KSK – BKM Copper Project

Asiamet’s ‘flagship’ project, the BKM Copper Project (“BKM”) sits within the eastern area of the Kalimantan Surya Kencana (‘KSK’) Contract of Work (“CoW”). The KSK CoW is wholly-owned by Asiamet and is located northwest of Palangkaraya, the regional capital of Central Kalimantan.

The KSK licence covers circa 390 km² and includes a large number of gold and gold-copper targets including the BKM copper cathode project. In May 2023, the Company released an Executive Summary of the Feasibility Study Update on the BKM copper project. The Feasibility Study demonstrates a viable project with the following robust economics:
Note : All references to ($) dollars in the tables below are US Dollars. Tables with decimals may not add due to rounding.

Highlights -2023 BKM FS Update:

• Initial 9.2 year mine life producing up to 20ktpa of copper cathode per annum
• Life of Mine (‘LOM’) Revenue of $1.4 billion and EBITDA of $655.3 million
• Capital cost of $208.7 million (excluding growth and contingency $26.7 million)
• Post Tax NPV8 $162.8 million, IRR 21.0% (post tax, excluding closure costs)
• Payback Period 3.4 years
• C1 cash costs of $1.91/lb and AISC of $2.25/lb
• Base case uses consensus long term copper price of $3.98/lb
• Total Measured, Indicated and Inferred Resources unchanged at 69.6Mt @ 0.6% Cu for 451.9kt of contained copper.
• Updated Ore Reserves of 40.8M tonnes @ 0.7% total Cu (272kt contained total copper) and 0.5% soluble Cu (198kt contained soluble copper).
• Additional opportunities identified to further reduce capital will be explored through the engineering design phase.
• Strategic starter project – establishes infrastructure springboard for delivering future phases of development from the Beruang Kanan district and KSK Contract of Work.

The BKM Feasibility Study Life of Mine key metrics are included in Table 1 below. The following economic assumptions were utilized:

• Long term copper price of $3.98/lb LME (London Metal Exchange);
• Discount rate 8% (after tax, Real);
• Indonesian corporate income tax (‘CIT’) rate of 22%¹; and
• Indonesian Government Royalty of 2% (of revenue).

¹Tax holiday (subject to successful application of regulation, PMK-130 (130/PMK.010/2020)) of a 100% Corporate Income Tax reduction for 7 years followed by a further 2 years at a 50% reduction.

The estimated initial construction capital costs are in summarised in Table 2 below.

The capital cost estimate in Table 2 relates to the project construction costs and excludes sustaining capital and mine closure costs. These costs have been included as part of the financial model and can be referred to in Table 3.

The total Life of Mine (LOM) operating costs for the Project as adopted in the financial model are shown in Table 3.

Approximately 70% of the total operating costs are incurred in the mining and processing activities. A mine operations life of 9.2 years and heap leach operations life of 10 years leads to no major replacement or rebuilds being necessary on major equipment. Sustaining capex needs for the project are dominated by required increases in ARD water management capacity in the mine and processing. The other primary requirement for sustaining capital relates to the planned installation of inter-lift liners within the heap leach facility.

The majority of the mining works, namely site preparation, blast hole drilling and load and haul requirements will be performed by a primary mining contractor. Some smaller pieces of the mining scope will be completed by support contractors. The mining LOM cost is forecast to be $3.37 per tonneof material mined inclusive of mine geology (including dedicated grade control) and ancillary mining activities.

The LOM processing costs equate to $6.10 per tonne ore stacked, with the key component being electricity consumption. Power is proposed to be sourced from the development of a new, dedicated biomass power station located within 135km of the site with a dedicated transmission line connecting the power station and BKM. The biomass power station will be built and operated by a third-party supplier. The current cost model adopted for the project delivers an average unit cost of 11.4c per kilowatt hour over the life of the heap leach facility.

Support Service costs include transport and logistics (contracted), site camp services (contracted),Supply Chain Management, Information Technology, Environmental, Sustainability and Governance and overhead administration activities. The LOM unit cost of these activities in the financial model is $3.05 per tonne ore processed or $0.34 per pound copper produced.

The charts below show the Life of Mine (LOM) production (Figure 1) and cash flows after tax (Figure 3). Ore mined is slightly lower in years 1-3 as higher grades of soluble copper are mined first (Figure 2), delivering strong early-stage cash flows to the project. The LOM strip ratio is low at 1.37:1, adding to the high margin and highly profitable project.

1. Yr1 Figure 4 represents first year of expenditure on the project, Yr4 represents Yr1 of production as shown in the production figures.

Strong free cash flow generation is expected from the project with the LOM net operating cash flows of$695.1 million.  This strong cash flow generation underpinned by a long-term copper price of $3.98/lb results in a 3.4 year payback period for the Project.

As part of the Feasibility Study, a sensitivity analysis was conducted to determine the effect of key variables on the base case NPV₈ of $162.8 million (post tax and excluding closure costs). The results of this analysis are shown in Figure 5 and Table 4.

Table 4 provides a sensitivity of +/- 2% for the Company’s 8% weighted average cost of capital (WACC).

Several opportunities to further de-risk the project will be addressed prior to, and during, the detailed engineering design phase. Promising outcomes from this work will be used as the basis for detailed engineering design.  These include:

• Relocation of the Heap Leach Facility – an expected 25% to 30% reduction in earthworks volume associated with Heap Leach Pad construction. A more straightforward location to build with an expected reduction in costs, material movement and an overall reduction in construction time.
• Open Pit Mine Design and Schedule – iterative design review of the open pit slopes based on outcomes of the geotechnical and hydrogeological study completed as part of FS update. Opportunity to review pit slope parameters in certain areas of the open pit that could lead to reduced waste mining.
• Engineering services review – review options to execute additional engineering services in Indonesia and China through partnerships established during development of the FS update. This is part of the Company’s overall lower-cost sourcing initiative.
• Contracting Strategy – full review of contracting strategy for execution of the project and the transition from construction to operations.
• Acid Mine Drainage Water Treatment – review wider range of options for treatment of mineimpacted water with a specific focus on the opportunity to increase recovery of copper.

²Asiamet cautions the Project Opportunities described above are preliminary in nature and have only been subjected to high-level preliminary assessment.  It is uncertain if further evaluation and or exploration work will result in the implementation of any of the potential opportunities or whether any additional economic benefit will be realized.