Research that is free to access for all investors. Companies commission these providers to write research about them.
Brokers who write research on their corporate clients and make it available through our main bundle offering.
Research that is paid for directly by asset managers. Only accessible to institutional investors permissioned for access.
Event in Progress:
View the latest research on other companies in the sector.
In our view, trading at 3x EBITDA and a 19% FCF yield suggests CAML remains a cheap way to gain exposure to the copper thematic. Management is keen to increase exposure via disciplined M&A, aided by a rising cash balance. We raise our TP by 5p to 210p and reiterate our Buy rating.
Central Asia Metals Plc
We continue to believe that CAML shares are undervalued, trading at just 3x our 2026E EBITDA forecast. We see c.10% upside to that EBITDA at present spot metals pricing, further highlighting the upside to the shares in our view. We reiterate our 205p target price and Buy recommendation.
We see CAML as a group that can generate its present market capitalisation from post-capex cash flows inside five years. For a company generating stable EBITDA margins around 45% that feels to us just too good an opportunity, so we reiterate Buy, but trim our TP from 215p to 205p.
We expect the shares to respond positively to the buyback, which signals that management and the board recognise CAML shares are materially undervalued. We reiterate our 215p TP and Buy recommendation.
The big reset is that we now assume a transition of cash flows away from investment and back to shareholders in our estimates. Given that we see a steady build in cash, there is upside to our base 18p dividend level, which may include other forms of cash returns to investors.
The CAML team now has another five days in which it can react to the Kinterra offer, after which the New World board is free to revise its recommendation. Currently that is in favour of the CAML offer. We reiterate Buy, TP 245p.
A delay accessing a planned mining area, plus unexpected orebody geometry, saw milled grades fall in 2Q. We believe both issues are manageable over time, and we do not expect our long-term production estimates to be impacted. The shares continue to look cheap, in our view.
The reduction in SASA guidance suggests further teething issues as the mine’s mining methods transition. We intend to review our target price and forecasts.
The increased stake and offer price come in response to news that Kinterra had made a A$0.057/share offer and acquired a 19.2% stake. This leaves the CAML offer as the recommended offer for New World Resources. We reiterate Buy, TP 285p.
The increased acquisition cost drives our estimated net debt higher for 2025E, from US$17m to US$37m. This slightly increases interest expenses, marginally lowering our PBT and EPS forecasts for 2025E onwards. We reiterate our 285p target price and Buy recommendation.
We believe this signals CAML’s determination to secure the attractive New World project. The State permitting process has moved faster than expected, driving the need for additional funding, hence the placement.
We believe this signal’s the CAML team’s determination to secure the attractive New World project. The state permitting process has moved faster than expected, driving the need for additional funding, hence the placement. We reiterate Buy, TP 285p.
Antler looks set to provide CAML with a medium-term growth engine, transforming group cash flows. In the meantime, we assume group dividends fall to 30% of free cash flows, implying DPS of 8.9p/10.1p/5.7p for 2025/26/27E. We reiterate our Buy recommendation.
While the US is outside CAML’s stated target geography, this project looks a good fit. It uses skills CAML has at SASA, provides medium-term growth, and also brings in some longer-term exploration projects, further building out the project hopper. We reiterate Buy and our 260p target price.
The shares have sold off given the tariff-inspired market moves, but we note that CAML’s dividend is cash-backed, underpinning its appealing yield, now over 12%. Add in its low cost operations and fading capex spend, and its resilient cash flows are appealing. We reiterate Buy, TP 260p.
Offering a 12% yield while hunting for its next project, we believe investors are being paid to wait for management to transact, be that mine or project. With 63% upside, we reiterate our Buy recommendation and 260p TP.
The two CAML operations continue to generate stable cash flows, underpinning healthy returns to investors, offering a cash-backed 12% dividend yield. This compensates investors during the wait for a transaction. We reiterate our Buy recommendation and 260p target price.
At a 12%+ DPS yield, we believe the team increasingly has the firepower to add to its portfolio, justifying the rising BD spend. Our target price falls from 285p to 260p on the higher costs, and we reiterate Buy.
We continue to believe CAML shares are undervalued, trading at 2.3x our 2025E EBITDA and just 2x 2026E EBITDA. We make no changes to our forecasts, and maintain our TP of 285p and Buy recommendation.
We continue to view the CAML DPS yield (9%, rising to 10% over the next two years) as highly reliable, more than compensating investors while they wait for the team to find and secure a third asset. We retain our Buy recommendation.
As the SASA transition beds in and the operation returns to normal rates of mining and processing, we expect cash flows to improve, driving a tick-up in dividends, supporting a 10% yield. We reiterate Buy, TP 290p.
The hunt for asset no.3 continues, but it is pleasing to see the business development team maintaining its discipline, looking for accretive transactions only. In the meantime, we see the group able to sustain c.10% dividend yields, underpinning our revised 290p TP. We reiterate Buy.
The cut-and-fill works are nearing completion, with the dry-stack tailings plant nearly complete. Similarly, the company expects the decline to meet the 750m level in 4Q, another significant milestone. We continue to view the 10%+ dividend yield as compelling. We reiterate Buy, TP 285p.
As the cut-and-fill transition continues, we expect increasing flexibility underground, reducing the likelihood of similar periods of reduced mining, as we saw in 2Q. As such, and given the appealing, cash-backed dividend yield of 9%+, we would add to positions on any near-term weakness.
Now the initial void-filling has taken place, we would expect to see an acceleration of tonnages mined from Sasa during 2H, which should contribute to a recovery in volumes. We reiterate our Buy recommendation and 285p target price.
4th July 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced, or it is a rumour Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: ITF announced: 24th June 2024: Rosebank Industries: The Company aims to repeat the successful 'Buy, Improve, Sell' business model which the Rosebank Co-Founders implemented during their time at Melrose. Rosebank proposes to acquire quality industrial or manufacturing businesses whose performance may be improved. The Company’s first day of trading on AIM is expected to be 11th July 2024. The primary offer expected size is approximately £50m. Media speculation: Reverse Takeovers: Change of Market: Dual Listing: Our daily digest of news from UK Small Caps If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Hybridan Chefs research@hybridan.com Banquet Buffet*** Central Asia Metals 207.25p £360m (CAML.L) The copper, zinc and lead production and exploration Company, announces its succession plans for the executive director team to ensure both continuity and effective leadership for the future. With effect from 1 October 2024, Nigel Robinson will step down as CAML's Chief Executive Officer (CEO), having successfully led the business for over six years. Also effective from 1 October 2024, CAML's current Chief Financial Officer (CFO), Gavin Ferrar, will succeed Nigel as the Company's CEO. CAML's Executive Director of Corporate Development, Louise Wrathall, will be appointed to the role of CFO on 1 October 2024, leading the strong existing finance team. Deltex Medical Group 0.15p £2.8m (DEMG.L) The oesophageal Doppler monitoring Company provides a trading update following the end of the first half of its current financial year on 30 June 2024. Unaudited revenue was £1.06m (H1 2023: £1.06m) excluding a further £92k of orders received in H1 2024 awaiting components or payment prior to shipment. EBITDA was positive for two months during H1 2024 and continuing improvement is expected in the second half of the current financial year ending 31 December 2024. Cash at hand on 30 June 2024 was £325k (H1 2023: £107k). The significant growth in the probe unit sales into the international markets shows that the focus on the international markets is working. Management expects the momentum to continue through H2. Distribution Finance Capital Holdings 33p £58.2m (DFCH.L) The bank providing working capital solutions to dealers and manufacturers across the UK, provides a trading update for the six months ended 30 June 2024. New loan origination exceeded a record £709m up c.17% (H1 2023: £607m). The loan book was £600m (H1 2023: 519m), in line with seasonal expectations. In light of the strong performance during the six month period, the Group's underlying trading performance is expected to be ahead of market expectations for the full year, driven by stronger net interest income, lower impairments and loss provisions and stronger cost control. Fusion Antibodies 3.2p £3.1m (FAB.L) The specialists in pre-clinical antibody discovery, engineering and supply for both therapeutic drug and diagnostic applications, provides an update on trading, commercial and research progress for the first quarter of the current financial year ending 31 March 2025 (Q1 FY25). Unaudited revenues for Q1 FY25 was of c.£522k (Q1 FY24: £241k). The order book at 30 June 2024 was approximately £0.7m. The order book includes a number of multi-stage projects for its clients and, subject to these projects progressing in line with expectations, revenue is expected to be recognised for all projects in the current order book in the current financial year. Image Scan Holdings 2.2p £3.0m (IGE.L) The specialist supplier of X-ray screening systems to the security and industrial inspection markets, announces that it has been selected for a contract with a prominent UK defence contractor, NP Aerospace Limited for the supply of its ThreatScan portable X-ray system. The contract (subject to the finalisation of commercial terms) will commence with a three month trial and testing process expected to commence in September 2024. Once the trials are successfully concluded, Image Scan will commence delivery of its ThreatScan portable X-ray systems. The estimated contract value is c.£3m over a 36 month period. The contract will not impact the Company’s sales and profit performance for the year ending on 30 September 2024 (FY24) with revenue and profits being recognised in FY25 and FY26. Induction Healthcare Group 12.5p £11.5m (INHC.L) The digital health platform driving transformation of healthcare systems Company, announces its audited results for the year ended 31 March 2024 (FY24). Revenue increased 5.6% to £14.4m (FY23: £13.6m), Adjusted EBITDA was £0.3m (FY23: loss £4.0m) and net cash at the year end was £3.7m (FY23: £4.3m). The Zesty portal continues to be the Company’s growth engine as the NHS sees value in digitizing interactions with patients who have an outpatient appointment. The Company indicates that FY24 was the year of stabilising and FY25 is a year for generating growth in new areas. Itim Group 38p £11.9m (ITIM.L) A SaaS based technology company that enables store-based retailers to optimise their businesses to improve financial performance, announces that it has signed a five-year multi-million-pound contract with Assaí Atacadista (Assaí), the largest Brazilian wholesaler, with more than 300 stores. Itim's UNIFY Price and Promotions Optimisation platform powered by Profimetrics AI provides its retail customers with advanced analytical capabilities to optimise prices and promotions, drive sales, and improve profitability by leveraging data-driven insights. The execution of this contract is in line with the Company's financial expectations for the current financial year. Katoro Gold 0.0925p £1.5m (KAT.L) The strategic and precious minerals exploration and development company, announces, following completion of due diligence, the confirmation of Mr Patrick Cullen as Interim Chief Executive Officer on the Company's Board. As outlined in the Company's announcement on 28 June 2024, Mr Cullen has extensive geological, geophysical and mining experience gained while working in the junior resource exploration and major mining sectors. This includes board and senior managerial experience at AIM, TSX and ASX listed junior explorers. Light Science Technologies 2.7p £8.8m (LST.L) The company that comprises three divisions: controlled environment agriculture (CEA); contract electronics manufacturing (CEM) and passive fire protection (PFP), provides a trading update for the six months ended 31 May 2024 (H1 FY24). Revenue is expected to be c.£5.2m (H1 FY23: £4.4m), up by approximately 19.3% year-on-year, with consistent growth through all divisions of the business. EBITDA is expected to be positive (H1 FY23: £494,000 EBITDA loss). The Group’s total quoted sales pipeline currently amounts to over £47m, with a committed orderbook currently worth nearly £5m. One Heritage Group* 7p £2.7m (OHG.L) The residential developer, development manager and property manager focused on the North of England, announces that it has completed the sale of the building Seaton House, Stockport for £600k. Additionally, the Company has exchanged conditional contracts for the sale of the land to the rear of Seaton House, an existing car park, for a sale price of £400k. The completion of this sale is subject to the buyer obtaining planning approval. The contract includes a nine month long stop period with the seller able to extend by three months, and the buyer is obligated to submit the planning application within three months of the exchange of contracts. Should the conditional land transaction also complete, total gross proceeds would therefore be £1m on which the Company would recognise a loss after selling costs of £139k. Proceeds from these transactions will be reinvested into the Company's pipeline of residential development projects in the North of England.
