REG - Central Asia Metals - Interim Results for Six Months Ended 30 June 2024
10/09/2024 07:00
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RNS Number : 5060D Central Asia Metals PLC 10 September 2024
10 September 2024
Central Asia Metals plc
(the 'Group', the 'Company' or 'CAML')
Interim Results for the Six Months Ended 30 June 2024
Central Asia Metals plc (AIM: CAML) is pleased to announce its unaudited
interim results for the six months ended 30 June 2024 ('H1 2024' or 'the
period').
H1 2024 financial summary
- Strong financial performance
o Group gross revenue(1) of $103.8 million (H1 2023: $99.3 million) and
Group net revenue of $97.5 million (H1 2023: $93.6 million)
o Group earnings before interest, tax, depreciation and amortisation
('EBITDA'(1)) of $49.1 million (H1 2023: $48.9 million)
o EBITDA margin(1) of 47% (H1 2023: 49%)
o Group free cash flow ('FCF'(1)) of $30.0 million (H1 2023 adjusted FCF:
$24.1 million)
o H1 2024 dividend of 9 pence per share (H1 2023: 9 pence)
- Flexible balance sheet
o Debt free
o At 30 June 2024, cash in the bank of $56.3 million(2) (31 December 2023:
$57.2 million)
o Providing a powerful platform for growth
H1 2024 operational summary
- Kounrad copper production of 6,608 tonnes (H1 2023: 6,716
tonnes) and sales of 6,415 tonnes (H1 2023: 6,315 tonnes)
- Sasa zinc-in-concentrate production of 9,014 tonnes (H1
2023: 9,764 tonnes) and payable zinc sales of 7,674 tonnes (H1 2023: 8,382
tonnes)
- Sasa lead-in-concentrate production of 12,872 tonnes (H1
2023: 13,734 tonnes) and payable lead sales of 12,535 tonnes (H1 2023: 12,416
tonnes)
- One Group Lost Time Injury ('LTI'); Group Lost Time Injury
Frequency Rate ('LTIFR'(3)) of 0.80 (H1 2023: 0.80)
- Investment of $3.8 million in Aberdeen Minerals, with
drilling under way post period-end; and exploration ramping up in Kazakhstan
through CAML Exploration ('CAML X'), an 80%-owned subsidiary
- Achieved conformance with the Global Industry Standard on
Tailings Management ('GISTM'), ensuring tailings storage meets the highest
standards of international best practice
1 See Financial Review section for definition of non-IFRS alternative
performance measures
2 The cash balance figure disclosed includes restricted cash but excludes cash
held in discontinued operations - see Financial Review section
3 The rate per million person-hours worked
2024 outlook and deliverables
- On track to meet copper production guidance at Kounrad of
13,000-14,000 tonnes
- Production at Sasa expected to be around the lower end of
previous guidance (zinc-in-concentrate production of 19,000-21,000 tonnes and
lead-in-concentrate production of 27,000-29,000 tonnes)
- Continuation of transition to paste-fill mining methods at
Sasa
- Completion of the Dry-Stack Tailings Plant and initial
placement of filter cake on the engineered landform scheduled for Q4 2024
- Completion of the Central Decline and connection with the
750-metre level planned for Q4 2024
Nigel Robinson, Chief Executive Officer, commented:
"I am delighted to report Group EBITDA of $49.1 million, driven by strong
prices for our three main products, particularly in Q2, and underpinned by a
solid operational performance from our two existing operations. We remain debt
free and, with cash in the bank of $56.3 million and continued strong
operational cash flows, we feel confident to fund both our important capex
programme at Sasa and an attractive interim dividend, which we have declared
at 9 pence per share.
"Our safety performance in H1 2024 was once again encouraging, with just one
LTI during the period. Kounrad performed well and remains on track to meet the
production guidance we gave at the start of the year. Meanwhile, at Sasa the
challenges posed by the transition to a new mining method resulted in a modest
reduction in mined tonnages in H1, but we are certain this investment will
benefit all stakeholders in the longer-term, by sustaining the life of both
the underground mine and its associated tailings storage facilities. We look
forward to the substantial completion of this programme by year-end.
"Our efforts to grow the business remain a key priority. During the period we
formally established CAML X, an 80%-owned subsidiary focused on early-stage
exploration for base metals in Kazakhstan, and we made an initial investment
of $3.8 million in Aberdeen Minerals, a privately-owned company exploring for
base metals in Scotland. Both of these initiatives are early-stage in nature,
and our search continues for an opportunity providing existing, or near-term,
cash flow to establish a project pipeline.
"Sustainability is fundamental to everything we do, and this commitment was
again demonstrated immediately post-period by CAML achieving conformance with
GISTM with respect to our Sasa operation. This standard of international best
practice for tailings management has been adopted by CAML on a voluntary
basis, representing the culmination of a three-year work programme, and is
independently audited by third-party consultants.
"To conclude, this will be my final set of financial results as CEO of CAML.
It has been a privilege to lead the Group for the past six years, and I would
like to take this opportunity to thank all stakeholders for their support. I
believe the Group is in a strong position, both financially and operationally,
and I am delighted to be remaining on the Board and to be able to continue
working with the executive team."
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 (UK) or +1 786 697 3501
(USA Local) and quoting the confirmation code 'CAML - H1' when prompted by the
operator, and the webcast can be accessed using the link:
https://brrmedia.news/CAML_HY_2024 (https://brrmedia.news/CAML_HY_2024)
The presentation will be available on the Company's website, and there will be
a replay of the call available following the presentation at
https://www.centralasiametals.com (https://www.centralasiametals.com)
Investor Meet Company
The Company will also hold a live presentation relating to the 2024 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 and add to meet Central Asia Metals Plc via:
https://www.investormeetcompany.com/central-asia-metals-plc/register-investor
(https://www.investormeetcompany.com/central-asia-metals-plc/register-investor)
For further information contact:
Central Asia Metals Tel: +44 (0) 20 7898 9001
Nigel Robinson
CEO
Gavin Ferrar
CFO
Richard Morgan richard.morgan@centralasiametals.com
Investor Relations Manager
Peel Hunt (Nominated Adviser and Joint Broker) Tel: +44 (0) 20 7418 8900
Ross Allister
David McKeown
Emily Bhasin
BMO Capital Markets (Joint Broker) Tel: +44 (0) 20 7236 1010
Thomas Rider
Pascal Lussier Duquette
BlytheRay (PR Advisers) 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 100% of the Sasa
zinc-lead mine in North Macedonia. The Company also owns an 80% interest in
CAML Exploration, a subsidiary that was formed to progress early-stage
exploration opportunities in Kazakhstan, and a 28.7% interest in Aberdeen
Minerals Ltd, a privately-owned UK company focused on the exploration and
development of base metals opportunities in northeast Scotland.
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's Review
The Kounrad operation in Kazakhstan had another safe six months, with no
recordable injuries, and the Sasa zinc and lead mine in North Macedonia
recorded just one LTI. The Group continues its drive to achieve zero harm.
Gross revenue in H1 2024 totalled $103.8 million, a 4% increase compared with
the corresponding period in 2023 as strong average prices for copper and lead,
backed by steady copper and lead sales, more than offset a marginal decrease
in the average zinc price and slightly lower sales of zinc-in-concentrate.
Group EBITDA was steady at $49.1 million, as the increase in revenue was
effectively matched by a rise in operating costs. The increase in costs
largely reflected general inflationary pressure on wages and consumables, plus
additional costs associated with the move to paste-fill mining methods at
Sasa. However, these increased costs bring tangible benefits, as maintaining
salaries in real terms is important in supporting good employee relations, and
the transition to paste-fill mining is both extending Sasa's life-of-mine and
reducing the quantity of tailings stored on surface.
The consistent EBITDA performance during the period combined with a reduction
in corporate income tax paid, owing principally to overpayments in the
corresponding period last year, resulted in a 24% increase in FCF compared
with H1 2023, and the Group ended H1 2024 with a strong cash position of $56.3
million.
Based on the Company's strong cash flow and balance sheet, the CAML Board is
pleased to declare an interim dividend of 9 pence per ordinary share. This
represents 70% of our $30.0 million FCF, which exceeds the Company's stated
policy of 30-50% of FCF. However, with cash-on-hand at a strong level, and in
the absence of a material transaction, as in certain prior periods the Board
determined a distribution exceeding the policy to be appropriate.
This dividend will be paid on 22 October 2024 to shareholders registered on 27
September 2024.
Growth is always at the forefront of management's thinking, and to this end
the Company made a significant investment in Aberdeen Minerals during the
period, purchasing a 28.7% shareholding in this highly prospective company for
$3.8 million. Drilling commenced at the Arthrath project in northeast Scotland
post period-end, and initial indications based on visual core logging are
positive. The exploration target is high-grade copper and nickel
mineralisation, and the drilling is testing deeper targets than have
previously been evaluated at this project. Meanwhile CAML X, the Company's
80%-owned exploration subsidiary in Kazakhstan, ramped up its activities
during H1 2024, focusing on target generation and licence applications. These
activities represent potential long-term growth, and are complementary to the
Company's continued search for an existing or near-term cash-flowing
opportunity that would transform the business in the immediate future.
The programme of Capital Projects at Sasa achieved several key milestones
during the period, with mining by both cut-and-fill and long-hole stoping
under way, connection of the Central Decline to the 800-metre level and
completion of the construction of the initial landform for the Dry-Stack
Tailings ('DST'). The Paste Backfill ('PBF') Plant operated consistently
during H1 2024, filling a large volume of existing mined voids and thus
stabilising the ground for future mining. Looking ahead to H2 2024, the key
targets of the Capital Projects remain completion of the main building for the
DST Plant and the initial placement of filter cake on the DST landform.
