AuKing Mining Limited (“AuKing” or “AKN”) is pleased to announce the agreement to earn up a 75% interest in the Koongie Park copper/zinc project (“Koongie Park”) situated in the south-eastern Kimberley Region of northern Western Australia (“Koongie Park Earn-In”). ASX-listed company Anglo Australian Resources NL (“AAR”) is the 100% owner of Koongie Park. The proposed earn-in retains for AAR’s benefit the rights to explore for and develop gold/platinum group metals deposits at Koongie Park.
The Koongie Park Earn-In is subject to the completion of due diligence, conduct of a significant new capital raising, AKN shareholder approval and certain other regulatory approvals. This proposed acquisition comprises a significant change in the scale of AKN’s activities in accordance with ASX Listing Rule 11.1.3, requiring AKN to re-comply with Chapters 1 and 2 of the ASX Listing Rules (see further information relating to ASX compliance in Part B below).
AKN Acquisition Strategy
The Koongie Park Earn-In is based upon the following business strategy that will be implemented by AKN:
Koongie Park Tenure and Location
The Koongie Park copper/zinc project is situated 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 Limited. Koongie Park is located about 25kms south west of the regional centre of Halls Creek on the Great Northern Highway.
AAR is the 100% owner of the Koongie Park project, acquiring full ownership of the project in 2003. The tenure holding comprises an area of more than 7,600 hectares covering over 40kms of the base metals prospective Koongie Park Formation.
Koongie Park has already been the subject of significant exploration drilling and analysis since the 1970’s, often in line with movements in commodity prices. Since its discovery the Koongie Park project has been the subject of over 245 RC and diamond drill holes consisting of more than 50,000m of drilling in total. The predominant focus of drilling has been at the Sandiego and Onedin deposits.
Figure 1 – Koongie Park Project Location
The Koongie Park project has been extensively explored and drilled over many years by the previous owners. AAR has previously reported Mineral Resource estimates for both the Sandiego and Onedin deposits at Koongie Park.
For more information about the Koongie Park project including resource estimates and feasibility study activities see Anglo Australian announcement to ASX dated 25 June 2020 by clicking here.
Koongie Park Geology
The copper/zinc mineralisation at Koongie Park is a VHMS (volcanic hosted massive sulphide) system hosted by the Koongie Park Formation – a sequence of volcanic rocks and volcanic derived sediments. The primary deposits within the Koongie Park project are called Sandiego and Onedin. The Sandiego deposit occurs as a massive conformable wedge-shaped lens that is 200m in length with a maximum thickness of 75m. A significant sub-horizontal zone of high-grade copper mineralisation (as chalcocite) is draped over the main copper and zinc lodes at Sandiego. It is a steeply dipping tabular mineralised zone and remains open at depth (see Annexure C below).
The Onedin deposit is stratabound and folded with mostly a rod-shaped plunging mineralised zone. However, there is also a high-grade near-surface horizontal component to the mineralisation – this is mostly located in the transitional zone material (comprising about 60% of the total estimated resource). The proportion of sulphide resource is lower due to the deeper sulphide zone largely being untested by drilling programs (see below).
Koongie Park Project Potential
There are three (3) primary areas that summarise the potential for AKN to establish commercial mining operations at Koongie Park, namely:
Processing at Onedin
AKN has a strong expectation that there are available ammonia-based processing solutions (including the Ammleach® ammoniacal leaching process) that may provide the key to unlocking the processing of oxide and transitional ores at Onedin. If this can be established, such an operation will be highly complementary to a mining operation at Sandiego – thereby creating a scale of operation that is not as reliant on an operation solely at Sandiego and substantially improving the overall project economics. The existing project studies previously carried out by AAR focus on an initial open pit operation at Sandiego, followed by underground mining of the deeper sulphide ores – a mining operation that would run for about 5 years. 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.
Additional Mineral Resources
As already stated, the deeper sulphide mineralisation at both Sandiego and Onedin remain open and will be the subject of future drill testing. In addition, while the primary focus over many years has been at Sandiego and Onedin, AAR possesses a wealth of technical information and data relating to the entire Koongie Park tenure area which covers 40kms of the highly prospective Koongie Park Formation. The aeromagnetic image in Figure 3 below shows further exploration targets for assessment in the AAR tenements.
