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 June 2019, The Company released a full Feasibility Study on the BKM project. The Feasibility Study demonstrates a viable project with the following robust economics:

Highlights of the BKM Feasibility Study:

• Initial 9-year mine life producing up to 25,000 tonnes of copper cathode per annum
• Total Proved and Probable Ore Reserves¹ of 51.5Mt @ 0.6% Cu for 303kt of contained copper and 0.39% total soluble Cu for 206kt of contained soluble copper
• Total Measured, Indicated and Inferred Resources^2,3 of 69.6Mt @ 0.6% Cu for 451.9kt of contained copper
• Life of Mine (‘LOM’) Revenue of $1.27 billion and EBITDA of $563.3 million
• Initial capital expenditure $192.0 million (excluding contingency $31.4 million)
• Post Tax NPV⁸ of $133.5 million, 19.5% IRR (excluding closure costs)
• C1 cash cost of $1.65/lb and AISC of $1.78/lb
• Additional value enhancement opportunities identified with potential to improve valuation by a minimum of $35 million on a risked weighted basis (excluding exploration upside)
• Defined exploration targets close to the proposed BKM mine have potential to expand the current mineral inventory and substantially impact the value of the BKM project through mine life extension beyond 2030. Evaluation of these targets will be a priority for the next phase of work.

The BKM Feasibility Study LOM key metrics are highlighted in Table 1 below. All dollars are US dollars. The following economic assumptions were utilised:

• a long-term copper price of $3.30/lb LME (London Metal Exchange);
• a real, after-tax, US dollar, discount rate of 8%;
• an Indonesian corporate income tax (“CIT”) rate of 25%⁴; and
• an Indonesian Government Royalty of 4% (of revenue).

Capital costs have been estimated for the Project based on Feasibility Study level engineering. The estimated initial capital costs are summarised in Table 2 below.

The capital estimate excludes escalation and mine closure costs which have been included as part of the financial model. In addition to the initial capital costs, a Stage 2 expansion of the Heap Leach is estimated to cost $21.3 Million (including indirect costs and contingency).

The total Life of Mine (LOM) operating costs for the Project are shown in Table 3. Approximately 78% of the total operating costs are incurred in the mining and processing activities. With an initial mine life of 8.8 years, on-going maintenance activities will replace sustaining capex. No replacement or rebuilds are required during the initial project life.

Mining activities are assumed to be contracted, with the overall LOM mining cost of $1.98/t material mined, which is in line with other projects in Central Kalimantan. The LOM processing costs equate to $4.77/t ore processed, with
the key component being electricity consumption from the LNG fired power units. Electricity costs is estimated at 14.7c/kWh. Site services and general and administration costs include management of waste water treatment, site
facilities, camp buildings, fuel storage and administration.

The charts below show the Life of Mine (LOM) production (Figure 2) and cash flows after tax (Figure 3). Once the operation is commissioned the ore mined is consistent over the LOM with the higher grades of soluble copper mined first, delivering strong early stage cash flows to the project. With lower waste to ore ratios in the first five years of the project the strip ratio is 0.99:1 well below the LOM ratio of 1.41:1. This is further highlighted in Figure 2 with the project consistently generating after tax free cash flow above $90 million in years 2 to 5 with peak cash flows in year 4 of $97 million.

As part of the Feasibility Study, a sensitivity analysis was conducted to determine the effect of key variables on the base case post-tax NPV8 of $124.8 million. The results of this analysis are shown in Figure 4 and Table 4.

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

A strategic review of the proposed capital and operating cost estimates was also completed to identify opportunities to further enhance the project economics. This process identified and ranked twenty ‘Value Enhancement’ opportunities, which are illustrated in Figure 5 below. Those with the highest value and ease of implementation totalled an estimated $35 million uplift over the base NPV on a risk adjusted basis, this excludes exploration success being valued. These opportunities will be prioritised for investigation and include:

Exploration of near mine targets proximal (less than 3kms) to the BKM ore body also have the potential to add very significant value by extending mine life beyond 2030. These targets are expected to add heap leachable copper resources to that already defined and create further opportunities for revenue enhancement. The high priority targets to be investigated immediately include:

• the BKM ‘link zone target’ between the BKM and BKZ deposits;
• testing IP geophysical targets approximately 800m to the north-west of BKM;
• the BKM depth extensions with drilling to follow up IP geophysical targets at depth; and
• the BK South near surface oxide targets.