Community engagement remained a key focus of the Group's sustainability
programme during H1 2024. A total of $0.2 million was provided by the two
foundations at Kounrad and Sasa to fund collaborative projects aimed at
sustainable development for the benefit of the local communities, consistent
with CAML's existing funding commitment. Additionally, a further $0.1 million
was allocated to support communities affected by flooding in northern
Kazakhstan earlier this year. In April 2024, CAML published its fifth
stand-alone Sustainability Report covering activities for the year ended 31
December 2023. The Solar Power Plant at Kounrad, operational since November
2023, provided an average of 15% of Kounrad's total electricity requirement
during H1 2024, making a significant contribution to the Group's efforts to
help combat climate change.
The Group enters H2 2024 with consistent, low-cost operations and a strong and
flexible balance sheet, providing resilience to any changes in market
conditions, while underpinning returns to shareholders and providing the
executive management team with the ability to seize new opportunities to add
value.
Operations Review
Kounrad
Production
CAML delivered copper cathode production of 6,608 tonnes from Kounrad for H1
2024, compared with 6,716 tonnes in the corresponding period in 2023.
Copper sales during H1 2024 were 6,415 tonnes, with the cathode sold to CAML's
offtake partner, Traxys Europe S.A. The quality of cathode produced remains
excellent, at purity levels of more than 99.99%, and continues to meet the
requirements of customers.
Throughout the period leaching was conducted at both the Eastern and Western
Dumps, with the Eastern Dumps contributing almost 30% of metal output as
previously unleached, reprofiled side dump slopes were brought under
irrigation. The leaching characteristics of both dumps continue to meet, and
in some instances exceed, the forecasts for recovery predicted at the
feasibility stage.
Despite Q1 winter temperatures being significantly lower than the previous two
equivalent periods, the improvements made to control of the boilers and the
dripper solution monitoring system allowed uninterrupted operation throughout.
Perimeter trench extension works continued adjacent to Dumps 21 and 22 in the
Western Dumps, with 450 metres of trench being lined during the period. In
addition, a new collection pond, pumphouse and delivery pipeline were
constructed and commissioned around Dump 22.
The Solvent Extraction Electro-Winning ('SX-EW') facility operated extremely
well at 99.6% availability, with the only down time associated with a planned
maintenance period during which 1,000 anodes were replaced in the EW1 tank
house. During the period, repairs were also made to the acid-resistant linings
in the EW2 section electrolyte and SX electrolyte storage tanks, with no
negative impact on output.
Operationally, Kounrad continues to be unaffected by the conflict in Ukraine
and resulting international sanctions.
Solar Power Plant
The 4.77MW Solar Power Plant operated continuously throughout the period,
generating 4.42 million kWh equivalent to 15.4% of total power consumption.
During the month of June, the facility produced 926,000 kWh, being 19% of
demand and more than double the quantity generated in January.
Sasa
Production
In H1 2024, 365,652 tonnes of ore were mined and 368,075 tonnes were
processed. The average head grades achieved for H1 2024 were 2.86% zinc and
3.70% lead. The average H1 2024 metallurgical recoveries were 85.5% for zinc
and 94.4% for lead. Plant availability during H1 2024 was 94%, with throughput
averaging 90 tonnes per hour.
Sasa produces a zinc concentrate and a separate lead concentrate. Total H1
2024 production was 17,913 tonnes of zinc concentrate at an average grade of
50.3% and 18,186 tonnes of lead concentrate at an average grade of 70.8%.
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 2024 was
7,581 tonnes of zinc and 12,228 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 7,674 tonnes of zinc
and 12.535 tonnes of lead.
During H1 2024, Sasa sold 174,916 ounces of payable silver to Osisko Gold
Royalties, in accordance with its streaming agreement.
Units H1 2024 H1 2023
Ore mined t 365,652 396,234
Plant feed t 368,075 396,673
Zinc grade % 2.86 2.90
Zinc recovery % 85.5 84.9
Lead grade % 3.70 3.72
Lead recovery % 94.4 93.1
Zinc concentrate t (dry) 17,913 19,257
- Grade % 50.3 50.7
- Contained zinc t 9,014 9,764
Lead concentrate t (dry) 18,186 19,302
- Grade % 70.8 71.2
- Contained lead t 12,872 13,734
Underground mining
Total development-in-ore for H1 2024 was approximately 3,000 metres, which
contributed 39% of total ore tonnes mined. The overall dilution for the period
was in line with plan, as more-efficient mining methods have been introduced
and orebody contouring improved.
As part of this transition to new mining methods, in addition to the start of
cut-and-fill mining, the first long-hole stopes have also been put into
production, and additional long-hole stopes will follow during H2 2024 and in
2025.
Development-in-waste during the period was 1,775 metres, up 36% compared with
H1 2023. Strategically the focus of the first six months of the year has been
connecting the new Central Decline with the 800-metre level, developing
ventilation raises and the excavation of interconnecting ramps to access
production areas. Approximately 3,200 metres of the Central Decline have now
been developed, and connection with the 750-metre level is planned for Q4
2024.
The availability of Sasa's Epiroc fleet of equipment during the period was 75%
for the production drills, 82% for the loaders and 86% for the trucks. During
H1 2024, new underground equipment was delivered as part of the replacement
strategy to aid production and ground-support works in future.
Paste Back Fill Plant and Underground Reticulation
During H1 2024, the Paste Backfill ('PBF') Plant operated consistently, with
placement of paste fill between the 990-metre and 910-metre levels in existing
voids, and in the 800-metre level cut-and-fill drives. By the end of H1 2024,
the total amount of paste fill pumped underground had reached just over
130,000 tonnes.
Some of these previously mined voids are proving to be of greater volume than
anticipated, requiring more paste fill, which in turn has restricted initial
stoping operations under the new mining method. However, this void-filling
provides the necessary ground stability for current and future mining, whilst
increasing the volume of tailings stored underground and thus further reducing
the quantity that needs to be stored on surface.
In H1 2024, operations continued to install steel pipes in the newly developed
areas, bringing the total reticulation pipe network for PBF to more than 5.5
kilometres.
Dry Stack Tailings Project
The Dry Stack Tailings ('DST') project 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 under way, with construction of the main
building on track for completion during Q4 2024. This will be followed by the
automation and electrical work. Initial placement of filter cake on the
engineered landform is scheduled by the end of this year.
The equipment is largely being sourced from Metso Outotec, and construction is
being undertaken by a North Macedonian construction company, Aktiva Ltd, which
was also responsible for building the PBF plant. Knight Piésold has completed
the detailed design work for the DST landform, and construction of the initial
phase of the landform has been completed.
Sustainability
H1 2024 health and safety statistics
During H1 2024, no Lost Time Injuries ('LTI') were recorded at Kounrad and one
LTI was recorded at Sasa. CAML Group therefore reports one LTI and one Total
Recordable Injury ('TRIs') for the six-month period. CAML's H1 2024 LTIFR and
Recordable Injury Frequency Rate ('TRIFR') is 0.80.
Health and safety update on 2024 focus areas
In H1 2024, both operations maintained a strong focus on safety-culture change
and occupational health. At Kounrad, key work included a review of the
findings of the Group Occupational Health Study. Sasa progressed its
site-specific occupational health plan, building on insights from both the
Group and local Occupational Health Studies, with finalisation expected in H2
2024. The health and safety teams at both sites, in collaboration with the
corporate sustainability team, conducted a comprehensive review of the Group's
health and safety culture to establish a safety-culture baseline. Based on
this review, CAML will develop its long-term safety-culture strategy in H2
2024.
Sasa successfully rolled out its '9 Golden Safety Rules' and carried out an
internal emergency response drill for the Tailings Storage Facilities
('TSFs'), with an external drill scheduled for H2 2024. Additionally, Sasa
installed a sprinkler fire-protection system on the crusher conveyor belts. At
Kounrad, a Fire Safety Audit was conducted, with positive results confirming
robust safety standards.
Governance update on 2024 focus areas
Good progress was made during H1 2024 on governance and stewardship-focused
sustainability goals. The Group has committed to conducting a Human Rights
Impact Assessment ('HRIA') on its operations every three years and is
currently halfway through the process. Following a risk-mapping exercise and
desktop review, the HRIA was initiated via a site visit to Kounrad in August
2024, whereby interviews were held with the identified departments. This will
be replicated for the Sasa operation by the end of 2024, with the reports due
to be presented in early 2025.
Additionally, the Group is undertaking an internal assessment of its
supplier-screening process. Responses to the environmental and social criteria
within the Supplier Code of Conduct questionnaire will be reviewed and
analysed to produce meaningful insights into the process, which will help
inform the Group's future efforts to ensure an ethical supply chain. The
results of the internal assessment (spanning a sample size of responses
received between August 2023 and August 2024) are expected to be issued by
year-end. The Group also continues to conduct training on modern slavery and
human rights to both risk-assessed employees and on-site contractors. There
were no human rights abuses reported at either site during the period.
People update on 2024 focus areas
CAML undertook a succession-planning project across the Group in H1 2024, in
which potential successors for management positions were identified. As part
of this project, the Group assessed other key positions within the business,
the roles of expatriates and potential skills gaps, to identify where action
may be required. This initiative is designed to ensure the retention of key
people and to maintain a talent pipeline, which is a fundamental challenge in
the mining industry.
During June, the Company announced upcoming changes to its executive
leadership team. Nigel Robinson is to step down as Chief Executive Officer
('CEO') effective 30 September 2024 and Gavin Ferrar will become CAML's CEO
effective 1 October 2024. Also effective from that date, Louise Wrathall will
assume the role of Chief Financial Officer. Nigel will remain an Executive
Director initially, moving to a Non-Executive Director role effective 1 April
2025.
