Gold & Nickel Projects to Drive 2026-27F Growth

Backed by gold performance, 1Q25 EBITDA came in line with ours and cons. In 1Q25, MDKA booked EBITDA of USD 89mn (+57% YoY), in line with our estimate (26.9%) and consensus (19.6%), driven by stellar gold performance with EBITDA reaching USD 67.2mn (+142.2% YoY) and higher cash margin of USD 1,825 per oz (+75.3% YoY). MDKA saw increased gold ASP to USD 2,757 per oz (+30.9% YoY) and solid sales volumes of 37Koz (+38.2% YoY), supported by higher stacked grade of 0.44g/t (1Q24: 0.40g/t), making it the largest contributor to MDKA’s EBITDA (62%). This was followed by NPI with EBITDA of USD 27mn (30.5%).

 

Mixed outlook in the coming quarters due to higher government royalties. Looking ahead, we expect MDKA’s cash costs to increase from 2Q25 onwards, following the introduction of new royalty scheme for coal and minerals. Gold royalty rate will rise to 16% (from 10%), assuming gold prices remain above USD 3,000 per oz. Additionally, MDKA’s gold and copper production numbers are expected to decline in the upcoming quarters due to lower ore grades. On a more positive note, earnings are expected to receive an EBITDA boost amounting to USD 30mn in 2H25 from the commencement of AIM project (acid for HPAL smelter) in Morowali, Central Sulawesi.

 

Copper, gold and nickel smelter projects to drive mid-to-long term outlook. MDKA is actively de-risking its TB Copper project (Banyuwangi, East Java) having increased the SLC operation ore reserve for early production to 6mn tons (up from 4mn tons), with the pre-FS announcement now delayed to 2H25. For the Pani Gold Project (Gorontalo, North Sulawesi), heap leach operations are expected to begin commissioning in 4Q25, with the first gold pour anticipated in 1Q26 (MDKA expects contribution of 80koz in 2026F from the project). On the HPAL projects, ESG HPAL Train B (Morowali) is projected to come online in 2Q25, transitioning to SCM FPP in 2H25 (currently operating with IMIP’s FPP). Meanwhile, the SLNC HPAL  smelter plant was 14.4% complete in 1Q25 with the project commissioning schedule on track for 2H26.

a
BUY on turnaround story in 2026-27F with TP of IDR 2,700 (30.4% upside).  We reiterate BUY on MDKA with SOTP-based TP of IDR 2,700, implying 26F P/E of 15.9x and 25.5% upside. MDKA is projected to post 2025F net loss of USD 11mn, followed by a solid bottom-line rebound to USD 196mn net profit in 2026F, supported by the commissioning of Pani Gold Project and continued strong gold prices. In addition, we see additional catalyst stemming from the TB copper underground project PFS, expected in 2H25. Key risks to our call: 1) weaker-than-expected commodity prices, 2) regulatory shifts, and 3) execution risks.