It may be that the recent appointment of Andrew Neale as general manager of the KSK copper project in Indonesia ends up marking a step change in the ongoing development of Asiamet Resources Ltd (LON:ARS) as a name to be reckoned with in copper exploration and development.
Neale, who brings boatloads of in-country copper mining experience, joins a team that was already brimming with experience in Indonesia.
But his speciality is more to the operational side, to mining and processing, rather than to the exploration and pre-development studies that Asiamet has largely been focussing on to date.
Yes, it’s got to that time where the company needs to appoint people who know how to build and run things, and for this particular job Neale has a CV that stacks up against anyone’s.
For a start, he managed a major expansion programme at Grasberg, one of the biggest mines in the world, and certainly one of Indonesia’s biggest export earners. That was back in 2005. Since then he’s worked with Merdeka and Bumi, two other giant names in Indonesian mining, and he’s also put down roots in the country himself and is currently based out of Jakarta.
What’s more, one of the projects he worked on with Merdeka, Wetar Island, is very similar to KSK, so he’s by no means a stranger to the process that Asiamet is already deep into.
He has close ties with Asiamet itself, having consulted with Asiamet’s former geologist Steve Hughes in the past and, more recently, commissioning work for the updated feasibility study for BKM, the first part of KSK that’s likely to get developed.
He’s a man then that’s ready to hit the ground running when it comes to the final stages of work on BKM ahead of financing, and it looks like progress from here on in will be pretty rapid.
Several things are now running in parallel, as optimisation work nears completion.
First off, says Neale, the company has retained a local geotech group to shrink the footprint of the project.
“Because we’re in a high rainfall district every drop has to be managed to stop oxidation,” he says.
Work is also being done to finesse arrangements for the disposal of waste rock and tailings, and there’s the potential for a nearby stranded gas asset to be brought into play to provide power. Negotiations on that are ongoing.
Perhaps the most important work though, is the ongoing tank leaching tests which will determine the ultimate processing route for the BKM ore. As a metallurgist, this is one of Neale’s key areas of expertise, and he speaks with cautious optimism about the potential for a successful outcome.
Tank leaching will likely involve a certain amount of extra expense up front, and may be more expensive operationally. But the key factor is the recovery rate, which in all likelihood will be much greater than the alternative method, heap leaching.
With the copper price running up to all-time highs on the back of the demand generated by global stimulus packages and China’s return to rapid growth, it makes sense to recover every pound of copper that’s on offer. As it stands at BKM, there’s 450,000 tonnes of contained copper in resource and 340,000 in current reserves, of which around 51% is recoverable from heap leach. If tank leaching were brought into play life-of-mine copper recovery could increase by 20% or more.
Tank leaching should be quicker too.
“The key thing is that you recover more copper per tonne of dirt processed,” says Neale, “but in addition you also recover it far more quickly.”
Asiamet’s chairman Tony Manini spells out what this means from an investment perspective.
“On the feasibility model put together in 2019,” says Manini, “it took two and a half years to ramp up to the proposed production rate of 25,000 tonnes per year. You ran it at that rate for four years and then it drops away. This way, you can potentially do ten years at 25,000 tonnes, and 25,000 tonnes equates to US$100mln of free cash flow per year at US$3.30 per pound copper.”
The stakes are pretty high, then, because such an adjustment would likely have a huge impact on the type of debt package Asiamet will be able to secure when the time comes.
“It strengthens the overall economics of the project,” says Manini straightforwardly enough, and given that debt financing discussions are underway, that’s a good card to be holding.
In any event, we should know within about three months whether the tank leaching option is viable, and about three months after that the updated feasibility study should be complete.
If that seems fast, it’s because a great deal of the work has already been done.
“Everything that relates to the resource is set in stone,” says Neale.
“It’s been peer reviewed. It’s the engineering that’s still to be settled. But it will be done, and done at a rapid pace.”