Regular meetings with unions and employee representatives continued to be held
throughout the period at both operations. Kounrad successfully renewed its
collective agreement with unions, and the Group anticipates finalising Sasa's
collective agreement by the end of Q1 2025.
CAML is once again taking part in the International Women in Mining Mentoring
Programme, with five women from the Group taking part this year (two from each
site and one from corporate). One of CAML's senior leaders was selected to act
as a mentor this year.
The training department at Sasa has been active with various workshops and
instruction in the new mining method, safety and change-management
initiatives. Additionally at Sasa, the Group continues to partner with local
schools for the Dual Education Programme. This programme provides each
participant with practical work in an established company with which the
school has signed a memorandum of co-operation. Eighteen students joined the
programme this year, which brings the total number to 90.
Environmental update on 2024 focus areas
In H1 2024, Sasa continued its efforts to review water usage across the site,
aligning with the Group's long-term target of a 75% reduction in Sasa's
surface-water abstraction by the end of 2026 (compared with the 2020
baseline). A key project initiated during the period involves using adit water
within the milling circuit. This project, expected to commence in Q3 2024,
aims to achieve an approximate 15% reduction in surface-water usage, and other
plans are in progress to achieve the first phase of the overall target.
The Kounrad Solar Power Plant, operational since November 2023, provided an
average of 15% of Kounrad's total electricity requirement during H1 2024. This
contribution is expected to increase to between 16% and 18% by year-end, as
the summer months enhance solar generation.
Work on the Group Biodiversity Strategy has continued, with plans for its
rollout in H2 2024. Additionally, during H1 2024, Sasa developed a pilot
project which will assess which species are best to plant on TSF 3.2 for
biological remediation, as part of the TSF's closure design.
There were no significant environmental incidents reported at Sasa or Kounrad
during H1 2024.
Community update on 2024 focus areas
During H1 2024, the Kounrad Foundation, in association with the Eurasia
Foundation for Central Asia ('EFCA'), supported a Science, Technology,
Engineering, Arts and Mathematics ('STEAM') programme. Training days were
conducted for 69 teachers from 16 different schools. This initiative aims to
enhance the quality of education in the STEAM subjects. Progress was also made
on the Balkhash Youth Centre, where the final design was approved. The
tendering phase is now under way to select a contractor for construction.
At Sasa, the X-ray machine purchased by the Sasa Foundation was delivered to
the medical centre at the local town, Makedonska Kamenica. Additionally, an
early-warning system communication plan, part of Sasa's tailings management,
was developed and will be communicated to stakeholders during H2 2024.
There were no community incidents at either operation during H1 2024.
Sustainability reporting
H1 2024 sustainability reporting update
CAML has reported in accordance with the Global Reporting Initiative ('GRI')
Universal Standards for the period 1 January 2023 to 31 December 2023, and
this is the Group's fifth stand-alone Sustainability Report. CAML has further
increased transparency to its stakeholders by using the GRI Mining Sector
Standards, which were published in February 2024, as well as mapping the
report to the Sustainability Accounting Standards Board ('SASB') for the
metals and mining industry. CAML's 2024 Sustainability report covers the
Group's approach to transparent business conduct, maintaining safe operations
and healthy working environments, and its efforts to manage any potential
environmental or social impacts. Furthermore, 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
2023 Sustainability report for details. Additional targets will be set in
future as appropriate.
Delivering value through stewardship - Zero human rights abuses
- Zero cases of bribery and corruption
- Implement Group-wide supplier-screening platform by 2025
Maintaining health and safety - Zero fatalities
- LTIFR target for 2024 to be below 1.20 (the Group average LTIFR
for the past six years)
Focusing on our people - Zero days lost to labour unrest
- Maintain 99% local employment across both operations
- 25% increase in Group female employees by end-2025 (compared with
2021)
Caring for the environment - Zero severe or major environmental incidents
- 50% reduction in the Group's Scope 1 & 2 Greenhouse 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
Creating value for our communities - Zero severe or major community-related incidents
- Maintain the level of community support to an annualised average
of 0.5% of Group gross revenue
- Work with local community leaders to develop long-term,
sustainable development plans, unrelated to our operations, for the
communities in which we operate
H1 2024 climate-change reporting update
Following the development of its climate-change strategy in 2021, CAML
continued during H1 2024 on its path towards reporting to the Task Force on
Climate-related Financial Disclosures ('TCFD') framework, publishing the
Group's third stand-alone Climate Change Report. This report details progress
towards CAML's long-term goals of a 50% reduction in its Scope 1 & 2 GHG
emissions by 2030 (versus the 2020 baseline) and achieving net zero by 2050.
In addition, the Group has for the first time disclosed its Scope 3 emissions
in alignment with its long-term target, utilising the GHG Protocol's Corporate
Value Chain (Scope 3) Accounting Reporting Standard for its calculations. The
Group's own data was used wherever possible, supplemented by global and
regional emissions standards and guidelines where necessary. More information
on the methodology used can be found in the GHG Emissions Methodology Report
on CAML's website.
Global Industry Standard on Tailings Management ('GISTM') update
CAML is committed to transparent disclosure for all its TSFs. In 2021, CAML
committed to report in accordance with GISTM within a three-year period. In H1
2024, CAML engaged Knight Piésold Consulting to conduct an independent
third-party audit of Sasa TSFs and tailings management system. The audit,
conducted in accordance with the ICMM Conformance Protocols, confirmed that
all GISTM requirements (Principles 1-15) have either been fully met or are
'met with a plan in place'. CAML achieved an overall conformance rate of 92%
plus 8% meeting with a plan, and therefore CAML conforms to GISTM. The 8%
meeting with a plan is being actively addressed, with completion expected by
Q1 2025.
Business Development Review
Summary
CAML continued to place a high priority on its business development efforts
during H1 2024, both in seeking acquisition opportunities offering existing or
near-term cash flow and with respect to the Company's longer-term exploration
investments. The new opportunities CAML reviewed during H1 2024 were all
selected in line with the Company's business development strategy as
previously outlined.
H1 2024 activities
Transformational opportunities
The CAML team remains focused on identifying transformational opportunities to
grow the business, whilst recognising the need for such developments to be
accretive to earnings and valuation. During H1 2024, a total of 23 potential
acquisitions were appraised, seven non-disclosure agreements were signed and
three site visits undertaken. Within this activity, the business development
team spent significant time on five opportunities in particular. Following
extensive evaluation, none of these remain active. However, the team has
entered H2 2024 with a pipeline of opportunities to pursue, and remains
focused on developing the business for the long term.
CAML X
CAML X has undertaken its first full exploration season during the summer of
2024. This fieldwork remains predominantly target-generative in nature, with a
view to applying for additional exploration licences. There is increasing
competition for licences in Kazakhstan, making licensing attractive properties
more challenging in some locations. However, the Group regards this increased
competition as reinforcing the rationale behind the decision to create CAML X,
which is now fully active in this sector.
In addition to the fieldwork, the team continues its desk-based work to
identify potential target areas using historical data with a view to narrowing
down areas of interest for forthcoming field visits and additional licence
applications.
Aberdeen Minerals
CAML completed its initial investment into Aberdeen Minerals on 31 May 2024,
and now owns 28.7% of that company.
CAML's investment represents a low-cost entry for CAML into a focused junior
exploration company which is actively exploring the Arthrath
Project in Aberdeenshire, northeast Scotland, and several promising targets
in the underexplored surrounding district. The investment into Aberdeen will
fund a significant drilling programme of 10,000 metres that will be undertaken
in several phases.
The first phase (six holes totalling 2,650 metres) of this drilling programme
is now under way. Three holes have been drilled to date, and visual results
from core logging are positive. The drilling is designed to test the
exploration model of increasing metal grades at depth, and these holes (of up
to 550m) are testing deeper geology than has ever been drilled in the area
before. The work also includes the first use of down-hole geophysics on the
project, which maximises the data gained from each hole.
Financial Review
Market overview
Copper prices surged during the first half of 2024, peaking at record highs in
May of over $11,000 per tonne, reflecting higher demand from the energy
sector, and supply disruptions and delays, with the positive sentiment further
driven by the prospect of a cut in US interest rates. Although copper prices
have since retreated somewhat, post period-end they remained higher than at
the start of H1 2024. Furthermore, copper's critical role in electrification,
which lies at the heart of the transition to a low-carbon global economy, and
ongoing supply constraints suggest a bullish market outlook for the long-term.
Zinc and lead prices held up generally well in H1 2024, driven principally by
supply tightness. However, like copper, these prices have also since
retreated, particularly post period-end, owing chiefly to concerns over global
economic conditions, especially in China, but also in part to seasonal effects
on activity.
Although inflation rates remain elevated, driven by a continued surge in food
prices and energy in Kazakhstan, there has been a noticeable slowdown in the
inflation rate in both Kazakhstan and North Macedonia. This deceleration is
attributed to effective monetary policy conducted by the respective national
banks and the measures taken to mitigate import-price pressures.
Finally, the weakening in the US dollar relative to sterling has had a
negative impact in US dollar terms on the Group's administrative costs, and on
the value of cash outflows to pay dividends.
Performance overview
The H1 2024 results demonstrate CAML's consistent financial performance in
terms of EBITDA, whilst also reflecting the Company's continued strong free
cash flow ('FCF').
Revenue
The Group reported increased revenues for the period, driven by an increase in
copper sales of 100 tonnes and higher metal prices received for both copper
and lead. Specifically, the received copper price rose by 6% compared with H1
2023, and lead prices received increased by 3%. As a result, gross revenue for
H1 2024 grew by 4% to $103.8 million (H1 2023: $99.3 million).
Earnings per share and EBITDA
This increase in revenue has directly influenced both profit before tax
('PBT') and resulting earnings per share ('EPS'). EPS from continuing
operations rose to 13.14 cents (H1 2023: 11.41 cents), reflecting stable
operating profitability augmented by a positive foreign-exchange swing of $3.4
million.
