AuKing Mining Ltd (ASX:AKN), formerly known as Chinalco Yunnan Copper Resources Ltd, has entered a deal with Anglo Australian Resources NL (ASX:AAR) to earn up to a 75% interest in the Koongie Park copper-zinc project, near Halls Creek in northern Western Australia.
The company also plans to undertake a $6 million capital raising exercise to fund the earn-in and reconstitute its board of directors.
Koongie Park project is in the highly mineralised Halls Creek Mobile Belt, which also hosts the Savannah (Sally Malay) and Copernicus nickel projects, the Argyle diamond mine and the Nicholsons gold mining operation of Pantoro Ltd (ASX:PNR).
It is already a significant undeveloped base metals project with publicly reported JORC 2004 resources containing copper, zinc, gold and silver and the primary deposits within the project are Sandiego and Onedin.
This earn-in is subject to the completion of due diligence, the capital raising, AKN shareholder approval and certain other regulatory approvals.
AKN managing director Paul Williams said: “Koongie Park is already a significant brownfield exploration project, with potential to become a substantial Australian copper/zinc mine.
“As part of the transaction, AKN will also bring a wealth of technical and financial expertise to the Board and senior management. We look forward to working through the acquisition and regulatory process over the next few months and then hitting the ground hard at Koongie Park in the second half of 2020”.
AuKing has the full support of major shareholder JCHX Group for the acquisition.
The proposed acquisition comprises a significant change in the scale of AKN’s activities and requires AKN to re-comply with Chapters 1 and 2 of the ASX Listing Rules.
Its shares will remain suspended until AKN recompiles with the Listing Rules and the proposed Koongie Park earn-in has been completed.
Capital raising and share consolidation
As part of AKN’s process to re-comply with the ASX’s re-quotation requirements, AKN will seek shareholder approval to consolidate its ordinary shares on at least a 10:1 basis, reducing its total issued capital from 932,584,461 to 93,258,446 ordinary shares.
It also plans to conduct a capital raising exercise under a full form prospectus to raise a minimum subscription of $6 million at an issue price of around $0.05 per share, on a post-consolidation basis.
AKN will seek a lead broker to the capital raising, which is unlikely to be underwritten.
AKN can earn up to a total 75% in the Koongie Park project by spending $4 million over three years to carry out the necessary processing test-work and establish the commercial feasibility study for the development of a mine.
The earn-in retains for AAR’s benefit the rights to explore for and develop gold-platinum group metals deposits at Koongie Park.
AKN plans to establish a commercially viable processing solution for the Onedin oxide and transitional ores, adding significant open cut copper-zinc mineralisation to the development plan and likely extending mine life at a combined Onedin/Sandiego operation.
It also intends to explore other high priority target areas within the 7,600-hectare tenure area that AAR holds, with a view to significantly increase the overall mineable resource base at Koongie Park.
It believes there is potential to collaborate with adjoining tenure holders to expand the overall resource base that can be processed through facilities established at Koongie Park.
Previous drilling at Koongie Park identified potentially significant levels of cobalt mineralisation and this will be a priority of AKN with its future activities and project studies.
The presence of gold and silver mineralisation at Sandiego and Onedin also gives rise to potential significant credits for those metals in the concentrates that can be produced from those deposits.
Processing at Onedin
AKN proposes to engage Perth-based Accudo Metals Pty Ltd, which holds the licence rights in Australia to the Ammleach® process, under a technical services agreement.
It believes this ammoniacal leaching process may provide the key to unlocking the processing of oxide and transitional ores at Onedin.
The ability to open up a mining operation of the near-surface oxide and transition ores at Onedin could add significant early cashflows to the operation and potentially extend the overall mine life to around 10 years.
As a result, a significant amount of initial time and resources will be directed by AKN towards establishing the Onedin open pit operation in the early stages of the agreement with AAR.
The AKN board will be reconstituted to have five board members comprising an independent chairman and a majority of independent directors on board.
More detailed resumes of these people will be provided in due course.