AuKing Mining Limited Prospectus

5.3 Specific risks to an investment in the Company (a) Completion Risk The KP Transaction is subject to the KP Transaction Conditions as summarised in Section 4.4 of this Prospectus. These include a condition that all necessary regulatory approvals pursuant to the Listing Rules are met. These approvals are discussed in further detail below in Sections 3.8 and 3.9. If these conditions are not satisfied or waived by the relevant due date, the KP Transaction may not proceed, in which case the Company will need to evaluate its future strategy. (b) Re-quotation of shares on ASX The KP Transaction constitutes a significant change in the nature and scale of the Company’s activities and the Company needs to comply with Chapters 1 and 2 of the Listing Rules as if it were seeking admission to the Official List. On 22 September 2020, the Company sought in-principle advice from ASX as to the suitability of the Company for re-admission to the official list of ASX if it proceeds with the Koongie Park Earn-In and the IP Services Agreement. The Company believes that there is no reason that would cause AKN not to have a structure and operations suitable for a listed entity for the purposes of Listing Rule 1.1 condition 1 or that would cause ASX to exercise its discretion to refuse re-admission to the official list under Listing Rule 1.19. Notwithstanding this, the Company notes that ASX has ultimate discretion under Listing Rules 1.19 and 2.9 to decline the Company’s application for re-admission to the Official List, without giving any reasons. While the Company considers that it can satisfy ASX’s requirements for quotation and re-admission to the Official List, there is the risk that ASX will exercise its discretion to decline the Company’s application for re-admission to the Official List. There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation of its Shares and the Offer Options on the ASX, which would result in Applicants funds being returned, and the KP Transaction not completing. Should this occur, the Shares will not be able to be traded on the ASX until such time as those requirements can be met, if at all. It is a risk for Existing Shareholders who may be prevented from trading their existing shares should the Company be suspended until such time as it does re-comply with the Listing Rules. If the Company has not re-complied with Chapters 1 and 2 of the Listing Rules and obtained approval for its securities to be re-admitted to Official Quotation before 30 September 2021, the Company expects that ASX will remove the Company from the Official List. (c) Dilution Risk The Company currently has 932,584,461 Shares on issue. In accordance with the proposed consolidation of the Company’s existing Shares (on a 200:1 basis), the total number of existing Shares will reduce to 4,662,923. In addition, subject to the passing of the Approval Resolutions and the successful Public Offer, the Company proposes to issue: 1. 3,135,620 Shares to Existing Directors and AKN employees in lieu of unpaid directors’ fees and salaries; 2. 7,500,000 Shares to JCHX in satisfaction of the JCHX Loan; 3. 3,553,333 Shares upon conversion of the Long-Term Convertible Notes; 4. 6,250,000 Shares upon conversion of the Short-Term Convertible Notes; 5. 187,500 Shares to the Lead Manager as part of the Lead Manager’s remuneration (see section 12.4 for more details about the Lead Manager’s remuneration); and 6. a minimum 30,000,000 Offer Shares to raise $6,000,000 under the Public Offer, with provision to accept oversubscriptions for a further 5,000,000 Offer Shares. Upon establishment of the Joint Venture and assuming the Public Offer is subscribed to the minimum $6,000,000 subscription: 1. the the Shares on issue at the date of this Prospectus (but excluding any Offer Shares issued under the Public Offer) will comprise approximately 8.43% of the Company’s issued share capital; and 2. the Offer Shares issued under this Prospectus will represent approximately 54.26% of the Company’s issued share capital. There is also a risk that the interests of Shareholders will be further diluted as a result of future capital raisings required in order to fund future development activities of the Company. AuKing Mining Limited | PROSPECTUS 59