TIDMCAML
RNS Number : 2354M
Central Asia Metals PLC
13 September 2023
13 September 2023
Central Asia Metals plc
(the 'Group', the 'Company' or 'CAML')
Interim Results for the Six Months Ended 30 June 2023
Central Asia Metals plc (AIM: CAML) is pleased to announce its
unaudited interim results for the six months ended 30 June 2023
('H1 2023' or 'the period').
H1 2023 financial summary
- Sector-leading dividend yield
o H1 2023 dividend of 9 pence per share (H1 2022: 10 pence)
- Dependable financial performance
o Group gross revenue(1) of $99.3 million (H1 2022: $119.5
million) and Group net revenue of $93.6 million (H1 2022: $113.8
million)
o Group earnings before interest, tax, depreciation, and
amortisation ('EBITDA')(1) of $48.9 million (H1 2022: $74.9
million)
o EBITDA margin(1) of 49% (H1 2022: 63%)
o Group adjusted free cash flow ('adjusted FCF'(1) ) of $24.1
million (H1 2022: $52.2 million)
- Strong balance sheet
o Debt free
o As at 30 June 2023, cash in the bank of $50.6 million(2) (31
December 2022: $60.6 million)
o Creates solid platform for growth
H1 2023 operational summary
- Kounrad copper production of 6,716 tonnes (H1 2022: 6,617
tonnes) and sales of 6,315 tonnes (H1 2022: 6,406 tonnes)
- Sasa zinc in concentrate production of 9,764 tonnes (H1 2022:
10,465 tonnes) and payable zinc sales of 8,382 tonnes (H1 2022:
8,761 tonnes)
- Sasa lead in concentrate production of 13,734 tonnes (H1 2022:
13,827 tonnes) and payable lead sales of 12,416 tonnes (H1 2022:
13,608 tonnes)
- One Group Lost Time Injury ('LTI'); Group Lost Time Injury
Frequency Rate ('LTIFR') of 0.80 (H1 2022: 0.85)
- Exploration activities underway in Kazakhstan through
arrangement with geological team, Terra Exploration
- 2022 Sustainability Report and Climate Change Report published
in Q2 2023 and submission of inaugural disclosures to Carbon
Disclosure Project ('CDP') in July 2023
1 See Financial Review section for definition of non-IFRS
alternative performance measures
2 The cash balance figure disclosed includes restricted cash
2023 outlook and deliverables
- On track to meet copper production guidance of 13,000-14,000
tonnes, zinc in concentrate production of 19,000-21,000 tonnes and
lead in concentrate production of 27,000-29,000 tonnes
- Completion of Kounrad Solar Power Plant construction
- Commencement of transition to paste fill mining methods at Sasa
- Continued focus on Business Development activity
Nigel Robinson, Chief Executive Officer, commented:
"I am pleased to report a Group EBITDA of $48.9 million for the
first six months of 2023 despite a challenging economic background
with metal prices deteriorating by an average of 17% across our
base metal portfolio and ongoing inflationary cost pressures. Given
our strong balance sheet with $50.6 million cash and no debt
together with continued robust underlying operational cashflows, we
are confident to declare an interim dividend of 9 pence per
share.
"We continue to look for opportunities to grow the CAML business
and were pleased to begin early-stage exploration activities
through our new arrangements with Terra Exploration ('Terra') in
Kazakhstan.
"During the first six months of the year, we have met our
production targets and remain on track to meet our full year
guidance. This achievement has been delivered with a strong safety
performance and only one LTI in the period.
"H1 2023 was a successful period for our investments at both
sites, with the Solar Power Plant advancing and commissioning of
the Paste Backfill ('PBF') Plant using thickened tailings now
underway. The transition to paste fill mining remains on track to
commence in H2 2023. We also witnessed the connection of the
Central Decline at Sasa, which was developed both from surface and
the 910 metre level, and this is now operational. Construction of
the Dry Stack Tailings ('DST') Plant project is underway.
"We have continued to develop our approach to sustainability,
and in H1 2023, we published our fourth standalone Sustainability
Report covering our 2022 activities. We also published our second
Climate Change Report and have commenced work to estimate our Scope
3 emissions with a view to reporting them in 2024.
"As we approach the end of 2023, we are confident that we will
deliver on our production guidance for our three base metals and
look forward to transitioning to paste fill mining methods at Sasa.
We will continue to focus on maintaining our competitive cost base
and look for opportunities to grow the business."
Analyst conference call
There will be an analyst conference call and Q&A today at
09:30 (BST). The call can be accessed by dialling
+44 (0)330 551 0200 and quoting 'Central Asia Metals' when
prompted by the operator. Additionally, the presentation can be
viewed via a live webcast using the following link
https://brrmedia.news/CAML_IR23 . The webcast and the Company's
corporate presentation will be available on the CAML website at
www.centralasiametals.com.
Investor Meet Company
The Company will also hold a live presentation relating to the
2023 Interim Results via the Investor Meet Company platform at
16:30 (BST) today. The presentation is open to all existing and
potential shareholders. Questions can be submitted at any time
during the live presentation. Investors can sign up to Investor
Meet Company for free at:
https://www.investormeetcompany.com/central-asia-metals-plc/register-investor
For further information contact:
Central Asia Metals
Nigel Robinson
CEO
Gavin Ferrar
CFO
Louise Wrathall louise.wrathall@centralasiametals.com
Director of Corporate Development
Emma Chetwynd Stapylton emma.chetwyndstapylton@centralasiametals.com
Group Investor Relations Manager
Peel Hunt (Nominated Advisor and Tel: +44 (0) 20 7418 8900
Joint Broker)
Ross Allister
David McKeown
BMO Capital Markets (Joint Broker) Tel: +44 (0) 20 7236 1010
Thomas Rider
Pascal Lussier Duquette
BlytheRay (PR Advisors) Tel: +44 (0) 20 7138 3204
Tim Blythe
Megan Ray
Note to editors:
Central Asia Metals, an AIM-listed UK Company based in London,
owns 100% of the Kounrad SX-EW copper project in central Kazakhstan
and the Sasa zinc-lead mine in North Macedonia.
For further information, please visit www.centralasiametals.com
and follow CAML on X at @CamlMetals and on LinkedIn at Central Asia
Metals Plc.
Chief Executive Officer Review
CAML's Kounrad operation in Kazakhstan had a safe six months,
with no recordable injuries, and the Sasa zinc and lead mine in
North Macedonia recorded one LTI. While this was not a serious
incident, lessons have been learnt and the Company aims for zero
harm.
The Group's strong base metal production offset by weaker base
metals prices resulted in CAML reporting gross revenue of $99.3
million for H1 2023. Whilst Group EBITDA of $48.9 million was lower
than the previous corresponding period, 78% of that decrease was
related to lower copper, zinc and lead revenues. The $5.8 million
increase in CAML's cost base half-on-half was due in large part to
higher labour costs as a result of pay rises with which we have
supported our loyal employees in current times of high in-country
inflation, and we continue to enjoy strong employee relations at
both of our operations.
As previously announced, the Group fully repaid its corporate
debt in August 2022 and, as at 30 June 2023, had also fully repaid
its available overdraft facilities and reported a strong cash
position of $50.6 million.
Based on the Company's strong operational performance and
balance sheet, the CAML Board is pleased to declare an interim
dividend of 9 pence per ordinary share. This represents 82% of our
$24.1 million adjusted FCF. FCF has been adjusted to more
reasonably apportion H1 2023 withholding tax payments over the full
year. This dividend will be paid on 20 October 2023 to shareholders
registered on 29 September 2023.
The Company has made good progress with its projects at Sasa
during H1 2023 and, in Q2 2023, the joining of the Central Decline
that was developed both from surface and the 910 metre level was
achieved. This decline is operational, with haulage of waste and
ore now underway. Commissioning of the PBF Plant using thickened
tailings is currently being undertaken, and CAML continues to
expect the commencement of paste fill mining methods as well as the
operational placement of paste underground during H2 2023. The DST
Plant construction project has commenced and will extend into H1
2024. Construction of the initial phase of the DST landform will
commence in H2 2023.
Management's focus on business development has accelerated
during the first six months of 2023, with 22 opportunities
reviewed, five non-disclosure agreements ('NDAs') signed and three
site visits conducted. Also, during H1 2023, the company entered
into an arrangement with a team of experienced explorers, Terra
Exploration, which comprises early-stage exploration geologists
with international and significant Kazakhstan experience and a
proven track record of discovery. The team is reviewing a series of
potential target areas using historical data and its advanced
database, combined with its analytical abilities, and applications
for exploration licences in Kazakhstan have already been made.
During H1 2023, CAML published its fourth Sustainability Report
and second Climate Change Report covering its activities for the
year ended 31 December 2022. Solid progress on the construction of
the 4.77MW solar farm was achieved during H1 2023. To date, 78% of
the installation works are complete, with all equipment and
materials delivered. CAML remains on track for completion of this
project during H2 2023.
Looking ahead to H2 2023 and beyond, CAML welcomes the material
conclusion of its investments at both sites and continues its
search for new business development opportunities. The Company is
debt free, and this strong balance sheet coupled with its low-cost
operations means that it remains well-placed to pursue potential
acquisition opportunities whilst investing in the business,
delivering returns to shareholders, and adding value for all its
stakeholders.
Operations Review
Sasa
Production
In H1 2023, total mined and processed ore was 396,234 tonnes and
396,673 tonnes respectively. The average head grades achieved for
H1 2023 were 2.90% zinc and 3.72% lead. The average H1 2023
metallurgical recoveries were 84.9% for zinc and 93.1% for lead.
Plant availability during H1 2023 was 95%, with throughput
averaging 98 tonnes per hour.
Sasa produces a zinc concentrate and separate lead concentrate.
Total H1 2023 production was 19,257 tonnes of zinc concentrate at
an average grade of 50.7% and 19,302 tonnes of lead concentrate at
an average grade of 71.2%.
Sasa typically receives from smelters approximately 84% of the
value of its zinc in concentrate and approximately 95% of the value
of its lead in concentrate. Accordingly, total payable production
for H1 2023 was 8,223 tonnes of zinc and 13,047 tonnes of lead.
Sales were made to European customers via CAML's offtake contract
with Traxys. Payable base metal in concentrate sales for the
six-month period were 8,382 tonnes of zinc and 12,416 tonnes of
lead.
During H1 2023, Sasa sold 167,919 ounces of payable silver to
Osisko Gold Royalties, in accordance with its streaming
agreement.
Units H 1 2023 H1 2022
Ore mined t 396,234 402,208
--------- --------- --------
Plant feed t 396,673 404,391
--------- --------- --------
Zinc grade % 2.90 3.07
--------- --------- --------
Zinc recovery % 84.9 84.3
--------- --------- --------
Lead grade % 3.72 3.66
--------- --------- --------
Lead recovery % 93.1 93.5
--------- --------- --------
Zinc concentrate t (dry) 19,257 20,959
--------- --------- --------
* Grade % 50.7 49.9
--------- --------- --------
* Contained zinc t 9,764 10,465
--------- --------- --------
Lead concentrate t (dry) 19,302 19,507
--------- --------- --------
* Grade % 71.2 70.9
--------- --------- --------
* Contained lead t 13,734 13,827
--------- --------- --------
Underground mining
Total ore development for the period was 2,716 metres, which
contributed 26% of overall ore tonnes mined. The overall dilution
for the period was reduced compared to H1 2022 because of more
efficient mining and ore body contouring.
