TIDMARS
RNS Number : 9518Y
Asiamet Resources Limited
10 May 2023
10 May 2023
Updated BKM Feasibility Study Delivers Excellent Economic
Outcomes
Asiamet Resources Limited (Asiamet or the Company) is pleased to
announce the results of the updated Feasibility Study (FS) for its
100% owned BKM Project located in Central Kalimantan,
Indonesia.
In line with significant changes in the macro-environment for
new projects, a very comprehensive update to the previously
announced 2019 FS for the BKM copper deposit has now been
completed. The updated 2023 study is based on open pit mining, and
heap leaching of crushed ore followed by solvent extraction and
electrowinning ('SX-EW') to produce LME Grade-A copper cathode (the
'Project') for sale into local and export markets.
Completion of the updated study enables the Company to
accelerate its engagement with key financial institutions,
commodity traders and equipment suppliers for a project finance
package to develop the BKM copper mine. The proposed development
timeline for the BKM Copper Project is well timed to take advantage
of the looming copper supply constraints predicted by leading
industry analysts. Development of this initial mine and associated
infrastructure is expected to unlock significant potential for
further mine developments based on deposits already identified
within the KSK Contract of Work.
A summary of the highlights of the Feasibility Study are
detailed below and the Executive Summary of the Feasibility Study
is available on the Company's website at
www.asiametresouces.com
Highlights - 2023 BKM FS Update:
-- Initial 9.2 year mine life producing up to 20ktpa of copper cathode per annum
-- Life of Mine ('LOM') Revenue of $1.4 billion and EBITDA of $655.3 million
-- Capital cost of $208.7 million (excluding growth and contingency $26.7 million)
-- Post Tax NPV(8) $162.8 million, IRR 21.0% (post tax, excluding closure costs)
-- Payback Period 3.4 years
-- C1 cash costs of $1.91/lb and AISC of $2.25/lb
-- Base case uses consensus long term copper price of $3.98/lb
-- Total Measured, Indicated and Inferred Resources unchanged at
69.6Mt @ 0.6% Cu for 451.9kt of contained copper.
-- Updated Ore Reserves of 40.8M tonnes @ 0.7% total Cu (272kt
contained total copper) and 0.5% soluble Cu (198kt contained
soluble copper).
-- Additional opportunities identified to further reduce capital
will be explored through the engineering design phase.
-- Strategic starter project - establishes infrastructure
springboard for delivering future phases of development from the
Beruang Kanan district and KSK Contract of Work.
-- (approval to use forest area) permit requirements well
advanced. All aspects of the project maintained in compliance with
regulatory requirements.
The majority of commodities analysts are predicting elevated
long term copper prices primarily driven by the inability of mine
supply to meet demand as the build out of renewable energy
infrastructure and transport systems accelerates to meet the 2050
net zero emissions targets committed to by many of the advanced
economies. Development of the BKM copper project is well timed to
capture this opportunity.
Table 1 compares 2023 BKM FS key economic metrics using a
US$3.98/lb long term copper price, the year to date (1 January 2023
to 28 April 2023) average of $4.06/lb, and a recent Goldman Sachs
long term copper price forecast of $10,000/t ($4.54/lb).
Table 1 BKM Copper Project Sensitivity to Copper Price
Copper Price US$/lb 3.98 4.06 4.54
-------- -------- -------- --------
Revenues US$M 1,396.6 1,415.0 1,580.5
-------- -------- -------- --------
EBITDA US$M 655.3 673.2 833.7
-------- -------- -------- --------
NPAT US$M 378.6 396.2 552.5
-------- -------- -------- --------
NPV(8) (post-tax, excl.
closure) US$M 162.8 171.2 260.9
-------- -------- -------- --------
IRR (post-tax, excl.
closure) % 21.0 21.3 27.3
-------- -------- -------- --------
Payback Period Yrs 3.4 3.4 2.8
-------- -------- -------- --------
1. Average YTD copper price 1 January 2023 to 28 April 2023
2. Goldman Sachs Copper Top Projects 2022, A Deficit on the Horizon
Next Steps
The release of this 2023 Feasibility Study is a significant
de-risking milestone for the Company. Along with the indicative
timeline (as per appendix) the following key milestones are
expected to be completed leading into the first phase
construction:
-- Completion and compilation of all Chapters of the 2023 BKM Project FS Update.
