling in 2022.

Historic drill-core logging & re-analysis of drilling data to also be incorporated in target generation works.

Objective #2: Drilling of highest priority drill targets in 2022

Target generation works expected to be completed in early-2022, with the highest priority targets to be drilled in the Norwegian summer months (mid-2022).

Objective #3: Assess and acquire new European battery metals projects

Investment thesis will be reviewed after the highest priority targets are drilled after the assays from drilling are received.

What could go wrong?

Exploration risk - although KNI is working with a historic mine there is potential for KNI’s drilling to show up results that disappoint - if this is the case or the drilling needs to go deeper the economics of the project could be affected

Market risk - while the commodities that KNI are targeting are at elevated prices, there is the possibility that the prices of these commodities falls, impacting the economics of the project and the ability to access financing

Funding risk - As of their September 2021 quarterly, KNI had ~$7M in cash which is sufficient funding for initial drilling. Subsequent drilling and development works will however depend on both good drilling results and commodity prices - should the drilling not go well or the commodity prices fall this would likely impact KNI’s ability to access funding for the project

What is our investment plan?

Our strategy with early stage explorers is to achieve free carry prior to the initial drilling results, which we expect in mid to late 2022. Because of KNI's European battery metals thematic, management team and connection to Vulcan we plan to hold ~60% of the initial position to see the entire story play out over at least 2 to 3 years.

=================== Investment Memo ends====================

We will asses the performance of this company against this initial investment memo in each update commentary we provide. This Investment Memo is current at 25th August 2021

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Investment Milestones in KNI

✅ Initial Investment: @20¢ (Majority Escrowed for 2 Years)
🔲 Increase Position
🔲 Increase Position
✅ Price increases 500% from initial entry
✅ Price increases 1000% from initial entry
🔲 Price increase 2000% from initial entry
🔲 12 Month Capital Gain Discount
🔲 Free Carry
🔲 Take Profit
🔲 Hold remaining Position for next 2+ years


Our Past Commentary on Kuniko Limited

Date Title
21-May-2022 $ 0.965 Commodities super cycles
14-May-2022 $ 0.885 Small caps in a shocking market
09-May-2022 $ KNI is Now Drilling for Cobalt in the EU - Three EM Targets to Aim For
07-May-2022 $ 0.920 Natural gas and the clean energy transition
23-Apr-2022 $ 1.190 What exactly is a share price catalyst?
18-Apr-2022 $ 1.420 Oil & gas crisis leads to record inflation
14-Apr-2022 $ KNI Drilling 18 Days Away, Cobalt Targets Firmed Up
19-Mar-2022 $ 1.130 Scott Morisson's "Shopping List" of Critical Minerals
15-Mar-2022 $ EU urgently needs ESG grade cobalt for EV transition - Russia and DRC supplies are ruled out
26-Feb-2022 $ 0.805 The War Begins, Cybersecurity, Food Security, Energy Independence and Precious Metals
05-Feb-2022 $ 1.000 The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
31-Jan-2022 $ 0.920 Inflation, US Fed Reserve, Bond Yield, Cash Buffer Portoflio
22-Jan-2022 $ 1.100 Our Investment Approach, Energy Cold War, Ukraine, Supply Chain Crisis
21-Jan-2022 $ Modern exploration methods lead to additional drilling targets
11-Dec-2021 $ 1.295 ASX rests pre-Chrsitmas as the market trades on very low volumes
06-Dec-2021 $ KNI Geophysics Unveils EM Conductor Under Historic Cobalt Mine
04-Dec-2021 $ 1.300 Omicron, Inflation and Investment Memos
08-Nov-2021 $ KNI delivers multiple conductors on copper and cobalt - Drill targets next
06-Nov-2021 $ 1.785 COP26, Battery Metals, Green Energy
16-Oct-2021 $ 2.040 Mainstream media casts a big spotlight on Green Hydrogen
11-Oct-2021 $ Fast start for KNI with more news on Zero Carbon Battery metals
18-Sep-2021 $ 1.980 Why uranium stocks are soaring, one good movie recommendation
15-Sep-2021 $ 2.470 KNI commences EM surveys - will they find EM conductors? Find out next month...
04-Sep-2021 $ 2.660 Annual Reports, Uranium and a Welcome to New Subscribers
28-Aug-2021 $ 1.965 Recap of the KNI IPO and share price run
24-Aug-2021 $ 0.805 Introducing Kuniko (ASX:KNI): Zero Carbon Copper, Nickel and Cobalt



