Asiamet Resources Ltd (LON:ARS) has announced the termination of the binding sale and purchase agreement (SPA) entered into with PT WIN, as signed and announced on December 24, 2020, for the acquisition of Indokal Ltd, the owner of the Kalimantan Surya Kencana Contract of Work, located in Central Kalimantan, Indonesia.
Under the SPA, the first tranche payment of US$2.5mln was not transacted by PT WIN within the agreed timeframe of 10 business days following the signing of the SPA and a subsequent extension period. The Company used best endeavours to ensure this payment was made, however, this was not complied with and no reasonable explanation was provided other than a request for further changes to the terms of the binding SPA which were considered to be unacceptable and detrimental to the best interests of the company.
As a result, the Asiamet board and management considered that following this default and material breach of the SPA it had no other course of action but to terminate the transaction. Asiamet is considering all options available to it in respect of this matter and the impact on its business.
As a result of the termination of the SPA the general meeting of shareholders to be held on January 29, 2021, for the approval of the transaction has been cancelled.
The KSK Contract of Work contains the development-ready BKM copper project.
Through the recent independent valuation work undertaken as part of the failed PT WIN transaction, the KSK CoW was valued in the range of between US$155mln and US$165mln for known ore reserves and mineral resources, with no value attributed for exploration targets.
Using the current spot copper price of US$3.60 per pound for the 2019 feasibility study, the attributable net present value at an eight per cent discount is US$191mln, with the internal rate of return ringing in at 24.4%.
Value enhancement work has been ongoing over the past five-to-six months with further metallurgical test work being undertaken in laboratories in Indonesia and Australia.
Initial results indicate significantly increased copper recoveries using an alternate leaching process to that selected for the BKM feasibility study. Final test results and associated consultants reports are expected to be received shortly. Other work including modifications to mine design and capital works will be further evaluated based on the final results of the metallurgical test work.
With significantly better copper prices and the likelihood of improved recoveries and mine life extensions flowing from this study work, a positive impact on the economics for the BKM copper project is anticipated.
The company will be re-engaging with various debt and equity financiers on a project financing package.
"While there is risk in every transaction, the termination of a sale process after investing a very significant amount of board and management time is always difficult,” said Tony Manini, executive chairman of Asiamet Resources in a statement.
“However, in this situation of material breach and non-compliance with clearly agreed terms of a binding SPA, and the lack of reasonable explanation or reasonable alternative, the Asiamet board was left with little choice but to terminate the agreement to protect the interests of our shareholders and all stakeholders associated with the KSK CoW and BKM copper project. Asiamet remains well-positioned with a strong portfolio of copper and copper-gold assets in a strong copper market.”