TIDMCAML
RNS Number : 3068G
Central Asia Metals PLC
29 March 2022
29 March 2022
CENTRAL ASIA METALS PLC
('CAML' or the 'Company')
2021 Full Year Results
Central Asia Metals plc (AIM: CAML) today announces its full
year results for the 12 months ended 31 December 2021.
Financial highlights
Increased dividend
-- 2021 final dividend of 12 pence per share (2020: 8 pence)
o 2021 full year dividend of 20 pence per share (2020: 14
pence)
o Represents 45% of 2021 free cash flow(1) ('FCF'), in line with
stated dividend policy
o Payable on 30 May 2022 to shareholders registered on 6 May
2022
Record financial results
-- Group gross revenue [1] of $235.2 million (2020: $170.3 million)
o Group net revenue of $223.4 million (2020: $160.1 million)
-- Group EBITDA 1 of $141.5 million (2020: $95.7 million)
-- EBITDA margin 1 of 60% (2020: 56%)
-- Group profit before tax of $109.3 million (2020: $59.8 million)
-- EPS from continuing operations of 47.69 cents (2020: 24.78 cents)
Strong balance sheet
-- Group FCF 1 of $103.8 million (2020: $58.9 million)
-- Group net cash1 as at 31 December 2021 of $22.7 million (2020: net debt of $36.2 million)
o Cash in the bank as at 31 December 2021 of $59.2 million(2)
(2020: $47.9 million)
o 2021 gross debt repayments of $48.4 million (2020: $38.4
million)
Sustainability and operational overview
-- Zero lost time injuries at Kounrad during 2021 (2020: zero)
-- Four lost time injuries at Sasa during 2021 (2020: zero)
-- Target of 50% reduction in Scope 1 and Scope 2 greenhouse gas
('GHG') emissions by 2030 versus 2020 and to achieve net zero
emissions by 2050
-- Copper production of 14,041 tonnes (2020: 13,855 tonnes)
-- Zinc in concentrate production of 22,167 tonnes (2020: 23,815 tonnes)
-- Lead in concentrate production of 27,202 tonnes (2020: 29,742 tonnes)
2022 outlook
-- Kounrad copper production guidance, between 12,500 and 13,500 tonnes
-- Sasa production guidance, zinc in concentrate, between 20,000
and 22,000 tonnes and lead in concentrate, between 27,000 and
29,000 tonnes
[1] See Financial Review section for definition of non-IFRS
alternative performance measures
[2] The cash balance figure disclosed includes restricted cash
balance
Nigel Robinson, Chief Executive Officer, commented:
"I am pleased to report a strong set of financial results for
2021, which represents our most profitable year to date with Group
EBITDA of $141.5 million at a margin of 60%. We ended 2021 with a
strong balance sheet, having made an additional $10 million early
repayment on our corporate debt facility, which brings total 2021
debt repayments to $48.4 million. As of 31 December 2021, we were
in a net cash position of $22.7 million, with cash in the bank
(including restricted cash) of $59.2 million.
"Following this strong performance, we are delighted to propose
a 12 pence per share final dividend, resulting in a full year
dividend of 20 pence per share. Once the final dividend is paid,
the Company will have returned $256.9 million to its shareholders
in the last 10 years. The full year dividend represents 45% of our
2021 FCF and is therefore within our stated policy of 30% to 50% of
FCF.
"We have continued to focus our efforts on the most important
sustainability aspects of our business and have in particular
worked on our climate change strategy during 2021. We ended the
year having firmed up a strategy, and are confident in our ability
to commit to a 50% reduction in our Group Scope 1 and Scope 2
emissions by 2030, and are committing to a net zero target by 2050.
Our forthcoming 2021 annual and sustainability reports contain more
information on our efforts in this regard, and our initial
reporting towards Taskforce for Climate-Related Financial
Disclosures ('TCFD').
"We look forward to another positive year for CAML in 2022 and,
in particular, progressing the Cut and Fill Project at Sasa. We now
expect this project, which will ensure maximum extraction of Sasa's
resources, in the safest way, with minimal water usage and improved
tailings management, to be completed in 2023. Our business
development efforts continue into 2022. We also look forward to
celebrating 10 years of copper production from Kounrad on 30 April
2022.
"It is clearly too soon to ascertain how the events in Ukraine
will affect the wider world and global economy, but in the meantime
our thoughts are with all of those directly affected.
"On a final note, I am delighted that Louise Wrathall, our
Director of Corporate Relations, will join the CAML Board as an
additional Executive Director at the conclusion of our forthcoming
AGM."
Analyst conference call and webcast
A live conference call and webcast hosted by Nigel Robinson
(Chief Executive Officer) and Gavin Ferrar (Chief Financial
Officer) will take place at 09:30 (BST) today. The conference call
can be accessed by dialling +44 (0)330 336 9601 and quoting the
confirmation code '1668061', and the webcast can be accessed using
the link:
https://webcasting.brrmedia.co.uk/broadcast/6214e5f7599ba174a3a33776
The presentation will be available on the Company's website and
there will be a replay of the call available following the
presentation at https://www.centralasiametals.com .
Presentation via Investor Meet Company
The Company will also hold a live presentation relating to the
2021 Full Year Results via the Investor Meet Company platform today
at 15:00 (BST). The presentation is open to all existing and
potential shareholders. Questions can be submitted at any time
during the live presentation. Investors can sign up to Investor
Meet Company for free and add to meet Central Asia Metals Plc
via:
https://www.investormeetcompany.com/central-asia-metals-plc/register-investor
For further information contact:
Central Asia Metals Tel: +44 (0) 20 7898 9001
Nigel Robinson, CEO
Gavin Ferrar, CFO
Louise Wrathall, Director of Corporate louise.wrathall@centralasiametals.com
Relations
Peel Hunt (Nominated Advisor and Tel: +44 (0) 20 7418 8900
Joint Broker)
Ross Allister
David McKeown
BMO Capital Markets (Joint Broker) Tel: +44 (0) 20 7236 1010
Thomas Rider
Pascal Lussier Duquette
BlytheRay (PR Advisors) Tel: +44 (0) 20 7138 3204
Tim Blythe
Megan Ray
Rachael Brooks
Note to editors:
Central Asia Metals, an AIM-listed UK company based in London,
owns 100% of the Kounrad SX-EW copper project in central Kazakhstan
and 100% of the Sasa zinc-lead mine in North Macedonia.
For further information, please visit www.centralasiametals.com
and follow CAML on Twitter at @CamlMetals and on LinkedIn at
Central Asia Metals Plc
Chairman's statement
2021 brought a very different metal price environment to the
previous year and I am delighted that we have reported for the year
record revenue, profits, free cash flow and of course returns to
our shareholders. We have also advanced many other aspects of our
business which are equally as important to our other stakeholders,
and I am pleased that our team has wholeheartedly embraced the
sustainability aspects on which we place such importance.
OUR PURPOSE
Our purpose is to produce base metals, which are essential for
modern living, profitably in a safe and sustainable environment for
all our stakeholders and we have fulfilled this purpose during
2021.
Coupled with strong commodity prices, our Kounrad and Sasa base
metal production generated EBITDA of $141.5 million and free cash
flow of $103.8 million. This has enabled us to continue
deleveraging, and we ended the year in our first period-end net
cash position since we acquired Sasa in 2017. The remainder of our
corporate debt facility will be repaid in 2022.
SUSTAINABILITY
We have continued to devote much of our time and energy to
advancing our sustainability efforts during 2021. In Q2 2021 we
published our second standalone Sustainability Report. This was the
Company's first report drafted in accordance with the Global
Reporting Initiative ('GRI') Standards 'Core option'. Forming the
foundation for the 2020 Sustainability Report, CAML engaged
external consultants, ERM, to conduct an independent stakeholder
engagement exercise to verify and assess the relative importance of
material sustainability topics for the Company and its
stakeholders. The report also identified four of the UN Sustainable
Development Goals ('SDGs') to which the Company has the capacity to
best contribute. CAML's third Sustainability Report will be
published shortly and will detail our activities during 2021
corporately and at the Kounrad and Sasa operations.
While we have advanced many areas of sustainability during 2021,
we have in particular focused on climate change and have developed
a Climate Change Strategy which sees us commit to a 50% reduction
in our greenhouse gas ('GHG') emissions versus 2020 by 2030. We
were pleased to have secured effectively 100% renewable power for
our Sasa operation in July 2021, which will result in a reduction
in our Group emissions on an annualised basis by approximately 35%.
Our 2021 annual report contains our first commentary towards the
Taskforce for Climate-Related Financial Disclosures ('TCFD')
reporting and demonstrates our efforts in this regard to date and
our plans going forward.
During H1 2021, we completed the River Remediation Project,
which was undertaken as a result of the September 2020 tailings
storage facility 4 ('TSF4') incident. We have removed as much as
possible of the tailings from the riverbed, and have planted trees,
shrubs and grasses along the banks of the river. While monitoring
of water quality and biodiversity will of course be ongoing, I am
pleased that we have now drawn a line under the incident to the
satisfaction of our stakeholders.
GOVERNANCE
On 31 July 2021, Nigel Hurst-Brown retired from the CAML Board.
Nigel was our first Chairman, guiding CAML through its listing on
the AIM Market of the London Stock Exchange in 2010, until my
transition to Chairman in 2016. He was a diligent member of the
Board for 15 years and I thank him for his commitment to our
business and his wise counsel during his tenure with us.
On 31 March 2021, Mike Prentis joined the CAML Board, as well as
the Audit, Sustainability, Remuneration and Nomination Committees.
His input has already been invaluable as he brings important
capital markets experience and investor insights, as well as a
rigorous approach to his non-executive role.
Robert Cathery has informed me of his plans to retire from the
CAML Board at the conclusion of our 2022 Annual General Meeting
('AGM'). Our Nomination Committee has been busy appraising
candidates for roles that will help to ensure the company continues
to embrace its forward-looking aspirations in line with our stated
purpose, as well as ensuring the highest standards of corporate and
business governance.
To that end, in January 2022, CAML announced the appointment of
Dr Mike Armitage to the Board as an Independent Non-Executive
Director. Mike brings a wealth of international technical
experience and will support management and be invaluable to the
Board, both in terms of our current operations and with our
business development activities. Mike's long career with SRK in
particular has seen him review, assist with due diligence, and help
to develop numerous mineral properties globally, therefore he has
the technical calibre that the CAML Nomination Committee believes
is crucial in overseeing a successful mining business for the long
term.
I am pleased to advise that Louise Wrathall, our Director of
Corporate Relations, has agreed to join the Board as an additional
Executive Director, responsible for corporate development, at the
conclusion of the forthcoming AGM on 26 May 2022. Louise has been a
key member of the senior management team since she joined CAML in
2015 and further enhances the skills of the Board, emphasising the
importance we place on investor relations, business development and
environmental, social and governance ('ESG').
Our Sustainability Committee has put much focus on advancing our
sustainability and climate change strategies this year and I am
grateful to Dr Gillian Davidson, who chairs that committee,
advising the senior management team ahead of presenting these
crucial aspects to the wider Board.
During the year, we hired a dedicated Group Internal Controls
and Risk Manager, who has brought a logical, practical and rigorous
approach to risk. Without effective risk management, we would be
unable to meet our strategic objectives and create value for our
stakeholders, and I am grateful to the Audit Committee for taking
overall responsibility for this crucial aspect of our business,
which affects each and every one of us on a daily basis.
ACKNOWLEDGEMENTS
I would like to thank the Board of Directors, our senior
management team and all of our employees for their dedication to
our business during 2021. Your efforts do not go unnoticed and we
very much appreciate your hard work. I would like to extend my
thanks to our stakeholders for their support as well.
CEO's statement
2021 FINANCIAL OVERVIEW
Sasa produced 22,167 tonnes of zinc in concentrate and 27,202
tonnes of lead in concentrate at a C1 zinc equivalent cash cost of
production of $0.63 per pound.
Our Kounrad operations continued to perform well, delivering
copper cathode output above production guidance at 14,041 tonnes.
Kounrad's 2021 C1 copper cash cost of production remained low by
global standards at $0.57 per pound.
Despite the persistent global challenges of COVID-19, commodity
prices performed well during 2021 and demand for copper, zinc and
lead improved materially versus 2020. This, combined with CAML's
base metal production, has led to us reporting record gross revenue
of $235.2 million and record EBITDA of $141.5 million at an EBITDA
margin of 60% for 2021.
We have continued to deleverage during 2021, with a $10 million
early debt repayment in addition to our regular monthly payments.
CAML ended 2021 in a net cash position of $22.7 million with cash
in the bank of $59.2 million (including restricted cash).