H1 2023 waste development was 1,307 metres, up 14% compared to
H1 2022. A greater proportion of this development was strategically
focused on the Central Decline, excavation ramps and access areas
rather than exploration development and drill platforms.
Due to the improved quality of ground support using the new
mobile shotcrete equipment, the requirement for mining development
rehabilitation reduced by 25% in H1 2023 compared to H1 2022.
The availability of Sasa's Epiroc fleet of equipment during the
period was 73% for the production drills, 83% for the loaders and
79% for the trucks. During H1 2023, a new underground bolting
machine was purchased to aid production and ground support
works.
In Q2 2023, the Central Decline that was developed both from
surface and the 910 metre level connected. This access route is
operational, with haulage of ore and waste now underway.
The 800 metre level has been prepared for Sasa's first paste
fill mining area, and waste development is underway. Six faces have
been designed on this level and ore development is expected within
the next month. CAML is therefore on track to begin the transition
to paste fill mining at Sasa in H2 2023.
PBF Plant and Underground Reticulation
During H1 2023, the construction of the main PBF Plant facility
was materially completed. Commissioning of the PBF plant with
thickened tailings is now underway. All permits required for the
new facilities have either been received or are being
processed.
In H1 2023, 2.5 kilometres of steel pipes were installed
bringing the total reticulation pipe network to more than 4.5
kilometres. Testing of the paste fill pipeline has been
successfully completed, including mechanical, structural, and
high-pressure hydrostatic tests and the line is now ready to serve
the commissioning of the PBF Plant.
Training of the underground team in the construction of the
backfill barricades was completed in H1 2023. Three trial
barricades have been constructed as part of the training. Another
three barricades are now in place to support the commissioning of
the overall backfill system.
Existing voids connected to the transition to paste fill mining
along with additional voids for the storage of additional tailings
have been identified at Svinja Reka and the preparation of these
areas will be a focus during H2 2023.
DST
DST comprises two separate aspects - design and construction of
the landform on which the dry tailings are stacked, and the design
and construction of the processing plant.
Construction of the DST plant is underway, with the focus being
the completion of the foundations prior to winter. The main
building construction is expected to be well advanced during H2
2023, whereas automation and electrical work will extend into H1
2024. Equipment is largely Metso Outotec, and the construction is
being undertaken by Macedonian construction company, Aktiva, which
was also responsible for building the PBF plant. Knight Piésold
('KP') has completed the detailed design work for the DST landform,
and construction of the initial phase of the project will commence
in H2 2023.
Kounrad
Production
CAML delivered copper cathode production of 6,716 tonnes from
Kounrad for H1 2023.
Copper sales during H1 2023 were 6,315 tonnes, with most of the
cathode sold to CAML's offtake partner, Traxys Europe S.A. The
quality of cathode produced remains excellent at a purity level of
99.998% and continues to meet the requirements of customers.
During Q1 2023, winter leaching was conducted at both the
Eastern and Western Dumps. Work has already commenced preparing the
covered winter blocks for the winter of 2023/24, with 33% completed
by the end of H1 2023.
While the installation of the Intermediate Leaching System
('ILS'), which was completed and commissioned in 2022, is now
available to the operations team as needed, the leaching
characteristics of the ore have been very stable in H1 2023 and as
such it has not been necessary to operate the new circuit.
Lining of the trench around blocks 22-32 of Dump 16 that was
excavated in 2022 was completed in H1 2023.
Despite the winter of 2022/23 being much colder than previous
periods, the solution temperature discharge control system made it
possible to optimise power usage from the boiler houses of the
Eastern and Western Dumps, therefore reducing coal consumption by
approximately 900 tonnes (6%) compared to the previous winter.
Timely inspection and preparation of boiler house equipment for
the forthcoming winter season is underway. To date 75% of planned
works have been completed in the Western Dumps boiler house and 60%
in the SX-EW boiler house. In a further attempt to reduce GHG
emissions, heat meters on each of the five boilers were installed
in the SX-EW boiler house to optimise efficiency. If these are
shown to be successful, the three Western Dump boiler units will be
retrofitted with similar heat meters.
Installation of the additional 180 cubic metres of Escaid
storage capacity was completed, and site can now hold a minimum of
six months stock. Operationally, Kounrad continues to be unaffected
by the conflict in Ukraine and resulting international
sanctions.
Solar Power Plant
The construction of the 4.77MW Solar Power Plant, which is
forecast to provide 16-18% of Kounrad's electrical power needs, is
well advanced. Construction is managed in-house with technical
oversight from the project designer. To date 78% of the
installation works are complete, with all equipment and materials
delivered and the planned start-up date remains H2 2023.
Sustainability
Governance update on 2023 focus areas
Good progress has been made on governance and stewardship
focused sustainability goals during the year. In H1 2023, the
Company has committed to screening new suppliers by environmental
criteria alongside its current practice of screening against social
criteria. Key environmental questions, focusing on carbon emissions
and environmental compliance, were agreed with the team and
screening at both sites commenced post the period end on 1 August
2023. Further to the Company's commitment to continuing education,
it plans to increase governance training for risk-assessed members
of staff. The scope of work for the supplier audit (aimed at
demonstrating year on year progress) has been agreed across sites
and will commence in Q3 2023. There have been no human rights
abuses reported at either site during the period.
H1 2023 health and safety statistics
One LTI and two Medical Treatment Injuries ('MTIs') were
recorded at Sasa during H1 2023. In all cases, employees are fully
recovered and back at work. CAML Group therefore reports one LTI
and three Total Recordable Injuries ('TRIs') for the six-month
period. CAML's H1 202 3 LTIFR is 0.8 0 and the Total Recordable
Injury Frequency Rate ('TRIFR') is 2.40 .
Health and safety update on 2023 focus areas
There has been significant focus in H1 2023 on the monitoring
and control of construction work for the transition to the paste
fill mining methods. Sasa appointed a dedicated Health and Safety
Engineer to ensure the safe execution of work activities during the
construction and commissioning of the PBF Plant as well as the
other capital projects. Emphasis has also been placed on the
training of new employees as well as the development of work
procedures and plans for the new PBF Plant. At Kounrad, the focus
has been on the development of safety procedures, plans and risk
assessments associated with the construction of the Solar Power
Plant. Employees engaged in the construction and commissioning of
the Solar Power Plant were given specific health and safety
training. Testing of the recent fireproofing treatment of steel
structures of the Solvent Extraction ('SX') workshop was undertaken
confirming that the fire protection coating complies with the
expected standards.
People update on 2023 focus areas
Across both operations, CAML is once again taking part in the
International Women in Mining Mentorship Programme. Two women from
each operation are being mentored and two members of the senior
management team are acting as mentors. During Q1 2023 a salary
benchmarking exercise took place in each jurisdiction, and pay was
increased across the Group accordingly. Development of CAML's
diversity and inclusion strategy is underway. To aid the process of
recruiting and attracting the next generation into the mining
industry, it is important to demonstrate innovation. Virtual
Reality ('VR') content is being created by a local Macedonian
company to educate employees in the change of mining method and
this will also be used during onboarding and training activities.
In Q2 2023, representatives from Sasa took a stand at a job fair in
Skopje, where students and teachers discussed subjects such as
mechanical and electrical engineering. Regular meetings with
employee representatives are held throughout the year at both
operations.
Environmental update on 2023 focus areas
Sasa continued with its energy efficiency programme during H1
2023. The key project was the installation of a new compressor, and
two further compressors will be installed in H2 2023. These new
compressors are expected to provide annual savings of approximately
$10,000 for power usage reduction. The construction of the 4.77 MW
Solar Power Plant in Kounrad started in H1 2023 and will be
completed in H2 2023. Phase 2 of the Kounrad biodiversity study
project, focussing on field studies, is scheduled to be completed
by end of H2 2023, and this work will feed into the wider Group
biodiversity strategy. The finalisation of Sasa's water management
strategy is advancing and on track for completion before the end of
2023. There were no environmental incidents reported at Sasa during
H1 2023. One minor incident was reported at Kounrad which involved
a minor break in a pipeline that was immediately remediated.
Community update on 2023 focus areas
During H1 2023, the Sasa Foundation continued working alongside
the local community to promote and ensure the sustainable
development of the local town, Makedonska Kamenica. The
implementation of the Phase I activities that were identified by
the 2022 Local Environmental Action Plan ('LEAP') and Local
Economic Development Plant ('LEDP') strategic documents are due to
be completed in Q3 2023. The key milestone during this phase
involves the development of a community-based tourism concept and
the establishment of a brand identity for Makedonska Kamenica,
which the community itself will create. During H1 2023, the Kounrad
Foundation engaged the Eurasia Foundation for Central Asia ('EFCA')
to assist in the development of a long-term community investment
strategy. As part of this development, the EFCA organised for
representatives of the Foundation to undertake a study tour of
other foundations in Kazakhstan. Development of Kounrad's
community-focused engagement strategy was completed in H1 2023, and
work on implementing that strategy is now underway. There were no
community incidents at either operation during H1 2023.
Sustainability reporting
H1 2023 sustainability reporting update
CAML has reported in accordance with the Global Reporting
Initiative ('GRI') Standards for the period 1 January 2022 to 31
December 2022, and this is the Company's fourth standalone
Sustainability Report. It covers CAML's approach to transparent
business conduct, maintaining safe operations and healthy working
environments, and its efforts to manage any potential environmental
or social impacts. With a view to maintaining momentum in its
sustainability achievements for the future, CAML has committed to
the following specific long-term targets and will report on its
performance in these key areas in next year's Sustainability
Report. Please refer to CAML's 2022 Sustainability report for
details. Additional targets will be set in future as
appropriate.
Delivering value * Zero human rights abuses
through stewardship
Maintaining health
and safety * Zero fatalities
* LTIFR target for 2023 to be below 1.30 (the average
LTIFR for the last five years)
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Focusing on our
people * Maintain 99% local employment across both operations
* 20% female interviewees for each eligible role from
2023 onwards
* 25% increase in Group female employees by end 2025
------------------------------------------------------------------
Caring for the
environment * Zero severe or major environmental incidents
* 50% reduction in Group G reenhouse Gas (' GHG')
emissions by 2030 and net zero by 2050
* 75% reduction in surface water abstraction at Sasa by
end 2026
* 70% of tailings to be stored in a more
environmentally responsible manner (paste backfill
and dry stack tailings) by end 2026
* Report Scope 3 emissions in 2024
* Report to Global Industry Standard on Tailings
Management (GISTM) in 2024
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Unlocking value
for our communities * Zero severe or major community-related incidents
* Increase level of community support to an annualised
average of 0.5% of Group gross revenue (up from
0.25%)
------------------------------------------------------------------
H1 2023 climate change reporting update
Following on from the development of its climate change strategy
in 2021, CAML has continued during H1 2023 on its path towards
reporting to the Task Force on Climate-related Financial
Disclosures ('TCFD'), becoming an official TCFD 'Supporter' and
publishing its second standalone Climate Change Report. This report
provides detail on CAML's scenario analysis undertaken during 2022,
as well as progress towards its long-term goals of a 50% reduction
in its GHG emissions by 2030 versus a 2020 base and achieving net
zero by 2050. CAML has committed to assessing its Scope 3 emissions
which it will report on in 2024, and work on this aspect began in
H1 2023 . The process of developing a Scope 3 emissions calculation
will follow the stepwise process outlined in the GHG Protocol's
Corporate Value Chain (Scope 3) Accounting Reporting Standard.
