Central Asia Metals Plc · LSE:CAML
Central Asia Metals — H1 2020 Earnings Presentation
50 slides from Central Asia Metals's earnings presentation, September 2020
Slide 1: H1 2020 Results Presentation
H1 2020 RESULTS PRESENTATION SEPTEMBER 2020
Slide 2: Disclaimer
DISCLAIMER The information contained in this confidential document (“Presentation”) has been prepared by Central Asia Metals plc (the “Company”). It has not been fully verified and is subject to material updating, revision and further amendment. This Presentation has not been approved by an authoris
Slide 3: TSF4 Incident
TSF4 INCIDENT TSF4 leakage 14 September 2020 - Short term leakage of tailings into the local river - Leakage stopped soon after (c.1.5hrs) - No one harmed in incident - Situation under control - All relevant North Macedonian authorities informed - Investigation underway to ascertain volume of materi
Slide 4: H1 2020 Highlights
H1 2020 HIGHLIGHTS H1 2020 revenue H1 2020 EBITDA Strong performance in challenging conditions - Solid H1 2020 production $75.4m $42.5m H1 2019: $89.9m H1 2019: $56.7m - Interim dividend decision deferred due to TSF4 - Strong EBITDA margin and cash generation in context of global conditions H1 2020
Slide 5: Financial results
Financial results
Slide 6: H1 2020 Market Conditions
H1 2020 MARKET CONDITIONS COVID-19 pandemic 7000 - COVID-19 lockdowns impacted all major economies - Uncertainty remains, however strong potential for V-shaped recovery supported by unprecedented stimulus packages 6000 Copper Copper down 2% YTD - Copper benefited from Q2 China economic recovery 5000
Slide 7: H1 2020 Income Statement
H1 2020 INCOME STATEMENT EBITDA margin 56% Highlights H1 2020 H1 2019 % change - Gross revenue and EBITDA lower due to weak commodity prices and higher treatment charges Gross revenue, $m 75.4 89.9 -16% - Strong EBITDA margin given global conditions Selling & distribution, 1.2 0.9 +33% - Increased S
Slide 8: EBITDA H1 2020 vs H1 2019
EBITDA H1 2020 VS H1 2019 42.5 Central Asia Metals PLC 7
Slide 9: H1 2020 Kounrad C1 Copper Cash Cost
H1 2020 KOUNRAD C1 COPPER CASH COST H1 2020 C1 cash cost $0.48/lb (H1 2019: $0.51/lb) 400 Wood Mackenzie Local G&A, $0.05 2019 copper cost curve 300 $/lb Realisation, $0.08 200 CAML 103c Kounrad 48c 100 Processing , $0.35 0 1st Q 2nd Q 3rd Q 4th Q 18.5mt Cost H1 2020 $/lb H1 2019 $/lb Reagents 0.08
Slide 10: H1 2020 Sasa C1 Zinc Eq. Cash Cost
H1 2020 SASA C1 ZINC EQ. CASH COST H1 2020 C1 cash cost $0.43/lb (H1 2019: $0.47/lb) H1 H1 H1 H1 C1 cash cost 2020 2019 2020 2019 Processing , $0.07 $m $m $/lb $/lb Mining , $0.14 Zinc payable production, t 10,273 9,708 Pro-rata costing zinc 37% 45% Mining 8.3 8.0 0.14 0.17 Processing 4.1 4.3 0.07 0
Slide 11: H1 2020 Group C1 Cash Cost
H1 2020 GROUP C1 CASH COST Kounrad copper C1 cash cost $0.48/lb H1 2020 H1 2019 % change - Remains in lowest quartile of industry cash cost curve Kounrad Cu C1 cash 0.48 0.51 -6% cost, $/lb - 6% lower HoH due to weaker Tenge and cost control Sasa Zn eq. C1 cash - Average C1 cash cost over life of pr
Slide 12: H1 2020 Fully Inclusive Cu Eq. Unit Cost
H1 2020 FULLY INCLUSIVE CU EQ. UNIT COST CAML Group fully inclusive cost, $1.46/lb H1 2020 H1 2019 % change ($/lb) ($/lb) - Overall increase of $0.02/lb HoH C1 cash cost 1.03 0.90 +14% - Increase in C1 copper equivalent cash cost - Lower concession tax and MET due to reduced commodity Capital expend
Slide 13: H1 2020 Capex
