Optiva, the house broker, expects 2018 to be a ‘monumental’ year for Asiamet as it switches from an exploration-development company into a low-cost copper producer.
A feasibility study for the company’s BKM copper project is due imminently, which will be followed by the conclusion of project funding and final permitting.
Asiamet has been successful with additional drilling and a maiden resource for the newly discovered polymetallic BKZ zone is expected once the current definition drilling is finished.
At Beutong, the crucial production licence has been granted, allowing the company to re-visit development plans.
Geared to copper
Strongly geared to copper, Asiamet shares have outperformed even a strong rising metal price with gains of more than 800% over the past two years.
Optiva adds the junior has emerged from a severe mining downturn with a robust, near-term production project, just as the copper sector emerges from the doldrums.
“We see further gains in the copper price, as the structural deficit starts to bite in 2018, added the broker.
“We anticipate the potent mix of declining mine production, limited new supply, strikes at major operations, and declining warehouse inventories continuing over the next few years.
BKM Feasibility imminent.
The feasibility work stream is in full swing and Asiamet anticipates completion within the next 6 months.
Ausenco has recently been appointed to manage process design and engineering. Current work is focusing on the high-grade, low-strip BK44 and BK58 zones, where mining is likely to commence.
Ongoing metallurgical test-work continues to indicate that the copper mineralisation is amenable to heap-leach, SX-EW, with high recoveries.
BKZ has both copper and zinc appeal
Rapid exploration progress last year confirmed the discovery of BKZ, a zinc-rich polymetallic zone, 800m north of BKM.
Drilling returned exceptionally high-grades, on par with some of the highest-grade new zinc development projects globally.
Definition drilling to generate a maiden resource is underway. Drilling in late 2017 also intersected a high-grade copper zone immediately beneath the polymetallic mineralisation, which may have valuable development connotations.
Zinc is on a run
The zinc price is up 114% over the last two years (currently $1.57/lb), the highest level since August 2007, whilst LME zinc stocks are also at a decade low.
As the metal continues to emerge from a deep cyclical low, the supply response from the industry looks increasingly uncertain, with a dearth of quality new zinc projects in the development pipeline.
Beutong back on the burner
The recent grant of the crucial production licence de-risks the project and allows Asiamet to step up the pace of exploration.
A rig will be mobilised to site to focus on near-surface high-grade porphyry and skarn zones, and test the strike and depth potential.
• BKM: Feasibility study, Project funding, Final permits, construction decision:
• Maiden BKZ resource (May)
• Beutong drilling and metallurgical test work.
Target price raised
Optiva’s target price rises to 19p/sh from 8p/sh including BKZ for the first time and an upgrade to the valuation on Beutong.
The broker expects the shares to re-rate further upwards as 2018 unfolds.