Where relevant, other global or regional emissions standards or
guidelines will be incorporated or referenced. Post the period end
in July 2023, CAML made its inaugural climate change questionnaire
submission to the Carbon Disclosure Project ('CDP').
Global Industry Standard on Tailings Management ('GISTM')
CAML remains committed to reporting in accordance with GISTM for
all its storage facilities by the end of H1 2024. To ensure
conformance by the due date, a working group has been formed
consisting of key members of the Tailings Storage Facilities
('TSF') team including the Engineer of Record ('EoR'), Responsible
Tailings Facility Engineer ('RTFE') and the Deputy Account
Executive ('DAE'). Responsible individuals have been appointed to
cover all 77 requirements within the 15 Principles, using local and
international consultants where appropriate, and they provide
quarterly updates. During H1 2023, the Sasa TSF team and
international consultants, KP completed and implemented the
Operations, Maintenance and Surveillance Manual. In H1 2023, the
Board of Directors approved CAML's new Tailings Policy, which has
been published on the Company's website.
Business Development Review
Summary
CAML has been very active with its business development efforts
during H1 2023, and, during the six-month period, 22 opportunities
have been appraised. Five NDAs were signed, and three site visits
were undertaken. The opportunities that CAML has reviewed during H1
2023 have been in line with its business development strategy.
Business development strategy
Following internal discussions with CAML's business development
team and Board, the following broad strategy has been identified
and the team's efforts are focused on these key aspects, whilst
acknowledging that business development is and will always be
opportunistic.
- Type of opportunity
o Earlier stage exploration opportunities largely in existing
local jurisdictions
o Larger, more transformational and most likely 'in production'
acquisitions to enhance scale and liquidity
o Ad hoc 'overlooked' opportunities
- Jurisdiction
o European time zone plus Kazakhstan
- Attractive commodity exposure
o The metal focus should fit in with the Company's purpose,
which remains to produce base metals essential for modern
living
- Affordability
o CAML's strong balance sheet with no debt and strong cash
generation from existing operations means that the Group has
considerable borrowing capacity to enable a strong cash element to
any offer
o Good liquidity and strong shareholder support for future
deals
- Accretion
o Business development transactions must add value for
shareholders
- Sustainability
o Acquisition opportunities must not negatively impact the
Company's sustainability position for the long term
H1 2023 activities
In line with CAML's business development strategy, during H1
2023, the company entered into an arrangement with a team of
experienced explorers, Terra Exploration. Terra comprises
early-stage exploration geologists with international and
significant Kazakhstan experience with a proven track record of
discovery.
The team is reviewing a series of potential target areas using
historical data and its advanced database combined with its
analytical abilities, and applications for exploration licences in
Kazakhstan have already been made. The budget for this work in 2023
is expected to be c.$1 million. CAML has formed a new Company, CAML
Exploration, in the Astana International Finance Centre ('AIFC')
which will be owned 80% by CAML and 20% by Terra, before moving
towards a wholly-CAML owned company with a NSR-style royalty
arrangement for Terra on longer-term meaningful exploration
success.
In addition to developing its relationship with Terra, the CAML
business development team spent much of the six-month period
focused on two particular acquisition opportunities, and external
consultants were engaged for both of these projects. These
opportunities were in line with CAML's business development
strategy and both processes concluded during the reporting period.
However, with due diligence aspects uncovered and valuation gaps
being the ultimate issues in both cases, the Company did not
proceed further.
CAML currently has additional site visits planned and business
development projects underway, which will be progressed during H2
2023.
Financial Review
Overview
Revenue
The Group has reported lower revenues in the period due to a
significant fall in metal prices received for all three metals. In
particular, the zinc price reduced by c 28% when compared to H1
2022 but also copper and lead prices received were lower by 9% and
6% respectively. This has resulted in a c 17% reduction in gross
revenue to $99.3 million (H1 2022: $119.5 million) for H1 2023.
Profitability - Group Profit before tax ('PBT') and EBITDA
This reduction in revenue has had a direct impact on both PBT
and EBITDA. PBT for H1 2023 was $32.9 million (H1 2022: $66.9
million) reflecting the lower revenues, some inflationary cost
pressures, higher Mineral Extraction Tax ('MET') in Kazakhstan and
a foreign exchange loss of $2.5 million (explained below) compared
to a foreign exchange gain of $7.0 million in the comparable period
of H1 2022.
Group H1 2023 EBITDA was $48.9 million (H1 2022: $74.9 million),
again reflecting the lower revenues and some inflationary cost
pressures.
This has resulted in a reduced EBITDA margin of 49% (H1 2022:
63%). The majority of the $26.0 million EBITDA reduction (78%) was
a result of these lower revenues. The balance of $5.8 million was
due to increased MET and sales and distribution costs, as well as
other inflationary costs, such as a $0.6 million increase in
electricity prices in North Macedonia, and a $1.7 million increase
in labour costs as CAML supported its employees through in-country
cost increases.
At the operating level, Sasa's H1 2023 EBITDA was $18.2 million
(H1 2022: $35.1 million), with a margin of 41% (H1 2022: 60%)
whilst Kounrad's H1 2023 EBITDA was $39.2 million (H1 2022: $48.2
million), with a margin of 72% (H1 2022: 79%).
Adjusted free cash flow
Despite the above challenges of reduced revenues and
inflationary cost pressures, CAML still managed to generate an
adjusted FCF of $24.1 million (H1 2022: $52.2 million). The
calculation of adjusted FCF is reported below and includes an
adjustment to allow for the timing of withholding tax payments
during the first six-month period ended 30 June 2023.
Taxation
During H1 2023, the Group paid $7.0 million (H1 2022: nil) of
Kazakhstan withholding tax on intercompany dividend distributions.
The payment of 10% withholding tax on dividends from Kazakhstan was
introduced from 1 January 2023. Due to the timing of intercompany
dividend distributions, the amount of withholding tax to be paid in
H2 2023 will be significantly lower at $0.5 million, therefore
totalling $7.5 million for the full year ended 31 December
2023.
Debt free
The Group fully repaid the corporate debt in August 2022 and as
at 30 June 2023, had nil drawn overdraft facilities (31 December
2022: $1.4 million) and cash of $50.6 million (31 December 2022:
$60.6 million).
Income statement
Revenue
CAML generated H1 2023 gross revenue of $99.3 million (H1 2022:
$119.5 million), which is reported after deduction of zinc and lead
treatment charges, but before deductions including offtake buyers'
fees and silver purchases for the Sasa silver stream. Net revenue
after these deductions was $93.6 million (H1 2022: $113.8
million).
Sasa
Sasa generated H1 2023 gross revenue of $44.6 million (H1 2022:
$58.4 million).
A total of 8,382 tonnes (H1 2022: 8,761 tonnes) of payable zinc
in concentrate and 12,416 tonnes (H1 2022: 13,608 tonnes) of
payable lead in concentrate were sold during H1 2023.
The zinc price received decreased by 28% to an average of $2,662
per tonne (H1 2022: $3,679 per tonne) and the lead price received
decreased by 6% to an average of $2,051 per tonne (H1 2022: $2,174
per tonne), leading to an overall decrease in gross revenue
generated from the mine.
Treatment charges during the period reduced to $7.9 million (H1
2022: $8.4 million), and the offtake buyer's fee for Sasa was $0.5
million (H1 2022: $0.6 million).
Zinc and lead concentrate sales agreements have been arranged
with Traxys on a one-year rolling basis for 100% of Sasa
production.
Sasa has an existing silver streaming agreement with Osisko Gold
Royalties whereby Sasa receives approximately $6 per ounce for its
silver production for the life of the mine.
Kounrad
Kounrad generated H1 2023 gross revenue of $54.7 million (H1
2022: $61.2 million).
A total of 6,310 tonnes (H1 2022: 6,332 tonnes) of copper
cathode from Kounrad were sold as part of the Company's offtake
arrangement with Traxys. The offtake arrangement with Traxys has
been extended from 1 January 2023 on a one-year rolling basis. The
commitment is for a minimum of 95% of Kounrad's annual production.
A further five tonnes (H1 2022: 74 tonnes) were sold locally. Total
Kounrad H1 2023 copper sales were therefore 6,315 tonnes (H1 2022:
6,406 tonnes).
The copper price received decreased by 9% to an average of
$8,668 per tonne (H1 2022: $9,557 per tonne) leading to an overall
decrease in gross revenue from the mine while the offtaker's fee
for Kounrad increased to $1.4 million (H1 2022: $1.3 million) due
to higher transportation costs as a result of the conflict in
Ukraine.
Cost of sales
The Group cost of sales for the period was $44.6 million (H1
2022: $40.6 million). This includes depreciation and amortisation
charges of $13.4 million (H1 2022: $13.7 million). Global
macro-economic conditions led to an increase in key production
costs components such as electricity and salaries. The Company
continues to focus on factors such as disciplined capital
investments, working capital initiatives and other cost control
measures.
Sasa
Sasa's cost of sales for the period was $30.1 million (H1 2022:
$28.0 million). Compared to the prior period, Sasa faced some cost
increases due to inflationary pressures including an increase in
salaries of $1.1 million and an increase in electricity costs of
$0.6 million. Sasa incurred spot electricity prices during H1 2023
following the expiry of the largely fixed price contract in June
2022. Actions taken by governments to increase gas storage in the
latter part of 2022 as well as a mild winter resulted in easing of
electricity prices during H1 2023 compared to H2 2022.
H1 2023 royalties decreased against H1 2022 to $1.3 million (H1
2022: $1.6 million). This tax is calculated at the rate of 2% (H1
2022: 2%) on the value of metal recovered during the period and the
decrease resulted from the decline in production volume and metal
prices.
Kounrad
Kounrad's H1 2023 cost of sales was $14.5 million (H1 2022:
$12.6 million).
Mineral Extraction Tax ('MET') is a royalty charged by the
Kazakhstan authorities. From 1 January 2023, the MET rate increased
to 8.55% (H1 2022: 5.7%) on the value of metal recovered during the
period. MET for the period was therefore higher at $4.9 million (H1
2022: $3.7 million). Cost of sales also includes an increase in
salaries of $0.6 million.
C1 cash cost of production
C1 cash cost of production is a standard metric used in the
mining industry to allow comparison across the sector. In line with
the industry standard, CAML calculates C1 cash cost by including
all direct costs of production at Kounrad and Sasa (reagents,
power, production labour and materials, as well as realisation
charges such as freight and treatment charges) in addition to local
administrative expenses. Royalties, depreciation, and amortisation
charges are excluded from the C1 cash cost.
