Central Asia Metals Plc · LSE:CAML
Central Asia Metals — FY2019 Earnings Presentation
50 slides from Central Asia Metals's earnings presentation, April 2020
Slide 1: 2019 Results Presentation
2019 RESULTS PRESENTATION APRIL 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: COVID-19 Update
COVID-19 UPDATE Kazakhstan Board decision – no final North Macedonia 2019 dividend recommended - Currently no employees or - Currently, no employees or contractors diagnosed with - Short term priority, welfare of all contractors diagnosed with COVID-19 CAML employees and contractors COVID-19 - Poten
Slide 4: 2019 Results Highlights
2019 RESULTS HIGHLIGHTS 2019 revenue 2019 EBITDA EBITDA margin broadly maintained at 60% - Met 2019 production guidance for all three metals $180.8m $108.6 2018: $204.2m 2018: $125.3m - Strong 2019 EBITDA and cash generation - EBITDA $108.6m (2018: $125.3m) - EBITDA margin 60% (2018: 61%) 2019 margi
Slide 5: Financial results
Financial results
Slide 6: 2019 Market Conditions
2019 MARKET CONDITIONS Copper - US – China trade wars led to an underperformance in 2019 global copper consumption growth - 2020 broker consensus price, $6,195/t Zinc - Global mine zinc output growth of 2% led to increased TCs - 2020 broker consensus price, $2,307/t Lead - Weak auto sales led to a 0
Slide 7: 2019 Income Statement
2019 INCOME STATEMENT EBITDA margin 60% Highlights 2019 2018 % change - Gross revenue 11% lower due to weak commodity Gross prices revenue, $m 180.8 204.2 -11% - Broadly maintained EBITDA margin due to cost Cost of sales, control 73.1 76.4 -4% $m - EPS from continuing ops 6% lower at 29.36c Admin 18
Slide 8: EBITDA 2018 vs 2019
EBITDA 2018 VS 2019 1.1 108.6 Central Asia Metals PLC 7
Slide 9: 2019 Kounrad C1 Copper Cash Cost
2019 KOUNRAD C1 COPPER CASH COST 2019 C1 cash cost $0.52/lb 400 Wood Mackenzie 2019 copper cost curve 300 Local G&A, $0.06 $/lb 200 CAML 94c Realisation, $0.09 Kounrad 52c Processing , $0.37 100 0 1st Q 2nd Q 3rd Q 4th Q 18.5mt Cost 2019 $/lb 2018 $/lb Reagents 0.08 0.08 Power 0.06 0.07 2019 Kounrad
Slide 10: 2019 Sasa C1 Zinc Eq. Cash Cost
2019 SASA C1 ZINC EQ. CASH COST 2019 C1 cash cost $0.47/lb C1 cash cost 2019 2018 2019 2018 $m $m $/lb $/lb Zinc payable production, t 19,601 18,842 Mining , 0.16 Processing , 0.09 Pro-rata costing zinc 41% 44% Mining 17.3 15.7 0.16 0.17 Processing 9.1 8.4 0.09 0.09 Realisation , 0.16 Local G&A 6.6
Slide 11: 2019 Group C1 Cash Cost
2019 GROUP C1 CASH COST Kounrad copper C1 cash cost $0.52/lb 2019 2018 % change - Remains firmly in lowest quartile of industry cash Kounrad Cu C1 cash 0.52 0.54 -4% cost curve cost, $/lb Sasa Zn eq. C1 cash - 4% lower YoY due to weaker Tenge and cost control 0.47 0.46 +2% cost, $/lb - Average C1 ca
Slide 12: 2019 Fully Inclusive Cu Eq. Unit Cost
2019 FULLY INCLUSIVE CU EQ. UNIT COST CAML Group fully inclusive cost, $1.50/lb 2019 ($/lb) 2018 ($/lb) % change - 9% lower YoY C1 cash cost 0.94 0.87 +8% - Lower capex YoY due to higher TSF4 costs in 2018 - Lower loan interest Capital 0.16 0.24 -33% expenditure - Decrease in corporate overheads due
Slide 13: 2019 Capex
2019 CAPEX CAML 2019 Group capex 8.0 - $11.0m 6.0 Sasa capex $m - includes 4.0 7.5 - Underground development $2.6m - Processing equipment $2.1m (includes crushers $0.6m) 2.0 - Mining equipment $1.5m 1.6 1.9 - Safety expenditure $0.5m - - TSF4 capex of $1.9m (total project $16m) Kounrad Sasa TSF4 Sas
Slide 14: 31 December 2019 Balance Sheet
31 DECEMBER 2019 BALANCE SHEET Net debt $80.2m (2018: $110.3m) 31 Dec 2019, $m 31 Dec 2018, $m - Group gross debt, $108.8m (2018: $144.9m) PPE 406.4 429.6 - 2019 repayments of $38.4m Intangible assets 58.7 61.3 - Group cash balance, $32.6m Cash 28.6 34.6 - Other liabilities reduced to $13.1m Restric
Slide 15: 2019 Cash Flow
2019 CASH FLOW 2019 FCF of $69.8m 32.6 Central Asia Metals PLC 14
Slide 16: Sustainability
CENTRAL ASIA METALS PLC Sustainability r Boe