The Group generated 2021 free cash flow of $103.8 million,
enabling us to recommend a 12 pence per share final dividend. This
equates to a full-year dividend of 20 pence per share, which
represents 45% of 2021 free cash flow.
MARKET PERFORMANCE
During 2021, the CAML share price traded within a range of
GBP2.19 to GBP2.93, ending the year at GBP2.59, which represents an
8% increase on the 31 December 2020 price of GBP2.40. CAML
outperformed the FTSE AIM All Share/ Basic Resources Index, which
lost approximately 17% during 2021. Since the Company's IPO in
September 2010, CAML's share price has significantly outperformed
the FTSE AIM All Share/ Basic Resources Index, primarily due to
CAML's strong operational performance, low production costs and
attractive high dividend yield.
SUSTAINABILITY
We remain focused on safety and were therefore disappointed to
report four LTIs at Sasa during the year. We recorded zero LTIs at
Kounrad though, and therefore our 2021 total as a Group was four,
with a LTIFR of 1.69, a worsening of our performance since 2020 and
one which is reflected in Executive Director and senior management
compensation. Lessons have been learnt from the Sasa incidents and,
as ever, effective safety training and supervision for our
employees is a priority and is crucial to achieving an improving
safety record.
The strong financial performance we have reported underpins our
business and we place significant emphasis on ensuring that we are
sustainable for all stakeholders. To demonstrate our efforts and
achievements in this area, we will soon be publishing our third
Sustainability Report, our second to GRI standards ('core
option').
During 2021, we have developed a CAML Climate Change Strategy,
which focuses on five key objectives:
- Produce the metals which contribute positively to the energy transition
- Work towards decarbonisation
- Ensure we are operationally resilient
- Focus on our strategic and business resilience
- Deliver clear and transparent climate-related disclosures
Also during the year, we undertook risk analysis work focusing
on our physical risks at both of our operations, as well as any
likely transition risks which could affect our business, and we
have adjusted our internal financial modelling so that we can now
apply a shadow carbon price. We were pleased to be able to report
at the time of our interim results in September 2021 our agreement
with EVN to purchase solely renewable power for our Sasa
operations, thereby enabling us to commit to a Group GHG emission
reduction from this activity alone of approximately 35%. In
December 2021, our Board agreed to the construction of a solar
power plant at Kounrad. These two key developments, in combination
with some additional smaller initiatives, have led us to commit to
a Group Scope 1 and Scope 2 GHG emission reduction target of 50%
versus 2020 by 2030. We will also aim to be net-zero by 2050.
Having also firmed up our governance of climate change, we are
pleased to be able to begin reporting towards TCFD within our 2021
Annual Report and Sustainability Report.
In terms of our longstanding focus on the communities around our
operations, we have completed during H1 2021 to the satisfaction of
our local and national stakeholders the River Remediation Project
and we were delighted to be able to develop for the local community
the Youth Park along the banks of the affected river in our local
town, Makedonska Kamenica.
This outdoor area comprises trails and walkways along the river
with trees, flower beds and a gazebo, as well as children's play
areas, and we have been pleased to see this area being enjoyed by
so many in the community close to Sasa. During 2021, we spent a
total of $0.5 million at Sasa and Kounrad, supporting the local
communities and our host countries nationally as we played our part
in helping to mitigate the negative health impacts of the COVID-19
pandemic as well as other sustainable development projects that
have been identified.
Supporting our local communities in general is a vital aspect of
what we do in the areas close to the operations and, as a result,
we enjoy good relations with our neighbours and we believe we have
brought some real, positive change. We established the Kounrad
Foundation for charitable donations in 2018 and, in 2021, we
established a similar foundation for Sasa.
SASA
We encountered some difficult ground conditions at Sasa during
2021 and this, coupled with our enhanced approach to underground
safety risks, resulted in our zinc and lead production being
marginally below production guidance for 2021. However, we are
confident that our transition to the cut and fill mining method is
the optimal choice that will largely alleviate these issues for the
long term. We have made solid progress in this regard during 2021
as we began to construct the new Central Decline and have developed
over 500 metres from both surface and underground during the year.
We have also procured various key pieces of equipment for the paste
backfill plant and we have advanced our design work for the dry
stack tailings plant and landform.
KOUNRAD
During the year at Kounrad, leaching operations performed well,
as did the SX-EW processing facilities which achieved availability
of over 99%. We continued to develop more of the Western Dumps for
future leaching operations, while focusing on maximising copper
extraction in the Eastern Dumps. While capital expenditure remained
low at $2.8 million, it was $1.0 million higher than that spent in
2020 because the team invested in the intermediate leach solution
('ILS') infrastructure that should ensure maximum copper recoveries
for the medium term.
OUTLOOK
The CAML Board and management team are closely monitoring the
political situation in Kazakhstan, following the unrest in January
2022, as well as the situation in Ukraine. Our operations have
remained unaffected and, most importantly, our employees are safe
and well.
Notwithstanding this uncertainty, the outlook for 2022 is
positive, with a strong base metal price environment, improving
zinc treatment charges and solid demand for the metals we
produce.
Our production guidance for Sasa is 790,000 to 810,000 tonnes of
ore, which should lead to between 20,000 and 22,000 tonnes of zinc
in concentrate and between 27,000 and 29,000 tonnes of lead in
concentrate. At Kounrad, we expect to produce between 12,500 and
13,500 tonnes of copper.
Our focus at Sasa during 2022 will be progressing the Cut and
Fill Project, which will see us extract the maximum resources in a
safer, more sustainable and efficient manner. The project comprises
the development of the new Central Decline, as well as construction
of a paste backfill plant and associated reticulation pipework, and
a dry stack tailings plant and associated landform. From a
permitting perspective, the paste backfill and dry stack tailings
aspects of the Cut and Fill Project are effectively viewed in North
Macedonia as an overarching yet much improved tailings storage
solution for the long term.
While the overall approach is welcome in-country, CAML is the
first company in North Macedonia to propose the use of paste
backfill and dry stack tailings technology. Consequently, there is
no precedent in the country regarding best practice, which has
resulted in the Ministry of the Environment and Physical Planning
('MoEPP') requesting additional information to support our future
tailings disposal plans. This has led to a short-term delay in the
permitting process and we now expect the paste backfill plant to be
constructed and commissioned during H1 2023, and the dry stack
tailings component to be completed during H2 2023. CAML expects
that this timing adjustment will have minimal impact on 2023
production levels.
We expect 2022 capital expenditure of between $28 million and
$30 million, of which between $11 million and $13 million is
expected to be committed to sustaining capex. CAML expects
additional Cut and Fill Project capital expenditure in the order of
$10 million in 2023. This will be largely related to construction
of the dry stack tailings landform as well as capitalised decline
development, plus costs associated with increasing the processing
plant throughput capacity to 900,000 tonnes per year.
By September 2022, we expect to have repaid our corporate debt
facility, and therefore all of the debt associated with our $402.5
million Sasa acquisition in late 2017. Sasa has already generated
EBITDA of $245.1 million under our ownership and we look forward to
a long mine life continuing to generate significant value from this
asset until at least 2037. We are in a strong position from which
to grow again through acquisition and our business development
activities continue in this regard.
While COVID-19 continues to be a feature of our lives, we have
gained confidence over the last two years in the measures we have
put in place to try to manage, as best we can, infection rates on
our sites and we continue to hope for an improving global situation
as vaccination rates continue to grow. CAML has not accessed any
financial support throughout the pandemic from any government and
has not furloughed any employees.
Sustainability review
OVERVIEW
At CAML, sustainability means protecting the longevity of our
operations and working towards an enduring net positive outcome
after the end of life of our assets by upholding strong ethical
practices throughout the Company and our supply chain, prioritising
the safety, health and development of our people, conducting
business in an environmentally responsible manner and positively
contributing to our communities and countries of operation.
To achieve this, a focus on safety and sustainability is one of
our three strategic pillars, incorporated into our day-to-day
operations, led from the top by CAML's Board and a priority in
everything that we do. We have specific, robust and effective risk
management systems, with sustainability related risks and
opportunities fully integrated, to enable the Company to meet its
strategic objectives.
In our second year of reporting in line with GRI, we have worked
to improve disclosure and provide a comprehensive overview of our
sustainability approach in our Sustainability Report. By aligning
our business activities to the Sustainable Development Goals
('SDGs'), we aim to make a meaningful contribution to global
challenges. We have included SDG 7 and 13 in our target goals in
2021, as a result of our new Climate Change Strategy.
DELIVERING VALUE THROUGH STEWARDSHIP
CAML has a strong framework to promote ethical behaviour and
good corporate governance within our business and supply chain and
sets high standards that are crucial for the effective running and
sustainability of our operations.
We believe that a robust approach to human rights is vital to
fulfilling our corporate responsibilities, not only in respect of
our employees but for the workers along our supply chains and
within our communities. This is underpinned by our formal Human
Rights Policy, which covers internationally recognised rights.
Our procurement strategies at both sites aim to provide a level
playing field for suppliers, insisting on good governance,
compliance with local laws, respect for human rights, safety and
due care for the environment. We aim to work closely with our
suppliers to ensure we are part of a responsible value chain and
developed a social assessment process in 2021.
MAINTAINING HEALTH AND SAFETY
Safety is our most material issue and is at the heart of
everything we do. Our goal of achieving zero harm in the workplace
is laid out in the Company's Sustainability Policy and we have a
clear safety improvement target of achieving a 15% decrease in the
LTIFR over a five-year period. We recently hired a Group Health and
Safety Manager to further develop and implement a fully integrated
sustainable safety culture and train our local health and safety
teams to the highest standards.
Wherever possible, we look to eliminate occupational health
risks brought about by our operations. The challenges encountered
as a result of COVID-19 have served to highlight the importance of
maintaining a robust strategy to protect the health and contribute
towards the wellbeing of all our employees. We acted quickly at the
start of the pandemic to implement health protection measures and
48% of our workforce at Sasa and 99% at Kounrad have received one
or more COVID-19 vaccinations. Whilst vaccine hesitancy is an issue
in North Macedonia, we have initiatives aimed at addressing
this.
FOCUSING ON OUR PEOPLE
A motivated, dedicated and skilled workforce, underpinned by our
strong workplace culture and values, is a key enabler of our
success, and we are committed to attracting and retaining the best
people. We aim to ensure we have the succession plans and training
programmes in place to develop our leaders of tomorrow. In 2021,
our 1,052 employees received an average 36 hours of training.
CAML recognises the importance of diversity, specifically when
considering the breadth of thought, approach and opinion fostered
by a diverse group. We also have several initiatives to ensure that
CAML's workplaces are attractive and suitable for all.
We prioritise local hiring as one of the primary ways of
contributing to the economic security of our communities and want
to ensure that our workers are well remunerated. All Kounrad
employees are covered by a collective bargaining agreement.
Negotiations regarding a three-year agreement at Sasa commenced in
Q4 2021, with the intention to implement during 2022. 100% of our
Kounrad employees are Kazakh, and only 1% of our employees at Sasa
are expatriates.
CARING FOR THE ENVIRONMENT
We take our environmental responsibilities seriously and ensure
that we comply with the laws and regulations of the countries of
operation. We recognise the growing importance of understanding the
impact of climate change on the environment in which we operate and
its potential impact on the business. In 2021, we developed a
Climate Change Strategy, with a goal of achieving a 50% reduction
in Group GHG emissions by 2030 and net zero by 2050 and we are
beginning to report towards TCFD, with information detailed in the
2021 Sustainability Report. We have implemented or are planning
several decarbonisation initiatives, which include a renewable
power purchase agreement at Sasa and the construction of a solar
power plant at Kounrad.
We are mindful of our duty to ensure responsible waste
management and minimisation. We believe that our activities in
Kazakhstan have generally had a positive impact on the environment
by eliminating historical pollution from copper-rich solutions
leaching prior to the Company's ownership of Kounrad. We are firmly
committed to the environmental and socially responsible disposal of
tailings at Sasa. Our Cut and Fill Project that is currently in the
implementation phase will involve the more environmentally friendly
management of our tailings, incorporating storage as paste in our
underground voids as well as dry stack tailings. The water we are
able to remove from the dry stack tailings process should ensure a
75% reduction in Sasa's surface water abstraction from 2026
onwards.
UNLOCKING VALUE FOR OUR COMMUNITIES
We aim to provide real benefits to our local communities and
host countries by delivering philanthropic support, fostering
sustainable development, facilitating socio-economic progress and
helping the youth and most vulnerable members of the community in
line with our human rights commitments.
