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(Sharecast News) - Asiamet Resources updated the market on the BKM copper project in Central Kalimantan, Indonesia, on Friday, reporting robust advancements in multiple work streams related to its development.
The AIM-traded firm said the project, currently in the feasibility stage, was seeing timely progress in financing, construction planning, and corporate development.
It said a critical review report from the independent technical expert (ITE), SRK Consulting, was in the final stage and projected to be issued to a potential lead bank within 14 days.
The report followed SRK's recent site visit and ensuing feedback from Asiamet.
Notably, the ITE provided positive feedback on several items raised in prior project reviews and addressed in the updated feasibility study on 10 May.
Simultaneously, independent corporate adviser Grant Samuel coordinated with the possible lead bank and assisted Asiamet (ARS) in putting the final touches on the financing model and associated valuation metrics.
On the financing front, Asiamet secured an indicative term sheet from a prominent international metals trading group for prepayment financing tied to copper cathode offtake, following a detailed due diligence process.
The provided terms aligned with standard prepayment financing arrangements, the board said.
Additionally, the firm was in ongoing discussions with multiple commodity trading groups regarding similar prepayment financing options, with negotiations set to proceed with a preferred prepayment financier.
Regarding the execution of the BKM project, ARS said it was in ongoing discussions with several Chinese engineering, procurement, and construction (EPC) and EPCM groups active in Indonesia.
A decision regarding the engagement of project execution partners for BKM was expected in the fourth quarter.
Regarding site access, earthworks design for improvements essential for the main forestry access road to the mine site and the construction of a new road section were well advanced.
The development would enable more detailed planning for the work package.
Efforts were also being channelled to finalise the condition related to issuing the BKM change of forestry use operational permit (PPKH-OP).
Upon issuance, the permit would allow for activity on site, facilitating various site investigation programmes to support the detailed design of project infrastructure and, eventually, site construction works.
On the corporate development front, amid the scarcity of advanced copper and copper-gold projects in the region and uncertainties regarding future copper supply sources, Asiamet said it had garnered attention from several companies in Asia.
The entities were interested in propelling the BKM copper project forward or injecting direct investment into the project or company.
Asiamet said it was actively exploring the prospects to ensure fair and reasonable value was attained for stakeholders.
"We are pleased to report that the appointed ITE has completed their technical review of the BKM copper feasibility study update and provided their report for ARS' comment," said chief executive officer Darryn McClelland.
"This is going through a final review process with a report to then be provided to the proposed lead bank to support their due diligence and financial modelling activities.
"This is a critical step in moving forward with the process to secure bank financing for BKM."
McClelland said it was also encouraging to report receipt of an indicative term sheet for copper cathode offtake finance from an internationally recognised metals trading group.
"Whilst preliminary and subject to various conditions precedent, this represents a significant step forward in the overall financing journey.
"Offtake finance remains a key part of the overall project finance package bringing considerable benefits for both the project and shareholders.
"Due diligence is ongoing with other potential offtake partners also hoping to secure the copper cathode units that Asiamet will bring into production."
Darryn McClelland added that the company was continuing to explore options for project delivery actively, engaging in discussions with Chinese EPC contractors and dedicated design groups from China and Indonesian EPCM companies.
"During the fourth quarter, we anticipate making a final decision on the project delivery model for BKM and the appointment of our execution partners.
"We are also nearing completion of all aspects required to obtain the important operational stage forestry change of use designation for BKM, which will be a significant milestone for the project.
"The outlook for copper remains very robust, with a strong medium to long term demand forecast and a supply-side response challenged to meet demand."
Darryn McClelland said that new copper projects in the Asian region were exceedingly scarce, with the BKM copper project strategically positioned to deliver LME grade-A copper cathode into the supply-constrained market.
"The company's up-to-date feasibility study, which recently showcased excellent economics such as an EBITDA of $655.3m over the life of mine and a post-tax NPV8 of $162.8m, serves to highlight the inherent value of the company.
"In addition, since the publication of the updated feasibility study, the company has seen heightened levels of serious interest from a range of potential Asian strategic companies looking for exposure to copper through Asiamet.
"Work on progressing these opportunities, based upon appropriate valuations, progresses in parallel to the financing workstream."
At 1406 BST, shares in Asiamet Resources were up 8.11% at 1p.
Reporting by Josh White for Sharecast.com.
