Central Asia Metals Plc · LSE:CAML
Central Asia Metals — Merger or Acquisition (September 2017)
40 slides from Central Asia Metals's merger presentation, September 2017
Slide 1: H1 2017 Results and Proposed Acquisition of Lynx Resources
SEPTEMBER 2017 H1 2017 RESULTS AND PROPOSED ACQUISITION OF LYNX RESOURCES0
Slide 2: Disclaimer
DISCLAIMER The information contained in this confidential document ("Presentation") and any additional documents handed out at the meeting (together with the Presentation, the "Presentation Materials") has been prepared by Central Asia Metals plc (the "Company"). It has not been fully verified and i
Slide 3: CAML Performance - IPO to 30 June 2017
CAML PERFORMANCE - IPO TO 30 JUNE 2017 Raised $60m in 2010, total dividends declared since 2012 of H1 2017 copper $105m production Kounrad, Kazakhstan, SX-EW plant commissioned April 2012 7,027t H1 2016: 6,908t Total copper production 61,349t H1 2017 C1 cash Average C1 cash cost $0.57/lb cost Total
Slide 4: Kounrad Summary Financial Performance
KOUNRAD SUMMARY FINANCIAL PERFORMANCE Total 62 2017 2016 2015 2014 2013 2012 months 6 months 12 months 12 months 12 months 12 months 8 months Sales, Cu tonnes 61,083 6,870 13,938 12,040 11,163 10,689 6,383 Production, Cu tonnes 61,349 7,027 14,020 12,071 11,136 10,509 6,586 Average sale price, $/t 6
Slide 5: Creating a New Diversified Base Metals Producer
PROPOSED ACQUISITION OF LYNX RESOURCES CREATING A NEW DIVERSIFIED BASE METALS PRODUCER SEPTEMBER 2017
Slide 6: A Diversified, Low Cost Base Metals Producer
A DIVERSIFIED, LOW COST BASE METALS PRODUCER Acquisition of Lynx Resources for $402.5m, owner of the Sasa underground zinc-lead mine in Macedonia Result of an extensive search of opportunities 2017 zinc / lead production guidance High quality asset Resources to support 20 year mine life 22kt
Slide 7: Sasa: Transforming CAML
SASA: TRANSFORMING CAML Underground zinc-lead mine located in Macedonia Location of operations 20 year life-of-mine C1 costs in the lower half of the cost curve Proven operational track record, consistent producer for c. 8 years Suplja Stijena Bulgaria 779ktpa mill throughput of ore in 201
Slide 8: Sasa: Transforming CAML
SASA: TRANSFORMING CAML 2750 2650 2550 2450 2350 2250 2150 2050 1950 1850 1750 1650 1550 1450 1350 1250 1150 1050 1050 1150 1250 1350 1450 1550 1650 1750 1850 1950 2050 2150 2250 2350 2450 2550 2650 2750 2850 2950 3050 3150 3250 3350 3450 950 850 750 650 550 450 350 250 150 150 250 350 450 550 650 7
Slide 9: Acquisition Funding Summary
ACQUISITION FUNDING SUMMARY Transaction value of $402.5m Debt financing Sources $m Fully approved $120m senior debt facility with Traxys (4.75% + LIBOR, 5 year term) Roll over of $67m of Societe Generale / Investec existing facility at Lynx (5% + LIBOR, 5 years remaining) Cash on completion 273.
Slide 10: A Diversified, Low Cost Base Metals Producer
A DIVERSIFIED, LOW COST BASE METALS PRODUCER A larger, diversified resource base Significantly enhanced production scale (2016A Cu equivalent, kt) Copper Zinc² Lead² Copper Zinc1 Lead1 x2.5 34.8kt 36% 39% 11.1kt 20.8kt 100% x2.6 25% 14.0kt 9.7kt 11.1kt 14.0kt 14.0kt 9.7kt Standalone Pro-forma 194kt
Slide 11: A Diversified, Low Cost Base Metals Producer
A DIVERSIFIED, LOW COST BASE METALS PRODUCER Low cost, long life assets support cashflow generation through the cycle Kounrad: +14 years remaining mine life High quality assets SASA: +20 years remaining mine life Proven operational track record High quality products Track record of devel
Slide 12: Delivering Shareholder Value
DELIVERING SHAREHOLDER VALUE Two cash generative, low C1 cash cost operations $105m returned to shareholders since IPO 120 $105m On track to meet production guidance for 2017 100 Commitment to dividends through the cycle 80 H1 2017 interim dividend of 6.5p $m 60 Increase of 18% HoH 40 Re
Slide 13: A Diversified, Base Metals Producer