Both operations have community development programmes in place,
with foundation charities used as vehicles for targeted social
donations. At least 0.25% of the respective site's revenue is
committed for social development projects. Given the specialised
nature of our work, we are focused on providing the next generation
of experts in our local communities with the required skills, aided
by our Sasa training centre in North Macedonia.
Operations review
Sasa
SASA PRODUCTION AND SALES
In 2021, Sasa mined 818,609 tonnes of ore and processed 830,709
tonnes of ore. The average head grades for the year were 3.14% zinc
and 3.52% lead and the average 2021 metallurgical recoveries were
84.9% for zinc and 93.1% for lead.
Sasa produces a zinc concentrate and a separate lead
concentrate. Total production for 2021 was 44,383 tonnes of zinc
concentrate at an average grade of 49.9% and 37,893 tonnes of lead
concentrate at an average grade of 71.8%.
Units 2021 2020 2019
Ore mined t 818,609 826,421 817,714
--------- -------- -------- --------
Plant feed t 830,709 820,215 820,491
--------- -------- -------- --------
Zinc grade % 3.14 3.37 3.29
--------- -------- -------- --------
Zinc recovery % 84.9 86.1 86.5
--------- -------- -------- --------
Lead grade % 3.52 3.85 3.77
--------- -------- -------- --------
Lead recovery % 93.1 94.3 94.5
--------- -------- -------- --------
Zinc concentrate t (dry) 44,383 47,583 47,104
--------- -------- -------- --------
Grade % 49.9 50.0 49.6
--------- -------- -------- --------
Contained
zinc t 22,167 23,815 23,369
--------- -------- -------- --------
Lead concentrate t (dry) 37,893 41,289 40,366
--------- -------- -------- --------
Grade % 71.8 72.0 72.3
--------- -------- -------- --------
Contained
lead t 27,202 29,742 29,201
--------- -------- -------- --------
Sasa typically receives from smelters approximately 84% of the
value of its zinc in concentrate and approximately 95% of the value
of its lead in concentrate. Accordingly, total 2021 payable
production was 18,616 tonnes of zinc and 25,842 tonnes of lead.
Payable base metal in concentrate sales from Sasa in 2021 were
18,586 tonnes of zinc and 25,245 tonnes of lead. CAML's 2021
Operations Update, released on 11 January 2022, stated 2021 lead
sales of 25,877 tonnes. The restated figure reflects the final lead
concentrate shipment of the year that was delayed until January
2022, and therefore revenue from those metal sales will instead be
reflected in the 2022 financial year. During 2021, Sasa sold
323,849 ounces of payable silver to Osisko Gold Royalties, in
accordance with its streaming agreement.
HEALTH AND SAFETY
During 2021, there were four LTIs at Sasa and no MTIs, therefore
a total of four TRIs for the operation. COVID-19 remains a risk to
the welfare of CAML employees and contractors and there have been
cases of the virus at Sasa during the year. Despite this, and
despite a relatively low vaccination take-up rate, the Company is
confident that its COVID-19 procedures at both operations will be
sufficient to protect the welfare of its employees, meet respective
government guidance and maintain production going forwards.
MINING
A total of 818,609 tonnes of ore were mined using the sublevel
caving method during the year from the 990m and 910m working areas.
This was 1% lower than 2020 predominantly due to 385 metres of
unplanned rehabilitation works and localised poor ground
conditions. The ore from the underground operations is hoisted via
the Golema Reka shaft to surface (c.70%) and the remainder is
trucked to surface via the existing XIVb decline using a fleet of
20 tonne Epiroc trucks.
The average combined grade of the ore mined was 6.66% zinc and
lead, approximately 5% below the planned grade due to challenging
ground conditions coupled with an enhanced approach to underground
safety risk. This resulted in short term reductions in flexibility
of working areas and increased dilution, which led to reduced zinc
and lead head grades versus expected metal content.
Total ore development in the two working areas totalled 2,683
metres, which was 8% above budget and involved accessing additional
sub levels below the 910m level during Q4 2021. Waste development
for the year totalled 2,165 metres for approximately 74,000 tonnes
of waste, generated from internal ramp access and crosscuts to the
ore body, raise development and the development of the Central
Decline. During the year five new Epiroc units were purchased (one
twin boom jumbo drilling machine for the Central Decline
development, one 20 tonne truck, two seven tonne loaders and a new
Daimec diamond drilling machine) reducing the average age of the
Epiroc underground fleet of equipment from seven years to just over
five years. In addition to the Epiroc equipment, a Putzmiester
shotcrete unit and mixer were purchased to enable fully mechanised
placement of shotcrete, replacing the handheld units previously
used underground.
Preparation underground for the transition to cut and fill
mining began during the year with the relocation of existing
services in the existing XIVb decline (c.1.2 kilometres) to
accommodate the new paste fill services.
PROCESSING
Sasa processed 830,709 tonnes of ore during the year, an
increase of 1.2% versus 2020, and the plant had an overall
availability of 93%. Major maintenance works were completed during
the year, including replacement and rebuilding of the primary
crusher and improvements made to both ball and rod mills as well as
the SMD zinc regrind mill. Works were also undertaken on one of the
spiral classifiers and the filter presses. In addition, the Sasa
analytical laboratory was totally refurbished during the year, both
externally and internally.
TSF4 ran smoothly during the year, and the team was reinforced
with an additional two engineers and a dedicated TSF Manager. 24
hour per day surveillance of the facility was maintained throughout
the year and an independent audit of the facilities was completed
by Knight Piesold. An additional one kilometre tailings pulp line
from TSF3.1 to TSF4 was installed during the year.
DRILLING
A total of 4,818 metres of exploitation drilling was completed
during the year on the two working levels 910m and 990m to provide
additional information on the grade/thickness of the three
orebodies on the sub levels.
A total of 4,883 metres of exploration drilling was completed
below the 830m level to improve the confidence levels of the
mineralisation at depth with the objective of converting inferred
mineral resources to indicated resources. There was no exploration
drilling completed at Kozja Reka or Golema Reka during the
year.
The exploration programme during the year was adversely affected
by COVID-19 due to restrictions on external contractors on site.
The drill rig was instead used to provide data for hydrogeological
studies that were completed by consultants, SRK Consulting (UK)
Ltd, as part of Sasa's Environmental and Social Impact Assessment
('ESIA') work that was undertaken during 2021.
A comprehensive dewatering programme was also completed during
the year with over 500 metres of drainage holes drilled.
2022 PRODUCTION GUIDANCE
Prior to the transition to cut and fill mining at Sasa, which
will create a safer and sustainable underground mining operation
for the long term, CAML cautiously allows for continued ground
support challenges in its 2022 guidance and will maintain its
enhanced approach to underground safety risks. The Company
therefore targets ore mined of between 790,000 and 810,000
tonnes.
This should result in zinc in concentrate production of between
20,000 and 22,000 tonnes and lead in concentrate production of
between 27,000 and 29,000 tonnes. The Sasa team is also working on
the development of an increased number of sub-levels to enhance
flexibility. This will enable a greater number of potential working
faces in the event of further support being required in some
areas.
CUT AND FILL PROJECT
In 2020, the Board agreed to transition the Svinja Reka
operations at Sasa from the current sub-level caving mining method
to cut and fill stoping. The cut and fill mining method involves
filling mined voids with a backfill paste material containing
tailings to provide support, rather than allowing the roof to cave
as is the case with the current sub-level caving method. To achieve
this, a backfill plant will be constructed, along with associated
reticulation pipework to transport this material underground.
Given that a major component of the backfill material will be
tailings generated from the Sasa processing plant, it is estimated
that approximately 70% of Sasa's life of mine tailings will be
stored either underground in the form of paste, or in a dry stack
tailings facility that will be developed as part of the
project.
The Cut and Fill Project also includes development of a new
decline to facilitate swifter access to the orebody. In 2021, a
dedicated capital projects team was formed consisting of four
engineers and two administrative employees who are led by CAML's
Group Metallurgist. The team is further supported by Sasa's civil
engineering, permitting and administrative teams together with
external local and international designers and consultants.
In H1 2022, Sasa plans to recruit an additional four engineers
to join the capital projects team, which will include a
construction and health and safety manager representing the
construction management contractor. Progress has been made in all
aspects of the Cut and Fill Project with $8.3 million expenditure
incurred on the project during 2021. Of this amount $5.9 million
has been capitalised and $2.4 million recognised in non-current
receivables (note 23). Permitting processes for the various work
streams are also underway.
Central Decline
Construction of the Central Decline is underway. This decline
will be larger than the existing decline access to the mine and
will provide increased ventilation, easier access for reticulation
infrastructure and the potential to increase ore mined in the
medium term. The profile of the decline has been increased to
facilitate the potential future use of the slightly larger
underground electric vehicles, and an analysis of diesel versus
electric vehicles is currently underway.
Development of the portal on surface began in August 2021 and,
by the end of the year, 71 metres had been developed from surface
and a total of 432 metres were developed from underground on the
910m level. The total length of this decline will be approximately
four kilometres and construction will be undertaken in three stages
during the next four years.
Paste Backfill Plant
The site location for the paste backfill plant has been
confirmed, the equipment lay down area established, and the new
site offices have arrived at Sasa. Process engineering design has
been completed and all major components for the plant have been
ordered, including the civils and structural steels, thickener and
flocculant plant, the continuous mixer, various pumps including the
paste pump and in excess of eight kilometres of pipes for the
underground reticulation. In Q4 2021, the Metso-Outotec flocculent
and thickener plant was delivered to site.
A further milestone was the completion of the civil and
structural design of the paste backfill plant building with a local
company being awarded the construction contract. Detailed design of
the electrical and process control systems (supported by Paterson
and Cooke and Rockwell Automation) is ongoing and associated orders
are scheduled to begin in Q1 2022.
Construction and commissioning of the paste backfill plant is
expected to be undertaken during H1 2023.
Dry Stack Tailings
The dry stack tailings project comprises two separate aspects -
design and construction of the landform on which to stack the dry
tailings, and design and construction of the dry stack tailings
filter plant.
The design of the dry stack tailings filter plant is scheduled
to be completed in Q1 2022. The key component of the plant is the
press filter, and this has been procured from Metso-Outotec
alongside peripheral items such as pumps and holding tanks.
Construction of the filter plant will start immediately following
completion of the paste backfill plant and will take approximately
four months to complete. The design of the dry stack storage
landform by consultants, Knight Piésold, is on target to be
completed in Q1 2022. Ground works will then be undertaken in
preparation of receiving dry, filtered tailings in H2 2023.
Kounrad
2021 CATHODE PRODUCTION
During the year, the SX-EW plant produced 14,041 tonnes of
copper cathode, a slight increase from the previous year of 13,855
tonnes. Total Kounrad copper production since operations commenced
in April 2012 is now 124,141 tonnes, averaging over 1,070 tonnes
per month since start-up.
During 2021, copper was leached from the Eastern and Western
Dumps, with both areas performing well. Winter leaching of the
Eastern Dumps was suspended in early December 2020 and was
restarted in April 2021 and, over the winter period, copper
production was generated solely from the Western Dumps. This trial
resulted in an increase in solution viscosity, which had a negative
impact on organic reagent consumption. Additional tracking measures
have since been implemented whilst operating two leaching blocks on
the Eastern Dumps during the winter period of 2021/2022, and all
operational parameters are being closely monitored.
HEALTH AND SAFETY
There were no LTIs, or MTIs at Kounrad during 2021, meaning that
there were no TRIs. There have now been 1,324 days since the last
LTI at Kounrad. COVID-19 remains a risk to the welfare of CAML
employees and contractors and there have been cases of the virus at
Kounrad during 2021, despite a 99% vaccination rate. That said, the
Company is confident that its COVID-19 procedures at both
operations will be sufficient to protect the welfare of its
employees, meet respective government guidance and maintain
production.
LEACHING OPERATIONS
Both the Eastern and Western Dumps were simultaneously leached
during 2021, with the production split being 15% and 85%
respectively.
In the Eastern Dumps, the team focused on irrigating previously
leached blocks in order to maximise the recovery of copper. This
technique was implemented on various blocks that had been allowed
to rest for periods of, in some cases, almost two years. During
this rest period, bacterial and chemical activity continued to
solubilise copper mineralisation. In addition, with the purchase of
a new bulldozer, the summer period was spent pushing and levelling
side walls along Dump 7. This new area of exposed material will be
leached during 2022. Adopting these approaches resulted in the
typical pregnant leach solution ('PLS') grade pick-up averaging
about 0.7 grammes per litre ('gpl'). This was better than
anticipated and resulted in extracted copper of 2,116 tonnes from
this area during eight months of leaching. This takes the total
quantity of copper recovered from this resource area, since
operations commenced, to 79,847 tonnes or c.99.8% of that initially
forecast at the time of the CAML Initial Public Offering ('IPO') in
2010. The daily average area under irrigation at the Eastern Dumps
during the year was 27.7 hectares.
