Asiamet Resources Limited (Asiamet), through its Indonesian operating subsidiary PT Kalimantan Surya Kencana (KSK), has reported that ahead of moving into the project financing and development phase for its BKM copper project in Central Kalimantan, it has successfully concluded long running negotiations with the Government of Indonesia to amend its existing KSK Contract of Work (CoW) to secure long-term mining tenure.
|Prospects within the Beruang Kanan area. This resource estimate reports the estimated mineralisation within the Beruang Kanan Main Zone.|
The tenure was secured for up to 50 years, with no divestment required until after the tenth year of production.
The KSK property hosts the BKM Copper Project currently in the Feasibility Study stage with planned study completion in mid-2018, together with a pipeline of opportunities such as the BKZ polymetallic discovery and the BKS, BKW and Baroi prospects along with numerous other gold and base metal targets.
Securing long term-tenure for the KSK CoW places Asiamet in a strong position to deliver the BKM copper project and unlock further value through focused regional exploration work at a number of other targets within the KSK CoW.
Peter Bird, Asiamet’s Chief Executive Officer acknowledges that working closely with the Indonesian Government to achieve this outcome represents a significant milestone for Asiamet.
Asiamet has been working closely with the Indonesian Government to align the KSK CoW with the New Mining Law which was introduced in 2009. The key amendments that were agreed to include an initial contract term of 30 years being granted at 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 – the IUPK system.
Additionally, KSK will retain 40,000 hectares under the KSK CoW (currently 61,003 hectares) and the fiscal framework will remain highly competitive on a global scale. Foreign ownership laws mandate that Indonesian Nationals or Companies be offered the opportunity to invest in a Foreign Investment Company. KSK is a PMA and will be required to divest 51% 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 or introduction of a local partner(s). Asiamet has clearly stated its preference for partnering with suitable Indonesian companies at the development and operations stage.
The amended CoW requires Asiamet to work towards, and assist, the Indonesia Government in supporting the policy of establishing metals processing facilities in Indonesia. To satisfy this criterion, Asiamet plans to produce LME Grade (99.99%) copper cathode at BKM.
The amended CoW currently contemplates the priority use of local labour, products and registered mining service companies. Indonesian nationals currently comprise 98 % 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.
“Signing the amendment to the KSK CoW is a major de-risking milestone for Asiamet as we head into the project financing and development stage for our flagship BKM copper project,” said Mr Bird.
“The Company is firmly of the view that the KSK CoW has the potential to host a district scale pipeline of copper-gold and polymetallic mineral prospects, which are yet to be fully understood or appreciated.
“Achieving security of tenure and the fiscal framework for the KSK project significantly enhances our ability to deliver value for all our stakeholders both through the development of the BKM Copper Project and the discovery of further nearby value creating opportunities such as the recent BKZ polymetallic deposit. Asiamet is very committed to building sustainable long-term value for all its stakeholders and looks forward to continuing its work with the GOI and the local communities to build a significant business in Indonesia,” said Mr Bird.
2018 Work Programme
On 13 March 2018, Asiamet successfully completed an off-market placing of GBP7.2 million, (approximately US$10 million) before expenses. This will provide Asiamet with a strong platform to execute its near-term strategy for 2018 including:
- Completion of the BKM Copper Project Feasibility Study
- Delivering a maiden resource for the BKZ polymetallic project
- Accelerating exploration at additional targets on the KSK CoW
- Securing a strong finance package for development of the BKM project
- Increasing Asiamet’s equity position in the Beutong Cu-Au project from 40% to 80%
- Drilling to expand the Resource base and advance development studies at Beutong