H1 2020 CAPEX H1 2020 Group capex $4.3m (H1 2019: $4.4m) 4.0 - Exercise undertaken to identify potential savings 3.0 Sasa capex, includes $m 2.0 - Underground fleet: 3.7 - $1.4m (net of $0.3m trade-in), 3 loaders and 1 boomer drill rig 1.0 - H2 2020 capex to include second boomer and truck $0.7m 0.6
Slide 14: 30 June 2020 Balance Sheet
30 JUNE 2020 BALANCE SHEET Net debt $58.8m (2019: $80.2m) 30 Jun 2020, $m 31 Dec 2019, $m PPE 397.8 406.4 - Group cash balance, $44.0m Intangible assets 57.0 58.7 - Group gross debt, $99.0m (2019: $108.8m) Cash 40.3 28.6 - $89.0m Traxys corporate debt Restricted cash 3.7 4.0 - c.$10.0m North Macedon
Slide 15: H1 2020 Cash Flow
H1 2020 CASH FLOW 44.0 H1 2020 FCF of $21.1m Central Asia Metals PLC 14
Slide 16: Sustainability
CENTRAL ASIA METALS PLC Sustainability r Boe
Slide 17: First Sustainability Report Published
FIRST SUSTAINABILITY REPORT PUBLISHED Delivering value through Caring for the environment stewardship - Energy usage and climate - Corporate governance, business change ethics - Air quality and pollution - Sustainability management - Water usage Maintaining health and safety - Waste management - Saf
Slide 18: CAML 2020 Sustainability Targets
CAML 2020 SUSTAINABILITY TARGETS Health and safety “CAML’s performance against these targets, - Zero fatalities as well as other initiatives, will be reported - 15% reduction in 2 year average LTIFR from 2.01 to upon in the 2020 Sustainability Report, to be below 1.71 published in Q2 2021.” Environm
Slide 19: Health and Safety
HEALTH AND SAFETY Sasa H1 2020 H1 2020 H1 2020 2019 Sasa Kounrad CAML CAML - 0 LTI No. lost time 0 0 0 1 injuries (LTI) - 518 days since last Sasa LTI to 30 June 2020 No. medical - 1 MTI (employee broken finger) treatment 1 0 1 1 injuries (MTI) - No occupational health issues identified at Sasa No.
Slide 20: COVID-19 Update
COVID-19 UPDATE Kazakhstan North Macedonia - Nationally, over 100,000 cases - Nationally, over 15,000 cases - 700+ cases reported in - 100+ cases in wider Delcevo / Balkhash, town closest to Makedonska Kamenica area Kounrad operation close to Sasa mine - Employees currently with - Employees currentl
Slide 21: Our Communities
OUR COMMUNITIES North Macedonia COVID-19 support Kazakhstan COVID-19 support - Support of up to $150,000 - Kounrad Foundation, purchase of PCR machine for Balkhash Central Hospital - Community PPE provisions - Cost of $70,000 - Procurement of PPE for medical staff - Recommended by WHO - Food and hyg
Slide 22: Sasa
Sasa
Slide 23: Sasa Zinc and Lead Mine
SASA ZINC AND LEAD MINE Long life of mine N - Reserves and resources to 2038 - Skarn hosted deposit - Mechanised underground mine - Currently, sub-level caving operation, with transition to cut and fill planned - Single boom jumbos and diesel loaders - Currently, ore either trucked 0km 1km (30%) or
Slide 24: Sasa Production Update
SASA PRODUCTION UPDATE Solid H1 2020 performance Unit H1 2020 2019 2018 - Ore mined, 416,055t Ore mined t 416,055 817,714 803,101 - Zinc in concentrate, 12,203t Plant feed t 419,856 820,491 804,749 - Lead in concentrate, 15,140t Zinc grade % 3.37 3.29 3.31 2020 production guidance, under review Zinc
Slide 25: Sasa H1 2020 Underground Improvements
SASA H1 2020 UNDERGROUND IMPROVEMENTS New Epiroc mining fleet - 6 new underground machines on order for 2020 - H1 2020, on site - 1 boomer drill rig, 3 loaders - Q3 2020, to be delivered - 1 boomer drill rig, 1 truck - Future fleet replacement plans - additional units in 2021, 2022 and beyond Newtra
