BRMS - Prepare to monetize high gold price

CPM project progressing well; 1st CIL plant already dismantled – earlier than expected
We just returned from our site visit to Citra Palu Mineral (CPM), a BRMS operating asset, where we were afforded the opportunity to enter a mining tunnel and view how the infrastructure (water pump, air flow, refuge chamber, temporary ore stockpile, etc.) is already in place, while construction efforts to ensure safety of the mining site continue. As of this writing, the Company considers construction of this underground gold project as in-line with management progress target. The second phase of the underground project is nearly completed, and the firm is ready to go onto its third phase. If construction efforts all run smoothly, this project will come online within the Company target of 2027F. During the underground mine construction phase, the Company is carrying out further drilling: ore samples are extracted from within the tunnel,to further study mineralization and improve mine sequence, once it becomes operational. Preliminary findings indicate prospects are above expectations, with a current study showing superior tendencies to upgrade the reserve, with a grade of gold comparable to current JORC standard. Nevertheless, further drilling will attempt to verify their updated reserves, with the aim of amplifying their reserve modelling and thus upgrading their future mining sequence. Interestingly, the Company did decide to expedite its first CIL rebuild project: as of now, this processing plant ceased operations and has been dismantled. The plantis in progress to be upgraded to 2,000tpd (vs. a previous 500tpd) to support underground mining operations. We commend this as positive for BRMS, as the new plant will come online earlier than expected, by end-2H26F, vs. previous expectation of 2H27F. Based on our discussion, this current upgrade and dismantling of first CIL will not impact company production, as second CIL will back up any capacity loss from first CIL. Thus far, the second CIL is able to run at 4,500tpd (vs. designed capacity of 4,000tpd), thanks to its efficiency. While underground mining will come online later in 2027F, the Company has already secured a sufficient low-grade ore stockpile for blending, enabling it to sustain operation for one year; it will likely add more, with various grades, in order to hedge against any possible production hiccup in the future.

We upgrade our forecast, as first CIL might be online earlier than expected, thus exploiting strong gold price
- Gold price: we revise our 2025F/2026F/2027F price assumption upward by 0.0/25.0/26.2% to USD3,350/5,000/5,300 per oz., respectively. 
- Silver price: our 2025F/2026F/2027F price assumption revised upward by 22.5/22.5/22.2% to USD37/37/37 per oz., respectively. 
We tweak our revenue and earnings forecast for BRMS: revenue and net profit are reset higher, by 0.6/26.3/41.4% and 1.4/47.1/73.7% for 2025F/2026F/2027F, respectively. Our revenue for 2025-26F is upgraded, on the back of higher gold and silver price, whereas 2027F is to be driven by both gold price and sales volume. Our 2027F sales volume now sits 12% higher than our previous forecast, as first CIL will become operational in 2027F, vs. our earlier expecation of end-2027F. Our ex-royalty cash cost (net silver credit) is now 1.7/1.7/1.6% lower than our initial forecast, moved to USD1,225/1,197/1,118/oz., on the back of higher silver price.

Maintain BUY with higher TP
We remain bullish on gold over the long term, considering limited global production. We consider retail FOMO on gold as real and thus we observe long lines at dealers in Australia, Vietnam, as well as India. Meanwhile, silver is unavailable – completely sold out in India. Atthis juncture, itis hard to decide whether gold has already peaked, as the fundamental factors that we laid out in our initiation remain intact. We thus conclude that the current correction is but temporary, before the price spikes once again. We maintain BUY on BRMS, with a higher TP of IDR 1,100/sh (vs. a previous IDR750/sh). We price BRMS using a Sum of The Parts (SOTP) based valuation. Our TP pricing of BRMS in 2026F P/E and EV/EBITDA is 50.5X and 32.7x, respectively. Looking forward, our TP pricing for BRMS in 2029F P/E and EV/EBITDA is projected at 11.7x and 8.2x, respectively.