CAML FAB IGE FOX ZNT DTXMF
These internal promotions highlight the focus the board places on continuity and sustaining the corporate culture of Central Asia Metals. It also places the two leaders closest to the search for further assets in the top two roles, keeping the strategic focus on M&A. We reiterate our Buy rating and 285p TP.
Offering a 9% yield, while management continues to look for asset number three, we believe the shares offer appealing exposure to tight copper and zinc markets. We expect the price for both metals to rise through 2024E, supporting ongoing strong EBITDA and FCF generation.
CAML’s Q1 production performance was characteristically stable compared with the corresponding period of prior years. Given rates always increase at Kounrad as Kazakhstan exits its cold winter months, and with higher production levels expected at Sasa in H2 as construction activity concludes on the cut and paste back-fill transition project, we believe both operations are on course to meet guidance. Assuming costs stabilise around recent levels, we think this could drive dividend growth in 2024, with potential further upside should copper hold or build on its year-to-date gains. With capex projects at Sasa concluding this year, we see scope for dividends to increase even further going forward, absent significant M&A activity. Business development is a priority however, and we look forward to news flow in this area as 2024 progresses.
Central Asia Metals (CAML LN) has reported Q1 2024 production results and as a result our full year forecasts are unchanged. Output across the three metals was down QoQ and YoY due to seasonal factors while management has highlighted that higher production at Sasa is due once construction is complete.
With the paste fill plant up and running, the steady conversion of mining techniques at SASA can start in earnest. We expect a pick-up in mining rates as the conversion beds in over the rest of 2024E. We reiterate our Buy recommendation and 285p target price.
We increase 2025E DPS by 11% to 19p, on the assumption that the group’s cash balance is set to rise. This implies a cash-backed dividend yield of 9% while the team continues to build out options for the future. We reduce our TP by 5p to 285p and retain our Buy rating.
Central Asia Metals (CAML LN) reported full year earnings with net revenue of US$197m down 12% YoY (-1% against VSA estimate) owing to lower commodity prices and modestly lower output albeit comfortably within guidance. EBITDA of US$97m was down 27% YoY marginally below our estimate as the lower top line combined with inflationary pressure. However, group COGS ex-D&A increased 8% YoY, far lower than in-country inflation. A flagged increase in taxation in Kazakhstan meant that net income was US$37.4m, up YoY due to an impairment charge in 2022. FCF of US$58m was down 36% YoY owing to lower EBITDA and peak capex at Sasa. Despite the reduction in FCF, the debt free status gave the board flexibility for a 9p/sh. above policy final dividend taking the full year total to 18p/sh., implying 10% yield.
Weaker metal prices and slightly lower sales volumes saw earnings fall y-o-y as expected, though CAML nonetheless maintained a very healthy EBITDA margin, testament to the low operating cost structure of Kounrad in particular. The full-year dividend of 18p sees CAML yield an attractive 9%, and with capex projects at Sasa concluding this year, we see scope for dividends to increase further. M&A remains a priority, and we look forward to further developments in this area as 2024 progresses.
CAML’s two operating assets continue to generate strong cash flows and returns for investors. The Aberdeen stake opens up the possibility of longer-term development options, while allowing management to take other strategic steps. We reiterate our Buy rating and 290p target price.
Key Stocks ASOS (ASC LN) (Hold, TP 375.0p) - Look who's back (Tuesday 26 March, P2 update) Bellway (BWY LN) (Hold, TP 2,930p) - Building into the recovery (Tuesday 26 March, 1H) Big Technologies (BIG LN) (Hold, TP 122.0p) - Focus on US activity (Tuesday 26 March, FY) Fevertree (FEVR LN) (Reduce, TP 700.0p) - Can't justify 38x (Tuesday 26 March, FY) W.A.G Payment Solutions# (WPS LN) (Buy, TP 140.0p) - Platform important for 2024 (Tuesday 26 March, FY) S4 Capital (SFOR LN) (Hold, TP 55.0p) - In need of client spend momentum (Wednesday 27 March, FY) Stocks Previewed 888 Holdings, AG Barr, ASOS, Bellway, Big Technologies, Central Asia Metals#, discoverIE#, Ecora Resources#, Ferrexpo, Fevertree, Flutter Entertainment, Forterra, Gamma Communications, Henry Boot#, Hilton Food, JD Sports Fashion#, Luceco, Mears, Petershill Partners, Playtech, Pod Point, Rentokil Initial, S4 Capital, Strix, Topps Tiles#, Vanquis Bank, W.A.G Payment Solutions#, Wood Group, YouGov
CAML GAMA BOOT EVOK BAG ASC BWY BIG FEVR FLTR FORT LUCE PHLL EWG WG/ YOU ECOR PTEC SFOR KETL VANQ JD/ HFG TPT MER DSCV RTO FXPO ENELF
CAML’s investment case remains strong. Even at spot prices, we see the group sustaining 17% FCF yields, with full discretion over how the cash is distributed and/or reinvested. The Kazakh JV gives long-term exploration potential, and rising cash allows a wider range of options for M&A. With 74% potential upside to our TP, we reiterate our Buy recommendation.
Central Asia Metals (CAML LN) has again achieved production guidance for the full year. Copper production in Q4 2023 was 3.4kt, down 4% YoY and up 2% QoQ resulting in 13.8kt of output in 2023, down 3% YoY and 1% below our estimate. Zinc production in Q4 2023 was 5.4kt, up 3% YoY and 6% QoQ with full year output of 20.3kt down 5% YoY but 3% ahead of our forecast owing to strong grades in the latter part of the year. This was comfortably within the guidance range of 19-21kt which is maintained for 2024F. Lead production of 7kt in Q4 2023 was up 6% YoY and flat QoQ while full year was up 2% YoY to 27.8kt and in line with our estimate. This was within the guidance range of 28-30kt which is maintained for 2024F.
CAML delivered another solid production performance in 2023, with full-year copper output at Kounrad coming in towards the upper end of the company’s guidance range and zinc and lead production at Sasa stabilising around the prior year’s level. The project to transition to more flexible and sustainable mining and tailings disposal practices at Sasa progressed significantly in 2023 and is on track for completion this year. This will mark the end of any significant capex call beyond sustaining. Given the inherent low operating cost structure at both Kounrad and Sasa relative to industry peers, this should see a return to free cash flow growth from H2 2024. With no debt and $57m of cash at end-2023, CAML is thus strongly positioned to maintain its attractive dividend returns while also pursuing growth opportunities as they emerge.
CAML continues its steady operational performance. Although it has remained cash-rich throughout FY23, we expect a marked improvement in FY24 as only the current investment cycle comes to an end. We reiterate our Buy rating and 305p TP.
The steadily building cash balances provide greater flexibility for management, and reduce risk around dividend payments. Offering a 10%+ dividend yield, we see no fundamental reason for the derating of the shares over the past few months.
Central Asia Metals (CAML LN) has reported production figures for Q3 2023 demonstrating that the company is comfortably on track to achieve production guidance and our full year forecasts across copper, lead and zinc.
A typically stable performance at Kounrad and improving zinc grades at Sasa look to have CAML on course to meet its 2023 full-year production targets for copper, zinc and lead. Assuming metals prices hold around current levels through Q4, we think this will see CAML deliver another year of strong free cash flow generation and maintain its peer-group leading dividend returns. Capex requirements should reduce materially from next year as the project to transition to more flexible and sustainable mining and tailings-storage methods at Sasa completes, raising the prospect of higher dividends going forward in the absence of M&A activity. And with over US$50m of cash and no debt (mid-2023), CAML has the balance-sheet strength to pursue strategic acquisitions should the right opportunities emerge.
CAML continues its steady operational performance. The dry stack tails work is the final element of the cut and fill project meaning the present investment cycle is moving to a close.
Allowing a slower conversion over to cut-and-fill means that despite lower-than-expected cash costs our target price falls 15p to 310p on lower 2024E EBITDA (down 5%). We expect cash to build from 2H on, supporting either increased payouts or M&A activity from the team over time.
Central Asia Metals (CAML LN) results in H1 2023 follow a record prior comparable period, with the swing between the two primarily due to commodity price performance. H1 2023 net revenue of US$93.6m was down 18% YoY, EBITDA of US$48.9m was down 35% YoY. COGS was up 9.8% YoY given global inflationary pressures. Other charges on the P&L were minimal particularly now CAML is debt free. Owing to the timing of tax charges and some unfavourable working capital movements which we expect to be resolved in H2 2023, FCF was down 54% YoY to US$24.1m. The company finished the period with net cash of US$50.4m. We expect a stronger H2 2023 production boosted by the additional sales overhang from H1 2023.
The quality of CAML’s asset base came to the fore yet again in H1 2023 as the group maintained an impressively wide EBITDA margin despite the twin challenges of weaker base-metal prices and inflationary pressures on costs. The robust financial performance enabled CAML to declare a 9p interim dividend, maintaining its position amongst the top yielders in the junior mining sector. Capex requirements should reduce materially from next year as the project to transition to more flexible and sustainable mining and tailings-storage methods at Sasa completes, raising the prospect of higher dividends going forward in the absence of any M&A activity. And with US$51m of cash and no debt, CAML has the balance-sheet strength to pursue the latter should the right opportunities be uncovered.
CAML remains a low-cost, consistent producer, with a healthy balance sheet and no debt. We expect cash build to accelerate now the bulk of cut and fill capex has been spent and would expect to see a recovery in DPS and further investment in exploration come 2H. We reiterate our Buy.
Central Asia Metals (CAML LN) announced robust metal output in Q2 2023 and H1 2023. Copper output of 3.4kt in 2Q23 was down 6% YoY but up 1% QoQ, implying 1H22 production of 6.7kt, up 1.5% YoY. 2Q23 Lead production was flat YoY and up 8% QoQ to 7.1kt and flat YoY in 1H23 at 13.7kt. Zinc production of 4.8kt was 7% lower YoY and by 1% QoQ; 1H23 output was 7% lower YoY at 9.8kt. All three metals are on track to meet the company’s guidance and our forecast for copper remains unchanged with a 1% increase in expected lead output to 27.8kt and a 4% reduction in expected zinc output to 19.7kt. CAML highlighted this divergence in performance for lead and zinc with its guidance range of 19-21kt earlier in the year, so the trend is expected.
Offering over 11% dividend yields for the next few years, CAML’s steady, low-cost operations are nearing the end of an investment cycle. We reiterate our Buy recommendation and 325p target price, as rising discretionary cash flows open out options for the team.
