Asiamet BKM deposit PEA delivers US$204m NPV10 and 39% IRR
Tuesday, April 5 2016 - 01:05 PM WIB
Canadian firm Asiamet Resources Limited (ARS) announced on Tuesday the results of a Preliminary Economic Assessment (PEA) completed on its Beruang Kanan Main (BKM) copper deposit in Kalimantan, Indonesia. The PEA has been finalized in compliance with the guidelines of Canadian National Instrument 43-101 by independent Australian mine planning consultants, Orelogy.
The PEA is the first study undertaken to evaluate the economics of developing an open pit mine and heap leach solvent extraction electro-winning facility (SX-EW) to directly produce copper cathode based on the near surface copper deposit reported in the 2015 BKM Resource estimate (ARS NR October 21, 2015). Results of the PEA study demonstrate excellent potential for developing a robust, low strip ratio, low capital intensity copper project with low operating costs, strong cash flow generation capacity and significant upside potential through further Resource growth.
Asiamet considers target production of 25,000 tonnes of copper cathode per year for an initial 8 year LOM to be the most appropriate option for the PEA given the significant exploration potential already identified close to the BKM deposit. Copper mineralization at BKM remains open in several directions and locally at depth. Adjacent high potential prospects at Beruang Kanan South (BKS), Beruang Kanan West (BKW) and BKZ Polymetallic (BKZ) also represent attractive targets for additional mineralization as demonstrated by the strong surface and drilling results returned to date e.g. 10m at 2.52% Cu incl. 2m at 7.45% Cu from 19.5m at BKS (ARS NR November 16, 2015). Increasing the Mineral Resource base, and thus the potential feed available to the BKM processing facilities evaluated in the current PEA, is likely to have a strongly positive impact on the BKM Copper Project value and will be a key focus for Asiamet going forward.
Analysis conducted as part of the PEA to test the BKM project's sensitivity to the copper price highlights a robust project with the potential for a large lift in value at higher copper prices i.e. NPV10 of US$269.1M at US$3.50Ib and NPV10 of US$334.0M at US$3.75Ib.
Asiamet Resources CEO Tony Manini commented: "Asiamet is extremely pleased with the results of the BKM project PEA. To exceed our expectations on this most important milestone speaks volumes for the quality of the asset and the potential of the BKM deposit. The opportunity to develop a robust, low strip ratio, low capital intensity copper mine with low operating costs at a time when the copper market is forecast to be in supply deficit and a stronger price environment is highly compelling.
The Company considers the PEA base case economics to be highly attractive and is firmly of the view that additional detailed study work and exploration in and around BKM will further enhance the value of the project. The BKM deposit remains open in several directions and the adjacent high potential prospects at BKS, BKW and BKZ represent excellent targets for additional copper mineralization as demonstrated by the strong surface and drilling results returned to date. Our confidence in delivering this upside has provided strong support for assessing a larger project in the PEA than originally envisaged.
We look forward to building on the strong momentum we have established over the past year with a continued flow of news from ongoing project optimization and study work, drilling to increase Resource confidence and to test some of the exciting targets around BKM, and various corporate initiatives focused on partnering and funding for the ongoing development of the Company and its projects.
Success in developing BKM to its full capacity will provide the foundations for Asiamet to continue building a leading Asian copper and gold company through the exploration and development of its large asset base in Indonesia. I would like to thank the highly experienced Asiamet team together with its expert consultants for delivering a high quality PEA to time and budget".
BKM Project Preliminary Economic Assessment Results Summary
| BKM - Economic Summary | Unit | Base Case |
| Life of Mine (LOM) | Years | 8 |
| CopperCathode Sold | Million lbs | 391.0 |
| Copper Price (LOM Average) | $US/lb | 3.25 |
| Gross Revenue | $US | 1,270.6 M |
| LOM C1 Operating Costs | $US | 499.5 M |
| LOM C1 Operating Cost (recovered copper) | $US/lb | 1.28 |
| Royalties $US 63.5 M Off-site transport | $US | 19.8 M |
| LOM All In Operating Cost | $US | 582.8 M |
| LOM All In Operating Costs | $US/lb | 1.49 |
| Initial Capital Cost (including a 15% Contingency) | $US | 163.8 M |
| Taxes | $US | 136.6 M |
| NPV and IRR (Base Case) | ||
| Discount Rate Percent | (%) | 10 |
| Pre-Tax Net Free Cash Flow(including royalties) | $US | 524.0 M |
| Pre-Tax NPV | $US | 290.7 M |
| Pre-Tax IRR | % | 47.5 |
| Pre-Tax Payback Period | Years | 2.1 |
| After-Tax Net Free Cash Flow (incl. royalties) | $US | 387.5 M |
| After-Tax NPV | $US | 204.3 M |
| After-Tax IRR | % | 38.7 |
| After Tax Payback Period | Years | 2.4 |