Asiamet Resources Share Discussion Threads

[markth126] 27/10/2018 16:26

Some serious players on this board mind with £500k investments in a penny stock. You must have some serious spare cash!

[mount teide] 27/10/2018 16:25

jackbal - if like me you can see a copper price in the range $3.50 - $4.00 over a two year timeframe - it is worth visualising what the prospects of Asia Met would be like in such a pricing environment.

The current negative sentiment across the base metal sector which has seen most juniors drop in valuation by around 35% from the recent highs are largely the result of perceived macro issues and totally contrary to the sector fundamentals which are very sound.

It is a safe bet that the recession leaned mid and large cap miners now with strong cash flows and looking to fatten up their depleted development reserves, will be watching the valuations across the junior sector like a hawk waiting to pounce on its prey.

I'm no human psychologist but many here that sold out a little higher sound like they're hoping that the share price revisits the recent lows again rather than expecting it to.

[grocer1] 27/10/2018 15:45

I loaded up in ARS in the high 8s, in some volume, so am now hurting (on paper at least). I read MT's detailed analysis with hope and am also in this one for the long term, as exiting at today's share price is unthinkable for me given the volume of shares acquired around 8.9. While I am happy to sit on this position and wait for it to turnaround, and even to add at today's SP, the possibility (likelihood?)of an acquisition by a more established mining firm, even at a decent premium to today's SP, could leave me break even or with only a marginal gain, neither of which excites me! If that ends up being the outcome, the opportunity cost of my funds would also need to be taken into account to determine if ARS turns out to be a relative loss maker. I am relatively inexperienced in direct equity investing (having accessed equity markets through funds to date), so I would be very grateful for any insight as to the range of share price premium an acquisition of ARS's assets could come in at. I have no sense of the M&A scenarios in the mining sector, so a senior acquiring a junior outright, or a % of fits assets. It won't affect my decision-making but it might reduce the current stress levels! I have more funds to allocate and feel current ARS share price represents an opportunity, but I don't feel I have enough visibility into the takeover/acquisition scenario to commit at this stage. Timelines are no issue - happy to wait 3-5 years for this one to fulfill its potential, just worried about a low ball offer in the interim that would leave me flat, modest upside or even in the red given the share price I acquired ARS at. Thanks all. This BB is excellent.

[jackbal] 27/10/2018 15:39

HB and MT thank you both for your responses.

MT I agree that eventually a partner is really only way forward re beutong but how many months are we away from that event and how many shares do we have in issue by that stage?

I’m not trying to clog up this board with pointless negativity but I feel that any near term placing is going to depress share price for quite some time whilst credibility is restored and I think most will agree it’s more likely a near term placing than a partner right now.

I hope it’s just a for a couple of million max at no less than 5.5p as the weak bounce in the share price after the sell off concerns me that it could be more money at lower price....

Good luck all, nobody wants this to come good more than me.

If share price reaches low 5’s again next week I am going to put the cash back in that I took out at around 8 in order to accumulate.

[mount teide] 27/10/2018 15:02

Jackbal - 'Do you believe that ARS can attract a strategic investor in this climate or do you think we are simply awaiting a heavily dilutive patience testing placing at a silly SP?'

As demand for copper continues to trend higher major producers will need to replace depleting reserves. Current forecasts see a very significant supply shortfall begin in late 2019 and continue to quickly widen over the next decade. One of the major factors contributing to this supply shortfall is declining ore grades at the existing mines, the low grades of new mines under development and the low level of development resources on the asset registers of the major miners as a result of minimal exploration investment since 2013.

Currently, the economic climate for mid and large cap copper miners to get access to cheap copper resources through deals/partnerships with or takeover of juniors is at/close to the optimum point of the average 15-18 year copper market cycle.

Joshua Hall a highly astute US base metals sector investment advisor is well aware of this and recently published his Industrial MineFinder Junior Copper Index on Seeking Alpha;

It is a very well researched global list of copper juniors with assets/resources most likely to attract the interest of mid/large caps miners. He argues from an investment perspective, it is a historical fact that few juniors get to become mid/large caps but many with high quality assets DO find themselves getting acquired at substantial share price premiums during the recovery stage of each new market cycle.

Both Solgold and Asia Met are on the list of 15 Copper Juniors on Joshua's IM Junior Copper Index.

With this in mind - to answer your question - i would say there is zero chance of Asia Met attempting to raise the finance alone to evaluate the magnetic anomaly under Beutong that recent drill result modelling points to the likelihood of a high grade core. This will almost certainly be carried out in partnership due to the cost. With high grade near surface resources and deep potential it will almost certainly be a matter of when not if a partnership deep drill occurs - and it will probably be long before the price of copper makes it inevitable and has pushed the Asia Met share price substantially Northwards.

Any near term placing therefore will be primarily for the limited work at BKM and the wider KSK district - in this context i would expect it to be much more modest than the previous placing in March 2018 - and at a premium to the present s/p.

