Central Asia Metals Plc · LSE:CAML
Central Asia Metals — FY2017 Earnings Presentation
49 slides from Central Asia Metals's earnings presentation, April 2018
Slide 1: 2017 Results Presentation
2 0 1 7 R E S U LT S P R E S E NTAT I O N APRIL 2018
Slide 2: Disclaimer
1 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 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
Slide 3: 2017 Performance and Update
2 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 2017 PERFORMANCE AND UPDATE ▪ Total 2017 dividend 16.5p (2016: 15.5p), includes proposed final dividend 10p (2016: 10p) 2017 Cu production 2017 revenue ▪ Lynx Resources acquisition, CAML 100% owner Sasa mine, Macedonia 14,103t $106.5m ▪ Record
Slide 4: Share Price and Shareholders
3 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SHARE PRICE AND SHAREHOLDERS 350 12,000 350 300 300 10,000 250 250 8,000 LME Copper ($/t) Share price (p) 200 Share price (p) 200 6,000 150 150 4,000 100 100 2,000 50 50 0 0 0 Sep 10 May 11 Jan 12 Sep 12 May 13 Jan 14 Sep 14 May 15 Jan 16 Sep 1
Slide 5: Financial Review
4 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS FINANCIAL REVIEW
Slide 6: 2017 Market Conditions
5 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 2017 MARKET CONDITIONS Copper 8,200 ▪ Price increased by 30% YoY to $7,157/t ▪ 2018 copper price to be supported by production disruptions related to scheduled labour negotiations on mines in Chile and Peru 7,200 ▪ 2018 broker consensus price $
Slide 7: Lynx Resources Acquisition
6 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS LYNX RESOURCES ACQUISITION $402.5m acquisition Consideration $m Headline consideration 402.5 $12.0m New debt (Traxys), LIBOR $50.0m $120.0m +4.75%, 5 years Adjustments to reflect IFRS purchase consideration: Sasa debt (SocGen / Investec), LIBOR
Slide 8: 2017 Income Statement
7 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 2017 INCOME STATEMENT Increased revenue and EBITDA reflecting 2017 2016 % change acquisition of Lynx Resources ▪ Results of Lynx Resources consolidated for 2 months Gross revenue, $m 106.5 69.3 +54% from 1 November 2017 Profit before tax, $m 49
Slide 9: 2017 Balance Sheet
8 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 2017 BALANCE SHEET Net debt $138.9m 2017, $m 2016, $m ▪ Lynx Resources net assets acquired of $312.5m PPE 461.0 50.3 including PPE of $402.6m and borrowings of $70.3m Intangible assets 70.3 40.8 ▪ Other liabilities include $12.0m Lynx acquisiti
Slide 10: 2017 Cash Flow
$m - 50 100 150 200 250 300 Cash at 1 Jan 40.3 17 Share proceeds & gain on hedge 146.0 (net) Borrowings less 109.5 repayments & interest Acquisition of Lynx (net of cash (268.0) acquired) Cash generated 60.4 from 9 operations Income tax paid (12.3) CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINE
Slide 11: Group Capex and Cash Flow
10 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS GROUP CAPEX CASH FLOW IPO -2017 16 270 220 14 170 12 120 10 70 20 $m $m 8 -30 6 -80 -130 4 -180 2 -230 -280 0 2010 2011 2012 2013 2014 2015 2016 2017 2017 2018E 2019E 2020E Cash flow from operating activities Cash flow from investing activitie
Slide 12: CAML Summary Financial Performance
11 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS CAML SUMMARY FINANCIAL PERFORMANCE Total 2017 2016 2015 2014 2013 2012 (68 months) (Sasa 2 months) (8 months) Kounrad production, Cu tonnes 68,425 14,103 14,020 12,071 11,136 10,509 6,586 Sasa payable production, Cu eq. tonnes 3,333 3,333 - -
Slide 13: 2017 CAML C1 Cash Cost
12 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 2017 CAML C1 CASH COST CAML copper equivalent C1 cash cost $0.76/lb 2017 2016 % $/lb $/lb change ▪ Following acquisition of Sasa mine, CAML reports C1 cash Kounrad copper C1 cost on a copper equivalent basis 0.52 0.43 +21% cash cost ▪ Sasa and
Slide 14: 2017 Kounrad Copper C1 Cash Cost $0.52/lb
13 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 2017 KOUNRAD COPPER C1 CASH COST $0.52/LB Processing 2017 $/lb 2016 $/lb Reagents 0.07 0.05 Power 0.06 0.05 Payroll 0.11 0.09 Local G&A, $ 0.06 Materials 0.05 0.05 Consulting & other 0.08 0.04 Processing total 0.37 0.28 Realisation, $ 0.09 400
Slide 15: 2017 Sasa Zinc Eq. C1 Cash Cost $0.44/lb
14 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 2017 SASA ZINC EQ. C1 CASH COST $0.44/LB Unit costs, Run of Mine (RoM) 2017 2016 Mining, $000 14,413 13,331 Processing, $000 7,499 8,201 Local G&A, $000 5,019 4,822 Total operating costs, $000 26,931 26,354 Processing, $0.08 RoM, t 792,068 782
Slide 16: Delivering Shareholder Value
