Kincora Copper Advances 12-Project Portfolio Through Major Partnerships

• Kincora Copper has shifted to an asset-level funding model, partnering 5 of 12 projects
• Recent deals have unlocked up to $60M in partner funding, with $3-3.5M spent in 2024
• Kincora is focused on copper-gold discoveries in Australia's Macquarie Arc
• Management fees from partner spending help cover G&A and reduce shareholder dilution
• Next steps are reporting initial drill results and securing further asset-level deals

Junior mining companies face significant challenges in the current market environment. Weak retail investment appetite has made raising capital to fund exploration programs exceedingly difficult in recent years. Kincora Copper (TSXV:KCC) has adapted by pivoting to an asset-level funding model focused on copper-gold discovery. This shift has enabled Kincora to continue advancing its portfolio of 12 prospective projects without heavily diluting shareholders at the parent company level.

Background on Kincora Copper

Kincora Copper is an active project generator focused on making tier-one copper-gold discoveries. The company's key projects are located in the Macquarie Arc, Australia's foremost porphyry belt. Porphyry deposits are highly sought after by major miners as they can host very large, long-life, low-cost mines.

Kincora has assembled an experienced technical team with a track record of porphyry discoveries. John Holliday, a foremost expert on the Macquarie Arc, and Peter Leaman, who was involved in the Reko Diq discovery in Pakistan, lead Kincora's exploration efforts.

Pivoting to an Asset-Level Funding Model

In 2019-2020, Kincora made a strategic decision to focus on the Macquarie Arc in New South Wales, Australia. The company secured a district-scale land position and began systematically exploring its projects. Early drilling at the Trundle project returned encouraging results but did not significantly re-rate Kincora's share price.

Facing a difficult financing environment, Kincora shifted its funding model. The company divested non-core Mongolian assets, streamlined costs, and crucially, began pursuing asset-level funding partnerships.

Rather than dilute Kincora shareholders to raise risk capital, the company looked to bring in well-funded partners at the asset level. To enable these asset-level deals, Kincora first had to flip minority interests that existed on some projects up to the listed company level. With 100% ownership of its projects, Kincora was free to introduce new partners.

Unlocking Partner Funding

In the last 12-18 months, Kincora has executed five separate earn-in agreements with senior partners. These deals have unlocked up to $60 million in committed exploration spending across Kincora's portfolio. In 2024 alone, roughly $3-3.5 million worth of partner-funded drilling took place.

The earn-in model provides significant funding for exploration programs while minimizing dilution for Kincora shareholders. Partners can earn majority stakes in projects by sole-funding exploration over multiple years and stages. Kincora retains a minority interest, exposure to discovery upside, and typically receives cash payments to help fund overhead.

One notable deal is with senior gold miner AngloGold Ashanti on Kincora's Nyngen project. AngloGold can earn up to an 80% interest by spending $50 million over seven years, with a $2 million initial commitment.

For earlier-stage projects, bringing in partners allows Kincora to derisk and generate discoveries that would otherwise be very difficult to fund. On more advanced assets like Fairholme and Trundle, Kincora is working to secure larger-scale funding partnerships that reflect the value already added.

Interview with CEO Sam Spring

Creating Value for Shareholders

Exploration is inherently risky and requires a portfolio approach. The odds of any one project delivering a tier-one discovery are low, but the potential rewards are immense. By bringing in multiple partners to fund exploration across its portfolio, Kincora is playing the odds as intelligently as possible. Spring noted,

If we end up with one or two of those [projects] that end up going all the way through or to an advanced stage, that's how you create value for shareholders.

In the near term, initial results from ongoing partner-funded drilling programs could provide catalysts for Kincora's share price. Securing further asset-level deals, especially on more advanced projects, represents another major potential value driver. Funds from existing partnerships help cover G&A costs.

I'd like to think that in that next quarter six-month period, you'll see initial results from these funded programs, you'll see work programs for the next stage, and we'll see some bigger deals start coming through. Once we start hopefully re-rating from a $10 million market cap, then it creates more optionality.

The Investment Thesis for Kincora Copper:

• Exposure to 12 large-scale copper-gold porphyry projects in highly prospective districts
• Asset-level funding model minimizes shareholder dilution while maintaining growth potential
• $60 million in potential partner funding already secured, with more deals expected
• Experienced technical team with track record of tier-one copper-gold discoveries
• 7,000 meters of partner-funded drilling completed, with results pending in near term
• Potential for $5-10 million in partner-funded exploration in 2025
• Additional deals and larger drilling programs anticipated going forward
• Leverage to rising copper and gold prices driven by electrification and green economy transition
• Compelling valuation with significant upside potential as projects are advanced

Macro Thematic Analysis:

Major mining companies have focused on acquiring producing assets in recent years to bolster reserves and show growth. However, competition for a limited number of high-quality development assets has increased prices, making deals less accretive.

At the same time, many major miners downsized greenfield exploration budgets in the last cycle, leaving their long-term project pipelines relatively bare. Building new mines is also becoming increasingly time-consuming and challenging due to rising lead times, permitting hurdles and ESG considerations.

This is driving a resurgence in funding for junior explorers as the majors seek to reignite their project pipelines. Junior companies are more nimble and better equipped to make early-stage discoveries. As CEO Spring summarized:

What you're increasingly seeing is relatively generous deals where those majors are willing to give the junior quite an attractive scenario and actually fund that risk of making a discovery and getting these management fees or placements at premiums to try and encourage that. Because if you find a tier-one asset, and obviously the odds are never in your favor, but if you do, everyone's going to do really well out of it. And there's the realization that the juniors are better at that than the big end of town.

Key Macro Insights:

• Major miners need to replenish project pipelines but face headwinds to organic exploration
• Juniors are better suited to early-stage discovery and can provide leveraged upside exposure
• Assets in a stable jurisdiction like Australia are particularly sought after

This macro theme, if it continues to play out, provides a strong tailwind for prospect generators like Kincora Copper that control prospective ground and are seeking partnerships with major miners.