What Asiamet does
Asiamet Resources Limited (LON:ARS) is an AIM-listed mine developer. It owns large copper-gold and polymetallic deposits on the Indonesian islands of Kalimantan and Sumatra. The deposits are adjacent to the key growth markets in Asia.
The Beruang Kanan Zinc (BKZ) polymetallic project is within the south-eastern area of the KSK, less than 800 metres north of the BKM copper project.
The wider KSK district also incorporates a number of targets in addition to BKM and BKZ, including the BK South (BKS) and BK West (BKW) copper prospects, and the Baroi polymetallic system prospect.
On Sumatra, the Beutong Project – in which Asiamet has an 80% equity interest –comprises the Beutong East Porphyry (BEP), Beutong West Porphyry (BWP) and the Beutong Skarn (BSK).
In January 2020 Asiamet said it plans to relocate its corporate head office function to Jakarta, Indonesia from Melbourne, Australia.
How’s it doing?
Asiamet Resources completed a US$163.4mln deal to sell the BKM project in December.
PT Wasesa Indo Nusa (PT WIN), currently a private Indonesian shell company, is to acquire Asiamet’s wholly-owned subsidiary company Indokal, which holds the Kalimantan Surya Kencana (KSK) Contract of Work which in turn hosts the BKM project.
It will be a phased transaction with an aggregate deal consideration of US$163.4mln.
At first, US$10mln of cash will be paid to Asiamet upon execution of a binding sale agreement. The next US$40mln of cash will come as PT WIN completes an intended stock market IPO onto the Indonesian Stock Exchange in early 2021.
Asiamet will then subsequently receive PT WIN shares equating to 22.5% of the company, in two tranches.
The UK group will manage the project over a twelve-month period under a management services contract.
What the boss says: Tony Manini, executive chairman
“Completion of this transaction with PT WIN and Aeternum will meet the three key objectives Asiamet was looking to achieve and in doing so is expected to unlock very significant value for all stakeholders.
“Firstly, and most importantly, it paves the way for the advancement of funding and development of the BKM copper project, secondly the Company retains a very meaningful stake and continues to provide significant input into the ongoing development and wider exploration upside of the highly prospective KSK CoW, and thirdly it strengthens the underlying balance sheet of the company and enables Asiamet to continue growing value for its shareholders”.
What the broker says
Asiamet’s deeper involvement with commodity company Aeternum, which already owns a significant stake, offers potentially substantial upside suggests Liberum.
KSK will be rolled into a vehicle called PT WIN, which will also contain Aeternum’s commodity trading business, and which will likely be listed on the Indonesian stock exchange in early 2021.
Independent estimates put the value of PT WIN at around US$500mln, but broker Liberum raises the possibility that the actual valuation may go higher if other assets are included in the company at the time of listing.
Asiamet is set to own a 22.5% stake in PT WIN, allowing that certain milestones are met on KSK.
All of which will likely mark a step-change in the way Asiamet is valued said the broker, which has set a target of 14p for the shares,