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AuKing Mining Limited
(Formerly known as Chinalco Yunnan Copper Resources Ltd)

BOARD DECIDES TO PROCEED WITH ACQUISITION OF MEXICAN GOLD/SILVER PROJECT INTEREST

Summary:

The Board of AuKing Mining Limited (ASX:AKN) continues to focus on transforming the Company into a substantial mid-tier mining group, with a primary focus on acquiring and developing near-term copper, gold and other base metal production activities (both locally and overseas).

Introduction

On 27 April 2017, the Company announced that it had entered into a binding term sheet with Bonito Minerals Pty Ltd ("Bonito"), the holder of an option to purchase five (5) mining concessions that comprise the La Dura project in Mexico.

The La Dura project is located approximately 275kms NW of the city of Durango, Durango State and locally about 2.3km E of the village of El Durazno. Average altitude of the project area is 2,200m above sea level. The project sits within the famous Sierra Madre Occidental - a belt that has historically produced approximately 40million ounces of gold and 2billion ounces of silver over the last 400 years. The significant resources and production activities from the Sierra Madre Occidental help Mexico to become the largest producer of silver in the world, with 189.5Moz of silver produced in 2015 (20% of world production).

After conducting a due diligence review (including a recent site visit to La Dura by AKN representatives), the Board of AKN has decided to proceed with the proposed Bonito acquisition. Details of the acquisition are set out later in this release.

La Dura - A Summary

(a)Geology
The La Dura project is located in an area consisting of Cretaceous to Quaternary plutonic and volcanic rocks which hosts many epithermal Au-Ag vein deposits. Guanacevi for example (100km north-east of La Dura), is a low sulphidation epithermal vein deposit hosted within a fault structure. The vein structure at Guanacevi has been traced for 5km along the trend and averages about 3m in width. Mineralisation in the system (vein structure) is not continuous but occurs in steeply-dipping ore shoots up to 200m in strike length.
(b)Previous Mining Activities
Mining activities have been carried out at the La Dura site intermittently since the 1920's. In 1979 a beneficiation plant was installed at site with the processing capacity of 60 tonnes per day and this plant operated reasonably consistently until 1999. The operation resumed in 2009 but again ceased due to low prevailing metal prices.

The current owner has reported approximately 400,000 tonnes of ore has been mined from La Dura during this period - producing 120,000oz Au and 1.2Moz Ag. A concentrate has been sold to the nearby smelter operated by Industrias Peñoles at Torreón, some 250 kms away. The current owner has advised the concentrate was considered to be very clean, with the smelter normally paying up to 95% of the Au/Ag value.

These previous mining activities have identified a series of highly mineralised parallel systems that point to a potentially larger target that is open at depth and width. Further, the vein system can be seen (from surface outcropping) to continue along a SE-NW trend for 4km. Bonito is unaware of any other drilling or exploration activities having been conducted at La Dura.
(c)Bonito Option
Bonito has entered into an Option to Purchase agreement with the holder of the La Dura mining concessions. The option is for a four (4) year period during which Bonito can purchase the concessions for USD4M. In addition, the current holders will be entitled to a 2% net smelter royalty, which can also be bought out by Bonito during the option period for USD3M.

During the course of the La Dura option period, Bonito is obliged to make 6 monthly payments of USD50k in order maintain the option in good standing.

For more information, please visit http://doc.irasia.com/listco/au/auking/press/p170601.pdf.


Source: AuKing Mining Limited
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