King River Resources’ Security Purchase Plan Centred on Advancing Projects’ Exploration Ventures

Summary

• KRR announced a Security Purchase Plan (SPP) for existing shareholders at an issue price of $0.033.
• Proceeds from the SPP offer would be directed towards ongoing development and exploration of the Company’s projects.
• KRR to seek shareholder approval due to inclusion of options in the SPP offer.
• Varying aspects of Pre-feasibility Study on flagship Speewah Specialty Metals (SSM) Project are progressing well.

Australian exploration company, King River Resources Limited (ASX:KRR), which seems to be sailing smoothly with significant project developments, is in the limelight for its new Security Purchase Plan (SPP). The offer allows the Company’s existing shareholders to be able to each purchase additional shares in KRR worth up to $30,000. KRR plans on employing the funds raised towards ongoing development and exploration of its projects and general working capital.

KRR has more than 4,600 shareholders, and in the past few months, the Company has garnered attention as it progressed swiftly and strategically in the face of detrimental COVID-19 pandemic. The Company demonstrated developments at its project portfolio, including flagship Speewah Specialty Metals (SSM) Project, Mt Remarkable Gold Project and Treasure Creek Gold-Copper Project.

In a notable development at its SSM project, as part of the pre-feasibility study (PFS), KRR has achieved production of greater than 99.99% High Purity Alumina (HPA). At the same time, the Company continues to advance concerning varying PFS aspects. The focus remains on scaling the SSM project for the HPA production with Vanadium (V₂O₅), Titanium (TiO₂) and Iron (Fe oxide) as prospective co-products to be introduced at a later stage but not as part of the PFS. Meanwhile, the Mt Remarkable Project fortifies its position in the yellow-metal space.

With this backdrop, let us, deep dive, into essential details of the offer and look at the ongoing exploratory direction of the Company.

Lens Through Security Purchase Plan

King River Resources’ security purchase plan offering provides existing shareholders with an opportunity to increase their shareholding. Under the offer, issue price of each share will be $0.033, which represents a 20% discount to the Volume Weighted Average Price (VWAP) of KRR’s ASX-traded shares over the last five days and a discount of 18.5% on the closing price on 22 June 2020.

Under the SPP offer, one free attaching option would be included for every three shares issued. Each option will have an expiry date of 31 July 2022 and an exercise price of $0.06. The shareholders, who have a registered Australian or New Zealand address, will be entitled to apply under the SPP, which has 22 June 2020 as the record date for shareholder participation.

The relevant ASIC Corporations Instrument relief (from the disclosure and fundraising provisions in Chapter 6D of the Corporations Act) and Listing Rule security purchase plan exceptions for the current SPP offer cannot be relied upon, as the SPP includes the issue of options. The SPP offer would, therefore, be made under a prospectus and shareholder approval would be required to the issue of shares and options. The Company plans on calling a meeting to seek the shareholders’ approval as soon as possible.

The SPP offer will be conducted in accordance with the same terms as that of an ordinarily undertaken security purchase plan under ASIC Corporations Instrument relief. The SPP offer is currently proposed to open on 7 July 2020 and close on 31 July 2020.

The maximum number of securities under the SPP offer stands at ~374.6 million shares and up to 124.9 million options. Directors hold the right in their absolute discretion for scaling back any applications.

The ordinary shareholders will be issued shares and options under the SPP at the record date on a non-renounceable basis.

Recent Success, Road Ahead for KRR’s Exploration Ventures

As part of its Speewah PFS, King River Resources has made notable developments and continues to march forward, following the production of >4N (99.99% Al₂O₃) HPA by new refining process developed by the Company’s metallurgical consultants TSW Analytical Pty Ltd (TSW).

ALSO READ: King River Resources: Grasping Opportunities in High Purity Alumina Market

The Company is carrying out PFS on its wholly owned Speewah Project, wherein notable metallurgical testworks and other endeavours have resulted in significant developments. Varying aspects of PFS related progress includes calcination of the HPA precursor at 1200°C, achievement of stage 2 purification precipitation recovery of 81.5% and identification of some sources of reagent and equipment contamination.

KRR plans on releasing PFS following the completion of remaining outcomes, as the Company awaits some hydrometallurgical testwork and studies, including

• Repetition of the previously reported 4N HPA product result for producing a larger sample for verification analyses
• Independent umpire assays of the final >99.99% Al₂O₃ result are required
• Confirmation of HPA being 100% alpha-alumina by an X-Ray Diffraction (XRD) analysis
• Final model validation and review of the plant and infrastructure design and costings, which Como Engineers has largely completed

Stock Performance - With a market capitalisation of $47.45 million, KRR stock settled at $0.031 per share on 23 June 2020. The stock has delivered a three-month return of 111.11%.

(All financial information pertains to Australian currency, unless stated otherwise)