A characteristically stable production performance at Kounrad in H1 and higher lead grades at Sasa in Q2 look to have CAML well on course to meet its 2023 full-year targets for copper, zinc and lead production. Despite softer metal prices year-to-date, we think CAML’s comparatively very-low operating cost base should thus see it maintain peer-group leading margins and ultimately dividends this year. Moreover, with the project to transition to more flexible and sustainable mining and tailings-storage methods at Sasa set to reach fruition later this year, capex requirements should be materially lower from next year, raising the prospect of even higher dividends longer-term. And with US$51m of cash and no debt, CAML has the balance-sheet strength to pursue further growth should M&A opportunities emerge.
CAML’s cash balance and ongoing cash generation from its low-cost operations support high-conviction, highly compelling dividend yields of over 11% for the next few years. Buy, TP 325p.
Even with the cut and fill investment, we see CAML generating US$24.5m surplus cash in 2023E (after 20p of DPS payments). As capex fades, this cash surplus should increase. Our TP resets from 340p to 325p, reflecting the lower near-term EBITDA on lower zinc prices.
Central Asia Metals (CAML LN) has announced robust results for Q1 2023 indicating that the company is on track for guidance across all three metals. Copper output was particularly strong with 3,336t produced, up 10% YoY but down 7% QoQ due to seasonal factors. This is amongst the strongest first quarter copper production figures in the group’s history.
Overall we would see this as in line with expectations, with the copper production beat into a strong copper price more than offsetting the slightly lower zinc and lead production. The SASA cut and fill project remains on schedule for the transition to start later this year.
Central Asia Metals (CAML LN) reported full year earnings with revenue, EBITDA and adjusted net income all ahead of our estimates. Net revenue of US$221m was down 1% YoY (+1% against VSA estimate) owing to lower copper and lead prices offsetting gains in output while lower zinc output was offset by higher zinc prices. EBITDA of US$132m was down 7% YoY but 3% ahead of our forecast, with the inflationary impact largely due European power prices. A non-cash impairment at Sasa of US$55m meant that net income was US$33.8m, down 59% YoY, however, on an adjusted basis at US$88.7m, was ahead of our forecasted US$83.3m. Free cash flow of US$89m was down 15% YoY owing to lower EBITDA and modestly higher capex, YoY. Having fully repaid the debt in the year this gave management greater flexibility with the dividend which was maintained at 20p/sh. for the full year, in line with last year’s record payout.
The inherent low-cost structure of CAML’s Kounrad and Sasa operations shone through in 2022 as the group delivered a very stable financial performance in the face of significant macro-economic headwinds. Neither operation was fully immune to global inflationary pressures, but they nonetheless drove EBITDA and free cash flow (FCF) generation to an impressive $132m (a margin of 57%) and $90m respectively, only a little below 2021 levels despite the macro challenges. This enabled CAML to continue to progress its transition to cut-and-fill (C&F) mining at Sasa and to maintain shareholder dividends at last year’s level (CAML’s shares currently yield a compelling 8%). With the operational transition at Sasa set for fruition later this year, and minimal capex required thereafter, we expect dividends at around current levels or higher to be maintained over the longer term, even if base metals prices soften a little. Moreover, CAML continues to actively monitor potential M&A opportunities, which could add further growth and additions to our NPV-based valuation of 300p (which conservatively assumes long-term copper and zinc prices below current spot.
2022 saw the final repayment of the SASA acquisition facility, clearing the balance sheet for future strategic moves. In 2023 the cut and fill project at SASA moves to high gear and the solar plant completion at Kounrad should see a further step down in CAML’s emissions.
Central Asia Metals (CAML LN) has reported Q4 2022 and full year operating figures demonstrating copper production in excess of guidance and our estimates, and lead and zinc broadly in line with our forecasts. 14.3kt of copper production at Kounrad was up 2% YoY and 2% ahead of our forecast. Sasa performance was firmly within the guidance range with lead output of 27.4kt, up 1% YoY but 2% below our forecast. Zinc production was down 3% YoY to 21.5kt and 1% below our forecast. Grades dropped modestly in Q4 2022, however, the overall impact on the year’s performance was minimal with stable recoveries. Despite marginal differences, CAML’s performance was broadly as expected providing the basis for continued robust earnings performance. We have updated our 2022F forecasts to reflect actual commodity prices and production but highlight that with the company debt free, we believe this gives the board greater flexibility with respect to the dividend as indicated by the record interim payout of 10p/sh. The stock is trading on a forward yield of 7% based on our forecast for 2022F.
Adjusting our 2023E estimates to reflect guidance sees lower SASA output. We still see the group building some US$24m cash on the balance sheet through 2023E despite the lower output, which leads us to leave our 340p target price and 2023E DPS of 22p unchanged.
CAML starts 2023 in a position of considerable strength on the back of yet another year of guidance-beating copper production at Kounrad and a stable performance at the Sasa zinc-lead mine, which together helped the group end 2022 with over $60m of cash to hand an no debt. Kounrad is expected to remain producing at typical rates through 2023 while Sasa will see another year of slightly below historically achieved zinc and lead production rates as it completes the project to transition to cut-and-fill mining. The latter will secure a sustainable production path at Sasa for many years to come, and we anticipate margin growth at that operation going forward from 2024. The 2022 operational performance overall was characteristically strong and in-line with our expectations. We thus remain confident that the 2022 final dividend will exceed the interim pay-out – our 2022 full-year DPS estimate of 22p would put CAML’s shares on an attractive yield of over 8%, ahead of most of its base-metal peers. With a strong balance sheet and the prospect of robust free cash generation going forward, we see potential for further dividend growth over the longer term, while the group is also in a favourable position to pursue M&A opportunities as they arise.
The Kounrad site continues to run well with a record output and 2023 guidance returning to a 13-14kt range. SASA guidance looks more conservative as the site team starts the cut and fill transition. Delivering this, unlocking long-term production, even at the cost of short-term tonnes, is sensible. With rising cash on the balance sheet and no debt we continue to expect healthy dividends.
We take a conservative view on the speed of the mine ramp to capacity as the transition unwinds, reducing our 2023E estimates slightly. However, with cash building on the balance sheet, we increase 2023E DPS from 20.3p to 22p. We maintain our 340p target price and Buy rating.
We recently visited Central Asia Metals (CAML LN) Sasa operation shortly after the five-year anniversary of CAML’s ownership. We saw first-hand the changes that have happened since our last visit in 2019; most notably the progress in the mining method transition, which was a conceptual study when we visited last, and is advancing in line with our expectation. New hires have added dedicated experience to this type of transition, as well as the commissioning of paste backfill tailings de-risking the next few years and freeing up senior and executive management who are looking at business development.
A recent site visit to CAML’s Sasa zinc-lead mine in North Macedonia has further strengthened our view that the operation is well on course to make the planned transition to cut-and-fill (C&F) mining next year, securing a sustainable path for profitable operations for many years to come. Since taking ownership of Sasa five years ago, CAML has netted US$439m of revenue from zinc and lead sales and generated US$280m of EBITDA. Such robust profitability has enabled the group to fully repay the US$187m of debt taken on to part fund the US$402.5m acquisition in 2018, whilst also delivering significant benefits to the regional and local community via tax payments and community development projects. Moreover, it has allowed CAML to invest in the C&F and dry-stack tailings projects, which will enhance mining flexibility and maximise ore extraction whilst enabling around 70% of future process tailings to be stored in a more environmentally responsible manner (as paste backfill and dry stacks). Despite recent inflationary pressure (most notably on power costs), Sasa sits firmly in the lower half of the industry cost curve. Together with the exceptionally low-cost Kounrad copper operation in Kazakhstan, we think this will see well-above sector-average dividend returns maintained going forward.
Since our last visit the SASA site in North Macedonia has moved up a gear, embedding new processes and technologies into operations. Experienced hires have brought in fresh ideas, derisking the immediate projects as well as adding impetus to push the operation onto a higher performance level still.
We expect a steady build in gross cash over time as management builds a cash pile, allowing it to move swiftly on appealing strategic opportunities as they arise.
Characteristically strong Q3 copper production at Kounrad and positively trending zinc grades and recoveries at Sasa put CAML well on course to achieve its 2022 full-year targets at each operation. Against a volatile and unpredictable macro-economic backdrop, CAML’s inherent low operating-cost structure and well-established track-record of operational stability provide a welcome margin of safety and predictability versus most of its junior base-metal producer peers. We expect dividend growth to continue, and our full-year DPS estimate of 22p puts CAML on a yield of 10%, a stand-out high relative to peers. We therefore see scope for outperformance versus the peer group in a volatile market. And with a now fully de-levered balance sheet that boasts a very healthy cash position, CAML is well placed to add another growth element should the right M&A opportunity emerge.
Now debt free, CAML continues to generate strong FCF, allowing both a compelling dividend as well as the capacity to build cash, putting it in a healthy position to take advantage of any strategic opportunities.
Net the increase to SASA’s power costs drives downgrades to our estimates for 2022-24E. We still see cash building on the balance sheet – now reaching US$152m by 2024E. This surplus cash generation means we view CAML’s dividend as well supported. We trim our target price from 345p to 340p.
Central Asia Metals (CAML LN) reported record H1 results on the back of robust production and higher commodity prices. H1 2022 net revenue of US$114m was up 13% YoY, EBITDA of US$75m was up 16% YoY and the EBITDA margin increased 2pp to 63%. An FX gain of US$7m, combined with the reductions in interest payments from debt reduction and higher profits meant net income was up 72% YoY to US$53m. With capex this year weighted to H2, the company’s free cash flow metric was up 7% YoY to US$52m enabling a record interim dividend of 10p/sh. The company finished the period with net cash of US$38.9m with corporate debt repayments of US$16m in the period, with the complete repayment of the Traxys corporate debt facility in August 2022.
A typically strong operational performance at Kounrad and materially higher realised zinc prices at Sasa versus the year-ago period helped CAML overcome industry-common cost inflation pressure to post a 16% increase in EBITDA and widen its margin to an impressive 63%. This in turn has given the group confidence to declare a record interim dividend of 10p, which annualised puts CAML on a compelling yield of 9%. Despite increasing metals markets volatility and the potential for further inflationary pressure on costs in H2, CAML’s comparatively very-low operating cost base should see it sustain above-average margins, strong earnings and free cash flow and, potentially, further dividend growth this year. We think this should drive outperformance versus base-metal producer peers in a softer metals price environment. And with a now fully de-levered balance sheet and $58m of cash, CAML is in a strong position to pursue growth options should the right M&A opportunity emerge.
As would be expected with the final SASA debt payment coming in August, activities around assessing potential combinations and assets have stepped up a gear. We would expect this to continue given the cash generation from the low-cost CAML assets. In the meantime, the dividend payment suggests strong shareholder returns are set to remain a focus of the board.
Central Asia Metals (CAML LN) announced strong production performance for Q2 2022 with production well on track for full year guidance across all three metals. Copper output of 3.6kt in 2Q22 was up 8% YoY and 19% QoQ, implying 1H22 production of 6.6kt, up 6.4% YoY. Lead production was also up 4% YoY and 5% QoQ to 7.1kt and flat in 1H22 at 13.8kt. Zinc production of 5.2kt was 6% lower YoY but flat QoQ; 1H22 output was 7% lower YoY at 10.5kt. This was due to a further decline in zinc grades, and we have reduced our full year zinc production forecast by 4% to 20.7kt, well within the guidance range of 20-22kt. Our other forecasts remain unchanged at 13.5kt and 27.9kt for copper and zinc.