15 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS DELIVERING SHAREHOLDER VALUE 140 2017 dividend 16.5p 2018 dividend policy $129m “CAML will return to shareholders a target 120 100 80 range of between 30% and 50% of free cash flow, defined as net cash generated $m 60 40 from operating activit
Slide 17: Operational Overview, Kounrad
16 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS OPERATIONAL OVERVIEW, KOUNRAD
Slide 18: Kounrad, Overview
17 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS KOUNRAD, OVERVIEW Eastern Dumps ▪ Commenced leaching Q2 2012 ▪ Average dump height 20m, average leach time 8 months ▪ Average copper recovery 45-50% ▪ 2017 production from Eastern Dumps c.60% ▪ Leached 62,860t from Eastern Dumps ‒ 16,366t reco
Slide 19: Kounrad, Production Update and Outlook
18 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS KOUNRAD, PRODUCTION UPDATE AND OUTLOOK 2017 copper production and sales 4.5 80 Cumulative copper production (kt) 4.0 70 Quarterly copper production (kt) ▪ 2017 copper production 14,103t 3.5 60 3.0 ▪ Total copper production to end 2017, 68,426t
Slide 20: Kounrad, 2017 Operational Overview
19 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS KOUNRAD, 2017 OPERATIONAL OVERVIEW Stable operations 2012 2013 2014 2015 2016 2017 ▪ LTI free hours exceed 2m as of Q4 2017 LTI 0 0 1 2 0 0 ▪ Production in line with guidance Cu production, t 6,586 10,510 11,136 12,071 14,020 14,103 ▪ $77m cap
Slide 21: Kounrad, Scale of Leaching Operations
20 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS KOUNRAD, SCALE OF LEACHING OPERATIONS 120.0 0.167% Cu 15,000 ▪ Average copper grade under leach declining, copper 100.0 13,500 recovered increased YoY 12,000 Total material under leach, Mt 80.0 10,500 ▪ Lower grades under leach compensated by
Slide 22: Kounrad, Eastern Dumps
21 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS KOUNRAD, EASTERN DUMPS Leached Cu, Recoverable Cu, Dump In-situ Cu, tonnes tonnes tonnes 9-10 23,450 11,840 119 7 6 14,610 7,357 120 6 7 43,060 21,158 805 5 5 60,774 23,122 4,832 2 25,210 0 10,490 2 Total 167,104 63,477 16,366 9-10 ▪ Dumps 9-1
Slide 23: Kounrad, Western Dumps ILA
22 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS KOUNRAD, WESTERN DUMPS ILA ▪ Successful commencement of In-situ Leached Recoverable Dump Cu, Cu, Cu, tonnes leaching operation, including first tonnes tonnes winter 16 54,418 2,311 20,545 ▪ Continue leaching ILA and gradual 16 22 33,372 3,255
Slide 24: Operational Overview, Sasa
23 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS OPERATIONAL OVERVIEW, SASA
Slide 25: Sasa, Production Update and Outlook
24 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SASA, PRODUCTION UPDATE AND OUTLOOK 2017 production update and sales 2017 CAML Units 2017 2016 attributable ▪ Underground ore production 792,068t Ore mined t 134,063 792,068 782,823 ▪ Zinc production 21,585t Plant feed t 132,012 793,332 779,23
Slide 26: Sasa Production Statistics
25 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SASA PRODUCTION STATISTICS 2017 ore mined 2017 plant availability 80,000 100 80 Plant availability (%) 60,000 Ore mined (t) 60 40,000 40 20,000 20 0 0 2017 combined grade Production, 2010-2017 8.00 70 900 800 60 zinc plus lead grade (%) 6.00 7
Slide 27: Sasa for the Future
26 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SASA FOR THE FUTURE Mine and processing plant activities ▪ Infrastructure to access stoping block between 910 and 830 levels completed ‒ Extraction of ore from this area, 2018-2023 ▪ Decline access to 750 level commenced in 2017 ▪ Infrastructu
Slide 28: Corporate Social Responsibility
27 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS CORPORATE SOCIAL RESPONSIBILITY
Slide 29: Kounrad, Our CSR Approach
28 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS KOUNRAD, OUR CSR APPROACH Health and safety Environmental Social ▪ No LTI in 2017, total LTI free man ▪ Government environmental checks ▪ Strong focus on training staff hours now 2 million (last LTI, July successfully undertaken in 2017 ▪ c.$1
Slide 30: Sasa, Our CSR Approach
29 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SASA, OUR CSR APPROACH Health and safety Environmental Social ▪ Total LTI free man hours to end 2017, ▪ Amendment of the IPPC permit ▪ More proactive approach to community 1.8 million relations taken in 2017 ▪ Commissioning of biodiversity stu
Slide 31: Shuak
30 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SHUAK
Slide 32: Shuak, Overview
31 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SHUAK, OVERVIEW $1.5m 2017 exploration programme complete ▪ CHT drilling programme, 17,530m ▪ Diamond drilling programme, 5,242m ▪ All diamond drilling lab results and CHT results received ▪ New areas of oxide mineralisation identified at Kyzy
