Asiamet Resources Limited (LON:ARS) could attract a suitor at its current share price, according to analysts at Optiva Securities, though directors are in talks with potential strategic investors.
Asiamet, which is looking to develop large copper-gold and polymetallic deposits on the Indonesian islands of Kalimantan and Sumatra, recently indicated that discussions are underway with potential Indonesian and Asian strategic investors, while a recent tie-up with China Nonferrous could also introduce new potential investors to the process.
Under an MOU, a subsidiary of China Nonferrous is looking for improvements to the AIM-listed company's plans for the flagship BKM copper project on Kalimantan, where potential costs have already been cut by swapping to a closer seaport than the one originally envisaged.
Research house Optiva calculates that BKM deserves a net present value of US$133.5mln, currently, and that the massive Beutong project – in which Asiamet has an 80% equity interest – is worth US$70mln to the company at present.
Asiamet has been given a valuation of 15.6p per share by Optiva’s analysts, consisting of an EV/resource value for Beutong and a discounted cashflow model for BKM.
“At the current share price [below 3p], we believe Asiamet is vulnerable to an unwanted suitor. Although BKM is Asiamet’s most advanced project, Beutong is a copper discovery of global strategic importance and is an attractive asset for a large mining company,” Optiva said.
With the global refined copper market ending the first half of 2019 with a supply deficit of about 220,000mln tonnes, according to data amassed from the International Copper Study Group earlier this week, demand for large assets is likely to be real.