Typically strong Q2 production at Kounrad and a solid operational performance at Sasa keeps CAML well on course to achieve its full-year targets for copper, zinc and lead production. Despite softening metal prices over recent weeks, and the potential of industry-wide inflationary pressures to impact certain cost drivers at each operation, CAML’s comparatively very-low operating cost base should see it sustain above-average margins, strong earnings and free cash flow and, potentially, further dividend growth this year. We think the latter in particular could drive outperformance versus base-metal producer peers in a softer metals price environment. Together with a robust balance sheet – CAML had $58m of cash at mid-year and is set to move debt free in H2 – this would put the group in a strong position to progress M&A ambitions should the right growth opportunity emerge.
2Q sees another good quarter Overall output for 2Q was slightly better than we expected, with better lead production rates the single largest contributor. The cut and fill project is progressing to schedule at SASA, as is the decline. CAML sustained its strong safety record through 2Q, with both sites LTI free. Net cash continued to build, reaching US$45.6m at 30 June. Approaching the end of the repayments schedule, discretion over the company’s cash generation continues to grow. Buy, TP 345p reiterated. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
Reiterating 345p target price We expect another steady operational quarter from CAML for 2Q. Combined with the strong pricing environment, we anticipate record 6M EBITDA for 1H22E, despite the cost pressures, particularly for energy, across its sites. Marking to market for 2Q pricing, we make minor upgrades to 2022E and reiterate our 345p target price. Steady operations and strong profitability should appeal in uncertain times. Buy. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com 2-page note
CAML delivered another solid operational performance in the first quarter of the year, copper production at Kounrad up versus the year-ago period and zinc and lead output at Sasa, while expectedly slightly down on Q1 2021, still firmly tracking 2022 full-year guidance. The results are in-line with our production expectations for each operation for the full year, which if achieved would see metal output reach levels similar to last year. However, continued base metals pricing strength should see further earnings, cash flow and ultimately dividend growth in 2022. Our unchanged full-year estimates would put CAML on an undemanding EV/EBITDA multiple of just 3.5x and a compelling dividend yield of over 9%. Given our forecasts assume metal prices below current spot levels, we see scope for material upside to our numbers if the current tightness in metals markets is sustained.
Central Asia Metals (CAML LN) has announced a robust Q1 production update indicating the company is well on track to meet the company’s guidance and our forecasts.
1Q production slightly ahead of our expectations The SASA operation recorded a slightly better quarter than we expected as both ore grades and recovery rate were better than our forecasts. At Kounrad production was slightly behind our expectations, although given the miss of 30 tonnes this equates to well under a day’s production. Net, we see the production report as a slight beat. Offering an 8% dividend yield and imminently debt-free, CAML shares appeal. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
Building up for the next move We estimate that another SASA-like acquisition could be c.25% accretive to DPS, even while maintaining a 50% pay-out ratio of free cash flow. It highlights the potential accretion coming, given that by end-2024E we expect to see the group building up a net cash position of US$115m. We refresh our CAML estimates, seeing EBITDA increase 6% for 2022E, as higher price levels offset the impact of higher cash operating costs. Our target price increases from 335p to 345p and we reiterate our Buy recommendation. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com 7-page note #Corporate client of Peel Hunt
Central Asia Metals (CAML LN) reported record full year earnings underpinned by strong commodity prices enabling a record dividend of 20p/sh. Net revenue of US$223.4m was up 39% YoY primarily due to higher copper, lead and zinc prices, and was in line with our forecast. EBITDA of US$141.5m was up 48% YoY and 3% ahead of our forecast. Net income was up 93% YoY to US$84.2m. This performance drove strong free cash flow generation and on the company’s metric was US$103.8m, up 76% YoY enabling a final dividend of 14p/sh or 20p/sh. for the full year, up 43% YoY. The share price has been relatively volatile YTD, although the strong earnings expectation was sufficient to drive an 18% rerating from the March lows, indicating that the mispricing can be closed with further strong earnings performance which we expect in the current commodity price environment.
Surging base metal prices across H2 more than offset some expected (in the context of wider industry trends) cost inflation as CAML enjoyed a record year of profitability in 2021, EBITDA and free cash flow rising by an impressive 48% and 76% respectively. The strong financial performance (underpinned by the low-cost nature of the group’s two operations) enabled CAML to again lift its dividend – the 12p final declared today is 50% up on the interim dividend and takes the full-year pay-out to a record 20p, a yield of over 8%. With base metal prices having moved higher still in 2022 to date, we expect further earnings and dividend growth near-term – our revised 2022 forecasts would put CAML on an undemanding EV/EBITDA of just 3.4x and see its shares yield close to 10%. And given the group is set to move debt free in 2022 and has minimal capex requirements (other than sustaining) beyond 2023, we see potential for sustained dividend strength longer term, even if base metals retreat from current highs. Moreover, CAML continues to actively monitor potential M&A opportunities, which could see further additions to our long-term NPV-based valuation of 315p (which assumes long-term metal prices significantly below current spot levels).
Dividend beat hints at cash returns to come Record free cash flow of US$104m, up 80% YoY, combines with the shift to a US$2m net cash positive balance sheet and allows a 12p final dividend. In itself, this offers a 5% yield to the closing price on 28 March. In total for 2021 it is a 45% payout ratio of FCF and takes the 2021 dividend to 20p, another record. We also take the strong payout as a signal that as debt is repaid excess cash will be returned quickly to investors. Lastly, we note that at spot metals prices we see the shares trading at 3x EBITDA of US$160m. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
Sell-off opens up opportunity The Kazakh unrest did not affect production at Kounrad, despite the headlines, thus ensuring shareholders will continue to benefit from strong copper prices. We adjust our 2022E forecasts down given the SASA production guidance, but we still view the group as strongly cash generative. Our DPS remains unchanged, as does our 335p target price. Buy. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com 4-page note
Central Asia Metals (CAML LN) announced Q4 2021 copper output of 4.1kt, up 9% YoY and down 11% QoQ from a record Q3. Full year copper output was therefore 14kt, up 1% YoY. This underpins our record earnings forecast and we expect full year group EBITDA of US$138m. At Sasa, zinc and lead output were both down in the quarter meaning that full year output was modestly below guidance. Q4 zinc output of 5.1kt and lead production of 6.5kt were down 12% and 13% YoY respectively and 11% and 7% QoQ. Full year output of 22.2kt and 29.7kt missed the lower end of the guidance band of 23kt and 30kt as the impact of weaker ground conditions has continued to hinder performance. That said, lead and zinc prices were strong into year end and the net effect of higher prices offsets lower production in relation to our forecasts.
Despite a mixed 2021 – with Kounrad once again beating guidance but Sasa slightly missing targets owing to challenging ground conditions and lower grades – CAML enters 2022 in fine fettle with a strong balance sheet and all three of its metal products riding high. We are pleased to hear that the recent unrest in Kazakhstan has not impacted operations at Kounrad, and are encouraged that the transition to cut-and-fill mining at Sasa remains on schedule (which should see a much more stable operating environment at the mine – and enhanced mining flexibility and grades – from 2023). We have lifted our 2021 full-year earnings and dividend estimates on stronger-than-expected metal prices through the final quarter of the year. Our revised forecasts would put CAML on an undemanding EV/EBITDA of under 4x and see its shares yield close to 9%. With the group set to become debt free in H2 2022 and having minimal capex requirements (other than sustaining) beyond the end of this year, we therefore see scope for material dividend growth going forward, even if base metals retreat somewhat. Moreover, CAML is assessing potential M&A opportunities with renewed vigour, which could see further additions to our long-term NPV-based valuation of 300p (which assumes conservative long-term metal prices some way below current levels).
Central Asia Metals Plc Central Asia Metals Plc
High prices drive stronger than expected 2H cash flows Better than expected copper output, plus high 4Q metals prices, saw the group report US$26.2m net cash, well over double what we expected and despite lower than expected output from SASA. These better than expected prices have persisted into 2022E, and presently suggest FCF yields of about 25% should they persist well into this year. The group’s latest board appointment is likely to enhance the search for a third asset, just as it returns its balance sheet to full flexibility. Buy. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
Central Asia Metals (CAML LN) reported robust figures for copper and zinc production which remain on track for full year guidance and our estimates although cautioned on the lead production outlook. However, with copper prices above US$9,000/t, this is the real earnings driver for the stock and our estimates remain on track for all-time highs with 2021F EBITDA of US$135m which implies a one year forward EV/EBITDA multiple of 3.9x; making a compelling valuation, in our view. With the shares down 6% YTD the market appears entirely focussed on the operational performance entirely ignoring higher commodity prices, earnings and dividends.
CAML delivered a strong Q3 production performance, with output of copper, zinc and lead all up on the preceding quarter. Kounrad looks well on course to meet the upper end of full-year copper production guidance, and Sasa should hit the lower end of full-year zinc guidance. However, despite improved grades in Q3, CAML has lowered slightly its full-year lead production expectations for Sasa. We have marginally trimmed our full-year earnings estimates accordingly, though our 2021 dividend forecast and our NPV-based valuation are unchanged. H1-to-date copper, zinc and lead prices are some 5-10% higher than the assumptions embedded in our full-year estimates, and so we note the potential for upside to our forecasts should metals prices hold their current levels (or strengthen) across the remainder of the year. We expect CAML to move to a net cash position by the end of 2021, and to be debt free by August 2022. Given this balance sheet strength, CAML is now “more actively assessing” potential M&A opportunities. If fruitful, this could see further value upside potential to shares that are trading at an undemanding EV/EBITDA ratio of less than 4x and yield over 8% based on our 2021 full-year estimates.
Kounrad sees a record quarterly production rate The CAML team have delivered a safe 3Q with no lost time injuries or medically-treated injuries at either site. Kounrad set a quarterly production record of over 4kt copper produced. SASA saw a recovery from the 2Q levels, albeit lead grades did not recover as quickly as we had hoped. Given relative pricing we would say the higher copper output more than offsets the lower lead. We reiterate our Buy recommendation. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
Closing in on net cash 1H saw a bigger dividend as the strengthening balance sheet allows management to sustain strong returns to investors. We see discretionary cash flows of US$155m over the next 24 months given only US$54m remaining to pay on the SASA acquisition facility. As a result we increase our 2021E and 2022E dividends. Our expectation of sustained strong metals prices means the CAML team looks increasingly well positioned. Our target price increases 5p to 335p and we reiterate our Buy recommendation. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com 4-page note
Central Asia Metals (CAML LN) reported strong interim results as copper, lead and zinc prices extended their gains up 21%, 11% and 12% YTD. H1 2021 revenue of US$101m was up 42% YoY, EBITDA of US$64m was up 52% YoY and the EBITDA margin increased 5pp to 61%. With no significant other charges, net income was up 69% YoY to US$42m. Having marked to market our commodity price assumptions, our estimates are broadly unchanged meaning CAML remains well on track for a record year of earnings underpinned by ongoing high prices and stronger H2 metal production at Kounrad and Sasa following the reiteration of guidance.
