Koongie Park project secures funding with new JV between AuKing Mining and Cobalt Blue

AuKing Mining Limited has announced a major joint venture (JV) agreement with Cobalt Blue Holdings Limited to develop the Koongie Park project, a key copper zinc mining asset in Western Australia. This partnership marks a crucial step in advancing the project toward feasibility and potential commercial production. The agreement allows Cobalt Blue to earn up to a 75% interest in the project through staged financial commitments and operational milestones, while AuKing Mining retains a significant stake and shifts focus to other strategic resource projects.

The deal underscores the growing importance of copper zinc mining in Australia, with Koongie Park holding strong potential for future production. Cobalt Blue’s extensive metallurgical expertise is expected to play a vital role in unlocking the full value of the polymetallic deposits.

What Are the Key Terms of the Joint Venture Agreement?

The agreement follows a structured earn-in model, providing Cobalt Blue with a clear pathway to increasing its stake in the Koongie Park project while ensuring consistent investment in exploration and development. The arrangement unfolds in two phases:

Initially, Cobalt Blue secures a 51% beneficial interest by issuing AUD 200,000 worth of its ASX-listed shares to AuKing Mining. Additionally, it must meet a minimum project expenditure of AUD 500,000 by June 2027 to maintain its holding. If Cobalt Blue does not fulfill this requirement, AuKing has the right to repurchase 2% of the project, restoring its majority ownership.

In the second phase, Cobalt Blue has the option to increase its stake to 75% by investing an additional AUD 1.5 million by June 2028. Should the company fail to meet this target, AuKing retains the right to repurchase another 2%, maintaining a 51% share in the project. If AuKing’s interest falls below 10%, its stake will convert into a 1% net smelter royalty (NSR), ensuring future financial participation.

Why Is the Koongie Park Project Considered a Valuable Copper Zinc Mining Asset?

The Koongie Park project has been a focus of extensive exploration by AuKing Mining over the past three years, with significant drilling at the Onedin, Sandiego, and Emull deposits. These efforts have resulted in upgraded resource estimates and a deeper understanding of the site’s mineralization potential.

According to a scoping study released in June 2023, the project has an estimated 11-year mine life and requires an initial capital investment of AUD 134 million. The study projected a pre-tax net present value (NPV) of AUD 177 million, assuming a long-term copper price of USD 3.90 per pound. Additionally, the project boasts a robust internal rate of return (IRR) of 39.7%, with an estimated lifetime EBITDA of AUD 443.8 million and an average operating cash flow of AUD 40.3 million per year.

Despite these strong financial projections, the project’s success hinges on addressing metallurgical challenges associated with processing its polymetallic ore. This is where Cobalt Blue’s expertise in extraction technologies is expected to make a significant impact.

How Will Cobalt Blue’s Expertise Benefit the Project?

Cobalt Blue Holdings brings specialized knowledge in mineral processing and copper zinc mining technology, which could be instrumental in improving resource recovery rates at Koongie Park. Metallurgical efficiency has been identified as a key factor in determining the project’s long-term viability. The previous scoping study highlighted that while the resource base is promising, overcoming metallurgical challenges is crucial for advancing toward feasibility and eventual production.

AuKing Mining’s Managing Director, Paul Williams, emphasized that this joint venture agreement presents an opportunity to introduce additional funding and technical know-how into the project. He noted that while resource expansion is always beneficial, ensuring the economic feasibility of the existing deposits through optimized metallurgy is the next critical step.

By leveraging Cobalt Blue’s processing expertise, the partnership aims to improve the project’s economic viability, streamline operational efficiencies, and reduce overall production costs.

What Are the Next Steps for the Koongie Park Project?

With the joint venture agreement now in place, Cobalt Blue will focus on fulfilling its initial investment commitments while conducting further metallurgical testing and feasibility studies. The goal is to refine processing methods, optimize ore recovery, and establish a clear pathway toward commercial production.

For AuKing Mining, the partnership enables a strategic shift, allowing the company to direct its financial and operational resources toward other high-priority projects, including the Cloncurry gold and Mkuju uranium projects. Meanwhile, Koongie Park remains a core asset in its portfolio, with AuKing maintaining a minimum 25% ownership stake even if Cobalt Blue exercises its full earn-in rights.

This partnership is expected to accelerate the development timeline, ensuring that Koongie Park progresses toward a definitive feasibility study and, ultimately, a production-ready status. If milestones are met as planned, the project could become a major player in Australia’s copper zinc mining sector.

How Does This Joint Venture Impact the Broader Mining Industry?

The collaboration between AuKing Mining and Cobalt Blue reflects a growing trend in the resource sector, where joint venture agreements provide mid-tier miners with access to capital and technical expertise. For Cobalt Blue, the deal represents an opportunity to expand its presence in the copper zinc mining industry while diversifying its investment portfolio.

This agreement also highlights the increasing importance of securing sustainable mineral supply chains, as demand for copper and zinc continues to rise due to their critical role in renewable energy technologies, electric vehicle production, and infrastructure development.

If successful, the Koongie Park project could not only generate strong returns for both companies but also contribute to Australia’s position as a key supplier of essential industrial metals.