Investor Presentation

EVs overtake phones as top source of cobalt demand

ASX:KNI May 20, 2022

Investment Memo: KNI 2022

Macro theme: Cobalt


Cobalt demand is on a crash course with supply chain difficulties and Europe is going to need plenty of cobalt to satisfy its rapidly growing EV market.

In fact, EVs are now the number one source of demand for cobalt. We expect the demand for cobalt from EVs to ramp up dramatically in the coming years - and even bull cases for cobalt may underestimate the demand upside.

Our battery metals investment, Kuniko (ASX:KNI) is drilling for cobalt in Norway, right now.

Key takeaways:

  • Demand to nearly double in next 5 years, from 175K tonnes in 2021 to 320K tonnes by 2026 (Cobalt Institute)
  • Tesla’s Elon Musk has floated the idea of acquiring a mining company to gain access to the market
  • KNI is drilling in an area that used to be the largest source of cobalt in the world

For a full breakdown of why we’ve invested in KNI check out our Investment Memo by clicking the image below:


Kuniko raises A$8M, drilling commenced

ASX:KNI May 04, 2022 Announcement

Our European battery metals investment, Kuniko (ASX:KNI), just completed a capital raise in which notable resource investor John Hancock added to his position as a cornerstone investor.

KNI raised $8M via a placement @ $1 per share with the 8,000,000 shares to be issued on 6 May 2022.

As well as being cornerstoned by John Hancock, the KNI directors committed to taking $315k of the raise on the same terms.

In yesterday’s announcement, KNI also said that it would seek to raise a further $2M via a Share Purchase Plan (SPP) with the following key dates:

  • Record date: 29 April 2022
  • Closing date: 27 May 2022
  • Issue date: 1 June 2022 (Just in time for the completion of the drilling program which KNI confirmed would be some time in June).

This means that those who were holding shares at the close of market on the 29 April will be eligible to bid for a maximum of $30,000 in new shares, on the same terms and conditions as the placement.

The capital raise comes as KNI has just launched its first drilling program across its high priority geophysics targets from its cobalt project in Norway.

The current drilling program is key objective #2 of our 2022 KNI Investment Memo.

To see all of the key objectives we want to see KNI achieve this year, the reasons why we continue to hold KNI in our portfolio, and the key risks to our investment thesis.

Check out the memo by clicking the image below.


Letter of Intent between Beyonder AS and Kuniko

ASX:KNI Apr 26, 2022 Announcement

Batteries made from sawdust? With Kuniko’s Zero Carbon copper?

That’s the intent of today’s announcement from our battery metals Investment, Kuniko (ASX:KNI).

A Letter of Intent (LOI) has been signed between KNI and Beyonder, a Norwegian battery technology company.

Over a 3-year period, KNI and Beyonder will consider a potential offtake for KNI’s copper, use of Beyonder’s battery tech in KNI’s exploration activities, work on mining and processing innovations and other efforts to ensure zero-emissions in the battery supply chain.

Beyonder is developing a hybrid energy-storage technology called a Lithium-ion capacitor that uses sustainable materials. In particular, sawdust:

The sawdust is converted into “super-activated carbon” for the capacitor’s positive electrode.

Silicon derived from sand is used for the negative electrode.

