BASML ANTM: Another Gold Asset Acquisition

ANTM: another gold asset acquisition
Daisy fails to get excited over ANTM's acquisition of gold asset. The U$8mn purchase px for 95% stake in Cibaliung gold mine is attractive, but the project was colored by delays and mining difficulty (underground cut-and-fill stopping with decline access). Cibaliung has 412,000 oz reserves (US$20.4/oz). The project is at “wait and see” stage with commissioning delayed for ~2yrs due to capex overrun, financing difficulty and development phase delays. ANTM to spend US$35-40mn to bring it into operation in 2H10. We see Cibaliung as a replacement for ANTM’s Pongkor gold mine rather than a significant addition. As of Dec '07, Pongkor has 742,750 oz reserve, which we est' can last for 3-4 yrs. Post acquisition, ANTM is still mainly a nickel producer, with nickel contributing ~70% of revenue. Daisy remains cautious on nickel near term given no sign of nickel px rebound with LME inventory still rising and the global economy yet to recover. ANTM has also warned of a potential derivative loss. Maintain Underperform PxT Rp900.