Sasa
Sasa's on-site operating costs were $22.3 million (H1 2022:
$18.3 million). The on-site unit cost increased to $56.2 per tonne
(H1 2022: $45.5 per tonne) due to the higher costs mentioned above
and a reduction in tonnes of ore mined in H1 2023 versus H1
2022.
Sasa's total C1 cash cost base, including realisation costs,
increased to $32.1 million (H1 2022: $28.4 million), however Sasa's
C1 zinc equivalent cash cost of production increased marginally to
$0.72 per pound (H1 2022: $0.71 per pound). The marginal $0.01 per
pound increase in the C1 calculation was primarily due to a lower
proportion of pro-rata zinc costing resulting from the zinc
equivalent calculation due to the decrease in zinc revenue versus
lead in H1 2023.
Kounrad
Kounrad's H1 2023 C1 cash cost of copper production was $0.67
per pound (H1 2022: $0.63 per pound) which remains amongst the
lowest in the copper industry. The increase in C1 cash cost versus
H1 2022 is due primarily to higher costs resulting from employee
pay increases.
Group
CAML reports its Group C1 cash cost on a copper equivalent basis
incorporating the production costs at Sasa and by also converting
lead and zinc production into copper equivalent tonnes. The Group's
H1 2023 C1 copper equivalent cash cost was $1.56 per pound (H1
2022: $1.30 per pound). This number is calculated based on Sasa's
H1 2023 zinc and lead payable production, which equated to 5,512
copper equivalent tonnes (H1 2022: 6,468 copper equivalent tonnes)
added to Kounrad's H1 2023 copper production of 6,716 tonnes (H1
2022: 6,617 tonnes), totalling 12,228 tonnes (H1 2022: 13,085
tonnes). The C1 cash cost increase on a copper equivalent basis is
due to the higher C1 cost base at both Sasa and Kounrad and less
copper equivalent tonnes due to the lower zinc price.
CAML also reports a fully inclusive cost that includes
sustaining capital expenditure, local taxes, including MET and
concession fees, interest on loans and corporate overheads
associated with the Kounrad and Sasa projects as well as the C1
cost component. The Group's fully inclusive copper equivalent unit
cost for the period was $2.11 per pound (H1 2022: $1.81 per pound).
The increase is a result of lower copper equivalent tonnes, the
higher C1 cost components at Sasa and Kounrad and higher Kounrad
MET.
Administrative expenses
During the period, administrative expenses increased to $12.4
million (H1 2022: $11.2 million), largely due to an increase in
payroll across the Group and higher consultancy costs.
Foreign exchange
The Group incurred a foreign exchange loss of $2.5 million (H1
2022: gain of $7.0 million) resulting from the retranslation of USD
denominated monetary assets held by foreign subsidiaries with a
local functional currency. The prior period gain was significant
due to the weakening of the Kazakhstan Tenge and North Macedonian
Denar during the prior period.
As at 30 June 2023, the Tenge strengthened to 454.13 against the
US Dollar (30 June 2022: 465.08) and the Denar strengthened to
56.35 against the US Dollar (30 June 2022: 58.66).
Finance costs
The Group incurred lower finance costs of $0.9 million (H1 2022:
$1.2 million) resulting from the repayment of the corporate debt in
August 2022 somewhat countered by an increase in the unwinding of
the discount on asset retirement obligations.
Discontinued operations
The Group continues to report the results of the Copper Bay
entities within Discontinued Operations. These assets were fully
written off in prior years.
Balance sheet
Capital expenditure
During the period, there were capitalised additions to property,
plant, and equipment of $17.1 million (H1 2022: $ 8.0 million). The
additions were a combination of $1.2 million (H1 2022: $1.2
million) Kounrad sustaining capital expenditure, $5.0 million (H1
2022: $3.3 million) Sasa sustaining capital expenditure and $8.2
million (H1 2022: $3.5 million) in relation to the Sasa Capital
Projects and $2.7 million (H1 2022: nil) in relation to the Kounrad
Solar Power Plant.
Sasa sustaining capital expenditure includes capitalised mine
development of $1.3 million, $0.7 million on flotation equipment
and $0.5 million on underground fleet. Kounrad's sustaining capital
expenditure includes $0.2 million on dripper pipes.
H1 2023 cash outflow on purchases of property, plant and
equipment was lower at $11.3 million due to prepayments made during
the year ended 31 December 2022 which were subsequently capitalised
during H1 2023.
Capital projects
The Group continues to invest significantly at Sasa in order to
enable the transition to paste fill mining methods and the storage
of waste in a more environmentally responsible manner. This work
comprises the construction of a PBF Plant and associated
underground reticulation infrastructure, a DST Plant and associated
landform and the development of the new Central Decline.
As mentioned above, during H1 2023, capitalised additions to
property, plant and equipment on the Capital Projects totalled $8.2
million. Capitalised additions include $1.3 million of Central
Decline costs and $3.9 million on the PBF Plant. There was a
further $0.9 million spent on underground reticulation and $2.1
million spent on the DST Plant and associated landform. H1 2023
cash outflow on the Capital Projects was lower at $4.4 million due
to prepayments made during the year ended 31 December 2022 which
were subsequently capitalised during H1 2023.
CAML expects 2023 cash capital expenditure of between $28.0
million and $30.0 million, of which between $10.0 million and $13.0
million is expected to be committed to sustaining capex. Total
expected 2023 capex also includes approximately $5.0 million
related to the Kounrad solar power plant. CAML expects the Capital
Projects capital expenditure in the order of $12.0 million in 2023.
This will be largely related to construction of the DST Plant as
well as Central Decline development.
Working capital
As of 30 June 2023, current trade and other receivables were
$14.1 million (31 December 2022: $8.7 million), which includes
trade receivables from the offtake sales of $4.0 million (31
December 2022: $2.4 million) and $1.9 million in relation to
prepayments and accrued income (31 December 2022: $3.0 million).
Trade and other receivables also include $5.2 million (31 December
2022: $1.1 million) of overpaid Group corporate income tax which
will be offset against corporate income tax liabilities arising in
the same entities in the current and next financial year.
Non-current trade and other receivables were $6.6 million (31
December 2022: $11.5 million). As at 30 June 2023, a total of $4.2
million (31 December 2022: $3.4 million) of VAT receivable was owed
to the Group by the Kazakhstan authorities. Recovery is still
expected through a continued dialogue with the authorities for cash
recovery and further offsets.
As at 30 June 2023, current trade and other payables were $ 14.4
million (31 December 2022: $16.6 million).
Cash and borrowings
As at 30 June 2023, the Group had cash in the bank of $50.6
million (31 December 2022: $60.6 million) and no borrowings (31
December 2022: $1.4 million).
During the period, $1.4 million (H1 2022: $4.5 million) of North
Macedonian overdrafts were repaid. In addition, interest of $0.1
million was paid (H1 2022: $0.5 million).
Taxation
During H1 2023, corporate income tax paid to local governments
totalled $18.5 million (H1 2022: $11.7 million). This included
$11.0 million (H1 2022: $10.0 million) of Kazakhstan corporate
income tax and $7.0 million of Kazakhstan withholding tax paid on
intercompany dividend distributions. $0.5 million (H1 2022: $1.7
million) of North Macedonian corporate income tax was paid in cash
in addition to a $2.7 million (H1 2022: $1.8 million) non-cash
payment offset against VAT and corporate income tax receivable.
Adjusted free cash flow
The net cash generated from operating activities plus interest
received in H1 2023 was $25.1 million (H1 2022: $56.7 million).
FCF has been adjusted for the payment of Kazakhstan withholding
tax on intercompany dividend distributions during the period. As
explained above, $7.0 million of withholding tax was paid during H1
2023. Due to the timing of intercompany dividend distributions, the
amount of withholding tax to be paid in H2 2023 will be
significantly lower at $0.5 million, therefore totalling $7.5
million for the full year ended 31 December 2023. In order to more
reasonably apportion these cash flows over the full year, an
adjustment has been made to reflect half of the full year amount
($3.8 million) in H1 2023. Therefore, an adjustment of $3.2 million
has been made to FCF, calculated as the balance between the $7.0
million paid and the $3.8 million half-year apportioned cash
flow.
Six months ended
30-Jun-23 30-Jun-22
$'000 $'000
---------------------------------------------- --- ---------- ---------
Net cash generated from operating activities 24,145 56,619
Interest received 962 87
Less: Purchase of sustaining property, plant,
and equipment (4,247) (4,513)
Free cash flow 20,860 52,193
--------------------------------------------------- ---------- ---------
Adjustment for:
Kazakhstan withholding tax on intercompany
dividend distributions 3,254 -
Adjusted free cash flow 24,114 52,193
--------------------------------------------------- ---------- ---------
Dividend
Total dividends paid to shareholders during the period of $21.7
million comprised the final 2022 dividend of 10 pence per Ordinary
Share.
The Company's dividend policy is to return to shareholders a
range of between 30% and 50% of FCF, defined as net cash generated
from operating activities, plus interest received, less sustaining
capital expenditure. This remains the Company policy but due to the
timing of withholding tax payments during H1 2023, as explained
above, the Board has agreed to apply that policy to the adjusted
FCF.
The adjusted FCF of $24.1 million has been used as the basis of
the interim dividend for the current period and the Board has
agreed an 82% payout. This has resulted in the Board declaring an
interim dividend of 9 pence per Ordinary Share.
The interim dividend is payable on 20 October 2023 to
shareholders registered on 29 September 2023. This latest dividend
will increase the amount returned to shareholders in dividends
since the 2010 IPO to $318.8 million.
Going concern
The Group sells and distributes its copper product primarily
through an annual rolling offtake arrangement with Traxys Europe
S.A. with a minimum of 95% of the SX-EW plant's forecasted output
committed as sales. The Group sells Sasa's zinc and lead
concentrate product through an annual rolling offtake arrangement
with Traxys. The commitment is for 100% of the Sasa concentrate
production.
The Group meets its day-to-day working capital requirements
through its profitable and cash generative operations at Kounrad
and Sasa. The Group manages liquidity risk by maintaining adequate
committed borrowing facilities and the Group has substantial cash
balances as of 30 June 2023.
The Board has reviewed forecasts for the period to December 2024
to assess the Group's liquidity which demonstrate substantial
headroom. The Board has considered additional sensitivity scenarios
in terms of the Group's commodity price forecasts, expected
production volumes, operating cost profile and capital expenditure.
The Board has assessed the key risks which could impact the
prospects of the Group over the going concern period including
commodity price outlook, cost inflation and supply chain disruption
together with reverse stress testing of the forecasts in line with
best practice. Liquidity headroom was demonstrated in each
reasonably possible scenario. Accordingly, the Directors continue
to adopt the going concern basis in preparing the consolidated
financial information.
