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Asiamet Resources: THE INVESTMENT CASE

New boss of Indonesia-focused Asiamet Resources keen to build on the momentum already generated by 'amazing' team

Peter Bird has a clear idea of his task: to get the BKM deposit in production as quickly and seamlessly as possible
New boss of Indonesia-focused Asiamet Resources keen to build on the momentum already generated by 'amazing' team
INVESTMENT OVERVIEW: ARS The Big Picture
The latest drilling phase is coming to a conclusion

Indonesia-focused Asiamet Resources PLC's (LON:ARS, CVE:ARS) new chief executive Peter Bird brings with him bags of experience and a desire to build on the momentum already generated by the company’s small but motivated team.

“They have done an amazing job to get this project right up to feasibility stage with just a handful of people,” he says of the work carried out on the 65mln-tonne BKM copper deposit on the island of Kalimantan.

The full bankable feasibility study (BFS) should be completed by the year-end; metallurgical work is ongoing and resource drilling will be concluded soon.

Putting together the BFS, raising the finance and building a mine requires an odd assortment of skills – project management, technical know-how and capital and debt markets experience are just three.

Bird, a veteran of the sector who started his career with Western Mining in Australia, has that eclectic mix: he’s held roles with gold giants Newcrest, Newmont and Normandy Mining.

He was also Australia’s top rated gold analyst with Merrill Lynch and worked in investor relations; in other words he has a holistic view of the world of mining.

And just to add to the mix he has on the ground experience of working in Indonesia.

“Wherever you go in the world they have their own unique challenges,” Bird observes. “It is never easy, but I’ve found nothing is insurmountable.”

No small task

The task Bird has taken on is no small one – it is to finance and develop BKM into a 25,000-tonne-a-year cathode copper operation.

A preliminary economic assessment (PEA) estimates the capital cost of such an undertaking, which would include a solvent extraction and electro-winning plant, to be an eminently ‘fundable’ US$164mln. 

Meanwhile, C1 cash costs of US$1.28 per pound to produce from this near-surface discovery would make BKM one of the most economic pits in the world.

In mining, as in life in general, timing is everything and the development of BKM comes at a time when the copper market is headed into a period of deficit.

So, many commentators, including the mining investment guru Rick Rule, are expecting the market to go stratospheric over the next 12-18 months.

The cyclical deficit is exacerbated by a lack of new supply – in other words there are very few projects such as BKM coming on stream to fill the gap.

Perfect storm 

While a negative for the consumers of the red metal, it should provide long-term support for Asiamet, which is also sitting on the Beutong, a copper-gold deposit with the potential to churn out 50-70,000 tonnes a year.

This is a huge potential kicker. But new CEO Bird is clear: the first task is to get BKM financed and built. And in that respect “this is not my first rodeo”, he adds.

In fact the Asiamet team is full of experienced mine developers, including chairman Tony Manini.

He was one of the founders Oxiana Ltd, which from a modest start went on to agree a multi-billion dollar merger with Zinifex to create the business now known as Oz Minerals. Manini’s private incubator also spun off Nexgen Energy onto the Toronto exchange, which is now valued at C$1bn.

Track record 

He has been instrumental in getting the wheels rolling at Asiamet And has done so on a shoestring.

So, will Manini be taking a backseat now Bird is on board? “Not a bit of it, he is executive chairman,” says the chief executive. “He’s not about to walk away from this.”

The valuations of Central Asia Metals and Atalaya Mining (US$334mln and US$204mln respectively) reveal how just how highly prized producing copper miners are by investors here on London’s AIM market. Asiamet is worth US$41mln.

To put that in perspective, CAML’s production last year was 14,000 tonnes (BKM is expected to be 25,000). CAML’s big advantage is its best in class 43 cents per pound C1 costs.

Another way of looking at this is from the incremental uplift to be gained from developing BKM.

Significant potential 

Undeveloped copper projects of decent scale tend to trade at 4 cents per pound of copper in the ground, while a fully-developed and producing mine is worth 18-25 cents.

If we accept the market has done its job by correctly valuing Asiamet (and that’s not given), then in two years’ time BKM could be worth US$188mln-$250mln.

If you toss in the KSK Project (host to BKM) and world-class Beutong deposit, you understand why some observers believe Asiamet has the assets to build a US$1bn business.

Bird won’t be drawn on what other people think; he is laser focused on the job in hand: “We aren’t fluffing around here. We are a team of mine builders and our path is pretty clear.”   

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