-- Formally appoint lead bank for the project financing.
-- Lead bank-appointed Independent Technical Expert ('ITE') will
complete a detailed review of the 2023 FS documentation. Likely to
be the same ITE that reviewed the 2019 FS on behalf of the Company
prior to commencing the update studies.
-- Close out outstanding work on capital and operating costs
savings opportunities as outlined in the Project Opportunities
section (as detailed in the Appendix).
-- Commence engineering design works.
-- Commence formal project financing including engaging parties
in relation to product offtake finance, equipment finance, and
export credit finance.
-- Commence early works at site.
Darryn McClelland, Asiamet's Chief Executive Officer
commented:
I am pleased to be able to release the details of the 2023 BKM
Copper Project FS update today, delivering what is a significant
milestone for the company. The time has come to deliver BKM to the
market, with a project that not only has strong operating and
financial fundamentals on current long-term copper pricing, but
offers significant upside considering forecast supply/demand
imbalance in the copper market looking 2-3 years into the future.
The work completed during the BKM copper project Feasibility Study
(BKM FS) update has given all those involved greater confidence in
the execution of this important project with risk areas
investigated, understood, and accounted for in the current project
design. Delivering a smaller footprint project with higher grade
has delivered a robust technical and financial outcome, reduced the
disturbance area, and contributed to a lower overall level of
environmental impact for the development.
Formally releasing the outcome of the FS update is a trigger to
progress several activities related to project finance. The Company
can now accelerate discussions with banks on debt financing and
commence the engagement with a bank-appointed ITE as soon as
practicable. In parallel with this the Company will engage with
various groups on opportunities for delivering the significant
equity funding component of the project financing including those
interested in securing the Grade-A copper cathode BKM will produce.
The Company is looking forward to discussing opportunities for
co-operation with parties who see the value of advancing BKM to
production and unlocking the much bigger opportunity to develop
multiple mines within the broader Beruang Kanan mineral district
and greater KSK Contract of Work.
To reiterate, we are very pleased to be able to share the
positive outcomes of the BKM FS update, however, this is just one
step on the exciting journey towards becoming Asia's newest copper
mine. Asiamet greatly appreciates the strong support received from
all its stakeholders to date. We are now focused on delivering the
project in a safe, environmentally conscious manner, and
effectively engaging with our local communities to ensure the
benefits of development are realised. I would like to thank all who
have contributed to the BKM FS Update and look forward to working
with them as we take the project into the next phase of
development.
Investor Call
A management presentation to discuss the results of the updated
Feasibility Study on the Investor Meet Company platform will take
place at 11am-12pm tomorrow (Thursday 11 May 2023). To register for
the presentation, investors can sign up to Investor Meet Company
and add to meet ASIAMET RESOURCES LIMITED via:
https://www.investormeetcompany.com/asiamet-resources-limited/register-investor
Investors who already follow ASIAMET RESOURCES LIMITED on the
Investor Meet Company platform will automatically be invited.
Qualified Person and Competent Person's Statement
The Ore Reserves referred to in this release have been completed
by Australian Mine Design and Development Pty Ltd ("AMDAD") and are
reported in accordance with the requirements of the JORC Code
(2012) (see RNS dated 10 May 2023).
The information in this release and the report to which this
statement is attached that relates to the estimation of Ore
Reserves is based on information compiled by Mr John Wyche, a
full-time employee of AMDAD, and who has acted as the Competent
Person on the Ore Reserve Estimation of the BKM Project. Mr Wyche
is a Member of The Australasian Institute of Mining and Metallurgy.
