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Asiamet dips despite doubling Beutong stake – time to buy? (ARS)

Asiamet Resources (LSE:ARS) dipped 1.2pc to 10.4p this morning despite announcing that it has doubled its stake in the highly prospective Beutong copper-gold project in Indonesia to 80pc. The business has paid A$4.375m (£2.5m) to increase its stake in Beutong, a large, high-quality outcropping deposit that contains 2.4Mt of copper, 2.1Moz of gold, and 20.6Moz of silver.

The money will see Asiamet purchase the 50pc of Beutong Resources – Beutong’s 80pc owner – that it does not already own. It comes after the project was granted a production licence in January providing an initial 20 years of tenure that may be extended twice, each for ten years, to a total of 40 years. Securing this approval was an essential step in advancing Beutong to its development stage.

Since taking a 40pc stake in Beutong eight years ago, Asiamet has spent over A$12.3m (£6.9m) on intensive exploration and development work as well as making payments to its JV partner PT Media Mining Resources. This year, it plans to create further value at the site through a targeted infill and extension drilling comprising eight holes totalling around 4,000m.

The organisation is targeting the significant, additional upside potential on offer at the site, where recent assays have suggested that large amounts of copper mineralisation could be processed by heap leach to produce cathode copper. Extensive metallurgical test work is now required to assess this potential accurately.

Peter Bird, Asiamet’s chief executive, said: ‘Asiamet is extremely pleased to substantially lift its interest in this advanced, high-quality copper-gold project at a time when the copper market is forecast to be moving into supply deficit, and large copper development opportunities with nearby infrastructure are rare. 

‘Achieving this major milestone doubles the company’s attributable contained metal inventory in Beutong to 1.92Mt copper, 1.68Moz gold and 16.48Moz silver.  The deposit remains open both laterally and at depth with recent drilling at Beutong East hole BEU0900-08 extending mineralisation beyond the current Resource envelope and terminating, due to rig depth capacity, in mineralisation grading 1.14pc copper.  The company looks forward to reporting on progress at Beutong as the recently mobilised deeper capacity drill rig ramps up and development activities incorporating evaluation drilling, metallurgy and geotechnical activities gain momentum in the second half of 2018.”

In March, Bird said he expects to see ‘a significantly enhanced level of interest in Asiamet and its activities as the scale and grade of the Beutong deposit becomes more widely recognised’. Indeed, we have previously highlighted the upside potential on offer at the firm.

As we wrote in February, Asiamet is on the verge of making its first big step towards becoming a low-cost metal producer with its BKM asset, which contains an impressive 711.3Mlbs copper resource. It is due to begin producing at a time where a long-term rise in copper prices seems a safe bet due to a looming deficit in supply as demand grows. The business is also making steady exploration progress at its BKZ site, which has returned grades of zinc on par with the highest-grade zinc development projects globally.

Operationally, Asiamet is backed by a strong management team that deftly navigated a problematic copper environment and has ambitions to increase its asset base beyond its three primary resources in the future. This team includes executive chairman Tony Manini, a well-respected geologist who took resources firm Oxiana from a market cap of $3m to $6bn using a similar strategy to the one he is currently pursuing at Asiamet.  Namely, this involves buying good quality assets during bear markets before building them back up and creating shareholder value when the market turns.

Despite today’s slight dip, Asiamet’s shares have more than doubled since October last year. It could now be worth having a punt on this trajectory continuing as the market attributes more value to the company’s significant stake in Beutong.

Author: Daniel Flynn

Disclosure: The author of this piece does not hold shares in the company mentioned

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