AuKing Mining Ltd (ASX:AKN) has secured $1.385 million to support ongoing exploration along with initial funding for a proposed earn-in right at a gold project near Cloncurry in northern Queensland.
The funding is from a rights issue shortfall and follows an agreement with Benwest Investment Services Pty Ltd, which will place the shortfall to a group of sophisticated and professional investors.
This arose from AuKing’s recent rights issue entitlement offer of new fully paid ordinary shares on a 2 for 3 basis with 197,963,982 new shares to be issued at $0.007 per share for $1.385 million, before issue-related costs.
Use of funds
Funds are proposed to be allocated as follows:
- Cloncurry Project earn-in expenditure - $350,000;
- Existing project expenditure - $180,000;
- Transaction (JO:TCPJ) costs - $85,000; and
- Working capital/payment of creditors - $770,000.
Earn-in with Orion Resources
AuKing has taken another step to provide for future growth by entering an earn-in agreement with Orion Resources Pty Ltd, which is acquiring a substantial package of mining and exploration tenures, and mining processing facilities in Queensland.
This package includes the existing Lorena processing plant and associated facilities, about 15 kilometres east of Cloncurry, together with various exploration and mining tenements in that area.
AuKing has the right to earn a 15% interest in these assets by incurring $1.5 million on exploration expenditure on or before December 31, 2025.
About the Cloncurry assets
The Lorena plant is a conventional carbon in leach gold processing facility while the additional exploration and mining tenements are about 30 kilometres south of the Lorena plant, and described as the ‘Mt Freda/Golden Mile Project’.
Orion is developing plans to re-establish mining and processing operations at Lorena, with a focus on mining first ore from the Mt Freda/Golden Mile deposits and as part of a broader production strategy, proposes to establish a central gold and copper processing hub for the region.
Agreement details
AuKing’s agreement with Orion makes provision for it to earn up to a 15% interest in the Cloncurry Project.
The focus of activities by AuKing will be exploration, drilling and resource estimation work associated specifically with the Mt Freda/Golden Mile Project areas, which are the contemplated first areas for mining under Orion’s development program.
AuKing will have the right to earn this interest in the total package of assets being acquired by Orion by spending $1.5 million on proposed exploration, drilling and resource estimation work at Mt Freda/Golden Mile on or before December 31, 2025.
The company will be the manager of activities it is providing the funding for at Mt Freda/Golden Mile and on completion of the earn-in, a joint venture will be established between AuKing and Orion with the participating interests of 15% and 85% respectively.
Exciting opportunity
AuKing’s managing director Paul Williams said that the proposed Orion transaction presented an exciting opportunity for the company to take advantage of potentially stronger investment markets in the key commodity sectors of gold, uranium and copper.
“The funding received as part of this transaction not only enables AuKing to advance its key existing projects but also to secure an interest in the Cloncurry project assets that are being acquired and developed by Orion," he said.
"The intention is for AuKing’s exploration expertise to make a significant contribution to the proposed development activities of Orion.”
Shortfall details
Under the terms of the Entitlement Offer Prospectus dated September 12, 2024, the board of AuKing reserved the right, in the case that there is less than a full subscription by eligible shareholders under the offer to issue any shortfall within three months after the closing date.
Accordingly, agreement has been reached with Benwest Investment Services Pty Ltd to subscribe for the shortfall by way of a placement to sophisticated and professional investors on the same terms as were offered under the entitlement offer.
A further 98,981,991 free-attaching options to subscribe for shares at an exercise price of $0.03 each exercisable on or before April 30, 2027, will also be issued.
Existing project activities
The placement of the rights issue shortfall enables AuKing to allocate some funding to its existing project activities including:
- Immediate steps to commence the proposed drilling at the Mjuku Uranium Project in southern Tanzania. There remains a small window to carry out some initial drilling prior to the onset of the wet season in that region;
- It is proposed to carry out mineral resource upgrade and scoping study upgrade work in relation to the Koongie Park Copper-Zinc project in north-eastern Western Australia;
- Initial field work at the company’s two Canadian project (Grand Codroy and Myoff Creek) are likely to be postponed until 2025, now that significant snowfalls have been recorded in those areas;
- Finally, work continues with AuKing’s JV partner in Saudi Arabia to finalise formal grant of the Shaib Marqan gold exploration licence over the next few weeks, prior to commencement of exploration activities.
Board changes
As a result of completing the rights issue shortfall placement, certain changes will be made to the existing board of AuKing as follows:
- Three new highly experienced exploration and mining professionals will shortly join the board as additional directors;
- Peter Tighe will remain in his role as non-executive chairman;
- Paul Williams will remain as managing director; and
- Shizhou Yin will retire as a director.
“In addition, we are fortunate to secure the services of three experienced senior mining professionals as additional directors,” Williams added.