Group H1 2024 EBITDA was consistent at $49.1 million (H1 2023: $48.9 million).
The transition to paste-fill mining methods requires the operation of the
Paste Backfill ('PBF') Plant, and this incurred additional operating costs of
$0.8 million. Furthermore, inflationary pressures have led to increased
employee-related costs across the Group, rising by $2.0 million, which also
included the hiring of senior technical staff for the Capital Projects at Sasa
and higher national insurance contributions. Costs for reagents, technical
materials and spare parts also rose, by $1.3 million. These additional costs
contributed to a modest reduction in EBITDA margin to 47% (H1 2023: 49%).
At the operating level, Kounrad's H1 2024 EBITDA was $42.3 million (H1 2023:
$39.2 million), with a margin of 72% (H1 2023: 72%). Sasa's H1 2024 EBITDA was
$16.7 million (H1 2023: $18.2 million), with a margin of 37% (H1 2023: 41%).
Free cash flow and taxation
CAML generated an improved H1 2024 FCF of $30.0 million (H1 2023: adjusted FCF
of $24.1 million), with a resulting healthy net cash balance allowing the
Board to declare an interim dividend of 9 pence. The increase in FCF was due
principally to the prior period including substantial cash outflows for tax
payments, including Kazakhstan withholding tax paid on intercompany dividend
distributions. During H1 2024, $3.4 million in overpaid Group income tax was
applied to offset current income tax liabilities, with an additional $3.4
million expected to be utilised in H2 2024.
During H1 2024, the Group paid $2.6 million (H1 2023: $7.0 million) of
Kazakhstan withholding tax on intercompany dividend distributions, with a
further $2.5 million already paid in H2 2024 as these intercompany dividend
distributions have been spread throughout the year in 2024.
Income statement
Revenue
CAML generated H1 2024 gross revenue of $103.8 million (H1 2023: $99.3
million), which is reported as standard practice after the deduction of zinc
and lead treatment charges, but before deductions including offtake buyer's
fees and silver purchases for the Sasa silver stream. Net revenue after these
deductions was $97.5 million (H1 2023: $93.6 million).
Kounrad
Kounrad generated gross revenue of $59.1 million for H1 2024 (H1 2023: $54.7
million). A higher volume of copper cathode was sold compared with H1 2023,
totalling 6,415 tonnes (H1 2023: 6,310 tonnes) driven by the strong production
performance. These sales were made under the Company's offtake arrangement
with Traxys, which has been extended on a one-year rolling basis from 1
January 2024 and commits a minimum of 95% of Kounrad's annual production.
The average copper price received increased by 6% to $9,221 per tonne (H1
2023: $8,668 per tonne), while the offtaker's fee for Kounrad remained
consistent at $1.4 million (H1 2023: $1.4 million).
Sasa
Sasa generated gross revenue of $44.7 million for H1 2024 (H1 2023: $44.6
million). This steady performance was due to a 3% rise in the average price
received for lead during H1 2024, to $2,112 per tonne (H1 2023: $2,051 per
tonne), alongside a higher volume of payable lead-in-concentrate sold,
totalling 12,535 tonnes (H1 2023: 12,416 tonnes). These positive factors were
offset by the average zinc price received, which fell by 1% to $2,644 per
tonne (H1 2023: $2,662 per tonne), and by a decrease in the volume of payable
zinc-in-concentrate, to 7,674 tonnes (H1 2023: 8,382 tonnes), owing to a
reduction in ore processed and lower zinc grades.
Treatment charges during the period reduced slightly to $7.8 million (H1 2023:
$7.9 million), as zinc rates reduced and the offtake buyer's fee for Sasa
remained consistent at $0.5 million (H1 2023: $0.5 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 $7 per ounce for its silver production for
the life of the mine.
Cost of sales
The Group cost of sales for the period was $46.9 million (H1 2023: $44.6
million). This figure includes depreciation and amortisation charges of $13.1
million (H1 2023: $13.4 million). The increase in cost of sales was due
principally to higher wages as the Group responded to local inflationary
pressures by ensuring employee remuneration remains competitive, as well as
inflation relating to technical materials and reagents. From an overall
perspective, the Group continues to focus on discipline in its capital
investments, initiatives to maximise working-capital efficiency and other
cost-control measures.
Kounrad
Kounrad's cost of sales for H1 2024 increased to $16.2 million (H1 2023: $14.5
million), owing primarily to a $0.6 million rise in salaries. Additionally,
there was an increase of $0.4 million for key processing inputs in copper
production, including a 29% rise in electricity prices and increases of 8% and
4% for the key reagents, Escaid and LIX, respectively. There was also an
additional $0.3 million for depreciation, including an element recognised on
the newly constructed solar farm which was completed at the end of 2023.
Mineral Extraction Tax ('MET') is a form of royalty charged by the Kazakhstan
authorities at the rate of 8.55% on the value of metal recovered. MET for the
period remained stable at $4.9 million (H1 2023: $4.9 million).
Sasa
Sasa's cost of sales for the period was broadly the same as in H1 2023,
despite some cost pressures, amounting to $30.7 million (H1 2023: $30.1
million). This stability was primarily due to a $0.6 million reduction in
electricity expenses, driven by a 28% reduction in electricity prices in North
Macedonia.
The main factor contributing to the minor increase in cost of sales was the
full operation of the PBF Plant during H1 2024, leading to a rise in the cost
of technical materials by $0.5 million. In particular this included the
consumption of cement used in the backfilling process, and the use of pipes
and connectors for the backfill reticulation system as Sasa transitions to
paste-fill mining methods. There were also marginally increased mining costs,
by $0.3 million, which arose mainly from work on the 830-metre level for
ground support in the implementation of the new mining method. Additionally,
Sasa faced some general cost pressures, including an increase in salaries of
$0.4 million owing to an increase in headcount for the mining transition phase
and higher wages agreed with employees. Finally, there were additional costs
of $0.2 million to bring Sasa into conformance with the Global Industry
Standard on Tailings Management.
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.
Kounrad
Kounrad's H1 2024 C1 cash cost of copper production was $0.78 per pound (H1
2023: $0.67 per pound), which remains amongst the lowest in the copper
industry. The increase in C1 cash cost versus H1 2023 was due primarily to
higher costs resulting from employee pay increases and increases in prices of
key reagents and power.
Sasa
Sasa's on-site operating costs were $23.1 million (H1 2023: $22.3 million),
resulting in on-site unit costs of ore mined of $63.1 per tonne (H1 2023:
$56.2 per tonne). The increase was due mainly to the modest reduction in mined
tonnage for the period and the additional costs for the full operation of the
PBF plant.
Sasa's total C1 cash cost base, including realisation costs, was broadly
stable at $32.3 million (H1 2023: $32.1 million), whereas there was a marginal
reduction in Sasa's C1 unit cash cost of production when measured in
zinc-equivalents, to $0.70 per pound (H1 2023: $0.72 per pound). This was due
to a lower proportion of costs being attributed to Sasa's zinc production in
H1 2024, as the costs are assigned to Sasa's zinc and lead based on their
respective revenue contributions, and there was a decrease in zinc's share of
revenue relative to that of lead between the comparative periods.
Group
CAML reports its Group C1 unit cash costs on a copper-equivalent basis,
incorporating the production costs at Sasa with those of Kounrad and
correspondingly converting Sasa's zinc and lead production into
copper-equivalent. The Group's H1 2024 C1 copper-equivalent cash cost was
$1.70 per pound (H1 2023: $1.56 per pound). This is calculated based on Sasa's
H1 2024 payable zinc and lead production, which equated to 5,071 tonnes of
copper-equivalent (H1 2023: 5,512 tonnes of copper-equivalent), added to
Kounrad's H1 2024 copper production of 6,608 tonnes (H1 2023: 6,716 tonnes),
making a copper-equivalent total of 11,679 tonnes (H1 2023: 12,228 tonnes).
The increase in Group C1 unit cash costs on a copper-equivalent basis was thus
due largely to a combination of the higher C1 cost base at Kounrad and less
copper-equivalent tonnes from Sasa, with the latter caused mainly by the
relative outperformance of the copper price versus those of zinc and lead,
plus slightly lower zinc production.
CAML also reports a fully inclusive cost that includes sustaining capital
expenditure, local taxes (including MET and concession fees), interest on any
loans, and applicable corporate overheads, as well as the C1 cost component.
The Group's fully inclusive copper-equivalent unit cost for the period was
$2.35 per pound (H1 2023: $2.11 per pound). The increase was due principally
to the lower copper-equivalent tonnes from Sasa, as noted above, and the
higher C1 cost component at Kounrad.
Administrative expenses
During the period, administrative expenses increased to $13.9 million (H1
2023: $12.4 million), owing largely to an additional $0.7 million in
employer's national insurance contributions related to exercised share
options, as well as an increased non-cash accrual for employer's national
insurance liability. This increase was driven both by the number of newly
granted options and by the rise in the Company's share price at the end of
June 2024 compared with a year earlier. There were also higher non-cash
share-based payments, up by $0.2 million, owing to the quantum of granted
share options. In addition, there was an increase in foreign-exchange costs of
$0.2 million, owing to the movement of sterling against the US dollar, as well
as a $0.1 million staff payroll increase, and costs of $0.3 million for the
newly-formed exploration team in Kazakhstan at CAML X, which was focused on
exploration-target generation during the period.
Foreign exchange
The Group incurred a foreign exchange gain of $0.9 million (H1 2023: loss of
$2.5 million), resulting from the retranslation of US dollar-denominated
monetary assets held by foreign subsidiaries with a local functional currency
and related to the weakening of the Kazakh tenge during the period.