Robust FCF drives a strong dividend beat High prices and steady production saw the CAML operations generate strong 1H cash flows. With FCF of nearly US$49m in the period, even the mid-point of the policy payout rate equates to an 8p interim dividend, well ahead of our 6.5p estimate. Subsequent to period end the team has accelerated its debt repayment, bringing forward the moment in 2022E when CAML becomes debt free. Management looks to be making a point that the eye-catching CAML dividend of the past is back. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
Higher metal prices saw CAML achieve a 52% and 131% increase in EBITDA and FCF respectively in the first half of 2021, facilitating an attractive 8p interim dividend declaration (up 2p on H1 2020). The H1 results are tracking our full-year estimates, which if achieved would put CAML on an undemanding EV/EBITDA multiple of just 4x and see the shares yield over 8% at current market price. Given average copper, zinc and lead prices across H2 to date are around 10% higher than our pricing assumptions, we consider the risks to our full-year estimates lie to the upside. Moreover, as CAML moves to a net cash position by the end of 2021 and capex requirements diminish once the cut-and-fill project at Sasa is completed by the end of 2022, we see scope for even further growth in FCF and thus dividends thereafter.
Central Asia Metals (CAML LN) announced Q2 2021 production figures with 3.3kt copper, up 16% QoQ and down 2% YoY, lead production of 6.8kt down 10% YoY and 3% QoQ and zinc production down 9% YoY and 3% QoQ. Rock conditions at Sasa have forced a temporary focus on areas of the mine which necessitate higher dilution leading to lower head grades and production; highlighting the decision to transition to lower dilution cut and fill mining. The company has indicated that output is likely to be towards the lower end of the guidance range. We have adjusted our Sasa production forecasts for this year to 29.6kt of lead and 23.1kt zinc although highlight that CAML has a track record of top operational performance spanning close to a decade. Indeed, despite this headwind at Sasa we expect 2021F to be a record year financially for CAML which will ultimately be the driver of a rerating of the share price, in our view.
Q2 production keeps CAML well on course to hit its full-year target for copper, and if rates rise through H2, full-year zinc and lead output could also reach guidance (albeit perhaps at the lower end). Assuming costs broadly in line with recent years, this will yield material free cash flow growth given the rally in base metal prices, which should prompt higher dividends. Our upwardly revised 2021 EBITDA and DPS estimates put CAML on an undemanding EV/EBITDA multiple of just 4x and a compelling dividend yield of over 8%. And given CAML should move to a net cash position this year (and with minimal capex beyond 2022) we see scope for further dividend growth ahead. We believe this could underpin share price outperformance, even if metal prices retract somewhat from their current highs.
Higher prices translate to higher FCF generation Despite lower than expected output from SASA, the CAML operations ended the half having generated 14% more cash after capex and debt repayments than we expected. This highlights the benefit from strong prices, particularly in 2Q. With net debt at US$6.5m we would anticipate the group moving net cash positive during 3Q. Pleasingly, the river silt removal and planting work has finished, closing off the small tailings breach. Offering a 6%+ DPS yield and nearing a net cash positive balance sheet, we continue to think the shares appealing. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
CAML’s Q1 2021 production rates of copper, zinc and lead were down slightly versus Q1 2020, but we believe output of all three metals remains on course to meet group guidance for 2021. The latter is in-line with production levels over recent years, which if achieved we believe would result in material earnings (and potentially dividend) growth this year given the rally in base metals prices over recent months relative to 2020 average levels. Our 2021 forecasts would put CAML on an EV/EBITDA multiple of under 5x and a compelling dividend yield of over 6%, the latter conservatively assuming a free cash flow pay-out ratio below that used to set the 2020 dividend. Given our estimates assume zinc and lead prices broadly in-line with current pricing levels and a copper price assumption that is some way below current spot, we believe the risks to our 2021 estimates lie to the upside.
Steady first quarter at both operations The CAML team saw 1Q output at both sites in line with the reiterated production guidance for 2021. Ore throughput at SASA was higher than expected, offset by lower grades relative to our expectations. Kounrad output was marginally lower than we expected, likely due to the cell ages and longer leach cycles on the Western Dumps. We see the shares offering appealing yields and an increasingly strong balance sheet and reiterate our Buy recommendation. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
Lifting dividends as the balance sheet strengthens further Following the 2020 results, the main change we make to our model is a 1p increase to our 2021E and 2022E dividends, lifting those estimates to 15.5p for each year. This suggests a 6% dividend yield, which we think will continue to appeal to investors. We see the group closing 2021E with US$17m net cash, rising to US$25m if spot metals prices persist through the year. We increase our target price by 5p to 330p. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com 4-page note
Central Asia Metals (CAML LN) 2020A full year results came in ahead of expectations, putting a challenging but profitable year behind the company. Net revenue of US$160m was down 7% YoY owing to weaker commodity prices but 3% ahead of our forecast, while EBITDA of US$96m was down 11% YoY, but 8% ahead of forecasts combining the impact of the top line with strong cost control and a less severe impact than expected from the Sasa disruption. Net income of US$44m was in line with our forecast. However, levered free cash flow of US$59m was down 16% YoY while deleveraging continued on-target with year-end net debt of US$36m.
Dividend signals intent The CAML team has announced an 8p final dividend, well above our 6p estimate and a higher proportion of group free cash flow than we estimated. Given a robust start to 2021E, we see the group swinging to a net cash position later in the year, meaning that we interpret the strong dividend as a signal of management’s increased willingness to return cash to investors as debt levels reduce away. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
Central Asia Metals (CAML LN) has reported Q4 2020 production with 3,365t of copper taking full year output to 13,855 in line with our forecast of 13.9kt and at the top end of guidance. Q4 lead output was 7,442t meaning 29,741t over the full year, up 2% YoY and in line with our forecast of 30kt while zinc output of 5,848t took full year output to 23,815t again in line with our forecast of 24kt and up 2% YoY despite the disruption at Sasa which CAML has overcome rapidly as we expected.
Q4 sees better-than-expected production Overall output came in higher than expected, and allied to the stronger Q4 prices than we had allowed for in our model means 2020E EBITDA and earnings are likely to be better than our present estimates. The SASA clean-up continues at pace meaning investor focus should turn to the cut and fill project, something that should add progressively to profitability from 2023E on. Peter.Mallin-Jones@peelhunt.com, Tim.Huff@peelhunt.com
CAML’s 2020 year-opening production targets were reached or exceeded, an impressive feat given the unprecedented (and unforeseen) challenges posed by the coronavirus pandemic and, latterly, the tailings leak incident at Sasa. The characteristically strong operational performance was captured by our forecasts, but higher-than-anticipated metal prices through Q4 have lifted our full-year earnings estimates and our final dividend expectations. Notwithstanding the sharp rise in prices through late 2020, we retain a balanced-to-positive outlook on base metals, particularly copper. Both our revised dividend forecasts and our fundamental NAV estimate suggest value remains despite CAML’s recent strong share-price performance. We attribute the latter to the constructive commodity price backdrop, but also to CAML’s first-class response to the Sasa incident, which facilitated a rapid return to operational normalisation. In a yield-starved market, CAML’s attractive dividend policy – underpinned by its inherent low cost of metals production – remains a stand-out amongst UK-quoted junior miners.
Central Asia Metals (CAML LN) is our top pick for exposure to copper and following the recent operational and financial normalisation the shares have jumped, up 16% since our last note. Our copper price forecast assumptions implied that during Q4 2020 the price, at that point up 47% from March lows would pause. This has not come to pass, now up 60% to eight year highs of US$7,688/t, indicating a higher starting point in 2021F and we have upgraded our forecasts accordingly.
At 6p, the stronger-than-expected interim dividend drives us to increase our 2020E full-year DPS from 10p to 12p. This equates to a final dividend of 6p and assumes a 45% payout of our 2H20E free cash flow estimate. We are increasingly confident in our 14.5p 2021E dividend, which would be 46% of our base 2021E FCF, or just 40% assuming spot metals prices. This drives our target price up 15p to 290p. Buy reiterated.
Central Asia Metals (CAML LN) following a successful ramp up at Sasa, progress in the environmental clean up and confirmation of the remedial costs in line with the previously guided US$1.5m the company has declared an interim dividend of 6p/sh. This will be paid on 11 December 2020 with a record date of 20 November 2020.
Central Asia Metals (CAML LN) has announced an interim dividend of 6p/sh. for H1 2020. This follows the news that Sasa had reliably resumed production at the full run rate whilst costs of the remedial work including the environmental clean up are firmly expected to be below the earlier guidance of US$1.5m. As we previously highlighted CAML’s low cost base has meant that despite the impact of weaker commodity prices on H1 2020 performance the company has continued to generate positive free cash flow whilst with metal prices up strongly from March 2020 lows the outlook has strengthened.
CENTRAL ASIA METALS^ (CAML, NR, CNP) – H1’20 interim divi reinstated as we expected; COVID-19 cases rising at Sasa | HUMMINGBIRD RESOURCES^ (HUM, NR, CNP) – Dugbe: Central Licence option exercised; “significant project enhancement with exceptional prospectivity”
Central Asia Metals Plc Hummingbird Resources plc
As suggested in its last release, the CAML board has recommended the payment of a 6p interim dividend now that the SASA clean-up is well underway. This is ahead of our 3p estimate (and we suspect) the hopes of many CAML shareholders. We believe this underscores the board’s commitment to returning cash to shareholders. With the return of the dividend following its suspension earlier this year, we expect the shares to close the performance gap to its copper peers. We reiterate our 275p TP and Buy recommendation.
CAML’s decision to resume its dividend policy comes as little surprise given the strong performance of the business year to date, but the magnitude of the interim dividend beats our expectations. We have revised up our full-year dividend forecast by 20% accordingly, though still consider our 12p forecast a conservative one. The generous interim dividend is testament to the inherent low-cost operating structures at both Sasa and Kounrad, where margins have remained remarkably solid despite the unprecedented challenges posed this year by the coronavirus pandemic and, more recently, the unfortunate tailings leak incident at Sasa. Our dividend forecast and fundamental NAV estimate suggest the shares remain inexpensive, and, particularly if base metals prices hold their current course, we believe the risks to our estimates on balance lie to the upside.
Central Asia Metals (CAML LN) has advised that management are looking to reinstate the dividend with an interim payment during Q4 2020. Sasa production has now run at full capacity for the past three weeks following the successful implementation of both environmental and technical recovery programmes. Our cashflow analysis demonstrates that this is possible, primarily due to the low cost base of Kounrad where we expect unit costs to average US$0.49/lb and at Sasa where unit costs are expected to average US$0.53/lb in 2020.
The combination of satisfaction over the remediation works at SASA, the fast progress in cleaning up the deposited material along the river and the better than expected copper and zinc prices mean we see the group increasingly likely to restore its dividend before year end. As we look to a recovery from the economic woes of the pandemic, CAML shares look poised to re-rate on a return of the dividend. We can see further share price appreciation as rising metals prices drive EBITDA higher over the next 12-24 months.
CAML’s response to the unfortunate tailings leak incident at its Sasa zinc-lead operation in North Macedonia in September has been first class, as evidenced by it receiving approval to recommence operations within just three weeks of the incident occurring. The processing plant is now back running at full capacity, the underlying cause of the tailings leak has been addressed, and good progress is being made on the environmental clean-up of the affected river course. We believe this speedy and professional response will have limited the cash-flow impact of the incident, and therefore fully expect CAML to resume its hitherto generous dividend policy during the current quarter, as it is targeting. Our 10p full-year dividend forecast would imply a compelling 6% yield at CAML’s current share price, a share price which sits at a near 30% discount to our fundamental NAV estimate.
