Flurry of Good News Boosts Bumi Unit’s Outlook, Share Price
Tito Summa Siahaan
Shares of Bumi Resources Minerals rose 4 percent in Jakarta trading on positive investor sentiment about the company’s outlook, after it secured a license to operate a zinc and lead mine in North Sumatra.
The gain brought the stock’s total increase since late July, when the company announced the new concession area, to 25 percent. Its shares closed at Rp 520 on the Indonesia Stock Exchange on Tuesday. Since a recent low of Rp 310 set on July 19, the stock has risen 68 percent.
Herwin Hidayat, head of investor relations at Bumi Resources Minerals, a unit of Bumi Resources, told the Jakarta Globe via e-mail on Tuesday that the company had seen progress on several of its projects in the past three weeks.
“First, our zinc and lead project finally secured the borrow and use permit for exploitation works on July 23,” he said.
The company announced on July 25 that subsidiary Dairi Prima Mineral had acquired a working permit to operate the lead and zinc concession in North Sumatra.
BRM claims the concession has high-grade zinc deposits and has estimated standard reserves of 11 million tons.
Dairi Prima projects delivery of its first zinc and lead output in the second half of 2014, with an estimated production rate of 1 million tons of ore per annum.
The second piece of good news, according to Herwin, was that Gorontalo Minerals and Citrapalu Minerals, two units of BRM that secured copper and gold concessions on Sulawesi, will complete exploratory drilling at several sites and announce resource estimates in the third quarter of this year. BRM holds an 80 percent stake in Gorontalo Minerals, which holds a mining concession permit on 36,070 hectares in Gorontalo province.
Third, Herwin said gold miner Newmont Nusa Tenggara, of which BRM has a 24 percent interest, just announced that its Elang site may hold greater reserves than the Boddington gold mine that it operates in Australia. NNT’s controlling stakeholder is US industry giant Newmont Mining Corporation.
Elang is situated about 60 kilometers east of Newmont’s Batu Hijau gold and copper mine in West Nusa Tenggara, which falls under the same contract of work.
The company’s Boddington mine is regarded as the largest gold mine in Australia, situated about 130 kilometers southeast of Perth in Western Australia. At the end of 2011, the mine was believed to have ore reserves of 20.3 million ounces of gold and 1.03 billion kilograms of copper.
“Perhaps these positive factors are being taken into account by the market, reflecting the current stock price,” Herwin said.
Dileep Srivastava, director at Bumi Resources, BRM’s holding company, said these high-value assets had lured investors to buy BRM shares.
Mohammad Alfatih, an analyst with Samuel Sekuritas, said news on the license had lifted the company’s stock price in recent trading days.
“The share price reflects expectations on the company’s [future] revenue, not its past performance,” Alfatih added.
BRM posted a poor financial performance in the first quarter of this year, reporting a whopping 99.8 percent decline in net profit, to $62,871 from $37 million.
It also saw a 94.6 percent fall in revenue from its stake in NNT, down to $2.19 million from $41.22 million a year earlier.
NNT reported a 49 percent decline in copper output and 76 percent decline in gold output from its Batu Hijau mine.
NNT has been at the center of recent media attention after the Constitutional Court barred the central government from purchasing a 7 percent take in the miner.