He has 35 years of relevant experience in operations and consulting
for open pit metalliferous mines, being sufficient experience that
is relevant to the style of mineralisation and type of deposit
under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. Mr Wyche consents to the inclusion in
the report and this release of the matters based on his information
in the form and context in which it appears. Mr Wyche confirms that
he is not aware of any new information or data that materially
affects the
information included in the relevant market announcements, and
that the form and context in which the information has been
presented has not been materially modified.
Data disclosed in this press release has been reviewed and
verified by Mr John Wyche, FAusIMM (Fellow of the Australian
Institute of Mining and Metallurgy) acting as a qualified appointed
adviser to Asiamet. Mr Wyche is a Competent Person within the
meaning of the JORC Code 2012 and a Qualified Person for the
purposes of the AIM Rules for Companies.
ON BEHALF OF THE BOARD OF DIRECTORS
Darryn McClelland, Chief Executive Officer
For further information, please contact:
-Ends-
Darryn McClelland
CEO, Asiamet Resources Limited
Email: darryn.mcclelland @ asiametresources .com
Tony Manini
Executive Chairman, Asiamet Resources Limited
Email: tony.manini@ asiametresources .com
FlowComms Limited
Sasha Sethi
Telephone: +44 (0) 7891 677 441
Email: Sasha@flowcomms.com
Asiamet Resources Nominated Adviser
RFC Ambrian Limited
Andrew Thomson / Stephen Allen
Telephone: +61 8 9480 2500
Email: Andrew.Thomson@rfcambrian.com /
Stephen.Allen@rfcambrian.com
Optiva Securities Limited
Christian Dennis
Telephone: +44 20 3137 1903
Email: Christian.Dennis@optivasecurities.com
This news release contains forward-looking statements that are
based on the Company's current expectations and estimates.
Forward-looking statements are frequently characterised by words
such as "plan", "expect", "project", "intend", "believe",
"anticipate", "estimate", "suggest", "indicate" and other similar
words or statements that certain events or conditions "may" or
"will" occur. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that could cause
actual events or results to differ materially from estimated or
anticipated events or results implied or expressed in such
forward-looking statements. Such factors include, among others: the
actual results of current exploration activities; conclusions of
economic evaluations; changes in project parameters as plans
continue to be refined; possible variations in ore grade or
recovery rates; accidents, labour disputes and other risks of the
mining industry; delays in obtaining governmental approvals or
financing; and fluctuations in metal prices. There may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended. Any forward-looking statement
speaks only as of the date on which it is made and, except as may
be required by applicable securities laws, the Company disclaims
any intent or obligation to update any forward-looking statement,
whether as a result of new information, future events or results or
otherwise. Forward-looking statements are not guarantees of future
performance and accordingly undue reliance should not be put on
such statements due to the inherent uncertainty therein.
This announcement contains inside information as stipulated
under the Market Abuse Regulations (EU) no. 596/2014 ("MAR").
APPIX - BKM PROJECT FEASIBILITY STUDY DETAILS
The BKM Feasibility Study Life of Mine key metrics are included
in Table 2 below. The following economic assumptions were
utilised:
-- Long term copper price of $3.98/lb LME (London Metal Exchange);
-- Discount rate 8% (after tax, Real);
-- Indonesian corporate income tax ('CIT') rate of 22%[1]; and
-- Indonesian Government Royalty of 2% (of revenue).
Note : All references to ($) dollars in the tables below are US
Dollars. Tables with decimals may not add due to rounding.
Table 2: Summary LOM BKM Feasibility Study Metrics
Production Ore mined Mt 38.4
--------------------------------- ----------- --------
Waste mined Mt 52.5
--------------------------------- ----------------------------- --------
Strip ratio Waste:Ore 1.37:1
--------------------------------- ----------------------------- --------
Average soluble copper grade % 0.51
--------------------------------- ----------------------------- --------
Soluble copper recovery (from
Heap Leach) % 78.6
--------------------------------- ----------------------------- --------
Copper cathode produced Kt 156.3
--------------------------------- ----------------------------- --------
Initial project capital (ex.