The fact that it 'cost a mere $4 mil for the 40% stake of Beutong' offers little guidance as to its current market value - as i understand it that price was negotiated as a contract option when the copper market was in the depths of a brutal recession and there was zero interest in exploration assets and 100% management interest focused on survival.


AIMHO/DYOR

[jackbal] 27/10/2018 13:05

MT thanks for your post.

I would appreciate your view on the following please,

Do you believe that ARS can attract a strategic investor in this climate or do you think we are simply awaiting a heavily dilutive patience testing placing at a silly SP?

The fact that most brokerages covering ARS reiterated their price targets suggest to me that they are not factoring a heavy dose of dilution which can only mean that they believe a strategic partner/investor is available.

I personally think all we are going to see in next few months is some positive drilling results used as pr to get a placing away. Maybe recent events have made me cynical but I just don’t see it happening soon enough. (Beutong not proven up enough, protestors, fact that it cost a mere $4 mil for the 40% stake)

Glad to be wrong on this of course but I have planned for the worst (sold some off around 8) and will stay the course with the rest if price recovers into 2020.

[kjawoogie] 27/10/2018 12:00

Agreed a great balanced summary. Totally agree with doing your own research whether that's reviewing the huge amount of historic info on KSK, Tony Manini, the ups and downs and ups and hard work that took oxiana from $3m to $6bn which wasn't a straight line and had set backs or the Copper market. I've also added to my 5.4m holding this week some of which was acquired at prices over 10p.

[zeusfurla] 27/10/2018 11:58

MT Thanks for a terrific statement of the current position in an objective and even-handed way. The recent share price drop has resulted in quite a few overly negative views being expressed on this BB which have discouraged me from posting recently. I feel the pain of short-term paper loss too! However after we have criticised the Boards' comms 100x surely that is enough and we move on or sell out. The assets remain in place and even those that criticise the Board can see that in a worst case scenario value would still be realised from these assets above the current share price if ARS was bought over (although much upside would be lost. I have retained my holding through recent share price volatility and look forward to a recovery in the coming months. Last week was tough across the board - next week is likely to be better.

[aim0raider] 27/10/2018 11:22

Cracking post, I've copied that across to Twitter, hope you don't mind. Credit given.

[mount teide] 27/10/2018 10:57

In market sell-offs panic is the worst thing an investor can do - the key is to focus on the long term and actually take advantage of market emotion.

One person’s panic is another’s buying opportunity.

My stock market positions are all long-term, and mostly too large to trade in and out of, so short term price movements don't interest me, other than to take advantage of short term weakness to average up.


With regard to the long term investment case of Asia Met the main material changes with respect to the market and company fundamentals since the $7.2m March 2018 Institutional placing at 11.0p are:

* First Copper price correction since the H1/2016 circa $1.90/lb low: from $3.25 to $2.75(up 45% in two years) - its inflation adjusted 2011 peak of the last market cycle is over $5.00/lb.

* BKM BFS/Finance - Deferred to Jan-March 2019 to effect limited further drilling in the BKM pit area to better assess geological/geotechnical components and their impact on the open pit mine design and to evaluate the large Inferred Resource tonnages that currently sit both inside and outside the pit shells(The opportunity to capture substantial additional value while further de-risking the project is considered to potentially have material positive impacts on project financing outcomes).

* Further evaluation of the Beutong Porphyry system to expand the resource base. (Drilling programme has produced excellent results which after modelling strongly suggest the likelihood of a high grade porphyry core necessitating evaluation through deep drilling most probably by way of a partnership).

* Further technical evaluation of the initial 456m interval of the high grade area of Beutong to determine the potential for a near term, low cost heap leach starter operation.(Ore Testing at an advanced stage of evaluation with highly positive results to date)

* Initial Mineral Resource Estimate for BKZ (Polymetallic and Copper Zones)- Completed (New, near term targeted exploration programme to extend and further evaluate BKZ Resource and to test the linkage of BKZ and BKM copper mineralisation and a new high-priority target - a very large magnetic feature at depth thought to represent an untested porphyry intrusion.

* Increase Beutong shareholding from 40% to 80% (Completed)

While the market communications of a 4-6 month deferral of the BKM BFS were very poorly handled and for which the management should take full responsibility for the wholly predictable market reaction - the fact remains, VIEWED OVER A 2-3 YEAR OUTLOOK the most recent BKM and Beutong news and strategy change has likely improved the investment case and timetable to monetise the assets.


AIMHO/DYOR - while written as an attempt to provide some objectivity and perspective to the recent disappointing BKM BFS news and its impact on the longer term prospects of the investment case - readers should be aware the writer holds a 5 million plus shareholding which includes a material addition(greater than 10%) over the last week.

CANNOT OVEREMPHASISE THE IMPORTANCE OF DOING YOUR OWN RESEARCH - NOT JUST ON ASIA MET BUT MORE IMPORTANTLY THE IMPACT THAT A HIGH COPPER PRICE ENVIRONMENT IN THE MID/LATTER STAGES OF THE RECOVERY/BOOM PHASE OF A NEW MARKET CYCLE CAN HAVE AND, DID HAVE DURING PREVIOUS COPPER MARKET CYCLES.