Outlook
The Company remains on track to meet the 2023 production output
guidance from Sasa and Kounrad. CAML's low costs of operations
provides the Company with the ability to withstand a decline in
commodity prices and inflationary cost pressures. CAML has a strong
balance sheet with $50.6 million in cash and no debt as of 30 June
2023. This enables CAML to continue to pay some of the highest
dividends in the sector whilst actively considering various
business development opportunities.
Non-IFRS financial measures
The Group uses alternative performance measures, which are not
defined by the generally accepted accounting principles ('GAAP')
such as IFRS, as additional indicators. These measures are used by
management, alongside the comparable GAAP measures, in evaluating
the business performance. The measures are not intended as a
substitute for GAAP measures and may not be comparable to similarly
reported measures by other companies. The following non-IFRS
alternative performance financial measures are used in this
report:
Earnings before interest, tax, depreciation, and amortisation
(EBITDA)
EBITDA is a valuable indicator of the Group's ability to
generate liquidity and is frequently used by investors and analysts
for valuation purposes. It is also a non-IFRS financial measure
which is reconciled as follows:
Six months ended
30-Jun-23 30-Jun-22
$'000 $'000
------------------------------------------- ---------- ---------
Profit for the period 21,101 53,330
Plus/(less):
Income tax expense 12,065 13,537
Depreciation and amortisation 13,683 13,971
Foreign exchange loss/(gain) 2,478 (7,025)
Other income (140) (79)
Finance income (962) (87)
Finance costs 939 1,179
(Profit)/loss from discontinued operations (253) 69
EBITDA 48,911 74,895
------------------------------------------- ---------- ---------
Gross revenue
Gross revenue is presented as the total revenue received from
sales of all commodities after deducting the directly attributable
treatment and refining charges associated for the sale of zinc,
lead and silver. This figure is presented as it reflects the total
revenue received in respect of the zinc and lead concentrate and is
used to reflect the movement in commodity prices and treatment
charges during the period. The Board considers gross revenue,
together with the reconciliation to net IFRS revenue to provide
valuable information on the drivers of IFRS revenue.
Six months ended
30-Jun-23 30-Jun-22
$'000 $'000
--------------------------- ------------ ------------
Gross revenue 99,331 119,547
Less:
Silver stream purchases (3,859) (3,835)
Offtake buyers' fees (1,858) (1,925)
---------------------------- ------------ ------------
Revenue (net IFRS revenue) 93,614 113,787
---------------------------- ------------ ------------
Net cash
Net cash is a measure used by the Board for the purposes of
capital management and is calculated as the total of the bank
overdrafts plus the cash and cash equivalents held at the end of
the period. This balance does not include the restricted cash
balance of $0.3 million (31 December 2022: $0.3 million):
30-Jun-23 31-Dec-22
$'000 $'000
-------------------------- ---------- ---------
Bank overdrafts - (1,390)
Cash and cash equivalents 50,355 60,298
Net cash 50,355 58,908
-------------------------- ---------- ---------
Free cash flow and adjusted free cash flow
FCF is a non-IFRS financial measure of the net cash generated
from operating activities, plus interested received, less
sustaining capital expenditure on property, plant and equipment and
intangible assets. The definition of FCF has been updated to
include interest received. It is a key measure for the company as
the dividend policy is based on this periodic measure of
performance.
The purchase of sustaining property, plant and equipment figure
in H1 2023 was $4.2 million (H1 2022: $4.5 million) and does not
include $4.4 million (H1 2022: $3.5 million) expended on the Sasa
Capital Projects and $2.7 million (H1 2022: nil) expended on the
Kounrad Solar Power Plant. These costs are not considered
sustaining capital expenditure as they are expansionary development
costs. These exceptional project costs are expected to continue
until 2024.
As explained above, H1 2023 FCF has been adjusted to more
reasonably apportion H1 2023 withholding tax payments over the full
year.
Directors' Responsibility Statement
The Directors confirm that, to the best of their knowledge, the
interim financial information has been prepared in accordance with
IAS 34 "Interim Financial Reporting" as adopted by the United
Kingdom and the AIM Rules for Companies, and that the interim
results include a fair review of the information required.
On behalf of the Board
Gavin Ferrar
Chief Financial Officer
12 September 2023
INDEPENT REVIEW REPORT TO CENTRAL ASIA METALS PLC
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the six months ended 30 June
2023 is not prepared, in all material respects, in accordance with
UK adopted International Accounting Standard 34 and the London
Stock Exchange AIM Rules for Companies.
We have been engaged by the Company to review the condensed set
of financial statements in the interim financial report for the six
months ended 30 June 2023 which comprises the condensed
consolidated interim statement of financial position as at 30 June
2023, the condensed consolidated interim income statement and
condensed consolidated interim statement of comprehensive income
for the period then ended, the condensed consolidated interim
statement of changes in equity, the condensed consolidated interim
statement of cash flows and notes to the consolidated interim
financial information.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in Note 1, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this interim financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the Directors have inappropriately
adopted the going concern basis of accounting or that the Directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the Group to cease to continue as a going concern.
Responsibilities of Directors
The Directors are responsible for preparing the interim
financial report in accordance with
the London Stock Exchange AIM Rules for Companies which require
that the interim report be presented and prepared in a form
consistent with that which will be adopted in the Company's annual
accounts having regard to the accounting standards applicable to
such annual accounts.
In preparing the interim financial report, the Directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the interim report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the interim financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange AIM Rules for Companies for no
other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by
virtue of and for the purpose of our terms of engagement or has
been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
Ryan Ferguson
For and on behalf of BDO LLP
Chartered Accountants
London
12 September 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT (unaudited)
for the six months period ended 30 June 2023
Six months ended
30-Jun-23 30-Jun-22
Note $'000 $'000
--------------------------------------------------- ---- ------------ ------------
Continuing operations
Revenue 93,614 113,787
--------------------------------------------------- ---- ------------ ------------
Presented as:
Gross revenue[1] 99,331 119,547
Less:
Silver stream purchases (3,859) (3,835)
Offtake buyers' fees (1,858) (1,925)
--------------------------------------------------- ---- ------------ ------------
Revenue 93,614 113,787
--------------------------------------------------- ---- ------------ ------------
Cost of sales (44,566) (40,621)
Distribution and selling costs (1,447) (1,026)
---- ------------ ------------
Gross profit 47,601 72,140
--------------------------------------------------- ---- ------------ ------------
Administrative expenses (12,373) (11,216)
Other income 140 79
Foreign exchange (loss)/gain (2,478) 7,025
Operating profit 32,890 68,028
--------------------------------------------------- ---- ------------ ------------
Finance income 962 87
Finance costs (939) (1,179)
Profit before income tax 32,913 66,936
Income tax 6 (12,065) (13,537)
Profit for the period from continuing operations 20,848 53,399
--------------------------------------------------- ---- ------------ ------------
Discontinued operations
Profit/(loss) for the period from discontinued
operations 253 (69)
--------------------------------------------------- ---- ------------ ------------
Profit for the period 21,101 53,330
--------------------------------------------------- ---- ------------ ------------
Profit attributable to:
Non-controlling interests 90 5
Owners of the parent 21,011 53,325
--------------------------------------------------- ---- ------------ ------------
Profit for the period 21,101 53,330
--------------------------------------------------- ---- ------------ ------------
Earnings/(loss) per share from continuing
and discontinued operations attributable to $ $
owners of the parent during the period (expressed cents cents
in cents per share)
--------------------------------------------------- ---- ------------ ------------
Basic earnings/(loss) per share
From continuing operations 7 11.41 30.25
From discontinued operations 0.14 (0.04)
--------------------------------------------------- ---- ------------ ------------
From profit for the period 11.55 30.21
--------------------------------------------------- ---- ------------ ------------
Diluted earnings/(loss) per share
From continuing operations 7 10.93 29.15
From discontinued operations 0.13 (0.04)
--------------------------------------------------- ---- ------------ ------------
From profit for the period 11.06 29.11
--------------------------------------------------- ---- ------------ ------------
[1] Gross revenue is a non-IFRS financial measure which is used
by management, alongside the comparable GAAP measures, in
evaluating the business performance. The measures are not intended
as a substitute for GAAP measures and may not be comparable to
similarly reported measures by other companies.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
(unaudited)
for the six months period ended 30 June 2023
Six months ended
------------------------------------------------------ ---------------------
30-Jun-23 30-Jun-22
$'000 $'000
------------------------------------------------------ ---------- ---------
Profit for the period 21,101 53,330
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit
or loss:
Currency translation differences 9,236 (34,543)
Other comprehensive income/(expense) for the period,
net of tax 9,236 (34,543)
------------------------------------------------------ ---------- ---------
Total comprehensive income for the period 30,337 18,787
------------------------------------------------------ ---------- ---------
Attributable to:
* Non-controlling interests 90 5
* Owners of the parents 30,247 18,782
------------------------------------------------------ ---------- ---------
Total comprehensive income for the period 30,337 18,787
------------------------------------------------------ ---------- ---------
Total comprehensive income attributable to equity shareholders
arises from:
- Continuing operations 30,084 18,758
- Discontinued operations 253 29
----------------------------- ------- ------
30,337 18,787
----------------------------- ------- ------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
(unaudited)
as at 30 June 2023
Unaudited Audited
------------- --------------
30-Jun-23 31-Dec-22
Note $'000 $'000
-------------------------------------------- ------ ------------- --------------
Assets
Non-current assets
Property, plant and equipment 8 335,161 322,197
Intangible assets 9 26,237 26,552
Deferred income tax asset 13 4,006 328
Other non-current receivables 11 6,550 11,478
-------------------------------------------- ------ ------------- --------------
371,954 360,555
-------------------------------------------- ------ ------------- --------------
Current assets
Inventories 10 15,410 13,149
Trade and other receivables 11 14,124 8,715
Restricted cash 269 264
Cash and cash equivalents 50,355 60,298
-------------------------------------------- ------ ------------- --------------
80,158 82,426
-------------------------------------------- ------ ------------- --------------
Assets of the disposal group classified
as held for sale 67 64
-------------------------------------------- ------ ------------- --------------
80,225 82,490
-------------------------------------------- ------ ------------- --------------
Total assets 452,179 443,045
-------------------------------------------- ------ ------------- --------------
Equity attributable to owners of the
parent
Ordinary shares 1,821 1,821
Share premium 205,725 205,437
Treasury shares (15,413) (15,831)
Currency translation reserve (124,856) (134,092)
Retained earnings 312,266 312,107
379,543 369,442
-------------------------------------------- ------ ------------- --------------
Non-controlling interests (1,232) (1,322)
-------------------------------------------- ------ ------------- --------------
Total equity 378,311 368,120
-------------------------------------------- ------ ------------- --------------
Liabilities
Non-current liabilities
Silver streaming commitment 16,598 17,085
Deferred income tax liability 13 17,136 17,286
Lease liability 143 10
Provision for other liabilities and charges 14 24,098 20,744
-------------------------------------------- ------ ------------- --------------
57,975 55,125
-------------------------------------------- ------ ------------- --------------
Current liabilities
Borrowings 15 - 1,390
Silver streaming commitment 1,022 1,095
Trade and other payables 12 14,443 16,643
Lease liability 149 295
Provisions for other liabilities and
charges 14 260 333
-------------------------------------------- ------ ------------- --------------