Capital contingency) $M 208.7
--------------------------------- ----------- --------
Contingency $M 26.7
--------------------------------- ----------------------------- --------
Sustaining capital $M 35.4
--------------------------------- ----------------------------- --------
Closure and
Rehabilitation Closure costs $M 45.7
--------------------------------- ----------- --------
Economic Copper price $/lb 3.98
--------------------------------- ----------- --------
Assumptions Discount factor % (real) 8.00
--------------------------------- ----------- --------
Financials Revenue $M 1,396.6
--------------------------------- ----------- --------
Operating costs (ex. royalties) $M 657.3
--------------------------------- ----------------------------- --------
Other indirect costs (inc.
royalties) $M 38.3
--------------------------------- ----------------------------- --------
NPV(8) post-tax $M (real) 146.9
--------------------------------- ----------------------------- --------
NPV(8) post-tax, pre-closure $M (real) 162.8
--------------------------------- ----------------------------- --------
IRR post-tax % (real) 20.4
--------------------------------- ----------------------------- --------
IRR post-tax, pre-closure % (real) 21.0
--------------------------------- ----------------------------- --------
Payback period Years 3.4
--------------------------------- ----------------------------- --------
Initial mine life Years 9.2
--------------------------------- ----------------------------- --------
EBITDA $M 655.3
--------------------------------- ----------------------------- --------
NPAT $M 378.6
--------------------------------- ----------------------------- --------
C1 costs $/lb 1.91
--------------------------------- ----------------------------- --------
AISC $/lb 2.25
--------------------------------- ----------------------------- --------
The estimated initial construction capital costs are in
summarised in Table 3 below.
Table 3: Capital Costs
Mining Facilities 5.4
------
Crushing, Agglomeration and Stacking 19.0
------
Heap Leach 31.7
------
SX-EW (incl. Neutralisation) 27.1
------
Process Area Services and Utilities 17.6
------
On Site Infrastructure and Bulk Earthworks 30.9
------
Off Site Infrastructure 14.2
------
Sub-Total Direct Costs 145.9
------
Construction Indirect Costs 27.7
------
Spares and First Fills 6.9
------
EPCM & Owners Costs 28.1
------
Total Capital Estimate (excluding contingency) 208.7
------
Contingency 26.7
------
Total Capital Estimate 235.4
------
The capital cost estimate in Table 3 relates to the project
construction costs and excludes sustaining capital and mine closure
costs. These costs have been included as part of the financial
model and can be referred to in Table 4.
The total Life of Mine (LOM) operating costs for the Project as
adopted in the financial model are shown in Table 4.
Table 4 LOM Operating Costs
Mining 305.9 0.89
------ -----
Processing 234.3 0.68
------ -----
Transport, Logistics and Support
Services 117.1 0.34
------ -----
LOM C1 Cash Cost 657.3 1.91
------ -----
Other Indirect (incl. Royalties) 38.3 0.11
------ -----
Sustaining Capex 35.4 0.10
------ -----
Rehabilitation and Closure 45.7 0.13
------ -----
AISC 776.8 2.25
------ -----
Approximately 70% of the total operating costs are incurred in
the mining and processing activities. A mine operations life of 9.2
years and heap leach operations life of 10 years leads to no major
replacement or rebuilds being necessary on major equipment.
Sustaining capex needs for the project are dominated by required
increases in ARD water management capacity in the mine and
processing. The other primary requirement for sustaining capital
relates to the planned installation of inter-lift liners within the
heap leach facility.
The majority of the mining works, namely site preparation, blast
hole drilling and load and haul requirements will be performed by a
primary mining contractor. Some smaller pieces of the mining scope
will be completed by support contractors. The mining LOM cost is
forecast to be $3.37 per tonne of material mined inclusive of mine
geology (including dedicated grade control) and ancillary mining
activities.