A DIVERSIFIED, BASE METALS PRODUCER Transaction overview H1 2017 pro-forma EBITDA margin Acquisition of Lynx Resources for $402.5m, owner of the Sasa underground zinc-lead mine in Macedonia 61% High quality asset – long mine life, low cost, exploration potential Diversification across operatio
Slide 14: Appendix
CENTRAL ASIA METALS PLC APPENDIX
Slide 15: H1 2017 CAML Financial Review
H1 2017 CAML FINANCIAL REVIEW
Slide 16: H1 2017 Income Statement
H1 2017 INCOME STATEMENT CONTINUED PROFITABILITY, 62% EBITDA MARGIN H1 H1 % FY 2017 2016 change 2016 GROSS REVENUE $38.6m, +25% HoH Sales, t 6,870 6,355 +8% 13,938 Sales volumes 6,870t, +8% HoH Average sale 5,659 4,903 +15% 4,994 Average sales price achieved $5,659/t, +15% HoH price, $/t Off-takers
Slide 17: H1 2017 Unit Cost of Copper Production
H1 2017 UNIT COST OF COPPER PRODUCTION FULLY INCLUSIVE UNIT COST $1.08/lb (H1 2016: $0.97/lb) H1 H1 FY 2017 2016 % 2016 $/lb $/lb change $/lb C1 cost C1 cash cost 0.45 0.40 +13% 0.43 Depreciation, $0.22 MET & other Cost of production, $0.31 0.17 0.14 +21% 0.14 taxes MET and taxes, $0.17 Other, $0.45
Slide 18: H1 2017 C1 Cash Cost of Production
H1 2017 C1 CASH COST OF PRODUCTION KOUNRAD COSTS CONSISTENTLY LOW H1 H1 FY % 2017 2016 2016 change $/lb $/lb $/lb 4.00 Payroll 0.10 0.08 +25% 0.09 3.00 Reagents 0.06 0.05 +20% 0.05 $/lb 2.00 Power 0.06 0.05 +20% 0.05 1.00 Materials 0.04 0.05 -20% 0.05 - Consulting & 0.05 0.03 +67% 0.04 2012 2013 201
Slide 19: Cash Flow
CASH FLOW H1 2017 CASH FLOW CASH FLOW SINCE IPO (2010) 70 23.1 (5.8) 60 (1.6) 199.5 (13.5) (50.3) 250 50 (75.2) (0.9) 40.4 41.7 200 40 $m 150 $m (95.2) 30 100 20 59.0 50 2.6 41.7 10 1.3 - - Cash at 31 Dec Cash generated Income tax Capex Dividend Other Cash at 30 June Cash pre IPO Net IPO Cash Income
Slide 20: H1 2017 Balance Sheet
H1 2017 BALANCE SHEET STRONG BALANCE SHEET 30 June 31 Dec 2017 2016 $m $m CAPITAL EXPENDITURE PPE 50.4 50.3 Stage 2 Expansion completed 30% under budget No major expansionary capex Intangible assets 41.8 40.8 Annual sustaining capex, c.$2m Cash 41.7 40.4 WORKING CAPITAL Other 8.0 7.0 $41.7m cash Tot
Slide 21: H1 2017 CAML Operations Review
H1 2017 CAML OPERATIONS REVIEW
Slide 22: Production Update and Outlook
PRODUCTION UPDATE AND OUTLOOK 4.5 70 H1 2017 COPPER PRODUCTION AND SALES 4.0 60 Cumulative copper production (kt) Quarterly copper production (kt) H1 2017 copper production 7,027t 3.5 50 3.0 Cumulative copper production to end H1 2017, 61,349t 40 2.5 Western Dumps leaching commenced 1,300t copper 2.
Slide 23: Western Dumps Now Under Leach
WESTERN DUMPS NOW UNDER LEACH STAGE 2 EXPANSION COMPLETE Cost $13m, 30% below budget Included solution and water pipelines and all infrastructure required to enable leaching to commence from Western Dumps EASTERN DUMPS Average dump height 20m, average leach time 8 months Average copper recovery 45-5
Slide 24: Eastern and Western (ILA) Dump Resources
EASTERN AND WESTERN (ILA) DUMP RESOURCES 7 6 5 16 2 9-10 22 Eastern In-situ Cu, Leached Cu, Recoverable Dumps tonnes tonnes Cu, tonnes 9-10 23,450 11,840 119 Western In-situ Cu, Leached Cu, Recoverable 6 14,660 7,227 250 Dumps tonnes tonnes Cu, tonnes 7 43,065 20,855 1,108 ILA total 87,790 1,302 35,
Slide 25: Kounrad 2016 Operational Overview
KOUNRAD 2016 OPERATIONAL OVERVIEW STABLE OPERATIONS IN H1 2017 2012 2013 2014 2015 2016 No LTI in H1 2017, LTI free hours now 1.7m LTI 0 0 1 2 0 PLS flow rates increased, Western Dumps in operation Cu production, t 6,586 10,510 11,136 12,071 14,020 Ave. PLS, m3/hr 383 532 771 784 888 PLS grades stab
Slide 26: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY HEALTH & SAFETY No LTI in H1 2017, total LTI free man hours now 1.7 million Government health and safety inspections successfully undertaken in H1 2017 ENVIRONMENTAL Government environmental checks successfully undertaken in H1 2017 Bedrock drilling programmes underta
Slide 27: Shuak, Kazakhstan (CAML 80%)
SHUAK, KAZAKHSTAN (CAML 80%) SUBSOIL USE CONTRACT TRANSFERRED TO CAML, AUGUST 2017 Licence area 197km2 Extensively explored in Soviet times Contains three near term targets, with the priority area being Mongol V – Pre-GKZ resource, c. 327,000 tonnes of contained copper at 0.66% Cu in C2 and P1 categ
