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Asiamet Resources to start developing BKM copper project

JAKARTA (RambuEnergy) – Asiamet Resources Ltd, through its Indonesian operation subsidiary PT Kalimantan Surya Kencana (KSK), will soon start the development of its Beruang Kanan Main (BKM) copper project located in Central Kalimantan after the company concluded the long-running negotiations with the Indonesian government (14/3) to amend its existing Contract of Work (CoW).

The Beruang Kanan Man Copper Project currently in the feasibility study stage with planned study completion in mid-2018. The other projects such as the BKZ polymetallic discovery and the BKS, BKW and Baroi prospects along with numerous other gold and base metal targets are also in the process of the feasibility study.

On March 13, 2018, the company has completed an off-market placing of GBP7.2 million, (approximately US$10 million) before expenses. This will provide the company with a strong platform to execute its near-term strategy for 2018. This includes but is not limited to:

  1. Completion of the BKM Copper Project Feasibility Study
  2. Delivering a maiden Resource for the BKZ polymetallic project
  3. Accelerating exploration at additional targets on the KSK CoW
  4. Securing a strong finance package for development of the BKM project
  5. Increasing the Company’s equity position in the Beutong Cu-Au project from 40 to 80%
  6. Drilling to expand the Resource base and advance development studies at Beutong

Asiamet has been working closely with the GOI to align the KSK CoW with the New Mining Law introduced in 2009, focused on six key points that include: 1) royalty rates 2) size of the CoW 3) domestic processing 4) divestment obligations 5) state revenues and, 6) the use of local manpower, services and products.

Key amendments of the KSK CoW are as follows:

  1. An initial contract term of 30 years is granted at the commencement of production from the CoW area. The Company has the option of extending for two additional 10-year periods under the current Mining Law i.e. IUPK system.
  2. KSK will retain 40,000 hectares under the KSK CoW (currently 61,003 hectares).
  3. The fiscal framework will remain highly competitive on a global scale, summarised as follows:
    • Royalty and corporate income taxes shall be subject to the prevailing laws as follows:
      • Corporate income tax rate of 25 per cent
      • Net Smelter Return royalties for copper will be 4 per cent (previously US$45/ton), gold 3.75 per cent (previously US$225/kg) and silver 3.25 percent (previously USD1.9/kg)
    • KSK will receive a tax holiday and/or a tax reduction for imported capital goods.

In anticipation of these changes, the BKM Project PEA study completed in 2016 used the amended royalty rates outlined above and a corporate income tax rate of 25% as the basis for the financial evaluation of the project.

  1. Foreign ownership laws mandate that Indonesian Nationals or Companies be offered the opportunity to invest in a Foreign Investment Company. KSK is a Foreign Direct Investment company and will be required to divest 51 per cent of its foreign-owned shares at fair market value after 10 years of production. Divestment may take various forms including a partial listing on the Indonesian Stock Exchange (IDX) or introduction of a local partner(s) and Asiamet has clearly stated its preference for partnering with suitable Indonesian companies at the development and operations stage.
  2. The amended CoW requires the Company to work towards, and assist, the GOI in supporting the policy of establishing metals processing facilities in Indonesia. Asiamet plans to produce LME Grade (99.99 per cent) copper cathode at BKM and as such will satisfy the criteria.
  3. The amended CoW currently contemplates the priority use of local labour, products and registered mining service companies. Indonesian nationals currently comprise 98 per cent of the KSK workforce. KSK has strong community engagement and will continue to support the development of local communities in the areas in which it operates.

Asiamet has been actively exploring copper and gold prospects in Kalimantan and Sumatra, since 1996. In Central Kalimantan, the company is developing BKM copper project. The BKM Copper deposit is estimated to contain Measured and Indicated Resources of 49.2 million tonnes at 0.70% copper containing 711.3MIbs (322,600 tonnes) of copper at a 0.2% copper cut-off grade.
In Aceh, on the island of Sumatra Indonesia, the company is developing Beutong mineral resource. Beutong’s Mineral Resource on a 100% basis comprises: as announced January 14, 2015, Measured and Indicated Resources of 93Mt at 0.61% Cu, 0.13ppm Au, 1.97ppm Ag and 97ppm Mo (0.3% Cu Reporting Cut) for contained metal of 1,241MIbs copper, 373koz gold, 5,698koz silver and 20MIbs molybdenum (0.3% Cu Reporting Cut); and Inferred Resources of 418Mt at 0.45% Cu, 0.13ppm Au, 1.11ppm Ag and 129ppm Mo (0.3% Cu Reporting Cut) for contained metal of 4,092MIbs copper, 1,746koz gold, 14,903koz silver and 112MIbs molybdenum (0.3% Cu Reporting Cut).

“Working closely with the GOI to achieve this outcome represents a significant milestone for Asiamet. Signing the amendment to the KSK CoW is a major de-risking milestone for the Company as we head into the project financing and development stage for our flagship BKM copper project,” Peter Bird, Asiamet’s Chief Executive Officer said.

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