This approach of leaching and rotating around all the old,
rested blocks will be undertaken during 2022 for the full year,
with anticipated pick-up grades being in the region of
0.6-0.7gpl.
At the end of December 2021, an earth moving contract was
awarded to relocate approximately 180,000 cubic metres of material,
containing approximately 2,000 tonnes of copper, which was
effectively sterilised as it was located too close to the Kazakhmys
railway line. A cut-back leaving a 30 metre distance to the railway
line from the dump toe will be developed, through which a lined
trench extension of 950 metres will be installed. The excavated
material, which is currently unleached, will be placed on top of
Block 2 of Dump 9-10 and this work will allow access to previously
unreachable materials in Block 12 of Dump 5 and also Dump 3. All
relocation and installation works should be completed before the
end of 2022, at a total cost of around $0.5 million, and leaching
of this material is scheduled for 2023.
At the Western Dumps, the focus of irrigation remained on parts
of Dumps 16, 22 and 1A, with two cells accessed at Dump 21 from
June. During 2021, 11,924 tonnes of copper were recovered from
these areas, contributing approximately 85% of the total Kounrad
copper production. This Western Dump tonnage was the highest
achieved since leaching commenced in 2017 and was positively
impacted by higher than forecast PLS grades returning from the area
of Dump 21. The average daily area under irrigation on the Western
Dumps increased to 37.5 hectares (33 hectares in 2020) of both new
and previously leached material. The volume of raffinate pumped
around the site averaged 1,211 cubic metres per hour ('m(3) /hr').
This was lower than the 1,338 m(3) /hr pumped in 2020 due to the
Eastern Dumps not being leached in winter. During the summer
period, a proportion of the off-flow solutions from the Eastern
Dumps were recycled across to the Western Dumps with the aim of
maintaining broadly stable PLS grades to the solvent extraction
('SX') plant. This technique operated successfully and will be
continued in 2022, as and when appropriate.
Given the planned switch to almost all leaching from the Western
Dumps by 2024-2025, engineering studies have been finalised to
implement a split irrigation and solution collection system to
allow the operation of an Intermediate Leach System ('ILS'), which
should result in an increase in the copper grade of the PLS
generated at the Western Dumps. During 2021 as part of Phase 1 of
the project, a 14 kilometre water delivery pipeline was fully
installed, together with the east to west transfer pumps and,
during late Autumn, was wet commissioned to confirm the design
flow-rate of 180-200 cubic metres per hour ('m(3) /hr'). During
2022, the second phase will be completed in readiness for
operations from Spring 2023 onwards, as and when required. This
involves the construction of various collection ponds and the
installation of the top of dump distribution and irrigation
system.
Application rates of solution to the dumps were maintained at a
slightly reduced level of 2.12 litres per square metre per hour
('l/m(2) /hr') throughout the year. Direct field experience has
confirmed that materials in Dump 1A require a lower application
rate of approximately 1.5l/m(2) /hr to achieve optimum solution
penetration.
Utilising a second dedicated bulldozer for the Western Dumps,
significant levelling and shaping earthworks were undertaken during
2021 preparing future blocks for irrigation. Additionally, certain
changes were made to the irrigation systems used on winter blocks
in order to better maintain operational availability. These include
the replacement of all line control valves in October 2021,
solution temperature monitoring probes and also the installation of
duplicate, unconnected, dripper lines beneath the HDPE covers which
can be quickly connected to the header pipes in the event of
unexpected freezing.
SX-EW PLANT
The SX-EW plant continued to operate efficiently during 2021 and
the overall operational availability throughout the year was 99.4%.
This was 0.1% below that of 2020, due to a number of storm events
negatively affecting the regional incoming power supplies.
With the average Western Dumps copper grade of around 0.1%, the
average PLS grade for the year was 2.36gpl, somewhat higher than
2020 and mainly due to the positive returns from Dump 21. Solution
flow rates averaged 988m(3) /hr, with summer rates increasing to
1,200m(3) /hr. During the year each of the four Extract settler
units was taken off-line to facilitate inspection and any necessary
repairs and, after 10 years of operations, their condition was
found to be excellent.
While the increased levels of iron in the Western Dumps
generally has a positive impact on leaching, this also typically
results in a reduction in the current efficiency of the plating
process. The average for 2022 was 11gpl of iron, compared to under
9gpl in 2020, resulting in power consumed per tonne of copper
plated increasing by 3% to 4,183 kWh per tonne.
At the start of Q2 2021, 616 anodes were renewed in the EW1
building, with a further 400 pieces being renewed in Q3 2021. The
installation of these new anodes assisted in minimising the
increase in unit plated power consumption. An extra 960 anodes were
ordered in Q4 2021 for arrival and installation in EW2 in mid-2022.
Following receipt and installation of these anodes, no further
anode replacement programmes are expected until 2024.
The focus for the operations team has been on continued safe,
efficient plant operations and the tight control of all operating
costs. During Q3 2021, certain plant management / supervisory and
shift operating regimes were modified to enhance overall control
and productivity, which have all been implemented very
successfully.
COPPER SALES
Throughout the year, the quality of CAML's copper cathode
product has once again been maintained at high levels both
chemically and visually and there have been no negative quality
claims. Regular in-house and independent metallurgical analyses
have consistently reported 2021 copper purity of around 99.998%.
The Company continues to sell the majority of copper production
through its off-take arrangements with Traxys, the terms of which
are fixed until December 2022.
2022 PRODUCTION GUIDANCE
The 2022 guidance for Kounrad's copper cathode production
remains between 12,500 and 13,500 tonnes.
Financial review
SUMMARY
2021 was a record year for the Group, with EBITDA of $141.5
million which reflects strong prices of our metals amid
accelerating demand and a shortfall in supply. This result was
achieved despite global inflationary pressures resulting in some
cost increases. CAML is now in a net cash position for the first
reporting period since the acquisition of Sasa, and the Group
continues to reward shareholders with strong dividends as well as
looking after its other stakeholders.
2021 MARKET OVERVIEW
Kazakhstan
According to the National Bank of Kazakhstan, where CAML
produces its copper, Kazakhstan's 2021 GDP expanded by 4%, and
official inflation was 8.4%.
Copper
2021 was a strong year for copper, despite ongoing concerns
about COVID-19, rising inflation, logistic issues and troubles in
the Chinese property market. During 2021, refined copper was
strongly supported by demand from end-users and restocking has been
particularly strong as a result of vaccination rollouts, pent-up
consumer demand, fiscal stimulus packages and a general low
interest rate environment. During the year the increase in supply
of refined copper production of 3.2% has lagged demand increase of
4.4%.
The International Copper Study Group ('ICSG') indicated a 2021
global refined copper deficit of 340,000 tonnes.
North Macedonia
According to the National Bank of North Macedonia, North
Macedonia's 2021 GDP is expected to have expanded by 4.0%, with
inflation of 3.2%.
Zinc
The zinc market rebounded well in 2021, due to a 0.6% increase
in global growth in supply and a 5.8% increase in demand for zinc
metal. These figures reflect the global recovery from 2020 which
was severely affected by the initial spread of the COVID-19
pandemic.
Mine production recovered sharply by 4.5% after significant
interruptions during the previous year and, while zinc concentrate
production also increased, freight delays and strong smelter demand
resulted in falling treatment charges from $300/dmt to $160/dmt
year on year. Demand was also much improved, as evidenced by a rise
in the LME metal price from c.$2,700 to c.$3,500 per tonne during
the year and a decrease in LME metal stocks.
According to the International Lead and Zinc Study Group
('ILZSG'), there was an overall 2021 deficit of 192,000 tonnes. Two
European smelters (Porto Vesme Italy and Auby in Belgium) announced
closures towards the end of 2021 which will tighten the metal
market in 2022. The market in this current year could also be
affected by the significant delays experienced in seaborne
deliveries, which represent approximately 50% of all zinc
concentrate movements.
Lead
The lead market remains healthy with a modest 2021 surplus of
46,000 tonnes expected by the ILZSG. Demand continues to grow
despite the push to reduce dependence on lead-acid batteries. It is
deemed unlikely that lead demand will see any dramatic falls in the
coming years as EV's will continue to be a strong source of
demand.
Consumption of lead metal in 2021 rebounded by 4.3% from 2020
and, as a consequence, the market for lead concentrates remained
tight during 2021. Stocks of both lead metal and lead concentrates
were relatively low throughout the year despite mine production
increasing by 3.8%. Like zinc, supply of seaborne lead concentrates
was also affected by the tightness in the freight market. The lead
metal prices moved up from c.$2,000 to c.$2,300 per tonne during
the year and concentrate treatment charges fell year-on-year.
PERFORMANCE OVERVIEW
CAML's 2021 gross revenue was the highest recorded to date, up
significantly by 38% to $235.2 million (2020: $170.3 million).
Uncertainty caused by the COVID-19 pandemic was alleviated and
market conditions moved favourably during the year and the prices
of copper, zinc and lead reflected the increasing global demand for
these metals.
The Group also generated record 2021 EBITDA of $141.5 million
(2020: $95.7 million), and its EBITDA margin also improved
significantly to 60% (2020: 56%) which, despite the global
inflationary pressures, reflects the Group's ability to maintain
low costs across the operations.
Earnings per share ('EPS') from continuing operations was 47.69
cents (2020: 24.78 cents), 92% higher than the previous year.
Against such a backdrop, CAML generated strong free cash flow of
$103.8 million (2020: $58.9 million), allowing the Board to propose
a record dividend within policy. The Group has accelerated its
deleveraging, having repaid corporate debt of $48.4 million during
the year (2020: $38.4 million) which included an additional $10
million early repayment. As at 31 December 2021, drawn overdraft
facilities totalled $9.6 million (2020: $9.7 million) resulting in
net cash of $22.7 million (2020: net debt of $36.2 million).
Sasa's 2021 EBITDA was $57.5 million (2020: $42.3 million), with
a margin of 56% (2020: 51%). Whilst sales volumes for both zinc and
lead were lower during 2021 due to reduced head grades, zinc and
lead prices increased significantly during the year and treatment
charges reduced from April 2021 onwards. Sasa's EBITDA also
reflects an unfavourable movement in the North Macedonian Denar
exchange rate to the US Dollar of 4%, as well as higher energy
prices and salaries. Kounrad's 2021 EBITDA was $106.0 million
(2020: $65.5 million), with a margin of 80% (2020: 75%). The EBITDA
increased year on year due to the improved average copper price
received coupled with consistent copper sales.
Kounrad's EBITDA reflects an increase in costs due to higher
usage of reagents, as well as rising electricity prices and
salaries.
INCOME STATEMENT
Group profit before tax from continuing operations increased by
83% to $109.3 million (2020: $59.8 million). This was primarily as
a result of the aforementioned reasons, with higher revenue due to
significantly improved commodity prices. There were also reduced
finance costs of $3.9 million (2020: $6.7 million) due to the
significant reduction of debt during the year and the reduced LIBOR
rates. The 2021 economic recovery has resulted in global inflation
that has adversely affected several key costs such as energy and
reagents, as well as salaries, which have increased our Group cost
base.
Revenue
CAML generated 2021 gross revenue of $235.2 million (2020:
$170.3 million), which is reported after deduction of treatment
charges, but before deductions of offtake buyer's fees and silver
purchases for the silver stream. Net revenue after these deductions
was $223.4 million (2020: $160.1 million).
Sasa
Overall, Sasa generated 2021 gross revenue of $103.1 million
(2020: $82.7 million). A total of 18,586 tonnes (2020: 19,930
tonnes) of payable zinc in concentrate and 25,245 tonnes (2020:
28,218 tonnes) of payable lead in concentrate were sold during
2021. The payable lead in concentrate sales is lower than that
disclosed in the CAML 2021 Operations update as the final lead
concentrate shipment of the year was delayed until January 2022
and, under the Free on Board ('FOB') terms, this revenue will be
recognised in the 2022 financial year.
The challenging ground conditions at Sasa coupled with an
enhanced approach to underground safety risks resulted in short
term reductions in flexibility of working areas at the mine,
leading to a reduction in ore mined year on year and increased
dilution which led to reduced zinc and lead head grades. Lower
production led to a reduction in payable concentrate sold at Sasa.
The zinc price achieved was 35% higher than that achieved in 2020
and the lead price achieved was 23% higher than that achieved in
2020.
