Withdrawal from PGE rights acquisition deal

Investment Memo: AKN IM

Corporate: Transaction update

Today, our Catalyst Hunter base metals exploration investment AuKing Mining (ASX:AKN) announced its withdrawal from an agreement with Astral Resources (ASX:AAR, formerly called Anglo Australian Resources) to acquire the PGE (platinum group elements) right and remaining 25% interest not already owned of its flagship Koongie Park project in WA.

The reason for the withdrawal is that the $6M funding required for the acquisition fell through. AKN announced a $7.1M capital raise in March, with a placement completed raising $3.61M, and the remainder to be raised via a rights issue that was fully underwritten by Vert Capital. However, there were clauses that allowed for termination of the underwritten amount, which Vert Capital has exercised - in essence, the stock market has crashed, along with AKN’s share price.

Whilst the acquisition deal is now dead, we still like that AKN secured substantial funding to progress exploration activity, and were keen to move to full ownership of its flagship, as it points to management’s confidence in the asset - especially as we await the next catalyst and key milestone, i.e results from the metallurgical testwork. We consider this to be the key to unlocking the value in AKN’s JORC resource - with results likely in the next few weeks.

As at 31 March 2022, AKN had cash reserves of $1.127M. With the recent placement raising north of $3.6M, AKN is in a healthy position to fund progression of Koongie Park for the remainder of the year.