Slide 26: Life of Mine Study – Transition to Cut and Fill
LIFE OF MINE STUDY – TRANSITION TO CUT AND FILL Rationale - Cut and fill generally regarded as a safer mining method than sub-level caving - Existing operational team utilising the same equipment - A more flexible method, better suited to geometry of orebody - higher recovery and reduced dilution of
Slide 27: Life of Mine Tailings Solution at Sasa
LIFE OF MINE TAILINGS SOLUTION AT SASA Downstream tailings facilities - 5 TSFs at Sasa TSF4 - TSF4 facility in operation - Leakage incident 14 September 2020, investigation underway - Full Church of England Pension Board disclosure - Sasa team ascertaining workstreams required to comply with Global
Slide 28: Life of Mine Study in Numbers
LIFE OF MINE STUDY IN NUMBERS Svinja Reka Ore Reserves (JORC 2012) Production profile Grades Contained metal - Construction period (2021-2022) - Production guidance maintained at 825,000t - 850,000t Mt Pb (%) Zn (%) Ag(g/t) Pb (kt) Zn (kt) Ag(koz) - Ramp up period (2023-2024) Probable 10.7 4.0 3.0 2
Slide 29: Kounrad
CENTRAL ASIA METALS PLC Kounrad \ ”
Slide 30: Kounrad Overview
KOUNRAD OVERVIEW Eastern Dumps 7 6 2 5 20 Kounrad mine 9-10 SX-EW 13 plant 21a Western 15 Dumps 1a 16 Kounrad village Remaining recoverable resources Eastern Dumps 10,000t 22 Western Dumps 145,000t Total 155,000t Central Asia Metals PLC 29
Slide 31: Kounrad Production
KOUNRAD PRODUCTION In-situ dump leach and SX-EW plant 4.5 120 4.0 Quarterly copper production (kt) Cumulative copper production (kt) - On track to meet 2020 guidance 3.5 100 - H1 2020 copper production, 6,607t 3.0 80 2.5 - 2020 guidance, 12,500t-13,500t 2.0 60 - 75% to be leached from Western Dumps
Slide 32: Outlook
Outlook
Slide 33: Delivering Value for Shareholders
DELIVERING VALUE FOR SHAREHOLDERS Industry leading EBITDA Margins 70% 60% 50% 40% 30% 20% 10% 0% -10% 2019 2020 Source: Thomson Reuters Long-term dividend track record 200 98p First quartile cash costs 150 Market leading cost structure creating $m 100 competitive position 50 0 2012 2013 2014 2015 20
Slide 34: Capital Allocation
CAPITAL ALLOCATION Returns to shareholders Deleveraging - Remains an important component of our capital allocation philosophy - CAML was intending to reinstate dividend - H1 2020 dividend decision deferred pending greater clarity on TSF4 issue - Total dividends since 2012, $176m or 98p 99.0 Growth o
Slide 35: Outlook
OUTLOOK CAML, a strong and sustainable Kounrad 2020 copper business production guidance - Strong operational performance 12,500-13,500t during H1 2020 - LoM review identifies most effective long term approach at Sasa Sasa 2020 zinc - Low cost production production guidance - Producing the metals ess
Slide 36: Contact Details
DIRECTOR OF CORPORATE RELATIONS CONTACT Louise Wrathall DETAILS Sackville House 40 Piccadilly London W1J 0DR louise.wrathall@centralasiametals.com +44 (0) 207 898 9001 https://www.centralasiametals.com/ 35
Slide 37: Appendix
CENTRAL ASIA METALS PLC Appendix J Lad
Slide 38: Central Asia Metals (CAML) Operations
CENTRAL ASIA METALS (CAML) OPERATIONS KAZAKHSTAN - Population, 18.3 million - GDP per capita, $11,165 NORTH MACEDONIA - Population, 2.1 million - GDP per capita, $6,143 SASA (100%) KOUNRAD (100%) - Underground zinc and lead mine, northeast North Macedonia - In-situ dump leach and SX-EW processing fa
Slide 39: CAML Achievements
