Liberum sets a 14p price target for Asiamet, based on recent KSK deal and a comparison of Beutong wi

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Shares in Asiamet Ltd (LON:ARS) rose by more than 60% to over 4p on news that it is to roll certain of its Indonesian copper projects into a new, partially-owned vehicle that could be worth as much as US$500mln on listing.

Asiamet has made great strides in developing the KSK Contract of Work and the BKM project within it, but until now a path to financing construction hasn’t been clear.

But the deeper involvement of commodity company Aeternum, which already owns a significant stake in Asiamet, changes all that.

KSK will be rolled into a vehicle called PT WIN, which will also contain Aeternum’s commodity trading business, and which will likely be listed on the Indonesian stock exchange in early 2021.

Independent estimates has put the value of PT WIN at around US$500mln, but broker Liberum raises the possibility that the actual valuation may go higher if other assets are included in the company at the time of listing.

Asiamet is set to own a 22.5% stake in PT WIN, allowing that certain milestones are met on KSK.

All of which will likely mark a step change in the way Asiamet is valued.

The market’s already given its initial verdict, but there’s a real possibility of more upside to come. Liberum sets a target of 14p for the company, based on the upside offered by the PT WIN deal, the cash that’s coming into Asiamet as part of the transaction, and the upside that still remains at Asiamet’s other major asset, Beutong, which isn’t part of the deal.

Indeed, Liberum even goes so far as to compare the potential upside at Beutong to the huge discovery made by Solgold (LON:SOLG) at Cascabel in Ecuador some years ago. Cascabel has subsequently been much fought over by major mining companies and has secured a valuation for Solgold of upwards of GBP750mln.

The deal also meets the stipulations of Indonesian asset ownership legislation, and means that Asiamet’s largely untroubled experience of operating in Indonesia is likely to continue.

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