Cobalt to be added to flagship project
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.
