Summary

• The share prices of Asiamet Resources closed 72 per cent higher after it sold its wholly owned subsidiary Indokal to Indonesia’s PT WIN
• Asiamet said that it would like to retain its shareholding and keep associating with PT WIN on developing the project
• The deal was finalised for $163.4 million

On 8 October 2020, Asiamet Resources Limited (LON:ARS) closed up 72 per cent at £4.30 after the mining company announced to sell its wholly-owned subsidiary, Indokal Limited, to Indonesia-based private company, PT Wasesa Indo Nusa (PT WIN), for $163.4 million. Indokal is known to have held the Kalimantan Surya Kencana (KSK) Contract of Work. The KSK includes the Beruang Kanan Main (BKM) copper project situated at Kalimantan in Indonesia.

Key details of the transaction

Under a non-binding agreement between the two companies, the transaction would be completed in phases. Firstly, Asiamet would get $10 million in cash once it would sign a sale and purchase agreement (SPA). PT WIN would release the next $40 million after it completes the planned listing on the Indonesian Stock Exchange (IDX) in early 2021. Thereafter, Asiamet will secure up to 22.5 per cent of the PT WIN shares in two tranches.

PT WIN’s shares issued to Asiamet would have lock-up restrictions for around a year after which Asiamet could sell around half of its shareholding over the one-year duration. As PT WIN starts listing on the IDX, Asiamet would get around 10.7 per cent stake with further 11.8 per cent remaining due.

It is to be noted that Asiamet has said that it would like to retain its shareholding and keep associating with PT WIN on the development of the BKM Project. This approach would help Asiamet to retain flexibility for re-assessing its position at any time. Subjected to commercial and financial due diligence by both the companies, the transaction would additionally need Indonesian government’s and Asiamet shareholder’s approval.

Though, the transaction is yet to be completed, the Asiamet Board completely endorsed and supported the transaction. Asiamet emphasised that along with the IPO proceeds and existing cash reserves, PT WIN expected to have enough finances for developing the BKM project. The company would keep a meaningful exposure to the upside at BKM and KSK. It would administer all necessary improvement and development related activities that have been already undertaken.

PT WIN’s IPO

PT WIN has planned an initial public offering (IPO) in early 2021. It is expected that the due diligence procedure would be completed in approximately a month’s time. However, PT WIN said that the timing could vary because of the current coronavirus pandemic related restrictions.

It is estimated that the planned IPO would value PT WIN at $500 million adding up to the $163.4 million transaction amount. Additionally, within the anticipated transaction, the Indonesian company would buy Aeturnum Energy International PTE. Aeturnum Energy is a commodities trading enterprise that has 19.9 per cent stake in Asiamet.

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About BKM

Situated in the northwest of Palangkaraya, regional capital of Central Kalimantan, the BKM is part of the Kalimantan Surya Kencana (KSK) district projects. In end-2019, Asiamet informed that BKM provided an ore reserve of around 21.1 million tonnes (proven category- grading 0.6 per cent copper) and 30.4 million tonnes (probable category - grading 0.5 per cent copper).

A feasibility study conducted later stated that the functioning parameters of a probable mine at BKM included a nine year production run generating 25,000 tonnes of copper cathode annually. This could potentially bring in revenue of $1.27 billion. Asiamet has worked on four additional sites near the BKM project through satellite discoveries.

Stock performance

Asiamet Resources Limited is an emerging mining company that focuses on developing a portfolio of large copper, polymetallic deposits, and copper-gold in Indonesia. Its two major projects are the KSK and Beutong. On 20 August 2020, the company released its earnings report for six months ended 30 June 2020 and reported a net loss of $2,115 as compared to $4,209 in 2019.

On 09 October 2020, at 10:25 AM, the company’s stock (LON:ARS) was trading at £4.75 up 10.47 per cent from its previous day’s close of £4.30. The 52 week low high range was recorded as 0.85 and 4.30. With a market capitalisation (Mcap) of £63.60 million, the stock provided a positive return on price, which was plus 107.23 per cent on a year to date (YTD) basis. The total volume of shares traded at the time of reporting was recorded at 37,733,16.