We make small upgrades to our 2020E estimates following the better-than-expected Q3 production update. We increase copper and lead output, shifting our estimates into the revised guidance ranges. As the SASA operation returns to full capacity and the leak investigation is completed, we expect management will provide further updates over the timeline to reinstate a dividend.
Central Asia Metals (CAML LN) reported strong copper results for Q3 2020, up 14% QoQ to 3.9kt enabling a 3.7% increase in our 2020F production forecast to 13.9kt, in line with new guidance of 13.5-14kt. YTD copper production of 10.5kt was broadly flat YoY. This does imply a marginal YoY increase overall for 2020F, however, as well as realised grades being ahead of expectation, we expect CAML to push hard at Kounrad to offset Sasa disruption as much as possible. Kounrad has been out of focus recently, however, with copper prices up 10% YTD and with a strong fundamental outlook, the asset’s low cost base continues to underpin the CAML investment case.
CENTRAL ASIA METALS^ (CAML, NR, CNP) – Kounrad guidance upped, Sasa maintained despite TSF4 leak; interim divi decision “in the coming weeks” | DANAKALI^ (DNK, NR, CNP) – Surprise: Aggreko replaces ISI as power contractor; was a cheaper bid tendered? | HUMMINGBIRD RESOURCES^ (HUM, NR, CNP) – Yanfolila: exploration drilling supports possibilities of going underground, and of mining at Sanioumale West satellite
CAML HUM SBMSF
The CAML operations saw a solid quarter, despite the shutdowns at SASA, where high ore grades meant production beats for zinc and lead. At Kounrad solid production plus a strong start to Q4 saw management increase production guidance. The recent tailings leak is moving into the rear view mirror, as SASA is up and running and clean-up work is well underway. Only once SASA is back at capacity and the causes of the leak are well understood would we expect the CAML team to reinstate the dividend. Buy and 275p TP reiterated.
CAML’s Q3 production performance was remarkably strong, particularly when considering the challenges of operating under COVID-19 constraints and, more recently, dealing with the unfortunate tailings leak incident at Sasa. CAML’s response to the latter has been first class, as evidenced by it receiving approvals to recommence operations within just three weeks of the incident occurring. Assuming Sasa ramps back up to full-scale production in relatively short order, we estimate the operation should still meet full-year guidance. Kounrad has thus far exceeded year-opening expectations, aided by better-than-forecast contribution from the ageing Eastern Dumps. We have slightly lifted our full-year estimates for Kounrad accordingly, in-line with an upwards revision of guidance. Understandably, CAML’s immediate focus is remediating the environmental impact of the Sasa incident and ensuring the operation returns to full-scale production. But the strong group operational performance year to date gives us increasing confidence that dividends will be reinstated sooner rather than later.
Central Asia Metals (CAML LN) has announced that Sasa production can now resume in full and that original guidance of 23-25kt of zinc production and 30- 32kt of lead production remains achievable despite a reduction in throughput guidance from 825-50kt to 800-825kt. We had earlier reduced our throughput estimate to 820kt implying 29.95kt lead and 23.8kt of zinc for 2020 which indicates that our grade or recovery assumptions for lead production are likely too conservative. Processing resumed at a 50% run rate on October 2 on receipt of Government approval, which is to allow CAML to confirm that the restart has been affected safely. Once this has been confirmed, which is likely to take a week, CAML will resume at the full run rate.
Central Asia Metals (CAML LN) has announced that Sasa production can now resume in full and that original guidance of 23-25kt of zinc production and 30-32kt of lead production remains achievable despite a reduction in throughput guidance from 825-50kt to 800-825kt. We had earlier reduced our throughput estimate to 820kt implying 29.95kt lead and 23.8kt of zinc for 2020 which indicates that our grade or recovery assumptions for lead production are likely too conservative. Processing resumed at a 50% run rate on October 2 on receipt of Government approval, which is to allow CAML to confirm that the restart has been affected safely. Once this has been confirmed, which is likely to take a week, CAML will resume at the full run rate.
Any environmental incident is regrettable, but the extent of impact from last month’s tailings storage leak thankfully appears limited, and clean-up of the affected river is expected to be completed in short order. Moreover, CAML’s fast and characteristically professional response has seen the tailings facility repaired and all necessary changes implemented such that approval has been granted to resume operations within just three weeks of the incident occurring. The company therefore still expects to meet its original 2020 guidance for zinc and lead production. Assuming Sasa ramps back up to full-scale production rates over the coming weeks as forecast, we thus expect CAML to resume its hitherto generous dividend policy, as indeed it was set to do before the tailings incident occurred.
Central Asia Metals (CAML LN) reported robust interim results in the context of the H1 2020 backdrop; solid production and the company’s fundamentally low cost base meant that CAML remained profitable despite the sharp pullback in commodity prices during the period which led to a 17% YoY decline in revenue to US$70.8m. Consequently, EBITDA was down 25% YoY to US$42.5m despite a decline in unit costs of 6% YoY at Kounrad and 9% YoY at Sasa to US$0.48/lb and US$0.43/lb respectively which cushioned the impact of the weaker the top line. With no significant one offs in the period, EPS of US$0.10/sh. was 33% lower YoY.
Central Asia Metals (CAML LN) has announced that operations can be restarted following the shutdown after the tailings leak on Monday. This follows approval from the Macedonian authorities to use an area of storage capacity in the previous tailings facility TSF3.2. This allows up to ten days of tailings storage and management have indicated that remedial work on TSF4 will likely take between one and two weeks which is therefore comparable.
CAML delivered a commendably strong H1 financial performance given the backdrop of COVID-19 and weaker metal prices. Low costs at both Kounrad and Sasa enabled EBITDA margins to be sustained comfortably above 50%, and robust FCF generation facilitated continued deleveraging of the balance sheet. With metal prices recovering strongly over recent months, and COVID risks now better understood, we had been anticipating a return of dividends. However, the unfortunate tailings leak incident at Sasa earlier this week has understandably necessitated a delay. We are encouraged to read that CAML considers a prolonged shutdown of Sasa unlikely, and assuming production returns to normal levels in relatively short order, we believe dividends should still be reinstated this year.
Central Asia Metals (CAML LN) has announced a tailings leakage at Sasa from Tailings Storage Facility 4 into the local river. The leak has been halted and was brief in nature reportedly occurring at 5am this morning and stopped shortly after.
ADRIATIC METALS^ (ADT1, NR, CNP) – Updated Rupice resource has tonnes up 32%; PFS finalisation “in the coming weeks” | CENTRAL ASIA METALS^ (CAML, NR, CNP) – H1’20 interim financials out on Wed 16th Sept; conference call at 9.30am that morning | GEM DIAMONDS^ (GEMD, NR, CNP) – Letšeng yields another large stone (233ct gem-quality Type II), should provide welcome boost to FY20 finances | HUMMINGBIRD RESOURCES^ (HUM, NR, CNP) – Acquisition of highgrade Kouroussa in Guinea completed; could add c.100koz/yr to production profile within 2 years | POTASH SECTOR – Highfield Resources: Muga Mining Concession application now in final stage; could be received in Q4 CY20, we believe | WEST AFRICAN JUNIOR GOLDS – Oklo Resources: diamond drilling at SK1 North extends high-grade mineralisation along strike and at depth
CAML GEMD HUM ADTLF
Central Asia Metals (CAML LN) announced robust Q2 2020 operating statistics which highlight that there were no COVID-19 related interruptions, in part due to stringent measures put in place by the company. Q2 2020 copper output of 3.4kt was down 6% YoY, up 6% QoQ, however, H1 2020 total production was flat at 6.6kt indicating the company is on track for our 13.4kt 2020F target. Q2 Lead and zinc production of 7.5kt and 6.1kt were up 3% and 5% YoY although both were down 1% QoQ respectively. For H1 2020 12.2kt of zinc and 15.1kt of lead were up 5% and 6% which was primarily due to higher throughput.
CAML’s Q2 operational performance was characteristically stable despite the challenging backdrop of COVID-19, with neither production nor sales volumes interrupted. Risk mitigation measures are in place at both Kounrad and Sasa, including, post period-end, a temporary reduction in the former’s workforce. CAML does not currently envisage this materially impacting H2 output, and we therefore continue to believe both operations are on course to meet full-year guidance. Virus uncertainty remains, but we think risks should diminish as the year progresses. With a strong balance sheet (US$44m of cash at mid-year, having repaid US$19m of debt in H1) and a sector-low operating-cost structure, we thus believe CAML is well positioned to resume dividends this year. And if the recent recovery in base metals prices holds, we see further upside potential to our near-term estimates.
Incorporating the nascent recovery in copper and, to a lesser degree, zinc prices, we have upwardly revised our near-term estimates for CAML. Given the receding risk of significant COVID-related operational interruptions, we believe dividends could resume with the interim results. Our 10p full-year DPS estimate would put the shares on an attractive yield of over 6%, while our 260p NPV estimate points to considerable valuation upside with longer-term base metals price recovery.
Central Asia Metals (CAML LN) has published details of its inaugural sustainability report; although the company has always placed CSR and sustainability at the forefront the report highlights this and provides a quantitative benchmark for performance going forward.
POTASH SECTOR – Highfield Resources: Spanish-born Ignacio Salazar appointed CEO effective July 2020 | TITANIUM SECTOR – COVID-19: feedstock prospects better than pigment’s - Tronox expects pigment vol 4-7% down (Q2-Q3 is normally seasonal peak) | CENTRAL ASIA METALS^ (CAML, NR, CNP) – Celebrates 100kt copper cathode production milestone at Kounrad | EMMERSON^ (EML, NR, CNP) – Khemisset FS delivery still on schedule for H1 2020 delivery | POLYMETAL INTERNATIONAL^ (POLY, NR, CNP) – Good Q1’20 production, FY20 guidance reiterated; no change to 2019 final divi | SHANTA GOLD^ (SHG, NR, CNP) – Good Q1 FY20 production, full-year target reiterated | SOUTH32^ (S32, NR, CNP) – Q3 FY20 essentially in-line, guidance reiterated where no COVID-19 impact; share buy-backs suspended
CAML EML S32 SAAGF POLY
Central Asia Metals (CAML LN) has released strong results for Q1 2020 with higher production across copper, lead and zinc. Copper output of 3.2kt was up 8% YoY and 2% QoQ. Zinc production of 6.1kt was up 9% YoY and 8% QoQ while lead output of 7.6kt was up 5% YoY and 2% QoQ.
Q1 2020 saw output gains for all three of the base metals CAML produces versus the corresponding period of 2019 and puts the group on course to meet both fullyear guidance and our estimates, assuming no COVID-19 related disruptions. With cases of the virus increasing in both Kazakhstan and North Macedonia, the latter cannot be ruled out. But with a strong balance sheet and amongst the lowest opex structure in the junior mining sector, CAML is in our view well positioned to navigate a future temporary production interruption and/or weaker metal prices.
