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Early Christmas: Ark Mines (ASX:AHK) share price makes a comeback

Christmas has come early!
The post Early Christmas: Ark Mines (ASX:AHK) share price makes a comeback appeared first on The Motley Fool Australia. –

Shares in Ark Mines Ltd (ASX: AHK) have made a comeback on the ASX after completing its re-compliance with Chapters 1 and 2 of the ASX listing rules.

There’s a fairly hefty backlog of history to work through here, so let’s just get straight into it.

What’s the situation here?

To understand what’s going on here, it’s important to understand the background information to what’s led us to this point.

On 30 July 2019, Ark Mines announced that it had agreed “in-principle” to the terms of a joint venture (JV) with Trendsheer Holdings Pty Ltd and ICA Mining Services Pty Ltd.

The agreement was to mine and produce gold ore from its NT tenements and gold rights, for treatment in an environmentally friendly gold processing hub to be established by the JV.

At the time, Trednsheer had already sorted various mining and exploration licenses alongside associated infrastructure in the area whilst ICA had secured the NT rights to the Thiosulphate gold extraction process from the CSIRO. ICA was “well advanced in raising the necessary capital for this purpose”.

Regarding the “in-principle” terms of the JV, this contemplated the establishment of a JV in the NT that would have had exclusive access to explore, mine and process the ore mined and sell the gold produced.

Ark would have had board representation on the JV company and exclusive roles would have been entitled to up to 30% of JV distributors, Ark says.

Once the gold processing plant was completed, Ark expected to mine and process up to 150,000 tonnes of Glencore ore in the first 12 months of operations, then mine up to 500,000 tonnes of Mr Porter ore in the first year-and-a-half of operations.

A few years prior to the formation of this JV however, back in 2016, the company had entered into a “gold loan facility” with Hong Kong based Chan Investments Ltd to fund its Mr Porter gold mining prospect, plus any surrounding exploration.

The facility was made in 3 tranches and totalled US$6 million after each waterfall was completed. Curiously, the liability was actually counted as a derivative instrument. This came as it was repayable by an agreed amount of gold bullion but also allowed for a cash payment to settle the last 2 tranches, thus providing an embedded option into the liability.

Ark says that the repayment of the Chan loan facility was expected to be made from the proceeds of gold sales completed by the JV.

However, on 25 September 2019, voluntary administrators from KordaMentha were appointed to the company by Chan. The move came after Ark’s board had prepared financial statements that cast a shadow of doubt on its ability to continue as a going concern.

In other words, Chan wanted to ensure it got its money back and didn’t want to let Ark off the hook in doing so.

After administrators were appointed, Ark’s board had its powers suspended and the administrators then assumed control of the company’s affairs and assets. Ark’s share price quotation was also suspended as a result and has been in limbo right up until today.

A reconvened creditors meeting was held on 6 January 2020, whereby the administrators announced they had come to negotiated terms to sell off some of Ark’s assets, with proceeds going towards repayment of Chan’s secured debt.

As such the company was then recapitalised under a deed of company arrangement (DOCA) to which the creditors voted in favour to accept the DOCA.

As of July 2021, the administrators informed that they had in effect completed the DOCA the month prior and that managerial control had been transferred back to the board of directors.

Where are we at now?

Since regaining managerial control back in July, the company’s board has been taking the necessary steps to remove the suspension of trading on Ark’s shares on the ASX.

Ark released a new prospectus in September just prior to the re-listing of its equity and the offering of its shares in its equity to the public once more.

Within the prospectus was noted several share allotments to various parties, including those DOCA contributors and other creditors.

Yesterday, the ASX noted AHK raised $4.7 million pursuant to the offer under its prospectus dated 27 September 2021 as varied by supplementary prospectuses dated 11 November 2021 and 9 December 2021.

It raised this sum by the issue of 23,513,500 fully paid ordinary shares at an issue price of 20 cents per share.

Now on the eve of Christmas, the ASX advised today that suspension of trading in Ark’ shares was lifted today after the company met all its re-compliance measures.

The company also advised today that it will commence its maiden drilling programs in the first quarter of 2022, focusing on its copper, nickel and mining tenements.

Some might say Christmas has come a few hours early for this mining company and its shareholders, which is now set to offer investors another route of exposure to gold mining in Australia.

The post Early Christmas: Ark Mines (ASX:AHK) share price makes a comeback appeared first on The Motley Fool Australia.

Should you invest $1,000 in Ark Mines right now?

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Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Ark Mines wasn’t one of them.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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