In fact, one of its directors just bought almost eight million shares for £158,222 earlier this month.

Is this a sign that even more explosive growth’s on the horizon? And should investors be rushing to snap up this penny stock before it’s too late?

Copper mining in Indonesia

Demand for copper is growing at an accelerated pace. If the latest analyst projections are correct, the world could be in a 9.9 million tonne deficit by 2035, down to new technologies like renewables, electric vehicles, and data centres.

It’s a growing problem the mining industry’s scrambling to solve… and capitalise on. This includes Asiamet Resources with its flagship BKM Copper mining project in Indonesia.

Earlier this year, BKM passed its feasibility study with flying colours and is expected to produce an average of 10,000 tonnes a year of Grade A copper cathode.

Looking at Asiamet’s own projections, management expects to generate a total of $1.2bn over the entire 13-year lifespan of this mine, translating into an EBITDA of $612.2m. And if copper prices continue to climb on the back of a supply shortage, these preliminary estimates could be significantly lower than reality.

With commercial production seemingly on the horizon and perceived risk falling, it’s not surprising that investors and insiders are rushing to buy shares.

What to watch

Completing a positive feasibility study is a major milestone for young exploration businesses and is a critical step towards reaching commercial production.

The next step is for Asiamet to secure the necessary $145.5m of financing needed to build out the BKM project. That’s not exactly pocket change, but given the favourable findings of the study, the company should be able to find an interested party likely through a royalty, stream, or equity arrangement.

However, it’s important to recognise that this process is still time-consuming. And even after financing has been secured, building the actual mine could still take over a year. As such, even if there are no unwanted surprises,  commercial production likely won’t kick off until around 2027.

Until then, Asiamet remains a pre-revenue business. Even once production kicks off, the company will still be a single-project enterprise, creating concentration risk. That means any disruption at BKM could have a significant adverse impact on the group’s cash flow.

Over time, this could become less of a problem, given the firm has other early-stage copper and gold projects in its portfolio that might deliver some nice diversification in the future. Nevertheless, in the short term, this penny stock remains a high-risk/high-reward investment.

The bottom line

Asiamet looks like an exciting way to profit from the expected incoming copper shortage. And if everything goes smoothly, its current £50m market-cap could have considerable room for growth.

However, even with commercial production seemingly only a few short years away, the risk remains a bit too high for my tastes, especially since there are other small-cap copper mining stocks on my radar already profiting from rising metal prices.

The post A company insider just bought 7,911,115 shares of this penny stock! appeared first on The Twelfth Magpie.