Central Asia Metals (CAML LN) having previously announced strong operating performance for 2019 released strong earnings results leaving the company well placed to cope with current pricing weakness and global uncertainty. Revenue of US$171.7m was down 3%, largely due to weaker commodity prices YoY. The weaker top line led to EBITDA of US$108.6m, down 15% YoY, however, margins were broadly maintained at 60% due to CAML’s low cost base. Net finance costs were down 27% as CAML continued to deleverage ending the year with net debt of US$80.2m implying a trailing net debt/EBITDA of 0.74x. EPS from continuing operations was consequently down 6.3% YoY while capex of US$12.1m, down 24% YoY, meant that levered free cash flow of US$69.8m was down just 5% YoY.
CAML’s 2019 results serve a timely reminder of the group’s low-cost credentials. Despite an 11% metal-price related y-o-y fall in revenue, CAML maintained a 60% EBITDA margin and generated an impressive US$70m of free cash flow. In today’s uncertain times, the value of CAML’s position at the low end of the base-metals cost curve cannot be overstated. The demand-shock emanating from the COVID19 pandemic has triggered a severe downturn in metal prices, while production at mines around the world is coming under increasing strain. Our stress-test analysis of CAML suggests it could continue to meet its 2020 debt obligations in the event of some degree of future production interruption and a further downturn in metal prices. Though thankfully both Kounrad and Sasa are fully operational at present, given uncertainty on whether the effects of the pandemic will begin to adversely impact production, we understand management’s decision not to declare a 2019 final dividend. Assuming the world returns to a degree of normality over the next year, we believe metal prices will firm and operational disruption risks will recede, and therefore for the time being we expect CAML to regain its position as an abovesector average yielding stock as 2020 progresses. Our NPV-based valuation of 280p is around 80% above CAML’s current share price. We recognise markets are paying scant regard to long-term value in the current climate, but by our estimates CAML’s share price is discounting close to spot prices ad-infinitum, a highly pessimistic and in our view unrealistic scenario that suggests the shares have been oversold.
METAL PRICES – COVID-19 emergency prophylaxis: Fed slashes interest rates 0.5%, to 1-1.25%; our 2020 gold call now for moderate uptrend | CENTRAL ASIA METALS^ (CAML, NR, CNP) – FY19 financials to be released on Wed 1st April 2020 | POLYMETAL INTERNATIONAL^ (POLY, NR, CNP) – Strong FY19 financials as expected, nice divi; FY20 guidance reiterated
Central Asia Metals Plc Solidcore Resources plc.
CAML has been a standout performer in the junior mining sector since its IPO a decade ago, its low operating cost structure ensuring robust margins have been maintained throughout the past decade of commodity market volatility. This has enabled the group to return some US$177m of cash to shareholders via dividend distributions and share buybacks. CAML’s success is rooted in the Kounrad copper dump-leach operation, where the absence of rock handling facilitatesindustry-low cash costs. More recently, the group has added geographic, operational and commodity diversification with the US$403m acquisition of the Sasa underground zinc-lead mine in North Macedonia. Sasa has more than doubled CAML’s production capabilities in copper-equivalent terms, and with cash costs firmly in the lower half of the zinc industry cost curve it has proved earnings-accretive from day one. CAML has thus been able to pay down debt taken on with the acquisition whilst also maintaining an attractive dividend policy that sees it return 30-50% of annual free cash flow. CAML’s shares yield around 7% at current market price – three times the peer-group average – and we believe dividends could be increased as the group returns to a net cash position within the next two years. But CAML is more than just an income play – we see scope for earnings growth as it progresses production optimisation initiatives at Sasa, while further M&A activity is also a possibility. Our DCF points to fair value at 292p (a valuation supported by market peer comparable analysis), suggesting over 40% upside to market price.
Central Asia Metals (CAML LN) announced strong full year production numbers beating our estimates on full year copper and zinc production while lead production was in line with our estimates. Q4 2019 copper production of 3.1kt was down 7% YoY and 22% QoQ following a strong Q3 2019 resulting in full year output of 13.8kt, down 2% YoY with Kounrad now in its new operational phase. Zinc output of 5.7kt was down 2% YoY and 8% QoQ as zinc grades were modestly lower at 3.23% versus a full year average of 3.29% offsetting increased throughput. However, given a strong 9mo19 performance full year zinc output of 22.98kt was up 2% YoY and 2% ahead of our estimate at the top of the guidance range. Q4 2019 lead output of 7.48kt was up 1% YoY and 2% QoQ owing to stronger grades and recoveries resulting in full year output of 29.2kt which was in line with our forecast.
Central Asia Metals (CAML LN) – 2019 operations report | Ormonde Mining* (ORM LN) – Proposed disposal of residual interest in Barruecopardo | Tri-Star Resources* (TSTR LN) – SPMP financing update | Sirius Minerals (SXX LN) - Anglo | American (AAL LN) – Sirius in discussions with Anglo American over potential £386m offer
CAML ORM TSTR SXX
Central Asia Metals (CAML LN) – H1 2019 operations on track to meet full year 2019 guidance | Metal Tiger (MTR LN) – Kalahari drilling | MOD Resources (MOD LN) – Court approves Scheme of Arrangement | Sirius Minerals (SXX LN) – 300 workers laid off at Sirius’s Woodsmith mine site | Vast Resources* (VAST LN) – Funding update
CAML MOD SXX VAST MTR
Central Asia Metals (CAML LN) has delivered another quarter of strong production with QoQ increases in copper, lead and zinc production of 11%, 3% and 5% respectively and annual increases of 3% and 8% for copper and zinc while lead production was marginally lower YoY by -3%. With Q3 2019 production of 4kt of copper, 6.2kt of zinc and 7.4kt of lead CAML is well on track to meet the initial guidance and our production estimates for the full year 2019.
NICKEL – Tsingshan possibly a major force behind last week’s record LME drawdown; we look forward to Horizonte’s Vermelho PFS with great interest | CENTRAL ASIA METALS^ (CAML, NR, CNP) – Q3 2019 in-line with expectations; full-year production targets reiterated | FERREXPO^ (FXPO, NR, CNP) – 9m 2019 production in-line, but full-year target now “likely” to be 10.4-10.6Mt (previously: 10.6Mt) given “current market environment”
Central Asia Metals Plc Ferrexpo plc
Central Asia Metals has reported yet another solid set of operating results from its Kounrad copper dump leach operation in Kazakhstan and its SASA lead-zinc mine in North Macedonia. Copper production of 4,039 tonnes was some 2.5% ahead of last year’s 3,938 tonnes, whereas zinc production of 6,186 tonnes in concentrate was the best since CAML took over, and lead production of 7,362 tonnes in concentrate was in line. Both operations are operating in line with guidance, this being 12,500-13,500 tonnes of copper, 22,000-24,000 tonnes of zinc and 28,000-30,000 tonnes of lead. We retain our price target of 300p, which gives 48% of upside, and reiterate our Buy recommendation.
Central Asia Metals (CAML LN) reported strong interim results, maintaining the 6.5p interims dividend along with an increase in H1 2019 free cash flow of 10% to US$35.5m despite a 7%, 18% and 22% YoY decline in average copper, lead and zinc pricing in the period. Metal sales were in line with previously announced production with 6.5kt of copper, 13.7kt of lead and 9.7kt of zinc sold, up 7%, 0% and 5% YoY respectively. This resulted in a decrease in revenue of 12% YoY to US$84.7m in H1 2019. However, a 35% reduction in SG&A along with a 4% reduction in Kounrad unit costs to US$0.51/lb YoY as well as lower than expected cost inflation at Sasa of 7% YoY to US$0.47/lb meant that EBITDA declined by 12% to US$56.7m maintaining a 63% margin. Minimal FX impact then meant that net income of US$27.6m was just 3% lower YoY. The period of challenging market conditions therefore highlights clearly CAML’s investment case based on low cost and consistently cash generative assets.
Central Asia Metals has reported a solid set of results, with both operations performing well. Revenue of US$89.9m was down 12% from last year’s US$102.4m, entirely because of weaker metal prices. The company produced 6,594 tonnes of copper in the half year, in line with guidance for the full year, which has been maintained at between 12,500 and 13,500 tonnes. SASA produced 11,517 tonnes of zinc in concentrate and 14,357 tonnes of lead in concentrate, both of which are in line with full-year guidance of 22,000-24,000 tonnes of zinc and 28,000-30,000 tonnes of lead in concentrate. The stock is currently yielding a highly attractive 8.0%, assuming that the dividend is maintained in line with last year’s payment. We slightly reduced our earnings forecast for the year to account for current metal prices, but have maintained our price target at 300p and reiterate our Buy recommendation.
Central Asia Metals (CAML LN) announced robust operational performance yesterday with production on track for full year targets and our estimates driven by incremental operational improvements at Sasa. Q2 2019 zinc production of 5.9kt was up 7% YoY and 4% QoQ while copper production of 3.6kt was broadly flat YoY and up 23% QoQ while lead output of 7.1kt was down 3% YoY and 1% QoQ. With H1 2019 production of 6.6kt copper, 14.4kt lead and 11.5kt zinc, CAML is on track for our full year estimates of 13.4kt, 28.9kt and 22.9kt respectively with our zinc estimate upgraded by 3%.
Central Asia Metals has reported yet another solid set of operating results from its Kounrad copper dump leach operation in Kazakhstan and its SASA lead-zinc mine in North Macedonia. Copper production of 3,642 tonnes was almost exactly in line with last year’s result, whereas zinc and lead production of 5,878 tonnes and 7,145 tonnes respectively in concentrate were the best since CAML took control of the mine. We reiterate our price target of 300p and Buy recommendation.
We recently visited Central Asia Metals (CAML LN) Sasa mine in North Macedonia. CAML have now been operators for over 18 months maintain strong margins and cashflow in 2018 with US$103m revenue and US$71m EBITDA. The site visit allowed us to see how the asset has been absorbed into the wider group, particularly in light of the ongoing Life of Mine review which is seeking to conclude whether additional value can be realised through optimising operational performance.
Central Asia Metals (CAML LN) having delivered on production guidance for 2018 released robust full year results underpinned by the low cost base of the group. Revenue of US$192m was up 88% YoY while Kounrad unit costs of US$0.54/lb were up 4% YoY, in line with our forecast. Sasa unit costs were 5% higher YoY. The stronger top line and low cost base meant EBITDA was up 88% YoY to US$125m. Net income from continuing operations was up 48% YoY while EPS up 8% YoY to 31 cents per share highlights the accretive nature of the transaction. The full year dividend of 14.5p/sh. was 5% ahead of our estimate.
Central Asia Metals has reported a solid set of results, in line with market expectations although slightly below our forecasts. This was the first full-year contribution from the SASA mine in North Macedonia, so the numbers are not directly comparable. The Kounrad operation produced 14,049 tonnes of copper in 2018, slightly ahead of guidance. SASA produced 22,532 tonnes of zinc in concentrate and 29,388 tonnes of lead in concentrate, both within but towards the upper end of guidance. The stock is currently yielding a comfortable 5.4%, even though the dividend was reduced from the previous year’s pay-out. We have reviewed our underlying metal price forecasts and have raised our zinc forecast from US$2,500 per tonne to US$2,800 per tonne (it is currently trading at US$2,936 per tonne). As a result, our target price increases slightly to 300p. We maintain our Buy recommendation.
