Shares in Asiament Resources Limited (LON:ARS) have performed strongly over the past six weeks, rising from around 1.1p in the first week of February to a current price of around 1.48p.
Part of that strength no doubt is down to the recent wave of unexpected positivity that has swept through the mining and commodities markets. But in the case of Asiamet it points to something far more meaningful too.
At the beginning of March the company updated the market on progress on the preliminary economic assessment currently being conducted on its Beruang Kanan Main (BKM) property in Kalimantan, Indonesia.
This is expected to be ready by the end of the quarter, and when delivered will be a significant milestone for the company.
“Asiamet has moved from being a pure explorer to being a developer with a lot of exploration upside,” chief executive Tony Manini told Proactive Investors.
And it’s that realisation that’s beginning to move the markets. More than 15 mln Asiamet shares changed hands on London’s Aim market on 15th March, one of the biggest daily volume numbers of the past 12 months.
And looking back on Asiamet trading patterns, big volumes have almost invariably meant that buyers are coming in, rather than that sellers are bailing out. And on that score, it’s noteworthy that Tony Manini himself has been a significant buyer, having put around A$2 mln of his own money into the company since he joined in late 2014.
That’s more than an average annualisedA$1 mln per year, and it may be that that’s another thing that investors are taking note of: at the more junior end of the mining market it’s always useful to know that company directors’ interests are directly aligned with those of shareholders.
After all, Manini has done this before. Back in the latter part of the last boom he was one of the team that was instrumental in the sale of Oxiana Resources, which he took from a tiny junior capitalised at less than A$5 mln to a final sale valuation of around A$5.8bn.
Having put his money where his mouth is, Manini’s focus now is firmly on delivering a PEA that the market can really buy into.
“We’re expecting the NPV and IRR numbers to be very attractive,” he says. “The fundamentals of BKM will make this a very competitive project. We would expect this to be a low cost producer. That has been our premise from day one and everything we’ve seen today supports that.”
So far, so good. But what kind of mine does he actually want to build?
The plan is to build a project capable of producing 44 mln pounds or 20,000 tonnes of copper per year. The copper would be produced on site via a heap-leach operation.
“The target is to produce five nines copper,” says Manini, referring to the grading standards used by the London Metal Exchange – material must be 99.999% copper to qualify.
So, a good quality product produced at low cost.
And why is the cost likely to be low?
“Well,” says Manini. “It’s a near-surface deposit. It’s very shallow. From day one of mining we’re straight into copper mineralisation. What’s more, the project is very well located. There are good transport logistics. We’ve got all-weather roads.”
There’s additional upside too, at the nearby BKS and BKW deposits, so it’s always possible the project could get still bigger yet.
In the immediate term though, all eyes will be on the PEA and on what happens immediately after it’s been released, both in terms of the share price and in terms of Asiamet’s next moves.
In terms of the share price, there’s a reasonable expectation that a re-rating may start to get underway as the market wakes up to the transformation that’s been taking place, and as the company underlines its new status as developer.
The newsflow that’s likely to follow the PEA will only emphasise this.
“We will look to move straight from the PEA into a feasibility study,” says Manini. Metallurgical work will continue, and some of the longer-lead study items will be initiated.
“We’ll start to take the project aggressively through feasibility,” says Manini.
It’s that sort of can-do attitude that’s likely to keep bringing the buyers on the market in. But there’s another possibility too. The PEA may start to flush out potential interest from industry partners.
“What’s very important to realise is that we’ve actually been talking to strategic partners, potential buyers of the product, other investors, other producers, other mining companies and a whole raft of potential partnerships, off-take type finance solutions sitting on the sidelines waiting for this PEA to come out,” says Manini.
We’ll have to wait for the PEA numbers to see exactly how BKM is shaping up and where it goes from here on in, but there’s no doubt that these are exciting times.