Slide 28: Kounrad
KOUNRAD Location of operations In-situ dump leach & SX-EW operation Kounrad has produced copper cathode since 2012 Produced over 61kt copper to date Stage 2 expansion undertaken in 2016 LME quality copper cathode Astana (Capital) Kounrad is now fully invested Kazakhstan Last major capi
Slide 29: Zinc Market Outlook
ZINC MARKET OUTLOOK Zinc prices expected to remain strong in the medium term, supported by closure of key zinc mines Uses The refined zinc market is expected to stay tight over the next two years, which will keep prices elevated Galvanizing is the predominant first use for zinc, accounting for 60% o
Slide 30: Lead Market Outlook
LEAD MARKET OUTLOOK The outlook for lead consumption remains bullish – prices are forecasted to be driven higher due to a continued supply deficit Uses Market balance and price (refined lead) The battery sector is the single largest consumer of lead, accounting for Refined balance (ktPb) Woodmac lea
Slide 31: Copper Market Outlook
COPPER MARKET OUTLOOK Market balance and price Mine output (after disruptions) is set to shrink for the first time since Market balance (kt, LHS) Cu price ($/lb, RHS) 2011 this year 1,000 $4.5 The improvement in scrap availability which has materialised so far 800 $4.0 $3.5 600 this year on the back
Slide 32: Kazakhstan Country Overview
KAZAKHSTAN COUNTRY OVERVIEW COUNTRY Country OVERVIEW overview KEY Key STATISTICS statistics The Republic of Kazakhstan is the world’s largest landlocked country Located in Central Asia Population 18.4m (2016) 9th largest country in the world Nominal GDP $128.1bn (2016) The country’s populati
Slide 33: Macedonia Country Overview
MACEDONIA COUNTRY OVERVIEW COUNTRY Country OVERVIEW overview KEY Key STATISTICS statistics The Former Yugoslav Republic of Macedonia is a landlocked country in the Balkan peninsula of Southeast Europe Population 2.1m (2016) The country was formed in 1991 when it declared independence from the fo
Slide 34: Corporate Structure
CORPORATE STRUCTURE CENTRAL ASIA METALS PLC (UK) 100% 100% 100% 100% 80% 75% CAML Sary Kazna LLP Copper Bay Ltd (UK) ZMLUK LIMITED CAML MK Limited Shuak BV Kazakhstan BV (Kazakhstan) 100% (UK) (UK) (The Netherlands) (The Netherlands) Kounrad 85% 99% Copper Bay 100% 100% 100% (UK) Ltd Zuunmod UUL LLC
Slide 35: Stable and Supportive Shareholder Base
STABLE AND SUPPORTIVE SHAREHOLDER BASE Central Asia Metals’ register includes a number of major institutional investors Provides supportive long term shareholder base Significant shareholders1 as of 22 August 2017 No. of shares % Holding Mr Kenges Rakishev2 21,211,751 19.01 Hargreave Hale 11,537,885
Slide 36: Board of Directors
BOARD OF DIRECTORS 35
Slide 37: Executive Biographies
EXECUTIVE BIOGRAPHIES NICK CLARKE, EXECUTIVE CHAIRMAN Nick has over 40 years of mining experience, including 16 years spent within senior management positions in production and technical services in South Africa, Ghana and Saudi Arabia. Nick served as the managing director of Oriel Resources plc unt
Slide 38: Non-Executive Biographies
NON-EXECUTIVE BIOGRAPHIES NIGEL HURST-BROWN, DEPUTY CHAIRMAN Nigel is currently chief executive of Hotchkis and Wiley Ltd. Previously he was chairman of Lloyds Investment Managers between 1986 and 1990 before becoming a director of Mercury Asset Management and later a managing director of Merrill Ly
Slide 39: Senior Management Biographies
SENIOR MANAGEMENT BIOGRAPHIES HOWARD NICHOLSON, TECHNICAL DIRECTOR Howard is a metallurgist with 35 years of experience in project development and mine operations management. Formerly the COO of European Minerals Corporation, he contributed to the development of Varvarinskoye, a copper-gold mine in
Slide 40: Contact
CONTACT INVESTOR RELATIONS CONTACT Louise Wrathall 11 Albemarle Street London W1S 4HH louise.wrathall@centralasiametals.com +44 (0) 207 898 9001 39
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