Central Asia Metals (CAML LN) beat our full year production estimates across copper, lead and zinc owing to continued strong operational performance. Copper production of 3.36kt in Q4 2018, up 8% YoY meant full year production of 14kt, in line with 2017 production, at the top end of full year guidance and 2% ahead of our forecast. Sasa zinc production of 5.8kt in Q4 2018 was up 8% YoY resulting in 2018 output of 22.53kt, up 4% YoY and ahead of our forecast by 1%. Lead production of 7.40kt was flat YoY meaning 29.39kt through 2018 although down 2% YoY was 2% ahead of our forecasts.
Central Asia Metals has reported yet another solid set of operating results from its Kounrad copper dump leach operation in Kazakhstan and its SASA lead-zinc mine in Macedonia. Copper production of 3,363 tonnes was some 4.0% ahead of last year’s 3,234 tonnes whereas zinc production of 5,769 tonnes was 7.9% up on Q4 2017 and lead production of 7,401 tonnes was flat. Both operations are operating in line with guidance, although we note that guidance for copper in 2019 has been reduced by 500 tonnes to 12,500-13,500 tonnes of copper. This is offset by a 1,000 tonne increase in zinc guidance to 22,000-24,000 tonnes although lead remains flat at 28,000-30,000 tonnes. We reiterate both our price target of 297p, which gives 34% of upside, and our Buy recommendation.
Central Asia Metals (CAML LN) has announced strong production results for 2018 in line with company guidance and marginally ahead of our estimates across copper, lead and zinc. Copper production of 3.4kt in Q4 2018 resulted in full year 2018 production of 14kt which was flat YoY, despite the impact of severe weather in Q1 2018, and the company was able to make up the shortfall through the balance of the year. Having forecast 13.8kt copper output was 2% ahead of our forecasts while average LME copper prices of US$6,544/t were in line. Guidance for 2019 of 12.5-13.5kt copper output is marginally lower than our estimate of 13.8kt although remains in line with historical production levels.
Central Asia Metals (CAML LN) has announced that it has refinanced and consolidated its corporate debt as of December 2018. The Sasa mine had gross debt of US$67m at the time of the acquisition by CAML in November 2017. As part of the acquisition financing CAML raised US$120m in debt from its offtake partner, Traxys. In order to simplify the outstanding corporate debt CAML has increased the size of the Traxys facility by US$60m to US$151m and repaid the outstanding Sasa debt plus accrued interest.
Central Asia Metals (CAML LN) – Consolidation of Debt | KEFI Minerals* (KEFI LN) – Tulu Kapi update | Metals Exploration (MTL LN) – CEO appointment | Solgold* (SOLG LN) – Discovery of copper/gold mineralisation at Porvenir
CAML KEFI MTL SOLG
Central Asia Metals has reported yet another solid set of operating results from its Kounrad copper dump leach operation in Kazakhstan and its SASA lead-zinc mine in Macedonia. Copper production of 3,938 tonnes was some 2.5% ahead of last year’s 3,842 tonnes, whereas zinc and lead production of 5,742 tonnes and 7,602 tonnes respectively in concentrate were the highest since CAML took control of the mine. Both operations are operating in line with guidance, this being 13,000-14,000 tonnes of copper, 21,000-23,000 tonnes of zinc and 28,000-30,000 tonnes of lead. We reiterate our price target of 297p, which gives 22% of upside, and our Buy recommendation.
Q3 2018 copper production was up 2% YoY and 7% QoQ to 3,938t with 9mo18 production of 10.7kt down 1.7% YoY. This YoY difference over 9mo18 of just 183t of copper was due to a particularly harsh winter which impacted production in Q1 2018. However, Central Asia Metals (CAML LN)# remains well on track to meet company guidance of 13-14kt copper over the full year and to meet our estimates of 13.75kt.
Central Asia Metals (CAML LN) announced strong H1 2018 results in the first full period reflecting the contribution from Sasa. Revenue was up 160% YoY to US$96.6m primarily driven by the acquisition as well as an 18% YoY increase in realised copper prices. EBITDA of US$64.6m was up 166% YoY as costs at Kounrad were in line with expectations and Sasa unit costs were held flat. With no significant non-cash charges net income of US$28.5m reflected the benefit of the acquisition also, up 88% YoY.
Central Asia Metals has reported a solid set of results, with both operations performing well. Revenue of US$102.4m is not comparable with the previous year’s US$38.6m because of the acquisition of the SASA mine during the period. The company produced 6,747 tonnes of copper in the half year, in line with guidance for the full year which has been maintained at between 13,000 and 14,000 tonnes. SASA produced 11,020 tonnes of zinc in concentrate and 14,386 tonnes of lead in concentrate, both of which are in line with full-year guidance of 21,000 to 23,000 tonnes of zinc and 28,000 to 30,000 tonnes of lead in concentrate. The stock is currently yielding a highly attractive 7.9% assuming that the dividend is maintained in line with last year’s payment. We have slightly reduced our price target to 297p, in essence in response to the recent falls in base metals prices. We reiterate our Buy recommendation.
Following the acquisition of Lynx Resources’ Sasa mine in Macedonia, Central Asia Metals (CAML LN) is now demonstrating the successful transition to an expanded group with not one but two well managed operations both with low operating cost bases, low capex demands and stable operational track records. We expect this performance to continue resulting in levered free cash flow generation of US$84-99m over the next three years, which underpins a “best in class” dividend yield of 7.5%, based on the stated 30- 50% of free cash flow target payout range.
Central Asia Metals (CAML LN) – On track to meet 2018 production guidance | Goldstone Resources (GRL LN) – Progress at Akrokeri - Homase | Orosur Mining (OMI LN) – Attracting financial support for Anza | Shanta Gold (SHG LN) – Cost savings targets reached ahead of schedule | Xpediator* (XPD) – Significantly oversubscribed placing raises £7m
CAML GRL OMI XPD SAAGF
Central Asia Metals (CAML) has transformed itself from a single-asset copper producer to a significantly larger base-metal producer. With a highly value-accretive acquisition, it has added another low-cost base metal operation, which will allow it to almost double EPS and maintain its impressive dividend flow and yield.
Central Asia Metals (CAML): Acquisition, fund raise and interims (U/R)
Our site visit to Central Asia Metals (CAML) confirmed that its Kazakh operations are a cashflow and dividend ‘factory’.
QuotedData’s analyst, Paul Burton, shares his impressions from his site visit to Central Asia Metals (CAML)’s Kazakh operations.
Central Asia Metals (CAML) has increased its annual dividend by 24% year-on-year, to 15.5p per share, providing shareholders with a 6.6% yield. The company recorded its fifth consecutive year of profits and has paid out in excess of the funds it raised in its 2010 IPO.
Central Asia Metals (CAML) has increased its annual dividend by 24% year-on-year, to 15.5p per share, providing shareholders with a 6.6% yield. The company recorded its fifth consecutive year of profits and has paid out dividends in excess of the funds it raised in its 2010 initial public offering (IPO).
Central Asia Metals (CAML): Q4 and FY operating results (BUY) | Intercede* (IGP): Large contract win (CORP)
Central Asia Metals Plc Intercede Group plc
Despite a weak market for copper, Central Asia Metals (CAML) turned in an impressive first half 2016 performance by increasing profits and raising its half-yearly dividend. H1 2016 earnings per share was up 95% year-on-year, to US9.5c, and the company has increased its interim dividend by 22%, to 5.5p per share.
Real Good Food* (RGD): Positive AGM statement (CORP) | Central Asia Metals (CAML): Interim results (BUY) | Tristel* (TSTL): Australian product approvals (CORP) | MP Evans (MPE): Tailwinds start to blow for H2 (BUY)
CAML TSTL MPE MLM
In January we screened for companies with estimates that had been declining consistently since a year previously, but which had risen in the immediately preceding three months (see our note dated 22 January 2016). We have reviewed the performance of those companies and, given the overall strength of this selection, we have re-run the screen. In the c.3 months since selection, the unweighted average rise was c.34% against a c.11% rise in the main All-Share index. From the same universe as before (some 900 companies) we find 38 companies selected by the screen. We note a number of stocks in the list where we have a supportive stance including: Devro (DVO LN, Buy), James Fisher (FSJ LN, Corporate), Mattioli Woods (MTW LN, Buy) and Spirent Communications (SPT LN, Buy).
CAML PAF STCM TCM TTG ULE IAE SEPL SEPL SOU LWB MPE PURE VLS AGY NIOX BEG ACSO FDSA JPR LCL QRT FLYB BRK FBH HLCL ACA ECOR CEY GYF1 GEMD HOC KAZ PDL SHI TYMN DSCV ELA CLBX CCR DVO CHOO CMS MTW UTW RS1 DTT FXI NETD SOG SPI AO/ FSJ CLIG HSD HSS IPX IPF AVN LMI GKP BGEO BNK KMR SMMT 0NR1 GHGUY CELTF NEXN SPMYY
Central Asia Metals (CAML’s) recent annual results show that the company recorded another profitable year in 2015. With a final dividend of 8.0p, the company is maintaining the total dividend at 12.5p, resulting in a dividend yield of 7.1% at the current share price.
Central Asia Metals | Kefi Minerals | Kibo Mining | Vedanta Resources
CAML KIBO VED KEFI
Caledonia Mining | Central Asia Metals | Connemara Mining | Kodal Minerals
CAML ARK KOD CAL
CAML recorded a profit in its first year of operation, 2012, and has remained profitable ever since. It has paid a dividend each year from cash earnings, something of a novelty for a junior mining company and has returned to shareholders all the funds it raised (US$60 million) in its 2010 IPO.
Central Asia Metals (CAML) recorded a profit in its first year of operation (2012) and has remained profitable ever since. It has paid a dividend each year from cash earnings, something of a novelty for a junior mining company and has returned to shareholders all the funds it raised (US$60 million) in its 2010 IPO (initial public offering).
7digital*: Snowite and the 7digital (CORP) | Central Asia Metals: 2015 production update and 2016 outlook (BUY) | Staffline: On track for very strong growth (BUY)
CAML STAF 7DIG
Gemfields | Bacanora Minerals | Central Asia Metals | IronRidge Resources | Leed Resources | Sumatra Copper & Gold
CAML LEERF ALL BCN GEM
Following the recent announcement regarding the near-term outlook for copper production at its Kounrad plant, we have taken the opportunity to review and update our valuation and earnings model. We have also incorporated a reduction in our expected average copper price. The average copper price for the first half of 2015 was US$2.69/lb versus the US$3.00/lb that we had been using. The second half has started with prices weakening further and so we have reduced our forecast average for the year to US$2.65/lb. We have also reduced our longer-term copper price forecast from US$3.00/lb to US$2.80/lb. The net impact is that we now expect revenue for the year of US$70.1m (previously US$86.0m) and EPS of 24.6 cents (previously 36.5 cents). Using the same inputs, our target price reduces to 280p. Nevertheless, the stock is still trading at a significant discount to our target price and so it remains a Buy.
This Morning’s News Armadale Capital (ACP LN) Central Asia Metals (CAML LN)
Central Asia Metals Plc Armadale Capital Plc
Central Asia Metals: Increased investment in Copper Bay (BUY) | Seeing Machines*: CAT dealerships begin to deliver (CORP)
Central Asia Metals Plc Seeing Machines Limited