Treatment charges were lower during the year at $18.8 million
(2020: $22.2 million) as a result of improved negotiated terms from
April 2021 onwards for both zinc and lead and reduced volumes of
deliveries. Treatment charges are expected to further reduce from
April 2022 onwards as more favourable terms have recently been
agreed. During 2021, the offtake buyer's fee for Sasa was $1.2
million (2020: $0.9 million).
Zinc and lead concentrate sales agreements have been extended
with Traxys through to 31 March 2023 for 100% of Sasa production to
align this with the tenor of the smelter contracts. Three new
smelters were identified in 2021 to further diversify CAML's
customer base and 3,309 dry tonnes of payable lead and zinc in
concentrate were sold to them during 2021. Group selling and
distribution costs decreased to $2.1 million (2020: $2.6 million)
as the prior period included international shipping costs to
Asia.
Sasa has an existing silver streaming agreement with Osisko Gold
Royalties whereby Sasa receives approximately $6 per ounce for its
silver production for the life of the mine.
Kounrad
A total of 13,983 tonnes (2020: 13,763 tonnes) of copper cathode
from Kounrad were sold as part of the Company's offtake arrangement
with Traxys which has been extended through to end of December
2022. The commitment is for a minimum of 95% of Kounrad's annual
production. A further 68 tonnes (2020: 97 tonnes) were sold
locally, a reduction from the prior year due to weaker local demand
as a result of COVID-19. Total Kounrad copper sales were 14,051
tonnes (2020: 13,860 tonnes).
Gross revenue increased due to the higher average copper price
received, which was $9,384 per tonne in 2021 (2020: $6,267 per
tonne), while sales volumes remained consistent. This generated
gross revenue for Kounrad of $132.0 million (2020: $87.7 million).
During 2021, the offtaker's fee for Kounrad was $2.6 million (2020:
$2.5 million).
2021 hedging
Given the increased capital expenditure to deliver the Sasa Cut
and Fill Project, the Group entered into commodity price hedge
contracts for a portion of its 2021 metal production. These
arrangements ensured that CAML retained its exposure to strong
copper, zinc and lead prices, while protecting a meaningful
proportion of revenues during the higher capex period and
continuing to rapidly deleverage. A Zero Cost Collar contract for
30% of copper production, which included a put option of $6,900 per
tonne and a call option of $8,380 per tonne, was put in place for
Kounrad. Also, two swap contracts were put in place for 30% of
Sasa's payable zinc production to be sold at $2,804 per tonne and
30% of its payable lead production to be sold at $2,022 per tonne.
As a result of these financial instruments, the Company recognised
$6.7 million (2020: nil) of realised losses during the year. These
financial instruments have expired at the end of the year and so
their year-end fair value was calculated as zero. The Group has not
put in place any further hedge contracts for 2022.
Cost of sales
Group cost of sales for the year was $80.5 million (2020: $72.0
million) and this includes depreciation and amortisation charges of
$28.9 million (2020: $28.6 million). The year on year increase of
12% includes greater Group royalty costs of $2.6 million linked to
the higher realised prices for all commodities. Global
macro-economic conditions led to an increase in key production cost
components such as reagents, electricity and salaries. The Company
continues to focus on factors such as disciplined capital
investments, working capital initiatives and other control
measures.
Sasa
Sasa's cost of sales for the period was 9% higher than the
previous corresponding period at $55.4 million (2020: $51.0
million) as Sasa faced certain global inflationary pressures.
However, 27% of this total cost increase ($1.2 million) was
currency related as the North Macedonian Denar, which is pegged to
the Euro, strengthened to an average of 52.06 against the US Dollar
versus a 2020 average of 54.02. Production costs increased due to
higher energy costs of $0.7 million as the electricity prices
increased by 63% from $6.4/kWh to $10.4/kWh. Other material cost
increases included $0.6 million rise in salaries, $0.4 million for
maintenance of equipment and $0.3 million higher costs of reagents,
explosives and other consumables.
2021 depreciation increased by $0.4 million versus 2020 due
primarily to the inclusion of TSF4 depreciation within these
calculations for a full period, which commenced in May 2020.
2021 royalties were $0.4 million higher than those of 2020
(2020: $2.4 million). This tax is calculated at the rate of 2%
(2020: 2%) on the value of metal recovered during the period and
the significant increase in metal prices was only moderately offset
by lower production.
Kounrad
Kounrad's 2021 cost of sales was $25.1 million (2020: $21.0
million) and 54% of this accretion was due to higher mineral
extraction tax ('MET') paid. MET is a royalty charged by the
Kazakhstan authorities at the rate of 5.7% (2020: 5.7%) on the
value of metal recovered during the year. MET for the year was $7.3
million (2020: $5.1 million) and an increase resulted from the
higher average copper price relating to similar sales volumes
versus the previous year.
There was also a 2021 increase in certain reagent costs of $0.9
million to $2.3 million (2020: $1.4 million). This was due to a
metallurgical adjustment arising from solely leaching the Western
Dumps during the winter period.
2021 Kounrad power costs were $0.5 million higher than 2020, due
to a 15% increase in local electricity prices from $0.039/kWh to
$0.045/kWh.
During the year, the Kazakhstan Tenge moved favourably for CAML,
depreciating against the US Dollar. The average exchange rate for
the year was 426 KZT/USD (2020: 413 KZT/ USD), with the Kazakhstan
Tenge being worth on average 3% less in US Dollar terms in 2021
compared to 2020. The depreciation and amortisation charges during
the year remain consistent at $3.9 million (2020: $3.9
million).
In line with the industry standard, CAML calculates C1 cash cost
by including all direct costs of production at Kounrad and Sasa
(reagents, power, production labour and materials, as well as
realisation charges such as freight and treatment charges) in
addition to local administrative expenses. Royalties, depreciation
and amortisation charges are excluded from C1 cash cost.
Sasa
Sasa's C1 zinc equivalent cash cost of production for 2021 was
$0.63 per pound (2020: $0.50 per pound). Although there were cost
increases, the reduced treatment charges countered the impact of
these so the $0.13 per pound increase in the C1 calculation was due
to the decreased production volumes of zinc ($0.03 per pound) and a
higher proportion of pro-rata zinc costing resulting from the zinc
equivalent calculation due to the increase in zinc revenue versus
lead in 2021 ($0.10 per pound). The on-site costs were $44.1 per
tonne (2020: $39.2 per tonne) and reflected global cost
increases.
Kounrad
Kounrad's 2021 C1 cash cost of copper production was $0.57 per
pound (2020: $0.51 per pound) and this remains amongst the lowest
in the copper industry. The increase in C1 cash cost versus 2020 is
due to higher on-site costs ($0.07 per pound) offset by higher
production volumes ($0.01 per pound) and a weaker Kazakhstan Tenge.
Approximately 70% of the C1 cash cost base in Kazakhstan is
denominated in Tenge. The average C1 cash cost since production
commenced in 2012 is $0.55 per pound.
Group
CAML reports its Group C1 cash cost on a copper equivalent basis
incorporating the production costs at Sasa. The Group's 2021 C1
copper equivalent cash cost was $1.32 per pound (2020: $1.15 per
pound). This number is calculated based on Sasa's 2021 zinc and
lead payable production, which equated to 11,959 copper equivalent
tonnes (2020: 15,227 copper equivalent tonnes) which has decreased
due to the significantly increased copper price relative to the
zinc and lead price and is added to Kounrad's 2021 copper
production of 14,041 tonnes (2020: 13,855 tonnes).
The Group C1 cash cost on a copper equivalent basis has
increased largely as a result of lower copper equivalent production
units mainly due to lower lead and zinc prices relative to copper
and partly due to higher costs at both Sasa and Kounrad.
CAML's fully inclusive copper equivalent cost of production has
primarily been adversely affected by a reduction in copper
equivalent tonnes due to the relative price performance of all
three base metals, as well as an increase in royalty costs.
Administrative expenses
During the year, administrative expenses increased to $22.1
million (2020: $19.0 million), largely due to an increased noncash
share-based payment charge of $2.4 million (2020: $0.9 million)
resulting from the vesting of three years' worth of share options
granted to employees. The comparative year shows only one year's
worth of vesting share options as the policy long-term incentive
plan was recently adjusted. In addition, in the comparative period
there were no additional divided share awards made given that the
Company did not declare a final 2019 dividend.
There was also an increase in employee related costs due to pay
rises, additional insurance premiums, and more business travel
following the easing of lockdown restrictions in prior year.
Finance costs
The Group reduced its finance costs in 2021 to $3.9 million
(2020: $6.7 million) principally driven by a lower debt balance
from further scheduled debt repayments of $38.4 million throughout
the year and an additional $10 million early repayment of the
corporate debt facility. The interest rates incurred also reflected
a lower LIBOR rate.
Taxation
2021 Group corporate income tax increased significantly to $25.1
million (2020: $16.0 million) as a result of higher profits at
Kounrad of $102.6 million (2020: $61.7 million) taxed at a
corporate income tax rate of 20% and at Sasa of $32.3 million
(2020: $16.3 million) at a corporate income tax rate of 10%. The
Group's underlying effective tax rate was $23.0% (2020: 26.8%)
which reflects the increased profits at both operations.
Discontinued operations
The Group continues to report the results of the Copper Bay
entities within Discontinued Operations. These assets were fully
written off in prior years.
BALANCE SHEET
Cut and Fill Project
The Group continues to invest significantly at Sasa with the
implementation of the Cut and Fill Project, comprising the
construction of a Paste Backfill Plant and associated underground
reticulation infrastructure, a Dry Stack Tailings Plant and
associated landform and the development of the new Central
Decline.
Capital expenditure on Cut and Fill Project totalled $8.3
million of which $5.9 million has been capitalised. This includes
$3.3 million on the Paste Backfill Plant including costs of $0.6
million for thickener tank, $0.3 million for displacement pumps and
construction and design. There was a further $0.9 million spent on
underground reticulation. There was also $1.4 million spent on the
Dry Stack Tailings filtration plant including $0.7 million on the
larox filter.
Central Decline costs include $1.2 million of capitalised
development and $2.4 million on new equipment including new
underground fleet.
The Group intends to spend $17-$19 million on its Cut and Fill
Project in 2022.
Sustaining Capital expenditure
The Group sustaining capital expenditure capitalised was $8.8
million (2020: $8.5 million), comprising $2.7 million (2020: $1.3
million) costs at Kounrad and $6.1 million (2020: $7.2 million) at
Sasa.
Kounrad sustaining expenditure included $1.2 million on solution
pipes, lining and dripper pipes and expenditure of $0.7 million on
new anodes and a new bulldozer of $0.2 million.
Sasa sustaining capital expenditure includes capitalised mine
development of $2.7 million, $0.5 million on underground fleet,
$0.3 million on a new drill rig and $0.2 million on TSF 4 pulp line
costs.
Working Capital
As at 31 December 2021, current trade and other receivables were
$6.2 million (31 December 2020: $8.9 million), which includes trade
receivables from the offtake sales of $1.2 million (31 December
2020: $1.9 million) and $2.5 million in relation to prepayments and
accrued income (31 December 2020: $2.6 million). The corporate tax
recoverable balance at Sasa has decreased by $1.2 million due to
increase in zinc and lead prices reducing the previously
accumulated recoverable balance.
Non-current trade and other receivables were $7.3 million (31
December 2020: $3.8 million), which has increased due to
prepayments made on property, plant and equipment as part of the
Sasa Cut and Fill Project as well as prepayments at Kounrad. As at
31 December 2021, a total of $3.3 million (31 December 2020: $3.3
million) of VAT receivable was still owed to the Group by the
Kazakhstan authorities. Recovery is still expected through the
local sales of cathode to offset these recoverable amounts.
As at 31 December 2021, current trade and other payables were
$16.1 million (31 December 2020: $12.9 million).
Asset retirement obligation
At year end an updated Sasa conceptual closure plan was
performed by independent external consultants WSP UK Limited
('WSP'). The report reassessed the estimated closure costs at the
end of the life of mine in 2038 including rehabilitation,
remediation, decommissioning and demolition. The year end provision
has therefore been increased to $16.1 million (2020: $7.2 million)
to account for the additional estimated costs surrounding managing
surface water in-line with the Global Industry Standard on tailings
management ('GISTM'). A key addition to the asset retirement
obligation proposed is to construct a diversion route to re-join
the natural course of the river.
Cash and borrowings
As at 31 December 2021, non-current and current borrowings were
nil (31 December 2020: $32.3 million) and $33.0 million (31
December 2020: $48.1 million) respectively comprising of $23.4
million in corporate debt through Traxys Europe S.A. and the $9.6
million of North Macedonian overdraft facilities. The reduction in
total borrowings of $48.5 million reflects monthly corporate debt
repayments during the year of $38.4 million plus an additional $10
million early repayment of debt.
