Kingston Resources Plans $8.47 Million Rights Issue at $0.035 per Share

Capital Raising to Support Strategic Pivot at Mineral Hill

Kingston Resources Limited (ASX:KSN) has launched a fully underwritten non-renounceable rights issue to raise approximately AUD 8.47 million by issuing up to 241.9 million new shares at an issue price of $0.035 each. The offer represents a 12.5% discount to the closing share price prior to the announcement and follows a $4.4 million placement completed on 25 June 2026. Together with cash reserves and a $10 million deferred payment from the Misima Gold Project sale, the company expects to have $32.3 million available to fund an ambitious drilling and expansion program at its Mineral Hill polymetallic mine.

This capital raise comes on the back of a significant operational setback, with the recent closure of the Pearse South open pit due to safety concerns from ramp tension cracks. This incident has resulted in an estimated $39 million gross revenue reduction from June to September 2026 and has forced Kingston to pivot its strategy towards underground exploration and resource expansion.

Funding a 25,000m Drilling Campaign and Plant Expansion

The proceeds from the rights issue, combined with the placement and existing funds, will primarily finance a 25,000-metre drilling program at Mineral Hill. This program includes extensional, infill, step-out, and near-mine exploration aimed at upgrading and expanding the existing Mineral Resource and Ore Reserve base to underpin a longer mine life and a larger production platform. The company also plans to advance plant expansion studies to potentially double the current 350ktpa processing capacity to 700ktpa, leveraging key permits already in place.

Kingston’s Mineral Hill operation features a fully permitted polymetallic processing plant with carbon-in-leach and flotation circuits, uniquely positioned in the South Cobar Basin. Recent drilling has bolstered the Southern Ore Zone (SOZ) Mineral Resource by 50%, lifting the total Mineral Hill resource to 12.1 million tonnes grading 0.85g/t gold, 0.90% copper, 1.23% lead, 0.93% zinc, and 23g/t silver, containing over 332,000 ounces of gold equivalent metals. The company is targeting further resource growth, including at the Jack’s Hut underground deposit, which historically produced high-grade copper and gold.

Underwriting and Shareholder Participation Details

The entitlement offer is fully underwritten by Argonaut Corporate Finance Limited, with Farjoy Pty Ltd, the company’s largest shareholder, sub-underwriting up to $4.3 million. Farjoy participated in the placement and has committed to take up its full entitlement under the rights issue. Some directors have also indicated intentions to participate, while others have not yet decided.

Eligible shareholders can subscribe for 1 new share for every 4 shares held on the record date of 30 June 2026, with the option to apply for additional Top-Up Shares up to 100% of their entitlement. The offer excludes shareholders with registered addresses outside Australia, New Zealand, Hong Kong, Singapore, and the European Union (excluding Austria). Shares not taken up by eligible shareholders will form the Shortfall and be allocated according to the company’s allocation policy, including to institutional investors and sub-underwriters.

Dilution Risks and Potential Changes in Control

The combined effect of the placement and entitlement offer could dilute existing shareholders by approximately 30.4% if they do not participate fully. The largest shareholder, Farjoy, may increase its stake to up to 30.1% post capital raising, including its sub-underwriting commitment. The underwriting arrangements and allocation policies are designed to prevent any single party, other than Farjoy, from increasing voting power above 20%. The company has appointed a nominee to sell shares for ineligible shareholders to comply with regulatory requirements.

Risks and Operational Challenges Ahead

Kingston highlights several risks in the prospectus, including exploration uncertainties, operational hazards, commodity price volatility, financing risks, and regulatory challenges. The closure of the Pearse South pit has triggered a $5.18 million impairment recognized in the pro forma balance sheet, with further impairments possible after year-end assessments. The company’s pivot to underground mining and resource expansion is subject to drilling success and market conditions. Financing risks include the possibility of underwriting termination if material adverse events occur before settlement. The company also faces dilution risk for non-participating shareholders and potential impacts from international conflicts and economic conditions.

Despite these challenges, Kingston’s strengthened cash position and focused growth strategy aim to unlock the full potential of Mineral Hill, supported by a robust infrastructure base and key permits for expansion. The market will be watching closely as the company undertakes its drilling program and plant studies, with results expected to shape future operational and financial outcomes.