Slide 17: 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 18: Material Sustainability Topics
MATERIAL SUSTAINABILITY TOPICS Delivering value through stewardship Maintaining health and safety Focussing on people Corporate governance, business ethics Safety Employee retention and development Sustainability management Occupational heath and wellbeing Diversity and inclusion “Our primary object
Slide 19: Health and Safety
HEALTH AND SAFETY Sasa 2019 2019 2019 2018 2017 Sasa Kounrad CAML CAML CAML* - 1 LTI (incident with an underground machine) No. lost time 1 0 1 8 0 injuries (LTI) - 1 MTI (employee cut leg) No. medical treatment 1 0 1 0 0 - Several recent safety initiatives at Sasa, including injuries (MTI) - Re-for
Slide 20: Our People
OUR PEOPLE Employment and training - CAML has 1,039 employees and 191 contractors - 698 employees and 105 contractors at Sasa - 323 employees and 86 contractors at Kounrad - 18 CAML Group employees - 12% CAML employees are female - Low staff turnover - 10% at Sasa - 11% at Kounrad - 3,277 safety tra
Slide 21: Caring for the Environment
CARING FOR THE ENVIRONMENT Taking our responsibilities seriously Carbon emission intensity - Zero significant spills at either operation - Zero air quality exceedances at either operation 6.0 t CO2-e/t Cu eq. product SASA t CO2-e/t Cu eq. product Kounrad 5.0 Total t CO2-e/t Cu eq.product - 43% reduc
Slide 22: Our Communities
OUR COMMUNITIES Sasa 2019 community projects ($0.3m) Kounrad 2019 community projects ($0.3m) - Establishing engineering training centre in local town, - Building purchase and refurbishment for the Kind Heart Makedonska Kamenica Centre for disabled children in Balkhash and construction of a garden an
Slide 23: Sasa
Sasa
Slide 24: 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 - Single boom jumbos and diesel loaders - Ore either trucked (30%) or hoisted (70%) to surface - Main haulage 830 level 0km 1km -
Slide 25: Sasa Production Update
SASA PRODUCTION UPDATE Met 2019 zinc and lead production guidance Unit 2019 2018 CAML 2017 - Ore mined, 817,714t Ore mined t 817,714 803,101 134,063 - Zinc in concentrate, 23,369t Plant feed t 820,491 804,749 132,012 - Lead in concentrate, 29,201t Zinc grade % 3.29 3.31 3.21 2020 production guidance
Slide 26: Sasa 2019 Improvements
SASA 2019 IMPROVEMENTS Underground mining improvements - New 3D computer software introduced to modernise systems - Deswick for mine planning, Leapfrog for geological modelling, Ventsim for ventilation modelling - Increased automation planned for UG fleet - ‘Line of sight’ remote control loading pla
Slide 27: Sasa for the Future
SASA FOR THE FUTURE Transition to cut and fill mining - Cut and fill generally regarded as a safer mining method than sub-level caving - +40% of Sasa tailings production to be stored underground as part of ‘paste’ fill of mined voids. - Widely viewed as safer tailings storage solution - May no longe
Slide 28: Tailings at Sasa
TAILINGS AT SASA Downstream tailings facilities - 5 TSFs at Sasa, all of downstream construction - Widely viewed as safest design option - Construction of TSF4 completed 2019 - Total cost (pre and post CAML), $16m - Designed to contain 6.5+mt tailings - Change in mining method to ‘cut and fill’ may
Slide 29: Sasa Resources, Reserves and Exploration
SASA RESOURCES, RESERVES AND EXPLORATION Svinja Reka Deposit Tonnage Pb grade Pb metal Zn grade Zn metal (mt) (%) (kt) (%) (kt) - 812,235t material depleted from ore reserve Svinja 12.3 4.76 587 3.70 456 - 4,538m infill drilling in 2019 Reka Indicated - Between 830 and 750 levels Golema Mineral 1.3
Slide 30: Kounrad
CENTRAL ASIA METALS PLC Kounrad \ ”
Slide 31: 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 150,000t Total 160,000t Central Asia Metals PLC 30
Slide 32: Kounrad Performance
KOUNRAD PERFORMANCE In-situ dump leach and SX-EW plant 4.5 120 4.0 Quarterly copper production (kt) Cumulative copper production (kt) 100 - Exceeded 2019 production target 3.5 3.0 80 - 2019 copper production, 13,771t 2.5 60 - 2020 guidance, 12,500t-13,500t 2.0 - 75% to be leached from Western Dumps