At 30 June 2024, the Kazakh tenge weakened to 471.46 against the US dollar,
down from 454.56 on 1 January 2024 (30 June 2023: 454.13, up from 462.65 on 1
January 2023). Similarly, the Macedonian denar had weakened marginally to
57.48 against the US dollar, down from 55.65 on 1 January 2024 (30 June 2023:
56.35 up from 57.65 on 1 January 2023).
Finance income
The Group received finance income of $1.2 million (H1 2023: $1.0 million)
owing predominantly to higher interest rates.
Finance costs
The Group incurred finance costs during H1 2024 of $1.2 million (H1 2023: $0.9
million). These costs were primarily due to the non-cash asset unwinding of
asset-retirement obligations totalling $1.1 million plus some minor overdraft
costs.
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.
Statement of comprehensive income
Currency translation differences arose primarily on the translation on
consolidation of the Group's Kazakh-based and North Macedonian-based
subsidiaries whose functional currency is the tenge and denar, respectively.
In addition, currency translation differences arose on the goodwill and fair
value uplift adjustments to the carrying amounts of assets and liabilities
arising on the Kounrad Transaction and CMK Resources acquisition, which are
denominated in tenge and denar, respectively. During H1 2024, a non-cash
currency translation loss of $12.3 million (H1 2023: gain of $9.2 million) was
recognised within equity.
Statement of financial position
Investments
On 31 May 2024, CAML completed its investment of $3.8 million (£3.0 million)
in Aberdeen Minerals Ltd ('Aberdeen'), acquiring a 28.7% shareholding. The
investment is accounted for as an associate using the equity method, as CAML
is deemed to have significant influence.
CAML holds warrants to invest an additional £2 million at a price of 11 pence
per share which, if exercised, would bring CAML's ownership to 37.8%, assuming
no further changes to Aberdeen's issued share capital. The warrants are
financial assets held at fair value through profit and loss ('FVTPL') and have
been valued at $0.4 million using the Black-Scholes model.
Capital expenditure
During the period, there were additions to property, plant and equipment
('PP&E') of $12.0 million (H1 2023: $17.1 million). H1 2024 cash outflow
on purchases of PP&E was lower, at $8.3 million, due to cash prepayments
made during the year ended 31 December 2023 which were subsequently
capitalised during H1 2024.
The cash additions to PP&E were a combination of $1.7 million (H1 2023:
$1.2 million) for sustaining capital expenditure at Kounrad, $3.4 million (H1
2023: $5.0 million) sustaining capital expenditure at Sasa, $3.1 million (H1
2023: $8.2 million) in relation to the Sasa's Capital Projects and $0.1
million for motor vehicles and office equipment at CAML X.
Sasa's sustaining capital expenditure included capitalised mine development of
$1.4 million, $0.7 million on flotation equipment and $1.0 million on
underground equipment including additions to the mining fleet. Kounrad's
sustaining capital expenditure included $0.6 million for anodes.
H2 2024 capital expenditure is anticipated to increase versus H1 2024, owing
principally to planned increased spending on Sasa's Capital Projects,
including finalising commissioning of the Dry-Stack Tailings ('DST') Plant.
Additionally, there will be further sustaining capital, including investment
in underground vehicles and other mining equipment.
Capital Projects
The Group continues to invest significantly at Sasa 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
the PBF Plant and associated underground reticulation infrastructure, the DST
Plant and associated landform and the development of the new Central Decline.
During H1 2024, capitalised additions to PP&E on the Capital Projects
totalled $5.8 million. Capitalised additions include $1.1 million of Central
Decline costs and $3.9 million spent on the DST Plant and associated landform.
There was a final $0.4 million spent on the PBF plant and $0.4 million on
underground reticulation.
CAML expects full-year 2024 capital expenditure of between $22.0 million and
$25.0 million, of which between $14.0 million and $16.0 million is expected to
be committed to sustaining capex. CAML also expects capital expenditure on
Sasa's Capital Projects to be in the order of $8.0 million to $9.0 million in
2024. This will be largely related to completion of the DST Plant and the
initial landform, as well as Central Decline development.
Working capital
At 30 June 2024, current trade and other receivables were $13.3 million (31
December 2023: $12.2 million), which included trade receivables from offtake
sales of $2.3 million (31 December 2023: $1.4 million) and $4.6 million in
relation to prepayments and accrued income (31 December 2023: $2.3 million).
Trade and other receivables also included $3.4 million (31 December 2022: $6.8
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 periods.
Non-current trade and other receivables were $8.9 million (31 December 2023:
$13.8 million) which reduced owing to capitalising prepayment advances made on
capital items in 2023 into PP&E in the reporting period. At 30 June 2024,
a total of $6.8 million (31 December 2023: $5.7 million) of VAT receivable was
owed to the Group by the Kazakh and North Macedonian authorities. Recovery is
expected through a continued dialogue with the authorities for cash recovery
and further offsets.
Cash and borrowings
At 30 June 2024, the Group had cash in the bank of $56.3 million (31
December 2023: $57.2 million) and a $0.4 million overdraft (31 December 2023:
$0.3 million).
Taxation
During H1 2024, tax paid to host governments totalled $8.2 million (H1 2023:
$18.5 million). Of this, $5.5 million (H1 2023: $11.0 million) was paid as
Kazakh corporate income tax ('CIT'). In North Macedonia, $0.1 million (H1
2023: $0.5 million) CIT was paid in cash. The decrease in CIT payments was
primarily due to tax instalments being based on the previous year's taxation
charge, resulting in overpayments in 2023 owing to the higher profits in 2022
for both Kounrad and Sasa.
Additionally, there was $2.6 million (H1 2023: $7.0 million) of Kazakhstan
withholding tax paid on intercompany dividend distributions.
Free cash flow
Net cash generated from operating activities plus interest received in H1 2024
totalled $35.3 million (H1 2023: $25.1 million), and FCF, a non-IFRS financial
measure, for the period was $30.0 million (H1 2023: $24.1 million, adjusted).
The prior year FCF had been adjusted to more reasonably apportion H1 2023
withholding tax payments evenly over the full year. No adjustment was required
for H1 2024 as dividends have been distributed across the year, with $2.6
million in H1 2024 and a further $2.6 million already paid in H2 2024.
Six months ended
30-Jun-24 30-Jun-23
$'000 $'000
Net cash generated from operating activities 34,119 24,145
Interest received 1,223 962
Less: purchase of sustaining property, plant and equipment (5,154) (4,219)
Less: purchase of intangible assets (208) (28)
Free cash flow 29,980 20,860
Adjustment for:
Kazakhstan withholding tax on intercompany dividend distributions - 3,254
H1 2024 free cash flow (H1 2023, adjusted) 29,980 24,114
Dividend
Total dividends paid to shareholders during the period of $20.1 million
comprised the final 2023 dividend of 9 pence per Ordinary Share.
The Company's underlying 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.
However, when cash-on-hand is at a strong level, and in the absence of a
material transaction, the Board may determine a distribution exceeding this
policy to be appropriate.
The FCF of $30.0 million has been used as the basis of the interim dividend
for the current period and the Board has agreed a payout of approximately 70%.
This has resulted in the Board declaring an interim dividend of 9 pence per
Ordinary Share.
The interim dividend is payable on 22 October 2024 to shareholders registered
on 27 September 2024. This latest dividend will increase the amount returned
to shareholders in dividends since the 2010 IPO to approximately $359.6
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
Kounrad's SX-EW plant's forecast output committed as sales. The Group sells
Sasa's zinc and lead concentrate through an annual rolling offtake arrangement
with Traxys. The commitment is for 100% of Sasa's 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 had substantial cash balances as of 30 June 2024.
The Board has reviewed forecasts for the period to December 2026 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 its 2024 production guidance for Kounrad
and expects Sasa to achieve the lower end of previous guidance. 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
statement of financial position, with $56.3 million in cash and no material
debt as of 30 June 2024. This enables CAML to continue to pay an attractive
dividend whilst actively considering 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 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-24 30-Jun-23
$'000 $'000
Profit for the period 23,735 21,101
Plus/(less):
Income tax expense 12,775 12,065
Depreciation and amortisation 13,466 13,683
Share of post-tax loss of equity accounted investments 15 -
Foreign exchange (gain)/loss (930) 2,478
Other income and losses, net (63) (140)
Finance income (1,189) (962)
Finance costs 1,218 939
Loss/(profit) from discontinued operations 108 (253)
EBITDA 49,135 48,911
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 with 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 concentrates and is used to reflect the movement in commodity prices and
treatment charges during the period. The Board considers gross revenue,
together with its reconciliation to net IFRS revenue to provide valuable
information to users of the interim results.
Six months ended
30-Jun-24 30-Jun-23
$'000 $'000
Gross revenue 103,787 99,331
Less:
Silver stream purchases (4,387) (3,859)
Offtake buyers' fees (1,874) (1,858)
Revenue (net IFRS revenue) 97,526 93,614
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 2023: $0.3
million):
30-Jun-23 31-Dec-23
$'000 $'000
Bank overdrafts (394) (326)
Cash and cash equivalents 56,022 56,832
Net cash 55,628 56,506
Free cash flow
FCF is a non-IFRS financial measure of the net cash generated from operating
activities, plus interest received, less sustaining capital expenditure on
PP&E and intangible assets. It is a key measure for the Company as the
dividend policy is based on this periodic measure of performance.
The purchase of sustaining PP&E in H1 2024 totalled $5.2 million (H1 2023:
$4.2 million), which does not include $3.1 million (H1 2023: $4.4 million)
expended on the Sasa Capital Projects. These costs are not considered
sustaining capital expenditure as they are development costs associated with
the Capital Projects.