CAML ACHIEVEMENTS 2012, Kounrad $39m 10kt 2015, completed $13m SX-EW plant Stage 1 Expansion to 2010 AIM IPO, raised 2012, instigated dividend commissioned, copper increase annual copper $60m at 96p policy production from Eastern production to current Dumps commenced 13,000-14,000t 2017, completed $
Slide 40: Share Price / Shareholders
SHARE PRICE / SHAREHOLDERS Share price performance versus peers Shareholder investment styles 160 Directors GARP 2% 0% Growth 3% 140 Corporate 120 3% Hybrid 13% 100 Index 80 1% 60 Value & Growth 35% 40 Priv Eq/Ven Cap 8% 20 0 Jan 19 Mar 19 May 19 Jul 19 Sep 19 Nov 19 Jan 20 Mar 20 May 20 Jul 20 Sep
Slide 41: Board of Directors
BOARD OF DIRECTORS Nick Clarke Nigel Robinson Gavin Ferrar Roger Davey Non-Executive Chairman CEO CFO NED - technical experience Chair Member - Nomination Committee - Sustainability Committee Member - Nomination Committee - Audit Committee - Sustainability Committee Robert Cathery Nigel Hurst-Brown
Slide 42: Our Purpose, Culture and Values
OUR PURPOSE, CULTURE AND VALUES Our purpose Our values Our purpose is to produce base Health and safety. The safety of our employees is a metals, which are essential for core value and we are passionate about protecting the health and wellbeing of our people. We work hard to modern living, profitabl
Slide 43: Copper – Improving Global Demand and Challenges to Supply
COPPER – IMPROVING GLOBAL DEMAND AND CHALLENGES TO CURRENT AND FUTURE SUPPLY Rapid price recovery, with outperformance 1,000 Copper Market Balance $4.0 expected based on strong demand $3.5 Surplus / (Deficit) (ktpa) fundamentals and low inventory $3.0 Price (US$/lb) 500 - Rapid recovery from April l
Slide 44: Zinc – 2020 Surplus Magnified by COVID-19
ZINC - 2020 SURPLUS MAGNIFIED BY COVID-19, HOWEVER A LONGER-TERM MARKET DEFICIT LOOMS Supply fundamentals support transition to 1,500 Zinc Market Balance $3,500 deficit despite weaker demand Surplus / (Deficit) (ktpa) $3,000 1,000 - Zinc set for third consecutive annual demand $2,500 Price (US$/t) d
Slide 45: Lead – Demand May Benefit from H2 Recovery
LEAD – DEMAND MAY BENEFIT FROM A H2 RECOVERY AND BATTERY GROWTH IN THE LONGER TERM Supply rebound post lockdown $2,500 Lead Price Chart - Latest ILZSG data shows mined lead recovered strongly in June and is now close to or at normal $2,250 Price (US$/t) levels - Rebound, with output rising +9.4% m/m
Slide 46: Kounrad Operating Statistics
KOUNRAD OPERATING STATISTICS 2012 2013 2014 2015 2016 2017 2018 2019 H1 2020 LTI 0 0 1 2 0 0 2 0 0 Cu production, t 6,586 10,509 11,136 12,071 14,020 14,103 14,049 13,771 6,607 Ave. PLS, m3/hr 383 532 771 784 888 921 993 985 983 PLS grade, gpl 3.9 3.0 2.2 2.3 2.4 2.5 2.2 2.2 2.0 Plant availability,
Slide 47: Kounrad Resource and Technology
KOUNRAD RESOURCE AND TECHNOLOGY Category Quantity, Mt Grade (%) Contained copper, kt Eastern Dumps Indicated 89.7 0.10 85.8 Inferred 79.6 0.10 81.7 Total 169.3 0.10 167.5 Western Dumps Indicated 296.4 0.10 282.4 Inferred 181.5 0.09 164.3 Total 477.9 446.7 Total East 647.1 614.2 and West Prepared by
Slide 48: Kounrad, PLS and Groundwater Model
KOUNRAD, PLS AND GROUNDWATER MODEL Central Asia Metals PLC 47
Slide 49: Sasa Resources and Reserves (JORC 2012)
SASA RESOURCES AND RESERVES (JORC 2012) Pb contained Zn Mt Pb grade (%) Zn grade (%) Ag grade (g/t) Ag (koz) (kt) contained(kt) Svinja Reka – Ore Reserves Probable 10.7 4.0 3.0 22.3 431 320 7,671 Total 10.7 4.0 3.0 22.3 431 320 7,671 Svinja Reka – Mineral Resources Indicated 12.7 4.7 3.3 25.7 588 42
Slide 50: Sasa Processing Flow Sheet
SASA PROCESSING FLOW SHEET Central Asia Metals PLC 49