Koongie Park Legal Agreements
Koongie Park Earn-In Terms
The Company has entered into an Earn-in and Joint Venture Agreement with AAR with respect to the Koongie Park Project. Under the Koongie Park Earn-in, the Company and AAR formed the Joint Venture on terms which include, but are not limited to, the following:
- the Company is granted the right to:
- Explore for and develop base metals deposits within the project area;
- Conduct exploration and development activities for base metals deposits on the project area during the earn-in period; and
- Earn up to a 75% interest in the project area through the joint venture by funding exploration and project development studies (as stipulated below); and
- AAR retains the right to explore for and develop gold and platinum group metals deposits within the project area.
The Koongie Park Earn-in provides for a two-staged earn-in process whereby the Company 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
The Company earned a nominal 25% interest in the Joint Venture (to be formed upon satisfaction of the first earn-in milestone) upon the Company making the total initial payment of $1,000,000 to AAR, in June 2021.
On 9 December 2021 the Company announced that it had completed the First Earn-In milestone and that the Company had earned a further 25% interest in the Joint Venture, having incurred expenditure of $1.5 million at Koongie Park.
Having satisfied the First Earn-in Milestone, the Company has now earned an additional 25% interest in the Joint Venture for a total 50% interest in the Joint Venture. The two mining leases (M80/276 and M80/277) were also incorporated into the Joint Venture at that time.
Second Earn-in Period
On 4 February 2022 the Company announced that it had completed the Second Earn-In milestone and that the Company had earned a further 25% interest in the Joint Venture, having incurred further expenditure of $1.5million at Koongie Park.
Having satisfied the Second Earn-In milestone, the Company has now completed its earn-in rights taking its total project interest to 75%. The formal Koongie Park JV has now commenced.
Other JV Provisions
The Koongie Park Earn-in between the Company and AAR contains various other provisions that are standard for an exploration joint venture including:
- The Company is the manager of all Joint Venture activities while it is earning interests in the Joint Venture and upon completion of those earn-ins;
- The Joint Venture manager is responsible for all reporting, budget and work program preparation, tenure management and generally report to the Joint Venture management committee from time to time;
- Upon conclusion of AKN’s earning rights, the parties are then obliged to contribute towards future work programs in accordance with their respective Joint Venture interests;
- Dilution mechanisms apply in the event a party is unwilling or unable to contribute towards their share of ongoing Joint Venture commitments;
- In the event a party’s interest in the Joint Venture dilutes below 10%, they will be deemed to have withdrawn from the JV and their interest will revert to a 1% net smelter royalty.
AAR’s Precious Metals Rights
In conjunction with the Koongie Park Earn-in summarised in section 8.1, AKN and AAR have entered into an agreement titled Precious Metals Rights Agreement (PMRA). The primary function of the PMRA is to establish the rights of AAR to explore for and develop gold and PGMs across the Koongie Park Project other than the area of the mining leases where the Sandiego and Onedin deposits are situated (Excluded Area). Under the PMRA:
- Each party must submit an annual work program to the other, in advance of the proposed activities;
- In the case of AKN discovering a geologically anomalous concentration of gold or PGMs it must immediately notify AAR and vice versa in the case of AAR discovering a geologically anomalous concentration of minerals other than gold or PGMs. If either of these occur, the party receiving notice then has the right to exercise their rights to exclusively explore and develop minerals (Mineral Rights);
- There is provision to establish priority when a party is seeking to exercising their Mineral Rights that may interfere with existing exploration or mining activities of the other party;
- There is provision to establish priority when there is the potential for respective mining activities to be carried out by the parties within close proximity of each other;
- There is also provision to establish priority when there exist economic deposits of gold, PGMs or other minerals within sufficient proximity that recovery of the minerals is best carried out by a single mining operation; and
Finally, the PMRA provides for parties to be credited for the proceeds from the mining and sale of minerals (to which they are generally entitled) but where they are not the dominant mineral being the subject of mining activities. As noted previously, the PMRA has no application in respect of the area of the mining leases where the Sandiego and Onedin deposits are situated – AKN retains the full right to explore and develop all minerals (including gold and PGMs) within those mining leases.