15,874 19,756
Liabilities of disposal group classified
as held for sale 19 44
-------------------------------------------- ------ ------------- --------------
15,893 19,800
-------------------------------------------- ------ ------------- --------------
Total liabilities 73,868 74,925
-------------------------------------------- ------ ------------- --------------
Total equity and liabilities 452,179 443,045
-------------------------------------------- ------ ------------- --------------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
(unaudited)
for the six months period ended 30 June 2023
Currency Non-controlling
Ordinary Share Treasury translation Retained interest Total
shares premium shares reserve earnings Total equity
-------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Balance as
at 1 January
2023 1,821 205,437 (15,831) (134,092) 312,107 369,442 (1,322) 368,120
-------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Profit for the
period - - - - 21,011 21,011 90 21,101
Other
comprehensive
income-
currency
translation
differences - - - 9,236 - 9,236 - 9,236
Total
comprehensive
income - - - 9,236 21,011 30,247 90 30,337
-------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Transactions
with owners
Share based
payments - - - - 2,213 2,213 - 2,213
Exercise of
options - 288 418 - (1,351) (645) - (645)
Dividends - - - - (21,714) (21,714) - (21,714)
Total
transactions
with owners,
recognised
directly
in equity - 288 418 - (20,852) (20,146) - (20,146)
-------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Balance as
at 30 June
2023 1,821 205,725 (15,413) (124,856) 312,266 379,543 (1,232) 378,311
-------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Currency Non-controlling
Ordinary Share Treasury translation Retained interest Total
shares premium shares reserve earnings Total equity
----------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Attributable
to owners of
the parent $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
----------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Balance as
at 1 January
2022 1,765 191,988 (2,360) (104,781) 323,951 410,563 (1,316) 409,247
----------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Profit for the
period - - - - 53,325 53,325 5 53,330
Other
comprehensive
expense-
currency
translation
differences - - - (34,543) - (34,543) - (34,543)
Total
comprehensive
income/(expense) - - - (34,543) 53,325 18,782 5 18,787
----------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Transactions
with owners
Share based
payments - - - - 1,741 1,741 - 1,741
Exercise of
options - 9 24 - (1,263) (1,230) - (1,230)
Dividends - - - - (27,819) (27,819) - (27,819)
Total
transactions
with owners,
recognised
directly
in equity - 9 24 - (27,341) (27,308) - (27,308)
----------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
Balance as
at 30 June 2022 1,765 191,997 (2,336) (139,324) 349,935 402,037 (1,311) 400,726
----------------- ------------ ----------- ------------ -------------- ------------ -------- --------------- --------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
(unaudited)
for the six months period ended 30 June 2023
Six months ended
30-Jun-23 30-Jun-22
Note $'000 $'000
-------------------------------------------- ---- --------- -----------
Cash flows from operating activities
Cash generated from operations 16 42,676 68,830
Interest paid (53) (477)
Corporate income tax paid (18,478) (11,734)
Net cash flow generated from operating
activities 24,145 56,619
--------------------------------------------- ---- --------- -----------
Cash flows from investing activities
Purchases of property, plant, and equipment (11,340) (8,008)
Purchase of intangible assets (28) -
Proceeds from sale of property, plant,
and equipment 27 17
Interest received 962 87
Increase in restricted cash - (3,155)
--------------------------------------------- ---- --------- -----------
Net cash used in investing activities (10,379) (11,059)
--------------------------------------------- ---- --------- -----------
Cash flows from financing activities
Repayment of overdraft 15 (1,403) (4,473)
Repayment of borrowings - (16,000)
Dividend paid to owners of the parent (21,714) (27,819)
Cash settlement of share options (641) (1,908)
Receipt on exercise of share options 4 6
Net cash used in financing activity (23,754) (50,194)
--------------------------------------------- ---- --------- -----------
Effect of foreign exchange gain/(losses)
on cash and cash equivalents 43 (34)
--------------------------------------------- ---- --------- -----------
Net decrease in cash and cash equivalents (9,945) (4,668)
--------------------------------------------- ---- --------- -----------
Cash and cash equivalents at 1 January 60,361 55,731
--------------------------------------------- ---- --------- -----------
Cash and cash equivalents at 30 June 50,416 51,063
--------------------------------------------- ---- --------- -----------
Cash and cash equivalents at 30 June 2023 includes cash at bank
on hand included in assets held for sale of $61,000 (30 June 2022:
$53,000). The consolidated statement of cash flows does not include
the restricted cash balance of $269,000 (30 June 2022:
$6,671,000).
Corporate income tax paid includes $7,027,000 (30 June 2022:
nil) of Kazakhstan withholding tax paid on intercompany dividend
distributions.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months period ended 30 June 2023
1. General information
Central Asia Metals plc (CAML or the Company) and its
subsidiaries (the Group) are a mining organisation with operations
in Kazakhstan and North Macedonia and a parent holding company
based in England in the United Kingdom (UK).
The Group's principal business activities are the production of
copper at its Kounrad operations in Kazakhstan and the production
of lead, zinc, and silver at its Sasa operations in North
Macedonia. CAML owns 100% of the Kounrad SX-EW copper project in
Kazakhstan and 100% of the Sasa zinc-lead mine in North Macedonia.
The Company also owns a 76% equity interest in Copper Bay Limited
which is currently held for sale.
CAML is a public limited company, which is listed on the AIM
Market of the London Stock Exchange and incorporated and domiciled
in England, UK. The address of its registered office is Masters
House, 107 Hammersmith Road, London, W14 0QH. The Company's
registered number is 5559627.
The condensed consolidated interim financial information
incorporates the results of Central Asia Metals plc and its
subsidiary undertakings as at 30 June 2023 and was approved by the
Directors for issue on 13 September 2023. The condensed
consolidated financial information is unaudited and does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The information for the year ended 31 December
2022 included in this report was derived from the statutory
accounts for that year, which were prepared in accordance with
International Financial Reporting Standards (IFRSs) issued by the
International Accounting Standards Board (IASB) and interpretations
issued by the International Financial Reporting Interpretations
Committee (IFRIC) of the IASB, as adopted by the UK up to 31
December 2022, a copy of which has been delivered to the Registrar
of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain a statement under 498(2) 498(3) of the Companies
Act 2006.
This condensed consolidated interim financial information has
been reviewed, not audited.
2. Basis of preparation
The condensed consolidated interim financial information for the
six months to 30 June 2023 has been prepared in accordance with IAS
34 'Interim financial reporting' and also in accordance with the
measurement and recognition principles of UK adopted international
accounting standards.
Principal risks and uncertainties
In preparing the condensed consolidated interim financial
information management is required to consider the principal risks
and uncertainties facing the Group.
In management's opinion, the principal risks and uncertainties
facing the Group are unchanged since the preparation of the
consolidated financial statements for the year ended 31 December
2022. Those risks and uncertainties, together with management's
response to them are described in the Principal Risks and
Uncertainties section of the 2022 Annual Report and Accounts.
3. Accounting policies
The accounting policies, methods of computation and presentation
used in the preparation of the condensed consolidated interim
financial information are the same as those used in the Group's
audited financial statements for the year ended 31 December
2022.
Going concern
The Group sells and distributes its copper product primarily
through an annual rolling offtake arrangement with Traxys Europe
S.A. with a minimum of 95% of the SX-EW plant's forecasted output
committed as sales. The Group sells Sasa's zinc and lead
concentrate product through an annual rolling offtake arrangement
with Traxys. The commitment is for 100% of the Sasa concentrate
production.
The Group meets its day to day working capital requirements
through its profitable and cash generative operations at Kounrad
and Sasa. The Group manages liquidity risk by maintaining adequate
committed borrowing facilities and the Group has substantial cash
balances and no outstanding borrowings as at 30 June 2023.
The Board has reviewed forecasts for the period to December 2024
to assess the Group's liquidity which demonstrate substantial
headroom. The Board have considered additional sensitivity
scenarios in terms of the Group's commodity price forecasts,
expected production volumes, operating cost profile and capital
expenditure. The Board have assessed the key risks which could
impact the prospects of the Group over the going concern period
including commodity price outlook, cost inflation and supply chain
disruption together with reverse stress testing of the forecasts in
line with best practice. Liquidity headroom was demonstrated in
each reasonably possible scenario. Accordingly, the Directors
continue to adopt the going concern basis in preparing the
consolidated financial information.
Revenue
IFRS 15 establishes a comprehensive framework for determining
whether, how much and when revenue is recognised. These steps are
as follows: identification of the customer contract; identification
of the contract performance obligations; determination of the
contract price; allocation of the contract price to the contract
performance obligations; and revenue recognition as performance
obligations are satisfied.
Under IFRS 15, revenue is recognised when the performance
obligations are satisfied and the customer obtains control of the
goods or services, usually when title has passed to the buyer and
the goods have been delivered in accordance with the contractual
delivery terms.
Revenue is measured at the fair value of consideration received
or receivable from sales of metal to an end user, net of any
buyers' discount, treatment charges and value added tax. The Group
recognises revenue when the amount of revenue can be reliably
measured and when it is probable that future economic benefits will
flow to the entity.
The value of consideration is fair value which equates to the
contractually agreed price. The offtake agreements provide for
provisional pricing i.e., the selling price is subject to final
adjustment at the end of the quotation period based on the average
price for the month, two months or three months, following delivery
to the buyer. Such a provisional sale contains an embedded
derivative which is not required to be separated from the
underlying host contract, being the sale of the commodity. At each
reporting date, if any sales are provisionally priced, the
provisionally priced copper cathode, zinc and lead sales are
marked-to-market using forward prices, with any significant
adjustments (both gains and losses) being recorded in revenue in
the Income Statement and in trade receivables in the statement of
financial position.
The Company may mitigate commodity price risk by fixing the
price in advance for its copper cathode with the offtake partner
and also its zinc and lead sales with the banks where a facility
has been set up and agreed. The price fixing arrangements are
outside the scope of IFRS 9 Financial Instruments: Recognition and
Measurement and do not meet the criteria for hedge accounting.
The Group reports both a gross revenue and revenue line. Gross
revenue is reported after deductions of treatment charges but
before deductions of offtaker fees and silver purchases under the
Silver Stream.
Taxation
Taxation for each jurisdiction is calculated at the estimated
average annual effective income tax rate in the respective
jurisdictions. This is the case for the corporation tax on taxable
profits and also on distributions made subjected to withholding
tax. These rates are applied to the pre-tax income of the six-month
period.
New and amended standards and interpretations adopted by the
Group
The Group has adopted the following standards and amendments for
the first time for the half-yearly reporting period commencing 1
January 2023, however there is no effect on the current reporting
period as they are either not relevant to the Group's activities or
require accounting which is consistent with Group's current
accounting policies:
-- IFRS 17 Insurance Contracts;
-- Disclosure of Accounting Policies (Amendments to IAS 1
Presentation of Financial Statements and IFRS Practice Statement
2);
-- Definition of Accounting Estimates (Amendments to IAS 8
Accounting policies, Changes in Accounting Estimates and
Errors);
-- International Tax Reform - Pillar Two Model Rules (Amendment to IAS 12 Income Taxes)
The impact of the amendments to IAS 12 Income taxes which relate
to deferred tax related to Assets and Liabilities arising from a
Single Transaction are currently being analysed and the impact, if
any, on the financial statements will be recognised in the annual
financial statements.
