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Asiamet Resources' copper assets very undervalued, suggest brokers

Recent weakness in the junior's share price is unjustified, says the broker, which reiterated its target price of 20p
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Asiamet's copper resources are growing

Strongly geared to copper, Asiamet Resources Limited (LON:ARS) shares have outperformed even a strong rising metal price over the past two years.

The junior has emerged from a severe mining downturn with a robust, near-term production project, just as the copper sector emerges from the doldrums.

Watch: Asiamet Resources confident of resource boost at 'big beast' Beutong

“We see further gains in the copper price, as the structural deficit starts to bite in 2018," said Optiva 

“We anticipate the potent mix of declining mine production, limited new supply, strikes at major operations, and declining warehouse inventories continuing over the next few years.

BKM Feasibility imminent

In August, Asiamet said it expects the bankable feasibility study for BKM, its most advanced project, to be delivered this quarter.

Work has focused on the high-grade, low-strip BK44 and BK58 zones, where mining is likely to commence.

Metallurgical tests-have indicated that the copper mineralisation is amenable to heap-leach, SX-EW, with high recoveries. 

Optimisation of the mine plan was almost complete with key inputs being finalised, the August update added.

“The heap leach design has undergone extensive review and optimisation with significantly improved expected performance and overall metrics. 

“Capital and operating cost estimates are being benchmarked and will be subject to further review once the mine planning studies are complete shortly. “

This final exercise is expected to provide substantial upside for the project, Asiamet added.

Beutong drill results impress

Liberum, meanwhile, pointed to what it says were further outstanding drill results from Beutong, another of Asiamet’s prospects in Indonesia.

“Results confirmed near-surface extensions to both the East and West Porphyry's, outside the 2014 resource envelope and including significant higher grade (c.1% Cu equiv.) intervals.”

Liberum added the feasibility study at BKM might provide a catalyst to an accretive sell-down at the KSK licence.

Copper assets too cheap

The broker said the copper contained within its projects is being valued at $36/t compared to a peer group peer group average of $118/t.

Liberum adds that Aussie group Finders Resources has an almost identical project to BKM at Wetar Island in Indonesia and it was acquired for US$254mln on an enterprise value basis.

At 9.1p, Asiamet is valued at £84mln (US$108mln). Asiamet also has the BKZ, Beutong and Baroi projects, said the broker, which reiterated its target price of 20p.

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