REG - Asiamet Res Ltd - BKM Copper Project Update - Capital Cost Estimate

Asiamet ResourcesAnnouncement

20/03/2023 07:00

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RNS Number : 4947T  Asiamet Resources Limited  20 March 2023

20 March 2023

 

BKM Copper Project FS Update - Capital Cost Estimate

 

Asiamet Resources Limited ("Asiamet" or "the Company") is very pleased to
advise that the workstream relating to the Capital Cost Estimate ("Capex" or
"Capex Estimate") for the BKM Copper Project ("BKM Copper") has recently
concluded with exceptionally positive results.

The updated BKM Feasibility Study ("FS") capital cost estimate based on high
confidence, present day input cost forecasts is $236.5 million 1  (including
$26.6 million in growth allowance & contingency), only slightly above the
$223.4 million capital estimate for the 2019 study.  The Company considers
this to be an exceptional outcome in the current highly inflationary
environment being experienced by mining projects globally. Initiatives
undertaken to re-size the project and deliver a higher margin / more
profitable, smaller footprint project have also served to significantly
de-risk the project capital cost and are highly encouraging for the overall
economics of the BKM Copper Project.

Highlights

·   Updated Capital Cost Estimate (inc. $26.6M contingency) of $236.5M(1)
considered to be an exceptional outcome vs significant industry cost
inflation,

·   Project capital costs significantly de-risked and highly encouraging
for the overall economics of BKM, which remains a robust and attractive copper
project which is forecast to generate more than USD 1.3 Billion in revenues
over its mine life  higher long term copper price projections,

·    Significant opportunity remains for further optimisation of Capex
post delivery of FS,

·    Full BKM Copper Feasibility Study nearing completion pending delivery
of full operating cost model,

·    Completion of updated feasibility study enables financing process for
development of BKM which in turn unlocks the very considerable upside
potential identified on the KSK CoW, including the larger BKM sulphide copper
resource and the high-value BKZ polymetallic project.

Key reasons control of Capex costs have been realised:

·    Reduced scope/size of the project leading to:

o  Reduced mine/waste rock dump footprint (area reduced by 17% compared to
2019 FS)

o  Reduced heap leach facility footprint (area reduced by 59% compared to the
2019 FS)

o  Reduction in size of processing facility equipment (reduced capacity from
8Mtpa to 4.5Mtpa)

·   Consolidation of several packages of work under BUMA Infrastructure to
deliver cost synergies, particularly in overheads/indirect costs.

·    Engagement with an Indonesian EPCM Group, Rexline Engineering,
delivering a highly cost-effective solution for packages relating to materials
handling, various ancillary facilities and some bulk materials.

·   Engagement with BGRIMM, a leading Chinese engineering design group on
SX-EW plant equipment and detailed Engineering and Procurement costs.

Opportunities identified to further reduce BKM Copper pre-production capex
will be investigated as part of ongoing project cost optimisation. These
include:

·    Relocation and updated design of the Heap Leach Facility ("HLF") to
reduce earthworks volumes and shorten the construction period,

·    Optimisation of engineering services and construction management costs
through further review and assessment of source and location of these
services,

·   Potential for cost savings through financing heavy equipment fleet used
in project construction which can then be transferred to the mining operation.
This optimisation seeks to compare the current base case scenario where all
construction equipment is rental fleet versus purchasing the fleet and
amortising the cost over the life of mine.

Delivery of the final BKM Copper FS update requires close out of project
operational costs. Detailed internal cost models have been prepared for
Processing and General & Administration areas with the final component,
Mining costs, currently under review and pending third-party verification.
There has been significant cost inflation related to mining operations, most
notably Ammonium Nitrate used in blasting and biodiesel as required for mining
fleet. To assist in mitigating these cost increases the Company has reviewed
the scope of work under a contract mining scenario and elected to take
additional responsibility for certain activities outside of the mining
contract scope. A first principles cost estimate for mining operations is
being prepared to benchmark cost estimates provided by third parties.

Finalisation of the pre-production capex cost for the BKM Copper project is a
critical step in the development of Asia's newest producer of LME Grade A
copper cathode direct to the growing copper consuming markets across Asia.
 

Darryn McClelland, Chief Executive Officer commented:

"An enormous amount of high-quality work has been completed to deliver this
Capital Cost Estimate with the final outcome being only marginally above the
2019 pre-production capex. The widespread industry cost inflation seen across
the global mining industry, especially in the latter half of 2022 required us
to revisit every aspect of the project in considerable detail. As a result, we
have been able to deliver a Capex Estimate which we are confident will support
a robust and commercially viable project - one that is well timed for a
forecast major uptick in the copper cycle 2-3 years from now.

