Out of Trading Halt; seeking to have licenses reinstated

Yesterday, our exploration junior Investment AuKing Mining (ASX:AKN) came out of its trading halt with an update on its acquisition of a suite of Tanzanian projects.

The bad news is that 2 of the 12 granted Tanzanian Prospecting Licences (PLs) have recently been revoked, due to an apparent malfunction in the licence allocation system that issued the PLs to another entity as well. This matters as the PLs in question cover some of the best uranium ground within the acquisition package, namely in the Manyoni project. Without these mineral rights over the 2 PLs, the acquisition package is devalued.

Accordingly, AKN is launching an appeal with the Minister of Minerals in Tanzania. AKN says it was issued the 2 Manyoni PLs in question on 26 January 2023, whereas the other group were subsequently double allocated the PLs on 3 February 2023.

The good news is that more funding should be coming AKN’s way shortly, with a commitment from Ven Capital to complete the second tranche $2.2M placement at 10c per share.

Recall that this acquisition was made at a $6M purchase price via an all scrip payment (i.e. issuing of 60 million AKN shares at 10c per share), alongside a two tranche capital raising. The first tranche was completed at the time the acquisition was announced in October 2022, raising $1.37M.

With Tranche 2 now close to being secured, pending this, we think AKN would have enough runway to continue its operations and appeal to regain those revoked PLs, as well as fund exploration on other areas within the newly acquired assets.

As outlined in our updated Investment Memo last October, we highlighted Permitting Risks as a new key risk associated with the acquisition of Tanzanian assets - unfortunately this seems to have played out.

We hope that the double allocation is simply an administrative error that is attributable to the digital mineral rights portal referred to in today’s announcement - “flexicadastre”, and that AKN will receive back its Manyoni PL’s.

We feel that Tanzania has made considerable progress on ensuring its mining industry is a major part of its economy under the leadership of President Samia Suluhu Hassan.

Indeed, we hold two other Tanzanian companies across our Portfolio and see AKN’s issues as an unfortunate anomaly rather than a pattern of events or anything indicative of systemic permitting risk within the country.

And as a result of the major emphasis President Hassan has placed on mining, we think the license matter for AKN has a reasonable chance of being resolved to AKN’s benefit (hopefully quickly).

What’s next?

We’re keen to see how the revoked PL’s play out, specifically the response from the Tanzanian Minister of Mines to AKN’s appeal.

Outside of Tanzania, we expect AKN should be providing an update on developments at its Koongie Park base metals project in WA shortly. Koongie Park hosts a 21.1Mt JORC resource containing 121kt copper and 372kt of zinc.