IN THE LAST MARKET CYCLE A VERY SIGNIFICANT NUMBER OF SMALL/MED SCALE MINE DEVELOPMENT PROJECTS WITH BREAKEVEN LEVELS IN THE $3.00 TO $3.25 RANGE WERE PUT INTO PRODUCTION THAT A FEW YEARS EARLIER WOULD HAVE BEEN TOTALLY INCONCEIVABLE. TODAY'S $2.75 COPPER PRICE IS EQUIVALENT TO AN INFLATION ADJUSTED PRICE OF $2.37 AT THE PREVIOUS MARKET CYCLE PEAK IN 2011 WHEN COPPER HIT $4.54 - THIS IS THE PRIMARY REASON WHY MOST OF THE INDUSTRY CONTINUES TO SIT ON ITS CAPITAL INVESTMENT HANDS DESPITE A 60% DECLINE IN INVESTMENT SINCE 2013.

[aim0raider] 27/10/2018 07:54

Tidy why would it be? They've delayed publication of the BFS by 6 months in view of improvements to the numbers. Why would it be the end? What else has changed, the assets certainly haven't.

[tidy 2] 27/10/2018 01:25

Fingers crossed its not the end of the line here for Pi profits.

[europa79] 26/10/2018 16:18

Let's hope that's not a matchbox model!

[charles clore] 26/10/2018 16:09

MT - I agree the market mentality is very temporal. I still have my 60% and am hurting badly but I won't sell. Call me stubborn or stupid if you like but I still think there's a new Tesla in this for me!

[uapatel] 26/10/2018 16:04

Zho. Thanks for posting that,

Put the link to the video interview here.

Mount Teide. Picks up on some of the points you raised too.

[zho] 26/10/2018 15:35

We've heard it before, but ...

"But at the same time, look at the inventories, they’ve collapsed. Global inventories on the three major exchanges, SHFE, LME, COMEX, are now about 450,000 tonnes. That happened at the same time the copper prices slipped, and if you look just recently, in the last two weeks, the premium for immediate physical delivery is skyrocketing in China. This is parabolic. So what’s going on? "

[okidokicoki] 26/10/2018 15:28

I still hold my 1.5 million which in hindsight should have sold when the BFS was going to be late and bought back in at a lower price to gain shares as im still relatively new to this game. But like others have mentioned this is a long term investment not a trade and even though it feels painfull at the moment the future will be very bright for us if we don't get bought out

[mount teide] 26/10/2018 15:04

uapatel - exactly - capital investment in new copper production fell over 60% between 2013 and 2016, and has since risen by around 10% from the lows. With falling ore grades there is unlikely to be any material increase in capex until copper consistently averages above $3.00.

Consequently, with demand growing by 2%-4% a year a very significant future price spike like that seen between 2000-2006 ($0.64 to $3.80)is becoming more certain with each passing day.

[uapatel] 26/10/2018 14:46

Think with copper prices below 3USD, it also means others will not readily be pushing investments in new mines.


The bubbles under the Copper Champagne cork are increasing.....

[mount teide] 26/10/2018 14:40

Dg4 - my sentiments exactly - taken some profits from an investment in GYM this week and been re-investing it here - now hold over 5m.

Natural resource sector investors would do well to remember that:
OVER THE NEXT DECADE THE FUTURE OF MOST NEW NEAR SURFACE COPPER MINE DEVELOPMENT IS TRENDING TOWARDS 0.30% TO 0.35% GRADE ORE - WHICH MOSTLY WILL NEED $3.25-$3.50 COPPER TO ATTRACT FINANCE.

The world's largest copper miner Codelco are spending $25bn of their shareholders funds between 2017 and 2021 just to maintain their Copper production output at the present level such is the fall off in head grades at its major mines.

[tektonik] 26/10/2018 14:34

Well said MT, a few people here really need a bit of perspective

[mount teide] 26/10/2018 14:23

cc - 'it's obvious to me their minds are focused on other things. This is no longer a priority for them. They have lost the plot imho.'

Anyone who thinks the new venture headed up by Steve Hughes is a remotely comparable investment prospect compared to Asia Met needs to do some research worthy of the name.

I have and would not invest a penny in the company on the basis of the information currently in the public domain.

[mount teide] 26/10/2018 14:16

cc 'Now anyone who bought on the dip in the 5-6p range will be twitching.'

If they have the investment outlook of the lifecycle of a Mayfly maybe!

The short term outlook of many 'investors' today is the reason why so few make money over the long term.

On the balance of probabilities - if you bought at 6p today and did't look at the share price for three years - it would be highly likely that the investment would have performed handsomely.

Asia Met has attracted more than its fair share of short term traders, including it appears many who describe themselves as 'long term' holders.