CASH FLOWS
Increased commodity prices coupled with a credible operational
performance resulted in strong cash flows for the Group. Net cash
flow generated from operations was $112.6 million (2020: $67.4
million). During the year, corporate debt repayments of $48.4
million were made (2020: $38.4 million), plus Group interest paid
totalling $2.4 million (2020: $4.8 million). Net drawdowns on
overdrafts during the year were $0.6 million (2020: $8.0
million).
The corporate debt facility agreement with Traxys Europe S.A. is
expected to be repaid in August 2022. The monthly repayment
schedule is $3.2 million and interest is payable at LIBOR plus
4.00% with effect from 27 March 2020. Security is provided over the
shares in CAML Kazakhstan BV, certain bank accounts and the offtake
agreements between Traxys and each operation. The financial
covenants of the debt which include the monitoring of gearing and
leverage ratios are all continuously monitored by management and
the Group is both currently compliant and forecast to continue to
be compliant with significant headroom.
In 2021, corporate income tax payments to governments totalled
$21.6 million (2020: $14.7 million). This included $0.5 million
(2020: $1.6 million) of North Macedonia corporate income tax paid
in cash in addition to a $3.5 million (2020: $4.0 million) non-cash
payment and was offset against VAT receivable and overpaid
corporate income tax from the prior year. $21.1 million (2020:
$13.1 million) of Kazakhstan corporate income tax was paid during
the year. Taking into account sustaining capital expenditure,
CAML's free cash flow for 2021 was $103.8 million (2020: $58.9
million).
The overdraft facility agreed with Komercijalna Banka AD Skopje
with a fixed interest rate of 2.4% - 2.5%, dependent on conditions,
was extended during the year to 30 July 2022. In June 2020, a new
overdraft facility was agreed with Ohridska Banka A.D. Skopje with
a fixed interest rate of 2.5% denominated in Macedonian Denar. This
was originally repayable on 26 June 2021 and was extended for a
further year to 26 June 2022.
The Company's dividend policy is to return to shareholders a
target range of between 30% and 50% of free cash flow, defined as
net cash generated from operating activities less sustaining
capital expenditure. The dividends will only be paid provided there
is sufficient cash remaining in the Group to meet the ongoing
contractual debt repayments and that banking covenants are not
breached.
As a result of the strong cash flows during the year, the CAML
Board declared a final 2020 dividend of 8 pence and 2021 interim
dividend of 8 pence. Total dividends paid to shareholders during
the year of $38.9 million (2020: $13.9 million) comprised the 2020
final dividend and the 2021 interim dividend, and compared
favourably to 2020 given that the CAML Board did not recommend a
2019 final dividend in March 2020 following the outbreak of the
COVID-19 pandemic.
In conjunction with CAML's 2021 annual results, the Board
proposes a final 2021 dividend of 12 pence per Ordinary Share which
represents 45% of free cash flow. This brings total dividends
(proposed and declared) for the year to 20 pence (2020: 14 pence)
and the final dividend is payable on 30 May 2022 to shareholders
registered on 6 May 2022. This latest dividend will increase the
amount returned to shareholders in dividends and share buy-backs
since the 2010 IPO listing to $256.9 million.
GOING CONCERN
The Group sells and distributes its copper cathode product
primarily through an offtake arrangement with Traxys Europe S.A.
('Traxys') with a minimum of 95% of the SX-EW plant's forecasted
output committed as sales for the period extended until December
2022. The Group sells Sasa's zinc and lead concentrate product
through an offtake arrangement with Traxys which has been fixed
through to 31 March 2023. The commitment is for 100% of the Sasa
concentrate production.
The Group meets its day to day working capital requirements
through its profitable and cash generative operations at Kounrad
and Sasa. The Group manages liquidity risk by maintaining adequate
committed borrowing facilities and the Group has substantial cash
balances as at 31 December 2021. During 2021, both the Kounrad
facility in Kazakhstan and the Sasa mine in North Macedonia
continued to operate with no disruptions to production or sales
volumes due to COVID-19.
The financial covenants of CAML's debt, which include the
monitoring of gearing and leverage ratios, are all routinely
monitored by management and the Group is compliant with its
covenants. The Board has reviewed forecasts for the period to
December 2023 to assess the Group's liquidity and debt covenant
compliance which demonstrate substantial headroom. Additional
sensitivity scenarios have been considered in terms of pricing and
production including consideration of risks together with reverse
stress testing of the forecasts in line with best practice.
Liquidity and covenant headroom was demonstrated in each reasonably
possible scenario. Accordingly, the Directors continue to adopt the
going concern basis in preparing the consolidated financial
information.
CONFLICT IN UKRAINE
The situation in Ukraine will have an impact on the global
economy and financial markets. The outlook in this regard is
uncertain and the full extent of consequences cannot be assessed at
this stage. Energy and commodity prices have risen adding to the
inflationary pressures already faced by CAML. CAML management's
focus is to ensure full compliance with sanctions imposed on Russia
across all operations, as well as to proactively address any
anticipated issues with logistics and supply chains by increasing
stock levels of reagents and critical spare parts.
In the meantime our thoughts are with those directly
affected.
NON-IFRS FINANCIAL MEASURES
The Group uses alternative performance measures, which are not
defined by generally accepted accounting principles ('GAAP') such
as IFRS. These measures are used by management, alongside the
comparable GAAP measures, in evaluating the business performance.
The measures are not intended as a substitute for GAAP measures and
may not be comparable to similarly reported measures by other
companies. The following non-IFRS alternative performance financial
measures are used in this report:
EBITDA
EBITDA is a valuable indicator of the Group's ability to
generate liquidity and is frequently used by investors and analysts
for valuation purposes. It is also a non-IFRS financial measure
which is reconciled as follows:
2021 2020
$'000 $'000
---------------------------------- ------- ------
Profit for the year 84,176 43,690
---------------------------------- ------- ------
Plus/(less):
Income tax expense 25,147 16,035
Depreciation and amortisation 29,572 29,148
Foreign exchange (gain)/loss (1,214) 690
Other income (166) (535)
Other expenses 139 28
Finance income (74) (116)
Finance costs 3,920 6,673
Loss from discontinued operations 4 70
EBITDA 141,504 95,683
---------------------------------- ------- ------
Gross revenue
Gross revenue is presented as the total revenue received from
sales of all commodities after deducting the directly attributable
treatment charges associated for the sale of zinc, lead and silver.
This figure is presented as it reflects the total revenue received
in respect of the zinc and lead concentrate and is used to reflect
the movement in commodity prices and treatment charges during the
year. The Board considers gross revenue, together with the
reconciliation to net IFRS revenue to provide valuable information
on the drivers of IFRS revenue.
Net cash/(debt)
Net cash/(debt) debt is a measure used by the Board for the
purposes of capital management and is calculated as the total of
the borrowings held with Traxys Europe S.A. and bank overdrafts
less the cash and cash equivalents held at the end of the year.
This balance does not include the restricted cash balance of $3.5
million (31 December 2020: $3.6 million):
31-Dec-21 31-Dec-20
$'000 $'000
-------------------------- --------- ---------
Borrowings (32,978) (80,412)
Cash and cash equivalents 55,695 44,231
Net cash/(debt) 22,717 (36,181)
-------------------------- --------- ---------
Free cash flow
Free cash flow is a non-IFRS financial measure of the cash from
operations less capital expenditure on property, plant and
equipment and intangible assets and is presented as follows:
2021 2020
$'000 $'000
------------------------------------------------- ------- -------
Net cash generated from operating activities 112,605 67,439
Less: Purchase of sustaining property, plant and
equipment (8,750) (8,497)
Less: Purchase of intangible assets (56) (2)
Free cash flow 103,799 58,940
------------------------------------------------- ------- -------
The purchase of sustaining property, plant and equipment figure
above does not include the $5.9 million (2020: nil) of expenditure
on the Sasa Cut and Fill Project. These costs are not considered
sustaining capital expenditure as they are expansionary development
costs required for the transition to the cut and fill mining
technique. The Cut and Fill Project exceptional costs are expected
to continue until 2023.
Sustainability reporting standards
Sustainability is at the core of our business values, and we
continue to align our reporting with the Global Reporting
Initiative ('GRI') Standards 'Core option'. We have an economically
robust business that underpins our ability to generate profits and
dividends for our shareholders and ensures that our successes are
also felt by other important stakeholders. We strongly believe that
by creating shared value we are ensuring the long-term
sustainability of our operations and acting as a good corporate
citizen. The table below highlights the economic value that has
been distributed amongst CAML stakeholders during 2021.
2021 2020
Stakeholder $'m $'m
-------------------------------------- ------------------------ ----- -----
Direct economic value generated 235.2 170.7
---------------------------------------------------------------- ----- -----
Economic value distributed:
Operating expenses Suppliers & contractors 48.6 42.3
Wages and other payments to employees Employees 30.5 26.7
Dividend payments to shareholders Shareholders 38.8 13.9
Payments to creditors: Interest
payments on loans Lenders 2.4 4.8
Payments of tax(1) Government 36.7 24.8
Community investments Local communities 0.5 0.5
Economic value distributed 157.5 113.0
---------------------------------------------------------------- ----- -----
Economic value retained (generated
- distributed) 77.7 57.7
---------------------------------------------------------------- ----- -----
1 The tax disclosed is the total corporate income tax recognised
in the income statement, MET, concession fees and property taxes.
The figure excludes the payroll taxes and additional cash payments
made on corporate income tax during the year.
On behalf of the Board
Gavin Ferrar
Chief Financial Officer
28 March 2022
Consolidated Income Statement
for the year ended 31 December
Group
2021 2020
Note $'000 $'000
---------------------------------------------------- ------- --------- ----------
Continuing operations
Revenue 6 223,372 160,130
---------------------------------------------------- ------- --------- ----------
Presented as:
Gross revenue (1) 6 235,152 170,335
Less:
Silver stream purchases 6 (8,040) (6,796)
Offtake buyers' fees 6 (3,740) (3,409)
---------------------------------------------------- ------- --------- ----------
Revenue 223,372 160,130
---------------------------------------------------- ------- --------- ----------
Cost of sales 7 (80,511) (72,037)
Distribution and selling costs 8 (2,116) (2,566)
---------------------------------------------------- ------- --------- ----------
Gross profit 140,745 85,527
---------------------------------------------------- ------- --------- ----------
Administrative expenses 9 (22,077) (18,992)
Other losses and expenses 10 (6,875) (28)
Other income 11 166 535
Foreign exchange gain/(loss) 1,214 (690)
---------------------------------------------------- ------- --------- ----------
Operating profit 113,173 66,352
---------------------------------------------------- ------- --------- ----------
Finance income 15 74 116
Finance costs 16 (3,920) (6,673)
Profit before income tax 109,327 59,795
Income tax 17 (25,147) (16,035)
---------------------------------------------------- ------- --------- ----------
Profit for the year from continuing operations 84,180 43,760
---------------------------------------------------- ------- --------- ----------
Discontinued operations
Loss for the year from discontinued operations 22 (4) (70)
---------------------------------------------------- ------- --------- ----------
Profit for the year 84,176 43,690
---------------------------------------------------- ------- --------- ----------
Profit attributable to:
* Non-controlling interests 21 (1) 20
* Owners of the parent 84,177 43,670
---------------------------------------------------- ------- --------- ----------
Profit for the year 84,176 43,690
---------------------------------------------------- ------- --------- ----------
Earnings per share from continuing and discontinued
operations attributable to owners of the parent $ cents $ cents
during the year (expressed in cents per share)
---------------------------------------------------- ------- --------- ----------
Basic earnings per share
From continuing operations 18 47.69 24.78
From discontinued operations - (0.04)
---------------------------------------------------- ------- --------- ----------
From profit for the year 47.69 24.74
---------------------------------------------------- ------- --------- ----------
Diluted earnings per share
From continuing operations 18 46.23 24.07
From discontinued operations - (0.04)
---------------------------------------------------- ------- --------- ----------
From profit for the year 46.23 24.03
---------------------------------------------------- ------- --------- ----------
(1) Gross revenue is a non-IFRS financial measure which is used
by management, alongside the comparable GAAP measures, in
evaluating the business performance. The measures are not intended
as a substitute for GAAP measures and may not be comparable to
similarly reported measures by other companies.