The LOM processing costs equate to $6.10 per tonne ore stacked,
with the key component being electricity consumption. Power is
proposed to be sourced from the development of a new, dedicated
biomass power station located within 135km of the site with a
dedicated transmission line connecting the power station and BKM.
The biomass power station will be built and operated by a
third-party supplier. The current cost model adopted for the
project delivers an average unit cost of 11.4c per kilowatt hour
over the life of the heap leach facility.
Support Service costs include transport and logistics
(contracted), site camp services (contracted), Supply Chain
Management, Information Technology, Environmental, Sustainability
and Governance and overhead administration activities. The LOM unit
cost of these activities in the financial model is $3.05 per tonne
ore processed or $0.34 per pound copper produced.
The charts below show the Life of Mine (LOM) production (Figure
1) and cash flows after tax (Figure 3). Ore mined is slightly lower
in years 1-3 as higher grades of soluble copper are mined first
(Figure 2), delivering strong early-stage cash flows to the
project. The LOM strip ratio is low at 1.37:1, adding to the high
margin and highly profitable project.
Figure 1 LOM Mining Production
Figure 2 LOM Ore Stacked and Soluble Copper Grade
pper Cathode Production
Figure 4 LOM Project Cash Flows - US$M(1)
1. Yr1 Figure 4 represents first year of expenditure on the
project, Yr4 represents Yr1 of production as shown in the
production figures.
Strong free cash flow generation is expected from the project
with the LOM net operating cash flows of $695.1 million. This
strong cash flow generation underpinned by a long-term copper price
of $3.98/lb results in a 3.4 year payback period for the
Project.
As part of the Feasibility Study, a sensitivity analysis was
conducted to determine the effect of key variables on the base case
NPV(8) of $162.8 million (post tax and excluding closure costs).
The results of this analysis are shown in Figure 5 and Table 5.
Figure 5 Project Sensitivities - US$M Base NPV(8) (Post-tax,
Real)
Table 5 provides a sensitivity of +/- 2% for the Company's 8%
weighted average cost of capital (WACC).
Table 5 Weighted Average Cost of Capital Sensitivity
NPV Post-tax 189.8 146.9 111.1
------ ------ ------
NPV Post-tax (pre-closure) 210.7 162.8 123.3
------ ------ ------
Project Opportunities[2]
Several opportunities to further de-risk the project will be
addressed prior to, and during, the detailed engineering design
phase. Promising outcomes from this work will be used as the basis
for detailed engineering design. These include:
-- Relocation of the Heap Leach Facility - an expected 25% to
30% reduction in earthworks volume associated with Heap Leach Pad
construction. A more straightforward location to build with an
expected reduction in costs, material movement and an overall
reduction in construction time.
-- Open Pit Mine Design and Schedule - iterative design review
of the open pit slopes based on outcomes of the geotechnical and
hydrogeological study completed as part of FS update. Opportunity
to review pit slope parameters in certain areas of the open pit
that could lead to reduced waste mining.
-- Engineering services review - review options to execute
additional engineering services in Indonesia and China through
partnerships established during development of the FS update. This
is part of the Company's overall lower-cost sourcing
initiative.
-- Contracting Strategy - full review of contracting strategy
for execution of the project and the transition from construction
to operations.
-- Acid Mine Drainage Water Treatment - review wider range of
options for treatment of mine impacted water with a specific focus
on the opportunity to increase recovery of copper.
[1] Tax holiday (subject to successful application of
regulation, PMK-130 (130/PMK.010/2020)) of a 100% Corporate Income
Tax reduction for 7 years followed by a further 2 years at a 50%
reduction.
[2] Asiamet cautions the Project Opportunities described above
are preliminary in nature and have only been subjected to
high-level preliminary assessment. It is uncertain if further
evaluation and or exploration work will result in the
implementation of any of the potential opportunities or whether any
additional economic benefit will be realised.
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END
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