AuKing Mining Limited Prospectus

(d) Liquidity Risk Subject to the Approval Resolutions being passed, the Company proposes to issue the Shares to convert existing loans and convertible notes. The Directors expect that ASX will treat some of these securities as Restricted Securities in accordance with Chapter 9 of the ASX Listing Rules. However, submissions will be made to the ASX to apply for cash formula relief in respect of some these Shares. Further details in this regard are set out in section 13.7. In addition, the Company proposes to issue Shares to existing AKN directors and employees of AKN and to JCHX to repay moneys owed by the Company. The Directors and JCHX have agreed to enter voluntary escrow arrangements with the Company pursuant to which these Shares will be restricted from trading for a period of 24 months from their issue. If a large number of the Company’s securities are classified as Restricted Securities, this would give rise to an increased liquidity risk as a large portion of issued capital may not be able to be traded freely for a period of time. The Shares will only be listed on the Official List and presently will not be listed for trading on any other securities exchange in Australia or elsewhere. As such, there can be no guarantee that an active market will develop or continue, or that the market price of the Shares will increase. If a market does not develop or is not sustained, it may be difficult for investors to sell their Shares. If illiquidity arises, there is a real risk that Shareholders will be unable to realise their investments in the Company. In the event that ASX imposes mandatory escrow on the Company’s securities, a high proportion of Shares will be subject to escrow following completion of the Public Offer. This would reduce liquidity in the market for the Shares and may affect the ability of a Shareholder to sell some or all of its Shares due to the effect reduced liquidity may have on demand. An illiquid market for the Shares is likely to have an adverse impact on the prices of the Shares. Following the end of any escrow periods, a significant number of Shares will become tradable on ASX. This may result in an increase in the number of Shares being offered for sale on market which may in turn put downward pressure on the prices of the Shares. (e) Earn-In Risk Under the terms of the Koongie Park Earn-in, the Company will have the right to acquire up to a 75% interest in the Koongie Park Project. The Company’s ability to achieve its objectives is dependent on it and other parties complying with their obligations under the Koongie Park Earn-in. Any failure to comply with these obligations may result in the Company not obtaining its interests in the Koongie Park Project and being unable to achieve its commercial objectives, which may have a material adverse effect on the Company’s operations and the performance and value of the Shares. The Koongie Park Earn-in is subject to the KP Transaction Conditions being satisfied by 31 March 2021. AAR may agree to extend this date by two further 14 day periods at its discretion and, beyond that, by agreement in writing. There is no guarantee that AAR will agree to these periods of extension and if AAR does not agree and the KP Transaction Conditions have not been satisfied by 31 March 2021 (or any later date that AAR do agree to), the Koongie Park Earn-in will not proceed. Further, as is the case with all joint venture agreements, there is a risk that joint venture partners may default in their joint venture obligations or not act in the best interests of the joint venture, which in either case would likely have an adverse effect on the interests and prospects of the Company. While the Company will earn an initial interest of 25% in the Koongie Park Exploration Tenements, if the Company does not comply with its expenditure commitments under the Koongie Park Earn-in, this interest will be relinquished. (f) Access to Accudo’s AmmLeach® Rights The IP Services Agreement between the Company and Accudo (see Section 12.3) provides for the Company to have access to Accudo’s rights to the AmmLeach® processing technology during the course of the conduct of the metallurgical testwork activities. In the event the testwork is successful and the Company seeks to proceed with further development at Koongie Park (using the AmmLeach® process), a further commercial agreement will need to be negotiated with Accudo. The Company believes that the development of a mining operation at Koongie Park (using the AmmLeach® processing technology) will be consistent with Accudo’s commercial objectives. However, there remains a risk that the Company and Accudo may not be able to reach agreement on suitable commercial terms and in that case, the Company will not have access to the AmmLeach® processing technology. 5. Investment Risks continued 60