Consolidated Statement of Comprehensive Income
Group
2021 2020
for the year ended 31 December Note $'000 $'000
-------------------------------------------------- ---- --------- ---------
Profit for the year 84,176 43,690
Other comprehensive (expense)/income:
Items that may be subsequently reclassified to
profit or loss:
Currency translation differences 27 (31,283) 26,975
Other comprehensive (expense)/income for the
year, net of tax (31,283) 26,975
-------------------------------------------------- ---- --------- ---------
Total comprehensive income for the year 52,893 70,665
-------------------------------------------------- ---- --------- ---------
Attributable to:
- Non-controlling interests (1) 20
- Owners of the parent 52,894 70,645
-------------------------------------------------- ---- --------- ---------
Total comprehensive income for the year 52,893 70,665
-------------------------------------------------- ---- --------- ---------
Total comprehensive income/(expense) attributable
to equity shareholders arises from:
- Continuing operations 52,897 70,735
- Discontinued operations (4) (70)
-------------------------------------------------- ---- --------- ---------
52,893 70,665
-------------------------------------------------- ---- --------- ---------
Statements of Financial Position Registered no. 5559627
as at 31 December 2021
Group Company
2021 2020 2021 2020
Note $'000 $'000 $'000 $'000
------------------------------------ ------ ---------- ----------- ------------ -------------
Assets
Non-current assets
Property, plant and equipment 19 384,889 418,045 410 638
Intangible assets 20 52,090 56,640 - -
Deferred income tax asset 37 352 236 - -
Investments 21 - - 5,107 5,491
Other non-current receivables 23 7,347 3,842 269,241 309,296*
------------------------------------ ------ ---------- ----------- ------------ -------------
444,678 478,763 274,758 315,425
------------------------------------ ------ ---------- ----------- ------------ -------------
Current assets
Inventories 24 10,452 7,830 - -
Trade and other receivables 23 6,210 8,945 34,204 17,359*
Restricted cash 25 3,516 3,641 3,284 3,441
Cash and cash equivalents 25 55,695 44,231 40,189 32,673
------------------------------------ ------ ---------- ----------- ------------ -------------
75,873 64,647 77,677 53,473
------------------------------------ ------ ---------- ----------- ------------ -------------
Assets of disposal group classified
as held for sale 22 38 58 - -
------------------------------------ ------ ---------- ----------- ------------ -------------
75,911 64,705 77,677 53,473
------------------------------------ ------ ---------- ----------- ------------ -------------
Total assets 520,589 543,468 352,435 368,898
------------------------------------ ------ ---------- ----------- ------------ -------------
Equity attributable to owners
of the parent
Ordinary shares 26 1,765 1,765 1,765 1,765
Share premium 26 191,988 191,537 191,988 191,537
Treasury shares 26 (2,360) (3,840) (2,360) (3,840)
Currency translation reserve 27 (104,781) (73,498) - -
Retained earnings 323,951 278,103 77,943 102,687
410,563 394,067 269,336 292,149
------------------------------------ ------ ---------- ----------- ------------ -------------
Non-controlling interests 21 (1,316) (1,315) - -
------------------------------------ ------ ---------- ----------- ------------ -------------
Total equity 409,247 392,752 269,336 292,149
------------------------------------ ------ ---------- ----------- ------------ -------------
Liabilities
Non-current liabilities
Borrowings 31 - 32,320 - 32,320
Silver streaming commitment 30 18,220 19,246 - -
Deferred income tax liability 37 23,229 26,199 - -
Lease liability 334 432 199 387
Provisions for other liabilities
and charges 32 18,917 6,999 - -
60,700 85,196 199 32,707
------------------------------------ ------ ---------- ----------- ------------ -------------
Current liabilities
Borrowings 31 32,978 48,092 23,406 38,400
Silver streaming commitment 30 1,229 1,573 - -
Trade and other payables 29 16,056 12,895 59,311 5,424
Lease liability 302 248 183 218
Provisions for other liabilities
and charges 32 49 2,687 - -
------------------------------------ ------ ---------- ----------- ------------ -------------
50,614 65,495 82,900 44,042
------------------------------------ ------ ---------- ----------- ------------ -------------
Liabilities of disposal group
classified as held for sale 22 28 25 - -
------------------------------------ ------ ---------- ----------- ------------ -------------
50,642 65,520 82,900 44,042
------------------------------------ ------ ---------- ----------- ------------ -------------
Total liabilities 111,342 150,716 83,099 76,749
------------------------------------ ------ ---------- ----------- ------------ -------------
Total equity and liabilities 520,589 543,468 352,435 368,898
------------------------------------ ------ ---------- ----------- ------------ -------------
* A portion of the comparative loans due from subsidiaries have
been reclassified from current to non-current assets (see note
23)
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the Parent Company Income
Statement or Statement of Comprehensive Income. The profit for the
Parent Company for the year was $13,585,000 (2020:
$48,526,000).
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Non-controlling
Currency interests
Attributable to Ordinary Share Treasury translation Retained Total $'000 Total
owners shares premium shares reserve earnings $'000 equity
of the parent Note $'000 $'000 $'000 $'000 $'000 $'000
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Balance as at 1
January
2020 1,765 191,184 (6,526) (100,473) 250,480 336,430 (1,324) 335,106
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Profit for the
year - - - - 43,670 43,670 20 43,690
Other
comprehensive
expense -
currency
translation
differences 27 - - - 26,975 - 26,975 - 26,975
Total
comprehensive
income - - - 26,975 43,670 70,645 20 70,665
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Transactions
with
owners
Share based
payments 28 - - - - 964 964 - 964
Exercise of
options 28 - 353 2,686 - (3,039) - - -
Disposal of
subsidiaries 21 - - - - (122) (122) (11) (133)
Dividends 35 - - - - (13,850) (13,850) - (13,850)
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Total
transactions
with owners,
recognised
directly in
equity - 353 2,686 - (16,047) (13,008) (11) (13,019)
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Balance as at 31
December 2020 1,765 191,537 (3,840) (73,498) 278,103 394,067 (1,315) 392,752
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Profit for the
year - - - - 84,177 84,177 (1) 84,176
Other
comprehensive
income -
currency
translation
differences 27 - - - (31,283) - (31,283) - (31,283)
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Total
comprehensive
income - - - (31,283) 84,177 52,894 (1) 52,893
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Transactions
with
owners
Share based
payments 28 - - - - 2,449 2,449 - 2,449
Exercise of
options 28 - 451 1,480 - (1,931) - - -
Dividends 35 - - - - (38,847) (38,847) - (38,847)
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Total
transactions
with owners,
recognised
directly in
equity - 451 1,480 - (38,329) (36,398) - (36,398)
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Balance as at 31
December 2021 1,765 191,988 (2,360) (104,781) 323,951 410,563 (1,316) 409,247
---------------- -------- ----------- --------- --------- ------------ ---------- ---------- ---------------- ----------
Company Statement of Changes in Equity
for the year ended 31 December 2021
Ordinary Share Treasury Retained Total
Shares premium shares earnings equity
Company Note $'000 $'000 $'000 $'000 $'000
---------------------------------- ------- -------- -------- -------- --------- -----------
Balance as at 1 January 2020 1,765 191,184 (6,526) 70,086 256,509
---------------------------------- ------- -------- -------- -------- --------- -----------
Profit for the year - - - 48,526 48,526
---------------------------------- ------- -------- -------- -------- --------- -----------
Total comprehensive income - - - 48,526 48,526
---------------------------------- ------- -------- -------- -------- --------- -----------
Transactions with owners
Share based payments 28 - - - 964 964
Exercise of options 28 - 353 2,686 (3,039) -
Dividends 35 - - - (13,850) (13,850)
---------------------------------- ------- -------- -------- -------- --------- -----------
Total transactions with owners,
recognised directly in equity - 353 2,686 (15,925) (12,886)
---------------------------------- ------- -------- -------- -------- --------- -----------
Balance as at 31 December 2020 1,765 191,537 (3,840) 102,687 292,149
---------------------------------- ------- -------- -------- -------- --------- -----------
Profit for the year - - - 13,585 13,585
---------------------------------- ------- -------- -------- -------- --------- -----------
Total comprehensive income - - - 13,585 13,585
---------------------------------- ------- -------- -------- -------- --------- -----------
Transactions with owners
Share based payments 28 - - - 2,449 2,449
Exercise of options 28 - 451 1,480 (1,931) -
Dividends 35 - - - (38,847) (38,847)
---------------------------------- ------- -------- -------- -------- --------- -----------
Total transactions with owners,
recognised directly in equity - 451 1,480 (38,329) (36,398)
---------------------------------- ------- -------- -------- -------- --------- -----------
)Balance as at 31 December 2021 1,765 191,988 (2,360) 77,943 269,336
---------------------------------- ------- -------- -------- -------- --------- -----------
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
2021 2020
Note $'000 $'000
---------------------------------------------- ----- ----- -------- --------- ----------
Cash flows from operating activities
Cash generated from operations 33 136,555 87,020
Interest paid (2,378) (4,837)
Corporate income tax paid (net of refunds) (21,572) (14,744)
Cash flow generated from operating activities 112,605 67,439
------------------------------------------------------------ -------- --------- ----------
Cash flows from investing activities
Purchase of property, plant and equipment (14,692) (8,497)
Proceeds from sale of property, plant
and equipment 16 350
Purchase of intangible assets (56) (2)
Interest received 15 74 116
Decrease in restricted cash 25 125 372
Net cash used in investing activities (14,533) (7,661)
------------------------------------------------------------ -------- --------- ----------
Cash flows from financing activities
Drawdown of overdraft 31 644 9,105
Repayment of overdraft 31 - (1,110)
Repayment of borrowings 31 (48,400) (38,400)
Dividends paid to owners of the parent 36 (38,847) (13,850)
Receipt on exercise of share options 28 13 10
Net cash used in financing activities (86,590) (44,245)
------------------------------------------------------------ -------- --------- ----------
Effect of foreign exchange (loss)/gain
on cash and cash equivalents (38) 82
Net increase in cash and cash equivalents 11,444 15,615
Cash and cash equivalents at the beginning
of the year 25 44,287 28,672
------------------------------------------------------------ -------- --------- ----------
Cash and cash equivalents at the end
of the year 25 55,731 44,287
------------------------------------------------------------ -------- --------- ----------
Cash and cash equivalents at 31 December 2021 includes cash at
bank and on hand included in assets held for sale of $36,000 (31
December 2020: $56,000) (note 22). The Consolidated Statement of
Cash Flows does not include the restricted cash balance of
$3,516,000 (2020: $3,641,000) (note 25).
The notes below are an integral part of the consolidated
financial information.
Notes to the Financial Information
for the year ended 31 December 2021
1. General information
Central Asia Metals plc ('CAML' or the 'Company') and its
subsidiaries (the 'Group') are a mining and exploration
organisation with operations primarily in Kazakhstan and North
Macedonia and a parent holding company based in the United Kingdom
('UK').
The Group's principal business activities are the production of
copper cathode at its Kounrad operations in Kazakhstan and the
production of lead, zinc and silver at its Sasa operations in North
Macedonia. CAML owns 100% of the Kounrad SX-EW copper project in
Kazakhstan and 100% of the Sasa zinc-lead mine in North Macedonia.
The Company also owns a 75% equity interest in Copper Bay Limited
which is currently held for sale. See note 22 for details.
CAML is a public limited company, which is listed on the AIM
market of the London Stock Exchange and incorporated and domiciled
in England, UK. The address of its registered office is Masters
House, 107 Hammersmith Road, London, W14 0QH. The Company's
registered number is 5559627.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these Consolidated Financial Statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
Basis of preparation of the Financial Information
The financial information set out herein does not constitute the
Group's statutory financial statements for the year ended 31
December 2021, but is derived from the Group's audited financial
statements. The auditors have reported on the 2021 financial
statements and their reports were unqualified and did not contain
statements under s498(2) or (3) Companies Act 2006, nor did they
contain a material uncertainty in relation to going concern. The
2021 Annual Report was approved by the Board of Directors on 28
March 2022, and will be mailed to shareholders in April 2022. The
financial information in this statement is audited but does not
have the status of statutory accounts within the meaning of Section
434 of the Companies Act 2006.
The Group's consolidated financial statements, which form part
of the 2021 Annual Report, have been prepared in accordance with
international accounting standards as adopted in the United
Kingdom. The consolidated financial statements have been prepared
under the historical cost convention with the exception of assets
held for sale which have been held at fair value. The Group
financial information is presented in US Dollars ($) and rounded to
the nearest thousand.