4. Critical accounting judgements and estimates
The preparation of condensed consolidated interim financial
information requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income, and
expense. Actual results may differ from these judgements and
estimates. The Group makes certain estimates and assumptions
regarding the future. Estimates and judgements are continually
evaluated based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances.
In preparing this condensed consolidated interim financial
information, the significant accounting estimates and judgements
made by management in applying the Group's accounting policies were
the same as those that applied to the consolidated financial
statements for the year ended 31 December 2022.
Refer to note 9 and note 14 for critical judgements and
estimates related to the impairment test for the Sasa mining
assets.
5. Segmental information
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker
which is considered to be the Board.
The segment results for the six months ended 30 June 2023 are as
follows:
Unaudited
------------------------------------- ------- -------- ----------- --------
Kounrad Sasa Unallocated Total
------------------------------------- ------- -------- ----------- --------
$'000 $'000 $'000 $'000
------- -------- ----------- --------
Gross revenue 54,693 44,638 - 99,331
Silver stream purchases - (3,859) - (3,859)
Offtake buyers' fees (1,388) (470) - (1,858)
------------------------------------- ------- -------- ----------- --------
Revenue 53,305 40,309 - 93,614
------------------------------------- ------- -------- ----------- --------
EBITDA 39,242 18,162 (8,493) 48,911
Depreciation and amortisation (1,877) (11,681) (125) (13,683)
Foreign exchange loss (1,836) (624) (18) (2,478)
Other income 140 - - 140
Finance income 9 - 953 962
Finance costs (238) (698) (3) (939)
------------------------------------- ------- -------- ----------- --------
Profit/(loss) before income tax 35,440 5,159 (7,686) 32,913
------------------------------------- ------- -------- ----------- --------
Income tax (12,065)
------------------------------------- ------- -------- ----------- --------
Profit for the period after taxation
from continuing operations 20,848
------------------------------------- ------- -------- ----------- --------
Profit from discontinued operations 253
------------------------------------- ------- -------- ----------- --------
Profit for the period 21,101
------------------------------------- ------- -------- ----------- --------
Depreciation and amortisation includes depreciation and
amortisation on the fair value uplift on acquisition of Sasa and
Kounrad of $7,409,000.
The segment results for the six months ended 30 June 2022 are as
follows:
Unaudited
------------------------------------- ------- -------- ----------- --------
Kounrad Sasa Unallocated Total
------------------------------------- ------- -------- ----------- --------
$'000 $'000 $'000 $'000
------- -------- ----------- --------
Gross revenue 61,178 58,369 - 119,547
Silver stream purchases - (3,835) - (3,835)
Offtake buyers' fees (1,314) (611) - (1,925)
------------------------------------- ------- -------- ----------- --------
Revenue 59,864 53,923 - 113,787
------------------------------------- ------- -------- ----------- --------
EBITDA 48,188 35,050 (8,343) 74,895
Depreciation and amortisation (1,871) (11,976) (124) (13,971)
Foreign exchange gain 4,293 2,577 155 7,025
Other income 79 - - 79
Finance income 10 - 77 87
Finance costs (91) (581) (507) (1,179)
------------------------------------- ------- -------- ----------- --------
Profit/(loss) before income tax 50,608 25,070 (8,742) 66,936
------------------------------------- ------- -------- ----------- --------
Income tax (13,537)
------------------------------------- ------- -------- ----------- --------
Profit for the period after taxation
from continuing operations 53,399
------------------------------------- ------- -------- ----------- --------
Loss from discontinued operations (69)
------------------------------------- ------- -------- ----------- --------
Profit for the period 53,330
------------------------------------- ------- -------- ----------- --------
Depreciation and amortisation includes depreciation and
amortisation on the fair value uplift on acquisition of Sasa and
Kounrad of $7,694,000.
A reconciliation between profit for the period and EBITDA is
presented in the Financial Review section.
Group segmental assets and liabilities as at the 30 June 2023
are as follows:
Segmental Assets Non-current Asset Segmental Liabilities
additions
---------------------- -------------------- -------------------- -----------------------
30-Jun-23 31-Dec-22 30-Jun-23 30-Jun-22 30-Jun-23 31-Dec-22
$'000 $'000 $'000 $'000 $'000 $'000
---------------------- --------- --------- --------- --------- ----------- ----------
Kounrad 78,746 82,258 3,992 1,189 (16,840) (13,928)
Sasa 330,007 324,197 13,167 6,806 (54,180) (54,718)
Assets held for sale 67 64 - - (19) (44)
Unallocated including
corporate 43,359 36,526 11 13 (2,829) (6,235)
---------------------- --------- --------- --------- --------- ----------- ----------
Total 452,179 443,045 17,170 8,008 (73,868) (74,925)
---------------------- --------- --------- --------- --------- ----------- ----------
6. Income tax
Six months ended
----------------------------------------- ------------------------
30-Jun-23 30-Jun-22
$'000 $'000
----------------------------------------- ------------ ----------
Current tax on profits for the period 9,148 15,131
Withholding tax on intercompany dividend
distributions 7,027 -
IAS 34 deferred tax adjustment (note 13) (3,596) -
Deferred tax adjustment (note 13) (514) (1,594)
------------------------------------------- ------------ ----------
Income tax expense 12,065 13,537
------------------------------------------- ------------ ----------
Taxation for each jurisdiction is calculated at the estimated
average annual effective income tax rate in the respective
jurisdictions, in accordance with IAS 34. This is the case for the
corporation tax on taxable profits and also on distributions made
subjected to withholding tax. These rates are applied to the
pre-tax income of the six-month period. The payment of 10%
withholding tax on intercompany dividends from Kazakhstan was
introduced from 1 January 2023.
Deferred tax assets have not been recognised on tax losses
primarily at the parent company and Copper Bay subsidiaries as it
remains uncertain whether these entities will have sufficient
taxable profits in the future to utilise these losses.
7. Earnings per share
a) Basic
Basic earnings/(loss) per share is calculated by dividing the
profit/(loss) attributable to owners of the Company by the weighted
average number of ordinary shares in issue during the period
excluding ordinary shares purchased by the Company and held as
treasury shares.
Six months ended
-------------------------------------------------------- --------------------------
30-Jun-23 30-Jun-22
$'000 $'000
-------------------------------------------------------- ------------- -----------
Profit from continuing operations attributable
to owners of the parent 20,758 53,394
Profit/(loss) from discontinued operations attributable
to owners of the parent 253 (69)
-------------------------------------------------------- ------------- -----------
Total 21,011 53,325
-------------------------------------------------------- ------------- -----------
Weighted average number of ordinary shares in
issue 181,904,941 176,498,266
-------------------------------------------------------- ------------- -----------
Earnings per share from continuing and discontinued
operations attributable to owners of the parent
during the period (expressed in $ cents per share) $ cents $ cents
From continuing operations 11.41 30.25
From discontinued operations 0.14 (0.04)
-------------------------------------------------------- ------------- -----------
From profit for the period 11.55 30.21
-------------------------------------------------------- ------------- -----------
b) Diluted
The diluted earnings/(loss) per share is calculated by adjusting
the weighted average number of ordinary shares outstanding after
assuming the conversion of all outstanding granted share
options.
Six months ended
----------------------------------------------- ------------------------------
30-Jun-23 30-Jun-22
Weighted average number of ordinary shares in
issue 181,904,941 176,498,266
Adjusted for:
- Share Options 7,998,873 6,697,437
----------------------------------------------- -------------- --------------
Weighted average number of ordinary shares for
diluted earnings per share 189,903,814 183,195,703
----------------------------------------------- -------------- ------------
Diluted earnings per share $ cents $ cents
From continuing operations 10.93 29.15
From discontinued operations 0.13 (0.04)
----------------------------- ------- -------
From profit for the period 11.06 29.11
----------------------------- ------- -------
8. Property, plant, and equipment
Motor
vehicles
and right
Construction Plant and Mining of use Mineral
in progress equipment assets assets Land rights Total
--------------------- ------------------ ----------- -------- ---------- ------ --------- ---------
$'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------------- ------------------ ----------- -------- ---------- ------ --------- ---------
Cost
At 1 January
2023 16,005 164,593 1,175 2,944 590 329,961 515,268
Additions 16,574 69 - 499 - - 17,142
Disposals (63) (518) - (53) - - (634)
Change in estimate
- asset retirement
obligation - 2,230 - - - - 2,230
Transfers (8,677) 8,471 - 206 - - -
Exchange differences 424 2,116 22 32 14 4,833 7,441
At 30 June 2023 24,263 176,961 1,197 3,628 604 334,794 541,447
--------------------- ------------------ ----------- -------- ---------- ------ --------- -----------
Accumulated depreciation
At 1 January
2023 - 72,016 580 2,161 - 118,314 193,071
Provided during
the period - 6,038 72 556 - 6,524 13,190
Disposals - (329) - (33) - - (362)
Exchange differences - 360 10 17 - - 387
--------------------- ------------------ ----------- -------- ---------- ------ --------- -----------
At 30 June 2023 - 78,085 662 2,701 - 124,838 206,286
--------------------- ------------------ ----------- -------- ---------- ------ --------- -----------
Net book value
at 1 January
2023 16,005 92,577 595 783 590 211,647 322,197
--------------------- ------------------ ----------- -------- ---------- ------ --------- -----------
Net book value
at 30 June 2023 24,263 98,876 535 927 604 209,956 335,161
--------------------- ------------------ ----------- -------- ---------- ------ --------- -----------
The increase in estimate in relation to the asset retirement
obligation of $2,230,000 is due to adjusting the provision
recognised at the net present value of future expected costs using
latest assumptions on inflation rates and discount rates as well as
updating the provision for management's best estimate of the costs
that will be incurred based on current contractual and regulatory
requirements (note 14).
9. Intangible assets
Mining Computer
licences software
and permits and website
Goodwill Total
------------------------------- ---------- ------------- ------------- -------
$'000 $'000 $'000 $'000
------------------------------- ---------- ------------- ------------- -------
Cost
At 1 January 2023 28,336 33,370 389 62,095
Additions - - 28 28
Exchange differences 139 457 - 596
At 30 June 2023 28,475 33,827 417 62,719
-------------------------------- ---------- ------------- ------------- -------
Accumulated amortisation and
impairment
At 1 January 2023 20,921 14,320 302 35,543
Provided during the period - 856 20 876
Exchange differences - 63 - 63
-------------------------------- ---------- ------------- ------------- -------
At 30 June 2023 20,921 15,239 322 36,482
-------------------------------- ---------- ------------- ------------- -------
Net book value at 1 January
2023 7,415 19,050 87 26,552
-------------------------------- ---------- ------------- ------------- -------
Net book value at 30 June
2023 7,554 18,588 95 26,237
-------------------------------- ---------- ------------- ------------- -------
Impairment assessment
In accordance with IAS 36 "Impairment of assets" and IAS 38
"Intangible Assets", a review for impairment of goodwill is
undertaken annually or at any time an indicator of impairment is
considered to exist and in accordance with IAS 16 "Property, plant
and equipment", a review for impairment of long-lived assets is
undertaken at any time an indicator of impairment is considered to
exist. When undertaken, an impairment review is completed for each
Cash Generating Unit (CGU):
Kounrad project
The Kounrad project has an associated goodwill balance of
$7,554,000 (31 December 2022: $7,415,000). The movement being due
solely to foreign exchange differences.
