MENU  

Share Pickers

3 reasons why I bought Asiamet

THE CONTENT OF THIS BLOG POST (OR ANY MATERIAL ASSOCIATED WITH IT) DOES NOT CONSTITUTE INVESTMENT ADVICE. PLEASE DO YOUR OWN RESEARCH.

Asiamet Resources Limited (ARS)

Share Price: 1.32p
Market Cap: £6.67 million

Asiamet Resources were formerly called Kalimantan Gold Corporation Limited and are focused on exploring its copper and gold prospects in Kalimantan and Sumatra, Indonesia.

They are listed on Alternative Investment Market in London and on the Toronto Stock Exchange.

Asiamet Resources 001

Here can here me talking to Sasha Sethi about Asiamet in episode 285 below:

Here are the 3 reasons why I bought Asiamet

Tony Manini and Owen Hegarty were instrumental in taking Oxiana from a company worth $3 million to $6 billion. Tony recently said, he managed to take Oxiana to a $6 billion valuation by doing what he’s doing with Asiamet right now.

1. Management

The Director, Chief Executive Officer and Deputy Chairman of Asiamet is a man called Tony Manini.

Tony Manini

He is also the Managing Director and CEO of Tigers Realm an Australian based resources company and board director of EMR Capital, a specialist resources private equity manager.

Both Tony and Owen Hegarty (see below) set up these companies.

Tigers have several mining ventures including NexGen Energy which they spun off and is one of best performers on TSX over last couple of years. They also developed the Martabe Mine the biggest gold mine in Indonesia and one of largest in the world, they know the country well.

They have also spun off Tiger Realm Coal onto ASX valued at $62m

Meanwhile EMR Capital raised $450 million in February. The fund was over-subscribed by $50 million. To read more on this click HERE

Tony is a geologist and business development executive with over 25 years exploration, development and operations experience in the resources industry.

He worked with Rio Tinto for 14 years in various technical, commercial and management positions before joining Oxiana Limited in 2000 where he pioneered the entry and establishment of Oxiana’s businesses in six countries.

OWEN HEGARTY

Owen Hegarty was head of Rio Tinto Asia, was Chairman of Fortesque Metals one of the biggest Iron Ore producers in the world value at $5bn.

Tony and Owen were instrumental in taking Oxiana from a company worth $3 million to $6 billion. To read about this deal click HERE

Tony Manini said, he managed to take Oxiana to a $6 billion valuation by doing what he’s doing with Asiamet right now. That is, getting good quality assets at the low points in the economic cycle, doing the necessary technical work to get them into production, funding the projects building the projects and creating value of the shareholders.


2. Resources

Kalimantan 01

They currently have 3 projects:

i Jelai Gold Project
ii. KSK Copper Project at Beruang Kanan in Kalimantan
iii. Beutong IUP

The project Asiamet will be working on first is the KSK Copper Project (in Beruang Kanan). They are looking to start producing from this field in late 2018.

Before Asiamet took this over project it was a joint venture between Kalimantan Gold and Freeport McMoran, one of biggest copper producers in the world (value $8bn) who spent $33m on the project.

This work included more than 30,000 metres of drilling, and 4,762 line kilometres of airborne surveys. This exploration identified 15 targets – five of which are considered high priority.

Freeport decided not to go ahead with this project. There’s been no real explanation as to why this decision was made but a downturn in commodity prices could have been one of the major factors.

Kalimantan stressed it was not due to the geological prospectivity of the project, which it claims is not in doubt.

The Beruang Kanan project (BKP), within the KSK project, has now been recognised as a new copper district in the central Kalimantan region.

The production costs on this mine are low. This is because the copper is at shallow depths. Some of the intersections are at 1 metre others are at 6 metres.

This means a low strip ratio of around 1:1. What does this mean?

Most mines typically have a 4 to 1 ratio. So this means you would have to remove 4 tons of waste to access 1 ton of copper.

The grades of copper are also quite high.

The average grades of copper is 0.6%. The majority of grades on this project are well above this and even as high as 9.26%.

You can see the grades in their latest half yearly report by clicking HERE

You combine these grades with the shallow depth and you have what Tony describes as a, “game changer”.

It’s production costs are estimated to be between $150m – $175m. This will to produce 15,000 – 20,000 tons of copper per annum at sub two dollar production cost.

According to the London Metal Exchange copper is currently priced at £3,384 per tonne.

So lets take a low price of copper per ton at £3000. Multiply this by 15,000 tons (the lower end of the estimate) and this equals £45 million per year.

If you apply a modest, 10% operating profit margin to this you get £4.5 million pound profit for one year. The market cap of Asiamet is (as of Friday 5th September) was £6.67 million.

This is an P/E of only 1.48.

This assumes the copper price is at low price of £3000 per ton but Tony Manini reckons by 2018, unlike the current state of the market, there will be a copper deficit. If this does happen then the price is likely to be higher than this .

These earnings do not include their other two assets.

The Beutong project has the capability to produce 70,000 to 80,000 tons of copper per year. This means it’s four to five times bigger than KSK Copper Project (in Beruang Kanan).

 

3. Shares in Issue

I like penny stocks without a huge number of shares in issue because it’s a simple supply demand issue. If there’s low supply, high demand can really move the share price.

I typically look for companies that have less 1 billion shares outstanding.

Asimet has only 503 million shares in issue.

Here the breakdown:

Tigers Realm Minerals Pty Ltd – 59,382,600 (11.8%)
Asipac Group Pty Ltd – 21,015,870 (4.2%)
Namarong Investments Pty Ltd – 14,877,210 (3.0%)
Management holds (the Company has no treasury shares) (4.03%)

This share related news was released on 4th September 2015:

Asiamet CEO Share Purchase

Asiamet Resources Limited (the “Company” or “ARS”) wishes to advise that on September 2, 2015 Antony Manini, a Director and the Deputy Chair and Chief Executive Officer of the Company, notified the Company that on September 1, 2015, he purchased 3,500,000 shares of the Company, privately at a price of GBP0.012999 per share.

Mr Manini purchased the residual shareholding interest of MK TRM Holdings LP (“MK”), a significant shareholder of Asiamet, after the Company became aware that MK was in the process of selling down its
shareholding. The sale of MK’s entire shareholding in the Company is now complete.

Following this purchase, Mr. Manini now indirectly holds 14,579,618 (2.9%) common shares in the Company by way of 6,483,566 common shares held by Antman Holding Pty Ltd and 8,096,052 common shares held by A.J.M. Investco Pty Ltd. Mr Manini also directly holds 3,812,554 share purchase warrants and 3,000,000 options in the Company with an exercise price of CAD $0.05 per share and an expiry date of August 31, 2020.

Some other bits worth looking at:

Video on Proactive Investors on 27th August 2015:

Video on Proactive Investors on 28th July 2015:

Video on Tpi Tv on 18th June 2015:

THE CONTENT OF THIS BLOG POST (OR ANY MATERIAL ASSOCIATED WITH IT) DOES NOT CONSTITUTE INVESTMENT ADVICE. PLEASE DO YOUR OWN RESEARCH.

September 6, 2015