Slide 33: Kounrad 2019 Operating Statistics
KOUNRAD 2019 OPERATING STATISTICS 2012 2013 2014 2015 2016 2017 2018 2019 2019, stable operations - 2019 no LTIs LTI 0 0 1 2 0 0 2 0 - LTI free hours 1,339,759 Cu production, t 6,586 10,509 11,136 12,071 14,020 14,103 14,049 13,771 - $1.6m capex invested at 3 Ave. PLS, m /hr 383 532 771 784 888 921
Slide 34: Kounrad Scale of Leaching Operations
KOUNRAD SCALE OF LEACHING OPERATIONS Dripper network from London to Nur-Sultan Ave area Total Total Average material Annual - Average copper grade under leach stable Year under installed under grade leach, drippers, under Cu, t leach, - Leach application rate of 2.5-3 l/hr/m2 is optimal ha km Mt lea
Slide 35: Outlook
Outlook
Slide 36: Capital Allocation
CAPITAL ALLOCATION Returns to shareholders Deleveraging - Remains an important component of our capital allocation philosophy - No 2019 final dividend recommended due to cash preservation in the face of the COVID-19 pandemic - Therefore, 2019 total dividend (i.e. interim), 6.5p 108.8 - c.4.5% divide
Slide 37: Delivering Value for Shareholders
DELIVERING VALUE FOR SHAREHOLDERS Industry leading EBITDA Margins 70% 60% 50% 40% 30% 20% 10% 0% 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 2016 20
Slide 38: Outlook
OUTLOOK Global uncertainty related to Kounrad 2020 copper COVID-19 pandemic production guidance 12,500-13,500t CAML is a sustainable business Sasa 2020 zinc - Strong operational performance production guidance - Strong margins and free cash flow generation 23,000-25,000t - Low cost base metal produc
Slide 39: 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/ 38
Slide 40: Appendix
CENTRAL ASIA METALS PLC Appendix J Lad
Slide 41: 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 42: CAML Achievements
CAML ACHIEVEMENTS 2012, Kounrad $39m SX-EW 2015, completed $13m plant commissioned with Stage 1 Expansion to 2010 AIM IPO, raised 10,000t production 2012, instigated dividend increase annual copper $60m at 96p capacity, copper policy production from Eastern production to current Dumps commenced 13,0
Slide 43: Share Price / Shareholders
SHARE PRICE / SHAREHOLDERS Share price performance versus peers Shareholder investment styles 140 GARP Non-Institutional 4% Growth Holdings 7% 120 26% Hedge 100 0% 80 Index 60 Value 3% 5% 40 Quant 20 2% 0 Jan 19 Mar 19 May 19 Jul 19 Sep 19 Nov 19 Jan 20 Mar 20 PCB Multi Style 14% 39% CAML Antofagast
Slide 44: 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 Member - Audit Committee - Sustainability Committee Robert Cathery Nigel Hurst
Slide 45: Copper - Long-Term Fundamentals Intact
COPPER - LONG-TERM FUNDAMENTALS INTACT 1,000 Copper Market Balance $4.0 Price volatility driven by global macro factors $3.5 Surplus / (Deficit) (ktpa) - Price heavily influenced by US–China trade war in 500 $3.0 Price (US$/lb) 2019 and COVID-19 in 2020 $2.5 - Significant 2020 Chinese stimulus expec
Slide 46: Zinc - 2019-20 Surplus Transitory
ZINC - 2019-20 SURPLUS TRANSITORY 1,500 Zinc Market Balance $3,500 Supply fundamentals support transition to Surplus / (Deficit) (ktpa) $3,000 deficit despite weaker demand 1,000 $2,500 Price (US$/t) - 2019 was 2nd consecutive year of global zinc demand 500 $2,000 decline - Chinese smelter bottlenec
Slide 47: Lead - Auto Demand Facing Macro Headwinds
LEAD – AUTO DEMAND FACING MACRO HEADWINDS $2,500 Lead Price Chart Supply growth to be muted in 2020 $2,250 - Unlikely to be significant additions to mined lead Price (US$/t) supply in 2020 $2,000 - Treatment charges for lead have been rising - spot TCs for imported material into China now $125/t vs
Slide 48: 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 49: Kounrad, PLS and Groundwater Model
KOUNRAD, PLS AND GROUNDWATER MODEL Central Asia Metals PLC 48
Slide 50: Sasa Processing Flow Sheet
SASA PROCESSING FLOW SHEET building a sustainable business 49