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Kuniko Limited

(ASX:KNI)


 

  Our Initial Entry
Price

Portfolio Initiation

5 Day VWAP
After Initiation

Current Price

Our Current Returns

ASX:KNI
$0.200
$0.805
Aug 25 2021
$1.753
$0.915
    358%

ASX:KNI
Our Current Returns
358%


Investment Memo: Short summary on why we invested (25th August 2021)


This investment memo is a short, high level summary of why we continue to hold KNI and what we expect the company to deliver in 2022. The purpose is to record our current thinking as a benchmark to assess the company's performance against our expectations 12 months from now.

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.

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

============================================================

Investment Milestones in KNI

In line with our general investment strategy for early stage explorers, we have sold 8.04% of our KNI position, and we are moving towards achieving free carry prior to the initial drilling results, which we expect to complete in the first half of 2022.

✅ 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

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 3,788,334 KNI shares on 21 Jan 2021. S3 Consortium Pty Ltd has been engaged by KNI to share our commentary on the progress of our investment in KNI over time.

[Last Updated 21-Jan-2021 - KNI investment memo amended to include director shares]

Kuniko Company Milestones

“Expected Company Milestones” are based on the company's publicly available execution plan and some assumptions made by our team on potential announcements that should de-risk the investment. “Our investment milestones” show our current long-term investment plan. Early stage investments are risky and there is no guarantee that the expected events will occur. The lists are not in sequential order.

✅ ASX Listing
✅ $7.8M IPO Raise @20¢ per share
Portfolio Initiation
ℹ️ KNI Share Price Run
🔲 Key Board Appointment
✅ Norwegian Based CEO Appointed (Antony Beckmand)
🔲 Key Consultant Appointment
Existing Project Landholding Expanded 1
🔲 Existing Project Landholding Expanded 2
🔲 New Project Acquired 1
🔲 New Project Acquired 2
🔲 Zero Carbon Studies
🔲 ESG Disclosure and Progression
🔲 Unexpected Positive Announcement 1
🔲 Unexpected Positive Announcement 2
🔲 Funding at Higher Share Price 1
🔲 Funding at Higher Share Price 2
🔲 Unexpected Positive Announcement 3
🔲 Favourable European Regulations

Skuterud Project - Cobalt

✅ Field Studies - Geochemical Sampling
🔄 Assay Results (Geochemical Sampling)
🔄 Geophysical Program
🔄 Drill Targets Identified
🔲 New Milestones Added

Copper Projects

Romsas, Undal and Vangrofta

✅ Field studies - mapping/sampling (Vangrøfta)
🔄 Geophysical Program (Vangrøfta, Undal)
🔄 Geochemical Surveys
🔄 Drill Targets Identified
🔲 New Milestones Added

NEW: Ringerike Project (copper, nickel, cobalt, PGE)

✅ Acquire licenses
🔄 process historical data
🔲 Announce 2022 exploration program

NEW: Nord-Helgeland Project (lithium, tin tantalum)

✅ Rock samples collected
🔄 Lab testing
🔲 Landowner approval
🔲 Announce 2022 exploration program

Key

🔲 Expected Milestone
✅ Achieved Milestone
🟩 Above Average Result
🟨 Average (Expected) Result
🟧 Below Average Result
🟥 Negative Result
🌎 Macro Event
⚔️ Results from Other Company / Project
🔄 In Progress
[UPA] Unexpected Positive Announcement
[NEW] New Milestone Added



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