AuKing Mining Ltd (ASX:AKN) has taken steps to expand its portfolio of uranium and copper projects in Tanzania and Australia, with an eye on the Kingdom of Saudi Arabia.
The company has entered into a Memorandum of Understanding (MoU) with Barg Alsaman Mining Company (BSMC), a subsidiary of the large Saudi Arabian group Segia Gulf Group, to jointly explore and develop mineral projects in the Kingdom.
“The board of AuKing is pleased to announce the collaboration with Segia Gulf Group (via its subsidiary BSMC), a substantial Saudi Arabian corporation, for the specific purpose of exploring and developing mineral projects in the Kingdom of Saudi Arabia,” said AuKing chairman Asimwe Kabunga.
“There is little doubt that the government of Saudi Arabia has a serious agenda to create a mining sector that attracts global attention and participation and already has many of the major mining players involved.”
Saudi Arabia supports mining industry
Saudi Arabia’s Vision 2030 reform agenda has elevated the mining sector’s role in the Saudi economy, positioning it as a third key economic pillar as part of the National Industrial Development and Logistics Program.
The Kingdom’s focus on mining is driven by a desire to diversify the economy and increase non-oil revenue as it weans itself off oil dependence.
Furthermore, minerals are key inputs in many industries essential to Vision 2030 objectives, such as achieving a green transition, digitising the economy, becoming a global hub for technology and connectivity, producing nuclear energy and localising military procurement.
In 2019, Saudi Arabia created the Ministry of Industry and Mineral Resources to accelerate the mining industry’s growth. To attract international and domestic investment, the Kingdom introduced a new mining law making it easier for companies to explore for and extract minerals and offering financial incentives.
Saudi Arabia also increased the activities of the Saudi Geological Survey. It recently awarded a $207 million contract to the Chinese Geological Survey as part of a bid to complete, by 2025, 50% of the survey of Saudi Arabia’s Arabian Shield — a more than 230,000 square mile area of Precambrian rocks in western Saudi Arabia.
The Gulf State has revised upwards estimates for its largely untapped mineral resources to $2.5 trillion, from a 2016 forecast of $1.3 trillion. This estimate is based on 30% of the Arabian Shields exploration, suggesting there is significant discovery upside potential.
MoU features
The key features of the MoU between AuKing and BSMC include:
- The focus of the cooperation with BSMC is gold, copper, silver and zinc projects;
- BSMC will support AuKing’s efforts to secure a foreign investment licence with the Saudi Investment Ministry;
- BSMC will make available to AuKing the opportunity to participate in their existing projects, as well as to jointly bid for new projects that are offered by the government from time to time;
- AuKing is intended to sole fund exploration and development activities on selected mineral projects up to the point of completion of a feasibility study;
- At completion of the feasibility study for a mining project, AuKing will secure a 70% interest in the project;
- In the case of a designated mining project being sold (on terms agreeable by the parties) prior to completion of the feasibility study, the sale proceeds will be allocated between BSMC and AuKing on a 30/70 sharing basis; and
- BSMC will assist AuKing (on a best endeavours basis) to raise funds for project activities.
Segia Gulf Group managing director Sheikh Abdullah Al-Qahtani said, “The Kingdom of Saudi Arabia is focusing substantial resources to expand our mining industry and to provide a basis for developing mining projects and providing significant opportunities to increase skills and expertise of local Saudis in this sector.
“The reputation of Australian explorers is first class and we look forward to working with AuKing’s technical team as we seek to identify and develop suitable mining projects.”
BSMC CEO Dr Elhamem M. Abdalla said, “It is an excellent opportunity for the company to partner with a company with great exploration experience and listed on the ASX. We will do what is necessary for the success of this partnership and work together to develop the field of mining in the Kingdom of Saudi Arabia.”
AuKing site visit
AuKing representatives recently conducted a site visit with BSMC personnel to identify certain existing and future areas of likely collaboration. The results from this site visit will allow AuKing to proceed with exploration activities within a matter of weeks.
Despite the opportunity in Saudi Arabia, AuKing notes that its primary commitment remains unchanged — to develop its existing uranium and copper projects in Tanzania and Australia respectively.
Sheikh Al-Qahtani at a previous visit to a BSMC project area; and scene from recent AuKing site visit to BSMC project areas
AuKing CEO Paul Williams said, “AuKing is indeed fortunate to have established a strong relationship with a large Saudi Arabian corporate group that has more than 40 years of operating experience in the Kingdom and which is now looking to develop various mining projects.
"While AuKing’s existing copper and uranium projects in Tanzania and Australia continue to be a focus, this unique opportunity could not be overlooked.”
The company says its focus over coming weeks will be to secure funding to support further exploration and development activities on these projects, while noting that such funding “is being sought on the basis that it is limited in terms of dilutionary impact to existing shareholders”.
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