Next Investors logo grey
Kuniko Limited Logo.png

Kuniko Limited

ASX:KNI

Last Price:

$0.400

Our Investment Summary

Date of Initial Coverage

25-Aug-21

Initial Entry Price

$0.200

Returns from Initial Entry

100%


Our Big Bet for KNI

To develop a sustainable battery metals mine within European borders that is of strategic importance - and hence highly valuable as an acquisition target.

Investment Memo:

Kuniko Limited (ASX:KNI)

- LIVE

Opened: 21-Jan-2022

Shares Held at Open: 2,639,750


What does KNI do?

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

What is the macro theme?

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.

Why did we invest in KNI?

Ethical, sustainable locally sourced battery metals

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.

What do we expect KNI to deliver?

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.

Objective #4: Identify Canadian lithium drill targets, be permitted to drill

We expect KNI to conduct preliminary exploration campaigns at its Canadian lithium projects over the coming months, and pending the results of this work, select the best targets and be fully permitted to drill by the end of 2023. [Added 9-Mar-2023]

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.


Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 2,639,750 KNI shares at the time of writing this memo. S3 Consortium Pty Ltd has been engaged by KNI to share our commentary on the progress of our investment in KNI over time.


Investment Milestones in KNI

✅ Initial Investment: @ 20c
✅ Top Slice
✅ Free Carry
✅ Increase Investment: @ $1.00
✅ Free Carry

🔲 Take Profit
✅ Price increases 300% from initial entry
✅ Price increases 500% from initial entry
✅ Price increase 1000% from initial entry
✅ 12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years

Our Past Commentary on Kuniko Limited

Date Title
27-May-2023 $ 0.415 Who will process the world's critical minerals?
22-May-2023 $ KNI fast tracks Canada Lithium exploration
24-Apr-2023 $ KNI delivers unexpected high grade, shallow intercept - biggest hit yet.
22-Apr-2023 $ 0.460 5 Battery Materials Stocks for 2023
23-Mar-2023 $ KNI hits “Exceptional Mineralisation” at Shallow Depth as EU launches Critical Materials Act
09-Mar-2023 $ KNI acquires lithium projects in same region as $1.5BN capped Patriot Battery Metals
18-Jan-2023 $ KNI Now Drilling - First of Three Drill Campaigns this Quarter
11-Oct-2022 $ KNI hits cobalt in all 8 drill holes at primary target
20-Jul-2022 $ KNI kept drilling after it kept seeing visible cobalt - assay results should get interesting
02-Jul-2022 $ 0.630 Tax loss selling over, market back in August?
28-Jun-2022 $ KNI Hits Visual Cobalt in all 5 Holes at Middagshvile Target
09-May-2022 $ KNI is Now Drilling for Cobalt in the EU - Three EM Targets to Aim For
23-Apr-2022 $ 1.190 What exactly is a share price catalyst?
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
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-Christmas 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