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
9 September 2024
INDEPENDENT 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 half-yearly
financial report for the six months ended 30 June 2024 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 group to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 which comprises the condensed consolidated interim income statement,
the condensed consolidated interim statement of comprehensive income, the
condensed consolidated interim statement of financial position as at 30 June
2024, 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 Revised International Standard on
Review Engagements (UK) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410
(Revised)"). 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 half-yearly 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 (Revised), 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 half-yearly financial report
in accordance with
the London Stock Exchange AIM Rules for Companies which require that the
half-yearly report be presented and prepared in a form consistent with that
which will be adopted in the Group's annual accounts having regard to the
accounting standards applicable to such annual accounts.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group'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 Group
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 half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly 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.
BDO LLP
Chartered Accountants
London, UK
9 September 2024
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 2024
Six months ended
30-Jun-24 30-Jun-23
Note $'000 $'000
Continuing operations
Revenue 97,526 93,614
Presented as:
Gross revenue 1 103,787 99,331
Less:
Silver stream purchases (4,387) (3,859)
Offtake buyers' fees (1,874) (1,858)
Revenue 97,526 93,614
Cost of sales (46,899) (44,566)
Distribution and selling costs (1,045) (1,447)
Gross profit 49,582 47,601
Administrative expenses (13,913) (12,373)
Other income and losses, net 10 63 140
Foreign exchange gain/(loss) 930 (2,478)
Operating profit 36,662 32,890
Finance income 1,189 962
Finance costs (1,218) (939)
Share of post-tax loss of investment in equity accounted associate 10 (15) -
Profit before income tax 36,618 32,913
Income tax 6 (12,775) (12,065)
Profit for the period from continuing operations 23,843 20,848
Discontinued operations
(Loss)/profit on discontinued operations, net of tax (108) 253
Profit for the period 23,735 21,101
Profit/(loss) attributable to:
Non-controlling interests (53) 90
Owners of the parent 23,788 21,011
Profit for the period 23,735 21,101
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.
Earnings/(loss) per share from continuing and discontinued operations
attributable to owners of the parent during the period (expressed in cents per
share) $ $
cents cents
Basic earnings/(loss) per share
From continuing operations 7 13.14 11.41
From discontinued operations (0.06) 0.14
From profit for the period 13.08 11.55
Diluted earnings/(loss) per share
From continuing operations 7 12.54 10.93
From discontinued operations (0.06) 0.13
From profit for the period 12.48 11.06
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (unaudited)
for the six months period ended 30 June 2024
Six months ended
30-Jun-24 30-Jun-23
$'000 $'000
Profit for the 23,735 21,101
period
Other comprehensive (expense)/income:
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (12,261) 9,236
Other comprehensive (expense)/income for the period, net of tax (12,261) 9,236
Total comprehensive income for the period 11,474 30,337
Attributable to:
Non-controlling interests (53) 90
Owners of the parents 11,527 30,247
Total comprehensive income for the period 11,474 30,337
Total comprehensive income/(expense) attributable to equity shareholders
arises from:
Continuing operations 11,582 30,084
Discontinued operations (108) 253
11,474 30,337
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (unaudited)
as at 30 June 2024
Unaudited Audited
30-Jun-24 31-Dec-23
Note $'000 $'000
Assets
Non-current assets
Property, plant and equipment 8 326,186 338,121
Intangible assets 9 23,878 25,425
Investment in equity accounted associate 10 3,836 -
Deferred income tax asset 14 510 512
Financial assets at FVTPL 10 449 -
Other non-current receivables 12 8,883 13,801
363,742 377,859
Current assets
Inventories 11 14,954 14,879
Trade and other receivables 12 13,307 12,224
Restricted cash 307 318
Cash and cash equivalents 56,022 56,832
84,590 84,253
Held for sale assets 77 76
84,667 84,329
Total assets 448,409 462,188
Equity attributable to owners of the parent
Ordinary shares 1,821 1,821
Share premium 205,825 205,725
Treasury shares (13,885) (15,413)
Currency translation reserve (133,428) (121,167)
Retained earnings 311,016 310,345
371,349 381,311
Non-controlling interests (1,307) (1,254)
Total equity 370,042 380,057
Liabilities
Non-current liabilities
Silver streaming commitment 15,511 16,042
Deferred income tax liability 14 18,462 18,983
Lease liability 1,245 1,325
Provision for other liabilities and charges 15 26,717 26,801
61,935 63,151
Current liabilities
Borrowings 16 394 326
Silver streaming commitment 1,043 1,002
Trade and other payables 13 14,539 17,327
Lease liability 389 176
Provisions for other liabilities and charges 15 46 55
16,411 18,886
Held for sale liabilities 21 94
16,432 18,980
Total liabilities 78,367 82,131
Total equity and liabilities 448,409 462,188
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (unaudited)
for the six months period ended 30 June 2024
Currency translation reserve Non-controlling interests
Ordinary shares Share premium Treasury shares Retained earnings Total
Total equity
Attributable to owners of the parent $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance as at 1 January 2024 1,821 205,725 (15,413) (121,167) 310,345 381,311 (1,254) 380,057
Profit/(loss) for the period - - - - 23,788 23,788 (53) 23,735
Other comprehensive expense- currency translation differences - - - (12,261) - (12,261) - (12,261)
Total comprehensive income/(expense) - - - (12,261) 23,788 11,527 (53) 11,474
Transactions with owners
Share-based payments - - - - -
2,451 2,451 2,451
Exercise of options - 100 1,528 - (5,511) (3,883) - (3,883)
Dividends - - - - (20,057) (20,057) - (20,057)
Total transactions with owners - 100 1,528 - (23,117) (21,489) - (21,489)
Balance as at 30 June 2024 1,821 205,825 (13,885) (133,428) 311,016 371,349 (1,307) 370,042
Currency translation reserve Non-controlling interests
Ordinary shares Share premium Treasury shares Retained earnings Total
Total equity
Attributable to owners of the parent $'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 - 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
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (unaudited)
for the six months period ended 30 June 2024
Six months ended
30-Jun-24 30-Jun-23
Note $'000 $'000
Cash flows from operating activities
Cash generated from operations 17 42,353 42,676
Interest paid (31) (53)
Corporate income tax paid (8,203) (18,478)
Net cash flow generated from operating activities 34,119 24,145
Cash flows from investing activities
Purchases of property, plant, and equipment (8,259) (11,340)
Proceeds from sale of property, plant, and equipment 63 27
Purchase of intangible assets (208) (28)
Interest received 1,223 962
Purchase of investment in equity accounted associate 10 (3,851) -
Net cash used in investing activities (11,032) (10,379)
Cash flows from financing activities
Overdraft drawdown/(repayment) 16 79 (1,403)
Dividend paid to owners of the parent (20,057) (21,714)
Cash settlement of share options (3,904) (641)
Receipt on exercise of share options 20 4
Net cash used in financing activity (23,862) (23,754)
Effect of foreign exchange (loss)/gain on cash and cash equivalents (34) 43
Net decrease in cash and cash equivalents (809) (9,945)
Cash and cash equivalents at 1 January 56,907 60,361
Cash and cash equivalents at 30 June 56,098 50,416
Cash and cash equivalents at 30 June 2024 includes cash at bank and on hand
included in assets held for sale of $76,000 (30 June 2023: $61,000). The
consolidated statement of cash flows does not include the restricted cash
balance of $307,000 (30 June 2023: $269,000). The restricted cash amount is
held at bank to cover Kounrad subsoil user licence requirements.
Corporate income tax paid includes $2,609,000 (30 June 2023: $7,027,000) of
Kazakhstan withholding tax paid on intercompany dividend distributions.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months period ended 30 June 2024
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 cathode
at its 100% owned Kounrad SX-EW copper project in central Kazakhstan and the
production of lead, zinc and silver at its 100% owned Sasa zinc-lead mine in
North Macedonia. The Company also owns an 80% interest in CAML Exploration
('CAML X'), a subsidiary that was formed to progress early exploration
opportunities in Kazakhstan and a 28.7% interest in Aberdeen Minerals Ltd, a
privately owned UK company focused on the exploration and development of base
metals opportunities in Northeast Scotland. The Company owns a 76% equity
interest in Copper Bay Limited, which is currently classified as 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 CAML and its subsidiary undertakings as at 30 June 2024 and was
approved by the Directors for issue on 10 September 2024. The condensed
consolidated financial information is unaudited and does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
comparative information for the year ended 31 December 2023 included in this
report does not constitute statutory accounts and was derived from the
statutory accounts for that year, which were prepared in accordance with
International Financial Reporting Standards ('IFRS') 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 2023, 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 2024 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, while the principal risks and uncertainties facing
the Group remain largely consistent with those identified in the consolidated
financial statements for the year ended 31 December 2023, there have been some
notable developments. The inflation risk has decreased, reflecting the
reduction of inflation in the Group's countries of operation, though it
continues to be a risk and uncertainty. Conversely, the governance and
compliance risk has experienced a modest escalation, driven by the growing
complexity and uncertainty of an expanding sanctions regime.
3. Accounting policies
The accounting policies, methods of computation and presentation used in the
preparation of the condensed consolidated interim financial information, aside
from the new investment in equity accounted associate policy as included
below, are the same as those used in the Group's audited financial statements
for the year ended 31 December 2023.
Going concern
The Group sells and distributes its Kounrad copper cathode product primarily
through an annual rolling offtake arrangement with Traxys Europe S.A.
('Traxys') 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 products
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 significant borrowings as
at 30 June 2024.
The Board has reviewed forecasts for the period to December 2026 to assess the
Group's liquidity, which demonstrates 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 that could impact
the prospects of the Group over the going concern period including commodity
price outlook, cost inflation and supply chain disruption 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.
