Optiva Securities mining analyst, Phil Swinfen, commented on the recent results.
- Key point: high-grade copper intersections from BKM ( Beruang Kanan Main), ARS’s copper deposit in Central Kalimantan, Indonesia.
- Resource evaluation drilling being undertaken as part of the BKM feasibility study has returned further wide intervals of higher grade near surface copper mineralization which further expands the BK044 Zone.
- The drilling is part of the in-fill programme which should upgrade large portions of the resource from the Inferred category to the M&I category. This will provide much higher levels of confidence in the resource and form the backbone of the next iteration of economic modelling. We always view resource upgrades as a very important de-risking event, as if a resource doesn’t hang together very well then it is normally exposed at the infill drilling stage. So far, BKM has shown excellent results. Also worth noting that you can’t convert Inferred resources to ore reserves, so ARS’s anticipated increase in M&I will be a significant milestone to open up the next stage of economic evaluation.
- The RNS reports the results from 10 holes drilled in the northern part of the BKM deposit, including the BK044 zone, one of two discrete higher grade zones at BKM.
- Better results from this round of drilling include: 104m at 0.83% Cu from 8m (includes 5m at 3.64% Cu) from BKM32600-03, and 15m at 0.66% Cu from 9m from BKM32600-04, and 9m at 1.35% Cu from 5m from BKM32200-06.
- Another key takeway is that the infill holes in the north (BK044 zone) intersected strong chalcocite/covellite mineralization just below the zone of oxidation. One interval returned 10.1% Cu over 1 m in hole BKM32600-04. We have attached the drilling map. It’s a bit hard to see but the holes mentioned above are located in the northern portion of the BK044 zone which appear to extend the continuity of high grade mineralisation in this area. This would have positive implications for early mining, with higher grade zones boosting economics and reduced capital payback. Current Indicated grade for the project is 0.7% Cu.
- The significance of these results is that the intersections are generally broader than ARS expected, and some excellent grades have been returned from shallow depths. Furthermore, intersections near the edge of the current resource envelope continue to return impressive results, which we think adds further potential for resource growth when the new resource is calculated.
- Next steps: continued drilling – further 51 holes (4,250m planned) and continued progress on the feasibility study.
Given the dearth of quality development projects in the copper space, Asiamet is one of the only ways to gain leverage to copper development on the London market. With a low capital intensity, low-strip, open pit heap leach mine with opex at the lower end of the cost curve (based on the PEA) we believe that Asiamet is a compelling investment at the current valuation.