AuKing to move to full ownership of flagship project

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.

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.

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.