Central Asia Metals’ copper, zinc and lead production and exploration company demonstrate the “fundamental strength” of the business with the results for the year ended. The company owns two low-cost base metals operations, one in Kazakhstan and the other in North Macedonia.
CEO Nigel Robinson says this is demonstrated by CAML having ended the financial year in a strong position with $32.6-million in cash in the bank and gross debt that has been reduced to $108.8-million, almost half the level that it was two years ago when CAML acquired its Sasa zinc and lead mine, in North Macedonia.
Despite this, the company remains conscious that it is announcing its results in “very uncertain times”, when the short-term outlook for the world’s health, the commodity markets and the global economy is in doubt owing to the Covid-19 pandemic.
Taking this into the account, Robinson indicates that both Sasa and Kounrad, a copper operation in Kazakhstan, remain fully operational at present, with no disruptions experienced to either production or the sales of metal products so far.
However, both North Macedonia and Kazakhstan have now closed their borders to neighbouring countries for the movement of people, although not trade, owing to the escalating number of Covid-19 cases.
Currently, the number of confirmed Covid-19 cases in Kazakhstan stands at over 340, while in North Macedonia, this number is more than 240, Robinson told Mining Weekly.
CAML has, as expected, implemented the respective government guidance plus additional stringent procedures to protect the welfare of its staff at both operations, as well as the company’s London-based headquarters, where the CAML team now works remotely.
While both North Macedonia and Kazakhstan currently have, so far, relatively few cases of the Covid-19 virus, compared with the rest of the world, the numbers are, unfortunately, rising daily. This has translated into seeing subsequent escalations of government measures, and CAML indicates that “the potential for increased restrictions” can therefore, not be ruled out.
Given the current period of uncertainty, CAML has decided not to recommend a final dividend for 2019 and is now reviewing its 2020 capital expenditure budgets with the aim of identifying near-term savings.
CAML did, however, declare an interim dividend of 6.5p for the 2019 full-year, compared with 14.5p in the prior comparable period.
“Despite the underlying strength of our business with a strong balance sheet and lowest quartile industry costs, we feel these measures are necessary to conserve cash given the unpredictable nature of the current situation, the potential impact on our operations and the volatility of the underlying commodity prices to which we are exposed,” Robinson says, adding that CAML “remains confident for the medium and long-term future” of the business.
The decision will be reviewed as the year progresses and the world gains more clarity on the Covid-19 situation and its impact on mining operations and metal prices.
Looking ahead, CAML says it remains focused on maintaining a strong cash position for 2020, which it intends to achieve through starting the year with $32-million in the bank, and cutting back on non-essential capital expenditure during the year.
Additionally, considering that it is currently unknown whether CAML will need to put its mines on care and maintenance, like the mining industry in South Africa, Robinson notes that CAML is “well placed” to continue with operations for a while, should Kazakhstan and North Macedonia decide to follow suit and declare a lockdown.
While the company may not survive with this approach indefinitely, Robinson is confident that the global market will have more clarity on the Covid-19 situation in the coming months.
The group’s gross revenue for the 2019 financial year was $108.8-million, with net revenue slightly lower at $171.8-million.
The group’s profit before tax was $67.8-million, and group earnings before interest, taxes, depreciation and amortisation $108.6-million with a 60% margin.
Earnings a share from continuing operations were $29.36.
CAML produced 23 369 t of zinc in concentrate, up from the prior year’s 22 532 t.
Lead-in-concentrate production was 29 201 t, down from the previous comparable period’s production of 29 388 t.
Copper production for the year reached 13 771 t, down from 14 049 t the year before.
Looking ahead, CAML has set its production guidance for this year at between 12 500 t and 13 000 t of copper, between 30 000 t and 32 000 t of lead, and between 23 000 t and 25 000 t of zinc.
However, Robinson notes that these guidance figures should be considered as a caveat, as these numbers could change depending on the direction that the Covid-19 virus forces CAML, and the global market, to take.