We have successfully reshaped the entire project and thoroughly reviewed all
inputs to this cost estimate. The additional time spent engaging with
in-country engineering groups and honing the considerable number of input
variables to the estimate have saved many millions in potential capital
expenditure and delivered tangible benefits for the project and its
shareholders.

The favourable capex cost update ensures that BKM remains a robust and
attractive copper project which, when considering nameplate production levels
and higher long term copper price forecasts of between $3.80 to $4.00/lb, is
projected to generate more than USD 1.3 Billion in revenues over its mine
life. The Capex estimate released today is not the end point and we will
continue to assess opportunities to further optimise the project throughout
the financing process and independent technical review.

We are in the final stages of developing the full operating cost model and are
looking forward to delivering the full BKM Copper Feasibility Study and
progressing to the next stage of project financing. As one of the very few new
sources of copper cathode into the Asian market, interest in the BKM Copper
Project is high and the Company looks forward to progressing discussions once
the FS is delivered."

Tony Manini, Executive Chairman commented:

"On behalf of all stakeholders I would like to congratulate Darryn and his
wider team on the capital cost estimate delivered today for the BKM copper
project. By any measure this an exceptional outcome given the very significant
inflationary pressures being experienced across the global mining industry.
The reshaped and re-optimised pit design has achieved significant benefits
across the spectrum of capital inputs and delivered excellent results. While
there is still further scope to improve the capital cost, these assessments
will take place after the release of the updated Feasibility Study, which is
our near-term priority. Work on the last remaining operating cost inputs to
finalise the Feasibility Study update is nearing completion and we are looking
forward to closing these out and releasing the results to market shortly.

Completion of the updated feasibility study not only provides the backbone for
securing finance for the initial mine development at BKM, it also establishes
a foundation to unlock the very considerable upside potential identified on
the KSK CoW, including the larger BKM sulphide copper resource and the
high-value BKZ polymetallic project."

 

ON BEHALF OF THE BOARD OF DIRECTORS

Darryn McClelland, Chief Executive Officer

For further information, please contact:

-Ends-

Darryn McClelland
Chief Executive Officer, Asiamet Resources Limited

Email: darryn.mcclelland@asiametresources.com
(mailto:darryn.mcclelland@asiametresources.com)

 

Tony Manini
Executive Chairman, Asiamet Resources Limited

Email: tony.manini@asiametresources.com
(mailto:tony.manini@asiametresources.com)

 

Investor Enquiries

Sasha Sethi

Telephone: +44 (0) 7891 677 441

Email: Sasha@flowcomms.com (mailto:Sasha@flowcomms.com) /
info@asiametresources.com

Asiamet Resources Nominated Adviser
RFC Ambrian Limited

Andrew Thomson / Stephen Allen

Telephone: +61 (0) 8 9480 2500

Email: Andrew.Thomson@rfcambrian.com (mailto:Andrew.Thomson@rfcambrian.com)
 / Stephen.Allen@rfcambrian.com (mailto:Oliver.Morse@rfcambrian.com)

 

Optiva Securities Limited
Christian Dennis

Telephone: +44 20 3137 1903

Email: Christian.Dennis@optivasecurities.com
(mailto:Christian.Dennis@optivasecurities.com)

 

Follow us on twitter @AsiametTweets

 

FORWARD-LOOKING STATEMENT

This news release contains forward-looking statements that are based on the
Company's current expectations and estimates. Forward-looking statements are
frequently characterised by words such as "plan", "expect", "project",
"intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other
similar words or statements that certain events or conditions "may" or "will"
occur. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause actual events or results to
differ materially from estimated or anticipated events or results implied or
expressed in such forward-looking statements.   Such factors include, among
others: the actual results of current exploration activities; conclusions of
economic evaluations; changes in project parameters as plans continue to be
refined; possible variations in ore grade or recovery rates; accidents, labour
disputes and other risks of the mining industry; delays in obtaining
governmental approvals or financing; and fluctuations in metal prices.  There
may be other factors that cause actions, events or results not to be as
anticipated, estimated or intended.  Any forward-looking statement speaks
only as of the date on which it is made and, except as may be required by
applicable securities laws, the Company disclaims any intent or obligation to
update any forward-looking statement, whether as a result of new information,
future events or results or otherwise. Forward-looking statements are not
guarantees of future performance and accordingly undue reliance should not be
put on such statements due to the inherent uncertainty therein.

 

 

 

 1  Note the capital cost estimate provided in this market release is subject
to final board approval. All $ are US dollars unless otherwise stated.

 

 

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