Investment in equity accounted associate
During the period, CAML invested $3.8 million (£3.0 million) in Aberdeen
Minerals Ltd ('Aberdeen'), acquiring a 28.7% shareholding. The investment has
been accounted for as an associate using the equity method, as CAML is deemed
to have 'Significant Influence' (see note 10).
Significant Influence is defined as the power to participate in the financial
and operating policy decisions of the investee, but without the ability to
exercise control or joint control.
Investments in associates are accounted for using the equity method of
accounting, after initially being recognised at cost. Thereafter, they are
adjusted to recognise the Group's share of the post-acquisition profits or
losses of the investee in profit or loss, and the Group's share of movements
in other comprehensive income of the investee in Other Comprehensive Income.
Where the Group's share of losses in an equity-accounted investment equals or
exceeds its interest in the entity, including any other unsecured long-term
receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
If at the end of a reporting period indications show that an investment in an
associate may be impaired, the entire carrying amount of the investment is
tested for impairment. If the carrying amount of the investment is found to be
higher than its recoverable amount, the carrying amount is reduced to its
recoverable amount and an impairment loss is immediately recognised in profit
or loss.
Financial assets at Fair Value Through Profit and Loss ('FVTPL')
As part of the investment in Aberdeen, CAML was issued warrants to subscribe
for an additional 18,181,818 ordinary shares in Aberdeen at an exercise price
of 11 pence per share. These warrants are classified as financial assets
measured at FVTPL. The fair value of these instruments has been determined
using the Black-Scholes valuation model, incorporating the probability of
various outcome scenarios and is categorised as a level 2 measurement.
The fair value valuation has resulted in the recognition a financial asset of
$449,000 and a corresponding gain in other income and losses of $449,000 in
the income statement.
Financial assets are classified as FVTPL if they are acquired principally for
the purpose of selling in the near term or do not meet the criteria to be
measured at amortised cost or at Fair Value Through Other Comprehensive Income
('FVOCI'). Financial assets at FVTPL are recognised at the date of issue of
the financial instrument. These instruments are initially measured in the
Statement of Financial Position at fair value, with transaction cost
recognised immediately in the income statement. After initial recognition,
financial assets at FVTPL are remeasured at fair value at each reporting date.
All realised and unrealised gains or losses movements arising from changes in
fair value are included within other income and losses.
Exploration and evaluation expenditure
During the period, the Group incurred exploration and evaluation costs at Sasa
and CAML X (H1 2023: nil). Capitalised costs include expenditures directly
related to any Group exploration and evaluation activities in areas of
interest where the Group has obtained the legal rights to explore. These costs
are capitalised pending the determination of the technical feasibility and
commercial viability of the project. Capitalised costs are classified as
either tangible or intangible exploration and evaluation assets, depending on
the nature of the assets acquired.
Exploration and evaluation expenditure capitalised includes acquisition of
rights to explore, topographical, geological, geochemical and geophysical
studies, exploration drilling, trenching, sampling and activities in relation
to the evaluation of the technical feasibility and commercial viability of
extracting a mineral resource. Administration costs not directly attributable
to a specific exploration area are charged to the income statement.
Exploration and evaluation assets are measured at cost, less provision for
impairment, where required. Amortisation is generally not charged during the
exploration and evaluation phase, except for licence costs paid in connection
with the right to explore, which are capitalised and amortised over the term
of the permit. Pre-licence costs are recognised in the income statement income
as incurred.
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 2024, 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:
· Lease Liability in a Sale and Leaseback (Amendments to IFRS 16
Leases);
· Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1 Presentation of Financial Statements);
· Non-current Liabilities with Covenants (Amendments to IAS 1
Presentation of Financial Statements); and
· Supplier Finance Arrangements (Amendments to: IAS 7 Statement of
Cash Flows and IFRS 7 Financial Instruments: Disclosure).
4. Critical accounting estimates and judgements
The preparation of the 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 the
future, actual experience may differ from these estimates and assumptions.
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 2023.
Refer to note 9 and note 15 for critical estimates and judgements related to
the impairment test for the Sasa mining assets and the asset retirement
obligation associated with the mining activities at Sasa and Kounrad.
5. Segment 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. CAML X was incorporated on 18 August 2023 and has been
reported as a new segment following the commencement of expenditure on early
exploration opportunities in Kazakhstan during the six months ended 30 June
2024.
The segment results for the six months ended 30 June 2024 are as follows:
Unaudited
Kounrad Sasa CAML X Unallocated Total
$'000 $'000 $'000 $'000 $'000
Gross revenue
59,098 44,689 - - 103,787
Silver stream purchases - (4,387) - - (4,387)
Offtake buyers' fees (1,411) (463) - - (1,874)
Revenue 57,687 39,839 - - 97,526
EBITDA 42,287 16,686 (298) (9,540) 49,135
Depreciation and amortisation (2,251) (10,994) (7) (214) (13,466)
Foreign exchange gain/(loss) 1,342 (275) (27) (110) 930
Other income/(loss) (103) (285) 1 450 63
Finance income 9 - - 1,180 1,189
Finance costs (266) (910) - (42) (1,218)
Share of post-tax loss of investment in equity accounted associate
- - - (15) (15)
Profit/(loss) before income tax 41,018 4,222 (331) (8,291) 36,618
Income tax (11,904) (871) - - (12,775)
Profit/(loss) for the period after taxation from continuing operations
29,114 3,351 (331) (8,291) 23,843
Loss from discontinued operations (108)
Profit for the period 23,735
Depreciation and amortisation includes depreciation and amortisation on the
fair value uplift on acquisition of Sasa and Kounrad of $6,013,000.
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 (10,956) (1,109) - (12,065)
Profit/(loss) for the period after taxation from continuing operations 24,484 4,050 (7,686) 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.
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 2024 are as follows:
Additions to
Segmental assets non-current assets Segmental liabilities
30-Jun-24 31-Dec-23 30-Jun-24 30-Jun-23 30-Jun-24 31-Dec-23
$'000 $'000 $'000 $'000 $'000 $'000
Kounrad 67,917 72,097 2,417 3,992 (18,710) (17,570)
Sasa 323,801 342,197 9,710 13,167 (54,748) (56,054)
CAML X 512 - 91 - (79) -
Investment in equity accounted associate -
3,836 - - - -
Assets held for sale 77 76 - - (21) (94)
Unallocated including corporate 52,266 47,818 19 11 (4,809) (8,413)
Total 448,409 462,188 12,237 17,170 (78,367) (82,131)
6. Income tax
Six months ended
30-Jun-24 30-Jun-23
$'000 $'000
Current tax on profits for the period 10,122 9,148
Withholding tax on intercompany dividend distributions 2,609 7,027
IAS 34 deferred tax adjustment 661 (3,596)
Deferred tax adjustment (617) (514)
Income tax expense 12,775 12,065
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 in certain
entities, primarily at the parent company, where 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-24 30-Jun-23
$'000 $'000
Profit from continuing operations attributable to owners of the parent 23,896 20,758
Loss/(profit) from discontinued operations attributable to owners of the
parent
(108) 253
Total 23,788 21,011
Weighted average number of ordinary shares in issue 181,904,941
181,904,941
Earnings/(loss) per share from continuing and discontinued operations $ cents $ cents
attributable to owners of the parent during the period (expressed in $ cents
per share)
From continuing operations 13.14 11.41
From discontinued operations (0.06) 0.14
From profit for the period 13.08 11.55
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-24 30-Jun-23
Weighted average number of Ordinary Shares in issue 181,904,941 181,904,941
Adjusted for:
- Share options 8,611,498 7,998,873
Weighted average number of Ordinary Shares for diluted earnings per share 190,516,439 189,903,814
Diluted earnings/(loss) per share $ cents $ cents
From continuing operations 12.54 10.93
From discontinued operations (0.06) 0.13
From profit for the period 12.48 11.06
8. Property, plant, and equipment
Motor vehicles, office equipment and right-of-use assets
Construction Plant and equipment Mining assets Mineral
in progress Land rights Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost
At 1 January 2024 13,038 200,070 1,197 4,393 612 337,290 556,600
Additions 11,778 61 190 - - 12,029
Disposals - (100) (1) (38) - - (139)
Change in estimate - asset retirement obligation (note 15)
- (920) - - - - (920)
Transfers (4,110) 3,943 - 167 - - -
Exchange differences
(537) (4,048) (43) (68) (19) (6,500) (11,215)
At 30 June 2024 20,169 199,006 1,153 4,644 593 330,790 556,355
Accumulated depreciation and impairment
At 1 January 2024 - 84,465 681 1,721 - 131,612 218,479
Provided during the period
- 7,193 20 347 - 5,123 12,683
Disposals - (48) - (33) - - (81)
Exchange differences
- (846) (25) (41) - - (912)
At 30 June 2024 - 90,764 676 1,994 - 136,735 230,169
Net book value at 1 January 2024
13,038 115,605 516 2,672 612 205,678 338,121
Net book value at 30 June 2024
20,169 108,242 477 2,650 593 194,055 326,186
The decrease in estimate to the asset retirement obligation of $920,000, in
relation to both Kounrad and Sasa, 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 (note 15).
9. Intangible assets
( ) Mining Computer software and website Exploration and evaluation
licences and permits
Goodwill Total
$'000 $'000 $'000 $'000 $'000
Cost
At 1 January 28,468 33,941 446 - 62,855
2024
Additions - - 6 202 208
Exchange differences (270) (742) (3) (2) (1,017)
At 30 June 28,198 33,199 449 200 62,046
2024
Accumulated amortisation and impairment
At 1 January 20,921 16,160 349 - 37,430
2024
Provided during the period - 860 28 - 888
Exchange differences - (150) - - (150)
At 30 June 20,921 16,870 377 - 38,168
2024
Net book value at 1 January 2024 7,547 17,781 97 - 25,425
Net book value at 30 June 2024 7,277 16,329 72 200 23,878
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, located in Kazakhstan, has an associated goodwill balance
of $7,277,000 (31 December 2023: $7,547,000), the movement being solely due to
foreign exchange differences.