While assessing the project for impairment the key economic
assumptions used in the review were a five-year forecast average
nominal copper price of $8,723 per tonne (31 December 2022: $7,777
per tonne) and a long-term price of $8,042 per tonne (31 December
2022: $7,436 per tonne) and a discount rate of 8.07% (31 December
2022: 8.07%) as well as market inflation rates. Assumptions in
relation to operational and capital expenditure are based on the
latest budget approved by the Board.
The carrying value of the net assets is not currently sensitive
to any reasonable changes in key assumptions. Management concluded
that the net present value of the asset is significantly in excess
of the net book value of assets, and therefore no impairment has
been identified.
Sasa project
The associated goodwill balance of the Sasa project was impaired
by $20,921,000 to nil during the year ended 31 December 2022.
The business combination in 2017 was accounted for at fair value
under IFRS 3 and therefore
recoverable value was sensitive to changes in commodity prices,
operational performance,
treatment charges, future cash costs of production and capital
expenditures. In accordance with IAS 16 'Property, plant and
equipment', a review for impairment of long-lived assets is
undertaken at any time an indicator of impairment is considered to
exist.
At 30 June 2023, the Group has tested for impairment/reversal of
impairment, using a present value calculation sensitive to
assumptions in respect of future commodity prices, treatment
charges, discount rates, operating and capital expenditure, foreign
exchange rates and the mineral reserves and resources
estimates.
The key changes in economic assumptions used in the review
were:
1) A discount rate of 11.72% (31 December 2022: 12.52%)
supported by a detailed WACC calculation applied to calculate the
present value of the CGU. This discount rate has reduced since year
end due to judgements applied to the country risk premium as the
sale of lead and zinc is a global market and therefore not fully
exposed to North Macedonian risk and favourable changes to the
equity risk premium because of market conditions.
2) The five-year forecast average nominal zinc and lead price of
$2,867 (31 December 2022: $2,760) and $2,016 (2022: $2,081) per
tonne respectively and a long-term real price of $2,600 (31
December 2022: $2,467) and $2,116 (31 December 2022: $1,874) per
tonne respectively based on market consensus prices which have
marginally improved since year-end inflated at 3%.
At the balance sheet date, the impairment test concluded that an
impairment or reversal of the prior year impairment is not
necessary as there have been no significant indicators of a
possible reversal identified due to commodity price risk and
judgements applied in the discount rate. Management performed
sensitivity analyses whereby certain parameters were flexed
downwards by reasonable amounts for the CGU to assess whether the
recoverable value for the CGU would result in an impairment charge.
The following sensitivities when applied in isolation would result
in a breakeven position:
Discount rate increased to 13.4%
Zinc price reduced by 9%
Lead price reduced by 6%
Operating expenditure increased by 8%
Capital expenditure increased by 36%
At the balance sheet date, the Board considers the base case
forecasts to be appropriate and balanced best estimates.
10. Inventories
30-Jun-23 31-Dec-22
$'000
$'000
--------------- ---------- ---------
Raw materials 13,013 11,917
Finished goods 2,397 1,232
--------------- ---------- ---------
15,410 13,149
--------------- ---------- ---------
The Group recognises all inventory at the lower of cost and net
realisable value and did not have any slow-moving, obsolete or
defective inventory as at 30 June 2023 and therefore there were no
write-offs to the income statement during the period (H1 2022:
nil). The total inventory recognised through the Income Statement
was $3,391,565 (H1 2022: $3,551,000).
11. Trade and other receivables
30-Jun-23 31-Dec-22
Current receivables $'000 $'000
------------------------------- ---------- ---------
Trade receivables 4,006 2,362
Prepayments and accrued income 1,863 2,991
VAT receivable 1,909 1,546
Other receivables 6,346 1,816
14,124 8,715
Non-current receivables
Prepayments 2,549 8,221
VAT receivable 4,001 3,257
6,550 11,478
------------------------------- ---------- ---------
Other receivables includes $5,236,000 (31 December 2022:
$1,095,000) of overpaid Group corporate income tax which will be
offset against corporate income tax liabilities arising in the same
entities in the current and next financial year.
As of 30 June 2023, the total Group VAT receivable was
$5,910,000 (31 December 2022: $4,803,000) which included an amount
of $4,190,000 (31 December 2022: $3,399,000) of VAT owed to the
Group by the Kazakhstan authorities. The Group is working closely
with its advisors to recover the remaining portion. The planned
means of recovery will be through a combination of local sales of
copper cathode to offset VAT liabilities and by a continued
dialogue with the authorities for cash recovery and further
offsets.
12. Trade and other payables
30-Jun-23 31-Dec-22
Current payables $'000 $'000
------------------------------------------------- ---------- ---------
Trade and other payables 6,779 6,722
Accruals 3,879 6,029
Corporation tax, social security and other taxes 3,785 3,892
14,443 16,643
------------------------------------------------- ---------- ---------
13. Deferred income tax asset and liability
The movements in the Group's deferred tax asset and liabilities
are as follows:
Currency Credit
to income
translation statement
At 1-Jan-23 differences $'000 At 30-Jun-23
$'000 $'000 $'000
---------------------------------------- --------- ------------ -------------------- ----------- --------------
Other temporary differences (326) 81 3,596 3,351
Deferred tax liability on fair value
adjustment on Kounrad transaction (4,457) (85) 139 (4,403)
Deferred tax liability on fair value
adjustment on CMK acquisition (12,175) (278) 375 (12,078)
Deferred tax liability, net (16,958) (282) 4,110 (13,130)
--------------------------------------------------- ------------ -------------------- ----------- --------------
Reflected in the statement of financial
position as:
---------------------------------------- --------- ------------ -------------------- ----------- --------------
Deferred tax asset 328 4,006
--------------------------------------------------- ------------ -------------------- ----------- --------------
Deferred tax liability (17,286) (17,136)
--------------------------------------------------- ------------ -------------------- ----------- --------------
A taxable temporary difference arose as a result of the Kounrad
Transaction and CMK Resources Limited acquisition, where the
carrying amount of the assets acquired were increased to fair value
at the date of acquisition but the tax base remained at cost. The
deferred tax liability arising from these taxable temporary
differences has been reduced by $514,000 during the period to
reflect the tax consequences of depreciating the recognised fair
values of the assets during the period.
The deferred tax adjustment of $3,596,000 relates to the IAS 34
adjustment of the effective tax rate on withholding tax as
explained in note 6.
All deferred tax assets are due after 12 months. Where the
realisation of deferred tax assets is dependent on future profits,
the Group recognises losses carried forward and other deferred tax
assets only to the extent that the realisation of the related tax
benefit through future taxable profits is probable.
14. Provisions for other liabilities and charges
Employee Other
Asset retirement retirement employee
obligation benefits benefits Legal claims Total
-------------------------- ------------------ ----------- ---------- -------------- -------
$'000 $'000 $'000 $'000 $'000
-------------------------- ------------------ ----------- ---------- -------------- -------
At 1 January 2023 20,543 244 288 2 21,077
Change in estimate 2,230 - - - 2,230
Settlements of provision - (12) - - (13)
Unwinding of discount 882 - - - 882
Exchange rate differences 170 4 7 - 182
At 30 June 2023 23,825 236 295 2 24,358
-------------------------- ------------------ ----------- ---------- -------------- ---------
Non-current 23,608 209 279 2 24,098
Current 217 27 16 - 260
-------------------------- ------------------ ----------- ---------- -------------- ---------
At 30 June 2023 23,825 236 295 2 24,358
-------------------------- ------------------ ----------- ---------- -------------- ---------
The Group provides for the asset retirement obligation
associated with the mining activities at Sasa and Kounrad. The
increase in estimate in relation to the asset retirement obligation
of $2,230,000 is primarily due to additional estimated costs at
Sasa surrounding the lining of the tailings facilities following
discussions with Regulators as well as an update to the discount
rate to 10.15% (31 December 2022: 9.17%) and inflation rate to
3.34% (31 December 2022: 3.53%) using latest assumptions.
15. Borrowings
30-Jun-23 31-Dec-22
$'000 $'000
------------------- ----------- ---------
Unsecured: Current
Bank overdraft - 1,390
-------------------- ---------- ---------
Total current - 1,390
-------------------- ---------- ---------
The carrying value of loans approximates fair value:
30-Jun-23 31-Dec-22
$'000 $'000
---------------- ----------- ---------
Bank overdrafts - 1,390
- 1,390
---------------------------- ---------
The movement on the borrowings can be summarised as follows:
$'000
-------------------------- ------------
Balance at 1 January 2023 1,390
Repayment of overdrafts (1,403)
Finance charge interest 30
Interest paid (30)
Foreign exchange 13
Balance at 30 June 2023 -
--------------------------- ------------
16. Cash generated from operations
Six months ended
30-Jun-23 30-Jun-22
$'000 $'000
-------------------------------------------------- --------- ---------
Profit before income tax including discontinued
operations 33,166 66,867
Adjustments for:
Depreciation and amortisation 13,683 13,971
Silver stream commitment (560) (660)
Loss/(profit) on disposal of property, plant, and
equipment 47 (5)
Foreign exchange loss/(gain) 2,478 (7,025)
Share based payments 2,213 2,418
Finance income (962) (87)
Finance costs 939 1,179
Changes in working capital:
Increase in inventories (2,154) (1,652)
Increase in trade and other receivables (5,167) (2,540)
Decrease in trade and other payables (995) (3,627)
Provisions for other liabilities and charges (12) (9)
Cash generated from operations 42,676 68,830
-------------------------------------------------- --------- ---------
The increase in trade and other receivables includes a movement
in the Sasa VAT receivable balance of $2,717,000 which is offset
against corporate income tax payable during the period.
17. Dividend per share
An interim dividend of 9 pence per ordinary share (H1 2022: 10
pence) was declared by the CAML Board on the 13 September 2023.
18. Related party disclosure
The Kounrad Foundation, a charitable foundation through which
Kounrad donates to the community, was advanced nil (H1 2022: nil)
as donations are expected during H2 2023. This is a related party
by virtue of common directors.
The Sasa Foundation, a charitable foundation through which Sasa
donates to the community, was advanced $110,000 (H1 2022: $96,000)
with further donations expected during H2 2023. This is a related
party by virtue of common directors.
19. Subsequent events
There were no events after the reporting period.
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END
IR EAANAFEEDEAA
(END) Dow Jones Newswires
September 13, 2023 02:00 ET (06:00 GMT)
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