Asiamet Resources: Strategic Partners Circling Copper Project in Indonesia

• AsiaMet Resources is developing a copper portfolio in Indonesia, with one 25,000 tonne copper project nearing production and a larger 500+ million ton project in exploration.
• COVID-19 has impacted operations and timelines, but work continues towards key milestones like finalizing the process flowsheet and drilling to extend mine life.
• AsiaMet is in talks with strategic investors for partnership and project financing, with 5 confidentiality agreements signed already including prominent Indonesian groups. The goal is to finance 60% of capex through debt.
• The first project could be in production within 24 months, generating estimated free cash flow of $100-150 million annually at current copper prices. This will help fund investment in the second larger project.
• The company is targeting strategic partners who bring strong in-country experience and relationships, with a focus on maximizing long-term shareholder value over quick returns. The CEO aims to avoid large dilutive equity raises.

About Asiamet Resources

Asiamet Resources is a junior mining company developing a portfolio of copper assets in Indonesia. The company’s most advanced project is the BKM copper project, which has a completed feasibility study for a 25,000 tonne copper mine and is moving towards production. Asiamet also has a large growth project called Beutong, which contains over 500 million tons of copper and gold resources.

Interview with Tony Manini, Director & Exec. Chairman of Asiamet Resources

Heading into Production at BKM

The BKM copper project has completed a full feasibility study and is nearing a construction decision. The project is estimated to require around $250 million in capital expenditures based on the 2019 feasibility study. Asiamet is targeting 60% project debt financing, which would leave an equity requirement of around $100 million.

Given the company's modest $50-55 million market capitalization, Asiamet does not want to finance the equity requirement by heavily diluting current shareholders. Instead, the company is in discussions with potential strategic partners to take an equity stake in the BKM project level, rather than at the corporate level. This would significantly reduce the equity Asiamet needs to fund.

Strategic Partner Discussions Advancing

Asiamet has signed confidentiality agreements with five potential strategic partners interested in the BKM project. Two groups are progressing most rapidly in their due diligence. Both are considered blue chip Indonesian companies with strong balance sheets and extensive in-country operating experience.

One group is the Indonesian mining contractor PT Delta Dunia Makmur Tbk (IDX: DOID), also known as PT Boomer. Boomer recently became a 15% shareholder in Asiamet. The other party is an unnamed leading Indonesian natural resources company that Asiamet's management knows well from past dealings.

Asiamet is aiming to finalize a partnership deal where the strategic partner contributes the majority of the equity requirement, estimated around $100 million, in return for a roughly 50% stake in the BKM project. This would significantly reduce the equity Asiamet needs to fund, while bringing on an experienced Indonesian partner for construction and operations.

Drilling Demonstrating Resource Upside

In tandem with strategic partner discussions, Asiamet has commenced a modest 3,000 meter drilling program at BKM. The company raised A$15 million in January 2022 to fund work including drilling, engineering studies and permitting.

The drilling aims to demonstrate resource upside and extensions at BKM beyond the initial 11 year mine life contemplated in the feasibility study. Proving additional reserves and mine life has strategic value in financing negotiations, by demonstrating further cash flow and reducing project risk.

Asiamet is also using drilling results and engineering studies to optimize process design before locking in the project layout. This will allow flexibility to adjust plans up until receipt of forestry permitting conditional approval.

Advancing Timeline at BKM

Asiamet is targeting a 24 month construction period, meaning first production could commence in late 2023. Ramp up to full 25,000 tonne per annum copper production would follow. At $3.25/lb copper as per the feasibility and today’s $3.70/lb price, BKM could generate $100-150 million in annual free cash flows for Asiamet’s 50% share.

Cash flows from BKM will help fund Asiamet’s second major project, the Beutong copper-gold development. Beutong will require a large capital investment, estimated over $1 billion. Asiamet plans to fund its share of Beutong development costs from BKM cash flows and bring in a strategic partner to finance and operate the larger project.

Conclusion

Asiamet Resources provides exposure to advanced copper development projects in Indonesia, benefitting from strong industry fundamentals. Strategic partnering arrangements expected in coming months could fully fund construction of the BKM copper project and accelerate Asiamet’s production timeline.

Once in production at BKM, Asiamet will be generating strong cash flows to fund growth and exploration upside at its portfolio of copper assets. Investors with a medium term time horizon could be rewarded as Asiamet transitions to producer status over the next 18-24 months. The company looks undervalued based on the quality of its copper assets and development timeline.