The Kounrad cash flows have been projected until 2034, the remaining life of
operation, and the key economic assumptions used in the review were a
five-year forecast average nominal copper price of $9,063 per tonne (31
December 2023: $8,696 per tonne) and a long-term price of $8,818 per tonne (31
December 2023: $8,444 per tonne) based on market consensus prices and a
discount rate of 8.07% (31 December 2023: 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 climate change impacts
are also considered including potential impact of regulatory changes and
physical risks to assets such as consideration of the impact on the Group
asset retirement obligations.
As at 30 June 2024, the Group has reviewed all potential indicators of
impairment and none have been identified. The carrying value of the net assets
is not currently sensitive to any reasonable changes in key assumptions.
Sasa project
The associated goodwill balance of the Sasa project was impaired to nil during
2022. The business combination in 2017 was accounted for at fair value under
IFRS 3, and recoverable value is sensitive to changes in commodity prices,
operational performance, treatment charges, future cash costs of production
and capital expenditures.
At 30 June 2024, the Group has reviewed all potential indicators of impairment
including cash flows projections until 2039, the remaining life of operation,
the 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:
· A discount rate of 10.21% (31 December 2023: 9.72%) supported by
a detailed WACC calculation applied to calculate the present value of the CGU.
This discount rate has increased since the year end due to an increase in the
risk-free rate and cost of debt.
· The five-year forecast average nominal zinc and lead price of
$2,554 (31 December 2023: $2,537) and $1,997 (31 December 2023: $1,983) per
tonne, respectively, and a long-term real price of $2,568 (31 December 2023:
$2,535) and $1,981 (31 December 2023: $1,968) per tonne, respectively, based
on market consensus prices and then inflated at 3.5% over the life of mine.
At the balance sheet date, there are no indicators of impairment or reversal
of the historic impairment as there have been no significant indicators of a
possible reversal identified due to commodity price risk and judgements
applied in the discount rate.
10. Investment in equity accounted associate
The following entity has been accounted for using the equity method as set out
in the Group's accounting policies in note 3.
Country of incorporation principal place of business
% of ownership interest Carrying amount
Name of entity
30-Jun-24 31-Dec-23 30-Jun-24 31-Dec-23
% % $000 $000
Aberdeen Minerals Ltd United Kingdom 28.7 - 3,836 -
On 31 May 2024, CAML invested $3.8 million (£3.0 million) in Aberdeen
Minerals Ltd ('Aberdeen'), acquiring a 28.7% shareholding. The carrying amount
of $3.8 million includes professional fees of $0.1 million directly
attributable to the acquisition.
30-Jun-24 $'000 31-Dec-23
$'000
Investment recognised at cost 3,851 -
Share of post-tax loss of investment in equity accounted associate (15) -
Carrying amount of the Group's investment in equity accounted associate 3,836 -
Financial assets at FVTPL
As part of the investment in Aberdeen, CAML was issued warrants to subscribe
for an additional 18,181,818 ordinary shares in Aberdeen at an exercise price
of 11 pence per share. These warrants are classified as financial assets
measured at FVTPL. The fair value of these instruments has been determined
using the Black-Scholes valuation model, incorporating the probability of
various outcome scenarios and is categorised as a level 2 measurement. This
valuation has resulted in the recognition a financial asset of $449,000 and a
corresponding gain in other income and losses of $449,000 in the income
statement.
11. Inventories
30-Jun-24 $'000 31-Dec-23
$'000
Raw materials and consumables 13,253 12,955
Finished goods 1,701 1,924
14,954 14,879
The Group recognises all inventory at the lower of cost and net realisable
value. There were write-offs to the income statement during the period
totalling $224,000 (H1 2023: nil) for defective raw materials and consumables
inventory as at 30 June 2024. The total inventory recognised through the
income statement was $4,596,560 (H1 2023: $3,391,000).
12. Trade and other receivables
30-Jun-24 31-Dec-23
Current receivables $'000 $'000
Trade receivables 2,298 1,449
Prepayments and accrued income 4,617 2,328
VAT receivable 2,524 1,247
Corporate income tax receivable 3,447 6,750
Other receivables 421 450
13,307 12,224
Non-current receivables
Prepayments 4,604 9,326
VAT receivable 4,279 4,475
8,883 13,801
Overpaid Group income tax of $3,447,000 (31 December 2023: $6,750,000) will be
offset against corporate income tax liabilities arising in the same entities
in the current year.
As of 30 June 2024, the total Group VAT receivable was $6,803,000 (31 December
2023: $5,722,000) which included a non-current amount of $4,279,000 (31
December 2023: $4,475,000) 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.
13. Trade and other payables
30-Jun-24 31-Dec-23
Current payables $'000 $'000
Trade and other payables 6,897 5,473
Accruals 2,445 7,628
Corporation tax, social security and other taxes 5,197 4,226
14,539 17,327
14. Deferred income tax asset and liability
The movements in the Group's deferred tax asset and liabilities are as
follows:
(Debit)/ At 30-Jun-24
At 1-Jan-24 $'000 Currency translation differences credit to income $'000
$'000 statement
$'000
Other temporary differences (2,381) 43 (480) (2,818)
Fair value adjustment on Kounrad Transaction (4,259) 146 141 (3,972)
Fair value adjustment on CMK (Sasa) acquisition (11,831) 374 295 (11,162)
Deferred tax liability, net (18,471) 563 (44) (17,952)
Reflected in the statement of financial position as:
Deferred tax asset 512 - (2) 510
Deferred tax liability (18,983) 563 (42) (18,462)
A taxable temporary difference arose as a result of the Kounrad Transaction
and CMK Resources (Sasa) 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 $436,000 (H1 2023: $514,000)
during the period to reflect the tax consequences of depreciating the
recognised fair values of the assets during the period.
Other temporary differences includes the deferred tax adjustment of $661,000
relating 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. All amounts are shown as
non-current on the face of the statement of financial position as required by
IAS 12 Income Taxes.
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.
15. Provisions for other liabilities and charges
Employee retirement benefits
Asset retirement obligation Legal claims
Other employee benefits Leasehold dilapidation Total
$'000 $'000 $'000 $'000 $'000 $'000
At 1 January 2024 26,100 282 378 94 2 26,856
Change in estimate (920) - - - - (920)
Settlements of provision - (8) - - - (8)
Unwinding of discount 1,137 - - - - 1,137
Exchange rate differences (281) (8) (12) (1) - (302)
At 30 June 2024 26,036 266 366 93 2 26,763
Non-current 26,036 240 346 93 2 26,717
Current - 26 20 - - 46
At 30 June 2024 26,036 266 366 93 2 26,763
The Group provides for the asset retirement obligation associated with the
mining activities at Sasa and Kounrad. The decrease in estimate in relation to
the asset retirement obligation of $920,000 is due to an update to the Kounrad
discount rate to 7.26% (31 December 2023: 6.70%) and inflation rate to 7.74%
(31 December 2023: 6.30%) and an update to the Sasa discount rate to 9.62% (31
December 2023: 9.14%) and inflation rate to 4.63% (31 December 2023: 4.68%).
16. Borrowings
30-Jun-24 31-Dec-23
$'000 $'000
Unsecured: Current
Bank overdraft 394 326
Total current 394 326
17. Cash generated from operations
Six months ended
30-Jun-24 30-Jun-23
$'000 $'000
Profit before income tax including discontinued operations 36,510 33,166
Adjustments for:
Depreciation and amortisation 13,466 13,683
Silver stream commitment (492) (560)
Share of post-tax loss of investment in equity accounted associate 15 -
(Profit)/loss on disposal of property, plant, and equipment (7) 47
Foreign exchange (gain)/loss (930) 2,478
Share-based payments 2,451 2,213
Other income and losses (110) -
Finance income (1,189) (962)
Finance costs 1,218 939
Changes in working capital:
Decrease/(increase) in inventories 309 (2,154)
Increase in trade and other receivables (4,219) (5,167)
Decrease in trade and other payables (4,661) (995)
Provisions for other liabilities and charges (8) (12)
Cash generated from operations 42,353 42,676
The increase in trade and other receivables includes a movement in the Group
VAT receivable balance of $1,432,000 (H1 2023: $2,717,000) which was offset
against Group corporate income tax payable during the period.
18. Dividend per share
An interim dividend of 9 pence per ordinary share (H1 2023: 9 pence) was
declared by the CAML Board on the 10 September 2024.
19. Related party disclosure
During the period, the Non-executive Chairman, Nick Clarke, and the Executive
Directors, Nigel Robinson and Louise Wrathall, exercised 1,383,849 options for
a total share option gain of $3,844,000, as set out in the table below.
Number of options over Shares exercised
Share option gain
Name Position $'000
Nick Clarke Non-Executive Chairman 588,209 1,634
Nigel Robinson Chief Executive Officer 657,749 1,827
Louise Wrathall Director of Corporate Development 137,891 383
1,383,849 3,844
CAML X is owned 80% by CAML and 20% by Thaler Minerals LLP ('Thaler'). CAML
X's CEO is Vladimir Benes who is also a shareholder of Thaler. He is therefore
an ultimate beneficial shareholder of CAML X.
The Kounrad Foundation, a charitable foundation through which Kounrad donates
to the community, was advanced nil (H1 2023: nil) as donations are expected
during H2 2024. 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 nil (H1 2023: $110,000) as donations expected during
H2 2024. This is a related party by virtue of common Directors.
20. Subsequent events
There were no events after the reporting period.
(#_ftnref1)
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