A profile of the company notes that:

The use of a wood-derived activated carbon cathode enables the LiC to operate at higher specific power, with greater durability compared to Li-ion batteries. The LiC is non-flammable, and batteries with LiC cells can be fully charged in two minutes and recharged up to 100,000 times.

Beyonder is aiming to have its first full-scale plant operating in Norway in 2023, with the ability to produce 5 million battery cells a year.

As investors, we see KNI’s collaboration with Beyonder as a potentially fruitful arrangement down the track.

What’s next for KNI?

For now though, we’re most interested in KNI’s upcoming cobalt drilling campaign which is slated to begin 2 May.

Here is why we invested in KNI and what we expect them to achieve in 2022 - KNI Investment Memo.


More on DRC cobalt and KNI's European Cobalt Project

ASX:KNI Mar 24, 2022

Our Zero Carbon copper, nickel and cobalt investment Kuniko (ASX:KNI) has had a solid two weeks on the market, rising more than 150% since it announced that it had been granted a drilling permit at its Norwegian cobalt project. The current geopolitical environment and cobalt supply concerns no doubt helped too.

In our recent note on our investment KNI, we highlighted a rapidly growing need to diversify the cobalt supply chain amid increased geopolitical tensions.

KNI’s Skuterud cobalt project lies in politically stable and mining friendly jurisdiction — an area that was formerly the largest cobalt producing region of the world.

Currently, some ~70% of it is sourced from the Democratic Republic of Congo which produced 120,000 tonnes in 2021.

Recent media attention has centred on the various challenges the DRC faces in ethically mining the battery metal and their complex relationship with Chinese mine operators.

This New York Times article is of particular interest to us:

The article notes that, “Biden administration officials have been looking for ways to strengthen ties with Congo and gain access to critical resources like cobalt. A delegation of White House officials flew to Kinshasa, the capital, earlier this year for meetings with Mr. Tshisekedi and other top officials. The U.S. government is backing the review of mining contracts in Congo as part of an effort to crack down on corruption.

For us, this underscores how battery metals are taking on an increasingly geopolitical flavour.

Tshisekedi is the president of the DRC and his government has previously pitched a ban on the export of raw cobalt from the country and argued for localising the processing of the battery metal.

According to Reuters, a new local mine administrator is in place at the Tenke Fungurume mine which in 2020, produced 182,600 tonnes of copper and 15,400 tonnes of cobalt. That’s around 10% of total global cobalt production in 2021.

With European EVs needing cobalt more than ever before, we’re eagerly looking forward to KNI’s maiden drilling campaign in Norway, slated to begin in the first week of May.

Here is why we invested in KNI and what we expect it to achieve in 2022 - KNI Investment Memo.


Drilling permit granted for Skuterud Cobalt project

ASX:KNI Mar 15, 2022

Yesterday, KNI announced that drilling permits had been granted for a 7-hole, 2,800m diamond drilling program at its Skuterud cobalt project.

The drilling program which is expected to commence in the first week of May will be targeting three high priority EM conductors that we have covered in our last two notes for KNI.

To read about the EM target we are most interested in check out our previous note here: KNI Geophysics Unveils EM Conductor Under Historic Cobalt Mine

With previous drilling missing the EM conductor we are hoping that the modern exploration technologies KNI have used can mean KNI can make a large scale cobalt discovery.


KNI drilling program update

ASX:KNI Feb 22, 2022

KNI announced today that the drilling program at its main cobalt target (Skuterud) is on track for Q2-2022.

With the applications for a drilling permit lodged and drilling contractor “Norse Diamond Drilling AS” awarded the contract, the 7-hole, 2,800 metre program appears to be on schedule.

KNI also announced that after further review of the geophysical and geochemical data the Vangrofta copper target wasn't of sufficient size to warrant further drilling.

This comes as KNI has spent the last 6 or so months refining the highest priority drill targets to allocate its funds to drill test in 2022.