Figure 2 – Koongie Park exploration targets
In addition to these areas of significant exploration potential there exists other project areas including:
Cobalt, gold and silver mineralisation at Koongie Park
Although Koongie Park has been the subject of extensive drilling over many years, only the more recent drilling activities of AAR assayed the drill samples for the existence of commercial levels of cobalt. Those recent assays identified cobalt mineralisation ranging between 0.05% to 0.2% Co which are clearly insufficient to include in any resource estimate but provide enough evidence to pursue cobalt in future project assessments.
Koongie Park Earn-In Agreement
AKN has entered into a binding term sheet with AAR with respect to the Koongie Park Project. Under the Agreement, AKN and AAR propose to form a joint venture (Joint Venture) on terms which include, but are not limited to, the following:
AKN Earn-in Rights
The Agreement provides for a two-staged earn-in process whereby AKN can ultimately secure a 75% project interest in the Koongie Park Project. A summary of the two-stage earn-in is outlined below.
First Earn-in Period
AKN shall be deemed to have earned a nominal 25% interest in the Joint Venture (to be formed upon satisfaction of the first earn-in milestone) upon AKN making a total initial payment of $1,000,000 to Anglo Australian, in the following tranches:
During the First Earn-In Period of twenty four (24) months after the satisfaction of the Conditions Precedent, AKN may earn a further 25% interest in the Joint Venture by incurring expenditure of $1.5 million including expenditure on exploration, testwork and related analysis to establish a commercially viable processing solution for the Koongie Park oxide ores (First Earn-In Milestone).
Upon satisfying the First Earn-in Milestone, AKN shall be deemed to have earned an additional 25% interest in the Joint Venture for a total 50% interest in the Joint Venture. The Joint Venture is to be formed upon satisfaction of the First Earn-in Milestone. AKN then has a 10 business day period to elect to proceed with the Second Earn-In Period.
If AKN fails to satisfy the First Earn-in Milestone during the First Earn-in Period, AKN will be deemed to have withdrawn from the Joint Venture, will cease to have any interest in the Joint Venture and the Agreement automatically terminates.
Second Earn-in Period
During the Second Earn-in Period, which is the 12 month period commencing from AKN’s election to proceed with the Second Earn-In Period after completion of the First Earn-In Period, AKN may earn a further 25% interest in the Joint Venture by incurring additional expenditure of $1,500,000, including expenditure on exploration activities and feasibility studies with a view to establishing mining operations on the Onedin and Sandiego deposits on the Tenements (Second Earn-In Milestone).
Upon satisfying the Second Earn-in Milestone, AKN shall be deemed to have earned an additional 25% interest in the Joint Venture for a total 75% interest in the Joint Venture. If AKN fails to satisfy the Second Earn-in Milestone during the Second Earn-in Period, then AKN will retain its earned interest in the Joint Venture of 50%.
For the duration of the Second Earn-in Period, AKN agrees to sole fund all expenditure on exploration activities in relation to the Joint Venture and free carry AAR’s interest in the Joint Venture.
The Agreement does not bind the parties and has no force or effect unless and until the following conditions are satisfied or waived:
(together, “the Conditions Precedent”).
AKN and AAR must use reasonable endeavours to satisfy the Conditions Precedent as soon as possible and, in any event, within 120 days of the date of the Agreement. The parties may terminate the Agreement if the Conditions Precedent are not satisfied within this period.
The Ammleach® minerals processing system
A focus of AKN’s efforts to demonstrate a commercially viable processing solution at Koongie Park’s Onedin deposit is access to the Ammleach® processing system. Ammleach® is a proprietary system that uses an ammonia-based process for leaching oxide and transitional ores that can then be subjected to normal solvent extraction and electro-winning processing.
The most common form of oxide/transitional ore leaching is by the use of sulphuric acid. However, with more complex oxide ores (such as at Koongie Park) one of the primary issues associated with leaching oxide ores can be the excessive use of sulphuric acid by a significant amount of carbonate minerals present in the ore. Not only does this use come at significant additional expense (making the process non-viable) but still may not achieve the levels of mineral recovery that is critical to establish an economically viable operation.
The Ammleach® process can leach complex ores that are otherwise uneconomic to treat (using traditional acid-based leaching technology) and operates at ambient temperature, making it an ideal process for either heap or tank leaching activities. Another advantage of the Ammleach® process is that the use of alkaline-based ammonia leaching (as opposed to the traditional acid leaching) can substantially reduce environmental impacts of the proposed operations.
AKN proposes to engage Perth-based Accudo Metals Pty Ltd (the holder of licence rights in Australia to the Ammleach® process) under a technical services agreement, whereby AKN will have access to Accudo’s metallurgical expertise and knowledge, including the Ammleach® process.