Slide 33: Shuak, Oxide and Sulphide
32 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SHUAK, OXIDE SHUAK, SULPHIDE Prospect Drill hole From (m) Intercept (m) Cu (%) Prospect Drill hole From (m) Intercept (m) Cu (%) Mongol V MN1 3.0 47.0 0.29 Mongol V MN2 78.3 27.4 0.58 Mongol V MN2 0.5 49.2 0.24 Mongol V MN3 55.0 23.0 0.94 Mong
Slide 34: Outlook
33 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS OUTLOOK ▪ Two low cost, low capex operations in prospective jurisdictions, plus exploration potential in Shuak ▪ Exposure to three base metals with attractive fundamentals – copper, zinc and lead ▪ Attractive cash flow based dividend policy ▪
Slide 35: Investor Relations Contact
34 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS INVESTOR RELATIONS CONTACT Louise Wrathall 11 Albemarle Street London W1S 4HH louise.wrathall@centralasiametals.com Tel: +44 (0) 20 7898 9001 www.centralasiametals.com
Slide 36: Appendix
35 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS APPENDIX
Slide 37: Central Asia Metals Operations
36 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS CENTRAL ASIA METALS OPERATIONS SHUAK (80%) KAZAKHSTAN 197km2 exploration licence, northern Population, 18.0 million Kazakhstan GDP per capita, $8,585 Potential for copper oxide and sulphide resources Extensively explored in Soviet times 22,000
Slide 38: CAML Company Timeline
37 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS CAML COMPANY TIMELINE 2017, commenced successful leaching of Western Dumps $129m paid to shareholders in 2015, completed $13m Stage dividends 1 Expansion to increase annual copper production to current 13,000-14,000t 6 Nov 2017, $402.5m April
Slide 39: Board of Directors
38 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS BOARD OF DIRECTORS
Slide 40: Director Biographies
39 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS DIRECTOR BIOGRAPHIES NICK CLARKE, CHAIRMAN. Nick has over 40 years of mining experience, including 16 DAVID SWAN, NON-EXECUTIVE DIRECTOR. David is a chartered accountant with years spent within senior management positions in production and tec
Slide 41: Senior Management Biographies
40 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SENIOR MANAGEMENT BIOGRAPHIES HOWARD NICHOLSON, TECHNICAL DIRECTOR. Howard is a OLEG TELNOI, GENERAL DIRECTOR, KOUNRAD COPPER COMPANY. metallurgist with 35 years of experience in project development and Oleg joined CAML in 2007 with over ten y
Slide 42: Corporate Structure
41 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS CORPORATE STRUCTURE
Slide 43: Kounrad Resource and Technology
42 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS 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
Slide 44: Kounrad, PLS and Groundwater Model
43 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS KOUNRAD, PLS AND GROUNDWATER MODEL
Slide 45: Sasa, Reserves and Resources
44 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SASA, RESERVES AND RESOURCES ▪ Sasa is a zinc / lead skarn deposit Category Quantity Grade Contained (mt) ▪ Ore body dips at approximately 35°, with 2-3 parallel Mt Pb (%) Zn (%) Ag (g/t) Pb (kt) Zn (kt) Ag (koz) lenses, 1km strike, vertical d
Slide 46: Sasa Processing
45 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS SASA PROCESSING LEAD CONDITIONER LEAD ROUGHER AND SCAVENGERS LEAD THICKENER PRIMARY/ SECONDARY CRUSHING ORE FROM LEAD FILTER MINE TO BALL MILL LEAD LEAD CLEANERS CONCENTRATE TO BALL MILL ROD MILL ZINC CONDITIONER ZINC THICKENER ZINC ROUGHER AN
Slide 47: Copper
46 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS COPPER Uses ▪ Copper is used in building construction, power generation and transmission, electronic product manufacturing, and the production of industrial machinery and transportation vehicles Commentary ▪ Demand for copper is expected to re
Slide 48: Zinc
47 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS ZINC Uses ▪ Galvanizing is the predominant first use for zinc, accounting for c.60% of global zinc usage in all forms ▪ Other common first uses are die-casting and producing brass ▪ End-use market dominated by construction then transport ▪ Chi
Slide 49: Lead
48 CENTRA L A SIA META LS PLC BUILDING A BIGGER BUSINESS LEAD Uses ▪ The battery sector is the single largest consumer of lead, accounting for 85.5% of lead demand and can be sub-divided into automotive and industrial batteries ▪ The second largest current end use for lead after batteries is in the