Considerable Q1 downturn, expect recovery in the upcoming quarters. In 1Q25, AMMN posted gross loss of USD 57mn (1Q24 gross profit: USD281mn), mainly due to lack of sales, as the Company’s export permit given by the government expired in 2024. With AMMN only having started to produce copper cathodes in late March 2025, the company only reported net sales of USD 2mn of which most were driven by concentrate shipments from the previous quarter. However, we expect AMMN to begin recording higher sales volumes in the coming quarters given that smelter production is underway, allowing for recovery.

 

Lower gold and copper operational figures due to Phase 8 transition. Although volumes of mined materials rose 2% YoY, AMMN’s concentrate production dropped 80k dmt (-55% YoY), as the company’s efforts were primarily focused on waste removal and extraction of outer halo of Phase 8, which comprised of lower-grade ore. As a result, AMMN booked 1Q25 lower copper production of 37mlbs (-62% YoY), slightly below our forecast at 19% of full-year estimate. Meanwhile, gold segment achieved higher-than-expected production of 32koz (-81% YoY), 37% from our projection and the company’s target.

 

Toning down our earnings forecasts, but anticipate improved 2026 earnings. We adjust (figure 4) our FY25F net income to -USD 116mn (previously: -USD 20mn) and FY 26F to USD 352mn (previously: USD 331mn), reflecting lower 2025 smelter utilization assumption of 51% (from 60%). Our rather conservative estimate takes into account the stabilization and fine-tuning period required before the smelter reaches optimal performance. By 2026, we expect the utilization rate to reach 93%, translating into copper cathode production of 205k tons (+81.9% YoY). The ramp-up in AMMN’s smelter utilization rate will be backed by plant expansion, which will double input capacity from 40 to 85 Mtpa.

 

Maintain BUY with lower TP of IDR 10,000.  We retain our BUY on AMMN, albeit with a new lower TP of IDR 10,000 (down from IDR 12,000), based on our updated SOTP valuation following our earnings downgrades on weaker-than-expected 1Q25 results. However, we believe the worst is behind for AMMN, with several positive catalysts ahead: 1) potential upside from processing plant expansion, 2) long-term operational sustainability supported by the Elang mine, and 3) unique positioning as the only ‘pure’ copper player in the market, allowing AMMN to benefit significantly from copper’s bullish long-term outlook on global clean energy transition and constrained supply. Downside risks are lower metal prices, operational delays, and regulatory changes.