The parent company meets the definition of a qualifying entity
under FRS 100 (Financial Reporting Standard 100) issued by the
Financial Reporting Council. The parent company financial
statements have therefore been prepared in accordance with FRS 101
(Financial Reporting Standard 101) 'Reduced Disclosure Framework'
as issued by the Financial Reporting Council. As permitted by FRS
101, the Company has taken advantage of the disclosure exemptions
available under that standard in relation to share-based payments,
financial instruments, fair value measurements, capital management,
presentation of a cash flow statement, new standards not yet
effective, impairment of assets and related party transactions.
Where relevant, equivalent disclosures have been given in the Group
financial statements of Central Asia Metals plc.
The preparation of financial information in conformity with
IFRS, as adopted by the United Kingdom, requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the financial information are explained in note
4.
Going concern
The Group sells and distributes its copper cathode product
primarily through an offtake arrangement with Traxys Europe
S.A.
('Traxys') with a minimum of 95% of the SX-EW plant's forecasted
output committed as sales for the period extended until
December 2022. The Group sells Sasa's zinc and lead concentrate
product through an offtake arrangement with Traxys which has
been fixed through to 31 March 2023. The commitment is for 100%
of the Sasa concentrate production.
The Group meets its day to day working capital requirements
through its profitable and cash generative operations at Kounrad
and
Sasa. The Group manages liquidity risk by maintaining adequate
committed borrowing facilities and the Group has substantial
cash
balances as at 31 December 2021. During 2021, both the Kounrad
facility in Kazakhstan and the Sasa mine in North Macedonia
continued to operate with no disruptions to production or sales
volumes due to COVID-19.
The financial covenants of CAML's debt, which include the
monitoring of gearing and leverage ratios, are all routinely
monitored by
management and the Group is compliant with its covenants. The
Board has reviewed forecasts for the period to December 2023
to assess the Group's liquidity and debt covenant compliance
which demonstrate substantial headroom. Additional sensitivity
scenarios have been considered in terms of pricing and
production including consideration of risks, together
with reverse stress testing of the forecasts in line with best
practice. Liquidity and covenant headroom was demonstrated in
each
reasonably possible scenario. Accordingly, the Directors
continue to adopt the going concern basis in preparing the
consolidated
financial information.
Please refer to notes 6, 25 and 29 for information on the
Group's revenues, cash balances and trade and other payables.
New and amended standards and interpretations adopted by the
Group
The Group has adopted the following standards and amendments for
the first time for their annual reporting period commencing 1
January 2021:
Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) that is the second part
to a two-phase project which finalises the IBOR and other interest
rate benchmarks reform. These amendments are mandatorily effective
for periods beginning 1 January 2021 however there is no impact on
the current reporting period.
New standards, interpretations, and amendments not yet
effective
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 December 2021 reporting
periods and have not been early adopted by the Group. These
standards include:
IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract
amending the standard regarding costs a company should include as
the cost of fulfilling a contract when assessing whether a contract
is onerous. These amendments are mandatorily effective for periods
beginning 1 January 2022.
IAS 16 - Property, Plant and Equipment - Proceeds before
Intended Use regarding proceeds from selling items produced while
bringing as asset into the location and condition necessary for it
to be capable of operating in the manner intended by management.
These amendments are mandatorily effective for periods beginning 1
January 2022.
IAS 1 - Presentation of Financial statements - The
classification of liabilities as current or non-current basing the
classification on contractual arrangements at the reporting date.
These amendments are effective for periods beginning 1 January
2023.
These standards are not expected to have a material impact on
the entity in the current or future reporting periods and on
foreseeable future transactions.
Basis of consolidation
The Group Financial Statements consolidate the Financial
Statements of CAML and the entities it controls drawn up to 31
December 2021.
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised losses/gains
on transactions between Group companies are eliminated. Unrealised
losses/gains are also eliminated but considered an impairment
indicator of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Business combinations
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of the acquiree's identifiable net
assets. Acquisition-related costs are expensed as incurred and
reported within other expenses.
Goodwill
The excess of the consideration transferred of a business
combination, the amount of any non-controlling interest in the
acquired entity, and acquisition-date fair value of any previous
equity interest in the acquired entity over the fair value of the
net identifiable assets acquired is recorded as goodwill. If those
amounts are less than the fair value of the net identifiable assets
of the business acquired, the difference is recognised directly in
profit or loss as a bargain purchase. Goodwill is capitalised as an
intangible asset with any impairment in carrying value being
charged to the consolidated statement of comprehensive income.
Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid,
the excess is credited in full to the consolidated statement of
comprehensive income on the acquisition date.
After initial recognition, goodwill is stated at cost less any
accumulated impairment losses, with the carrying value being
reviewed for impairment, at least annually and whenever events or
changes in circumstances indicate that the carrying value may be
impaired.
For the purpose of impairment testing, goodwill is allocated to
the cash-generating unit expected to benefit from the business
combination in which the goodwill arose. Where the recoverable
amount is less than the carrying amount, including goodwill, an
impairment loss is recognised in the Income Statement. The carrying
amount of goodwill allocated to an entity is taken into account
when determining the gain or loss on disposal of the unit.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity's incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent financier
under comparable terms and conditions.
Non-controlling interests
Non-controlling interests represent the portion of profit or
loss and net assets in subsidiaries that are not held by the Group
and are presented separately within equity in the Consolidated
Statement of Financial Position distinct from parent shareholder's
equity.
Where losses are incurred by a partially owned subsidiary, they
are consolidated such that the non-controlling interests' share in
the losses is apportioned in the same way as profits.
Where profits are then made in future periods, such profits are
then allocated to the parent company until all unrecognised losses
attributable to the non-controlling interests but absorbed by the
parent are recovered at which point, profits are allocated as
normal.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker
which is considered to be the Board. The Group's segmental
reporting reflects the operational focus of the Group. The Group
has been organised into geographical and business units based on
its principal business activities of mining production, having two
reportable segments as follows:
-- Kounrad (production of copper cathode) in Kazakhstan
-- Sasa (production of lead, zinc and silver) in North Macedonia
Included within the unallocated segment are corporate costs for
CAML PLC which includes the Group debt held with Traxys and other
holding companies within the Group which are not separately
reported to the Board
Foreign currency translation
The functional currency for each entity in the Group is
determined as the currency of the primary economic environment in
which it operates. The Consolidated Financial Statements are
presented in US Dollars, which is the Group's and Company's
presentation currency. The functional currency of the Company is US
Dollars.
Transactions in currencies other than the currency of the
primary economic environment in which they operate are initially
recorded at the rate ruling at the date of the transaction. Foreign
currency monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency rate of
exchange ruling at the reporting date. Exchange differences arising
on the retranslation of unsettled monetary assets and liabilities
are recognised immediately in profit or loss.
Exchange gains and losses arising on the retranslation of
monetary financial assets are treated as a separate component of
the change in fair value and recognised in profit or loss. Exchange
gains and losses on non-monetary OCI financial assets form part of
the overall gain or loss in OCI recognised in respect of that
financial instrument.
On consolidation, the results of overseas operations are
translated into USD at rates approximating to those ruling when the
transactions took place. All assets and liabilities of overseas
operations, including goodwill arising on the acquisition of those
operations, are translated at the rate ruling at the reporting
date. Exchange differences arising on translating the opening net
assets at opening rate and the results of overseas operations at
actual rates are recognised in other comprehensive income and
accumulated in the foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange
differences recognised in the foreign exchange reserve relating to
that operation up to the date of disposal are transferred to the
consolidated statement of comprehensive income as part of the
profit or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. Cost
comprises the aggregate amount paid and the fair value of any other
consideration given to acquire the asset and includes costs
directly attributable to making the asset capable of operating as
intended.
The cost of the item also includes the cost of decommissioning
any buildings or plant and equipment and making good the site,
where a present obligation exists to undertake the rehabilitation
work.
Development costs relating to specific mining properties are
capitalised once management determines a property will be
developed. A development decision is made based upon consideration
of project economics, including future metal prices, reserves and
resources, and estimated operating and capital costs.
Capitalisation of costs incurred and proceeds received during the
development phase ceases when the property is capable of operating
at levels intended by management and is considered commercially
viable. Costs incurred during the production phase to increase
future output by providing access to additional reserves, are
deferred and depreciated on a units-of-production basis over the
component of the reserves to which they relate. Ore reserves may be
declared for an undeveloped mining project before its commercial
viability has been fully determined. Development costs incurred
after the commencement of production are capitalised to the extent
they are expected to give rise to a future economic benefit.
Development costs are not depreciated until such time as the areas
under development enter production.
Depreciation is provided on all property, plant and equipment on
a straight-line basis over its total expected useful life. As at 31
December 2021 the remaining useful lives were as follows:
-- Construction in progress - not depreciated
-- Land - not depreciated
-- Plant and equipment - over 5 to 21 years
-- Mining assets - over 2 to 21 years
-- Motor vehicles - over 2 to 10 years
-- Office equipment - over 2 to 10 years
-- Right of use assets - term of lease agreement
Mineral rights are depreciated on a Unit of Production basis
('UoP'), in proportion to the volume of ore mined in the year
compared with total proven and probable reserves as well as
measured, indicated and certain inferred resources which are
considered to have a sufficiently high certainty of commercial
extraction at the beginning of the year. Assets within operations
for which production is not expected to fluctuate significantly
from one year to another or which have a physical life shorter than
the related mine are depreciated on a straight-line basis.
Construction in progress is not depreciated until transferred to
other classes of property, plant and equipment.
The carrying values of property, plant and equipment are
reviewed for impairment if events or changes in circumstances
indicate the carrying value may not be recoverable and are written
down immediately to their recoverable amount. Useful lives and
residual values are reviewed annually and where adjustments are
required, these are made prospectively.
An item of property, plant and equipment is de-recognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
de-recognition of the asset is included in the Income
Statement.
Leases
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable and variable payments based on
index or rate;
-- amounts expected to be payable by the Group under residual value guarantees ; and
-- payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions.
The Group leases offices and equipment. Rental contracts are
typically made for fixed periods of six months to five years and
have extension options.
Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements
do not impose any covenants other than the security interests in
the leased assets that are held by the lessor. Leased assets may
not be used as security for borrowing purposes.
Intangible assets
a) Exploration and evaluation expenditure
Capitalised costs include costs directly related to any Group
exploration and evaluation activities in areas of interest for
which there is a high degree of confidence in the feasibility of
the project. Exploration and evaluation expenditure capitalised
includes acquisition of rights to explore, topographical,
geological, geochemical and geophysical studies, exploration
drilling, trenching, sampling and activities in relation to the
evaluation of the technical feasibility and commercial viability of
extracting a mineral resource.
Exploration and evaluation assets are measured at cost less
provision for impairment, where required.
b) Mining licences, permits and computer software
The historical cost model is applied, with intangible assets
being carried at cost less accumulated amortisation and accumulated
impairment losses. Intangible assets with a finite life have no
residual value and are amortised on a straight-line basis over
their expected useful lives with charges included in either cost of
sales or administrative expenses:
Computer software - over two to five years
Mining licences and permits - over the duration of the legal agreement
The carrying value of intangible assets is reviewed for
impairment whenever events or changes in circumstances indicate the
carrying value may not be recoverable.
Impairment of non-financial assets
The Group carries out impairment testing on all assets when
there exists an indication of an impairment. If any such indication
exists, the Group makes an estimate of the asset's recoverable
amount. An asset's recoverable amount is the higher of an asset's
or cash-generating unit's fair value less costs to sell or its
value in use.
Where the carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. Impairment losses are recognised in the Income
Statement.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and risks specific to the asset.
The best evidence of an asset's fair value is the value obtained
from an active market or binding sale agreement. Where neither
exists, fair value less costs to sell is based on the best
available information to reflect the amount the Group could receive
for the cash-generating unit in an arm's length sale. In some
cases, this is estimated using a discounted cash flow analysis on a
post-tax basis.
A previously recognised impairment loss is reversed if the
recoverable amount increases as a result of a reversal of the
conditions that originally resulted in the impairment. This
reversal is recognised in the Income Statement and is limited to
the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised in prior
years.
Goodwill is also reviewed annually, as well as whenever events
or changes in circumstances indicate that the carrying amount may
not be recoverable. Non-financial assets other than goodwill which
have suffered an impairment are reviewed for possible reversal of
the impairment at each reporting date.
Revenue
IFRS 15 establishes a comprehensive framework for determining
whether, how much and when revenue is recognised. These steps are
as follows: identification of the customer contract; identification
of the contract performance obligations; determination of the
contract price; allocation of the contract price to the contract
performance obligations; and revenue recognition as performance
obligations are satisfied.
Under IFRS 15, revenue is recognised when the performance
obligations are satisfied and the customer obtains control of the
goods or services, usually when title has passed to the buyer and
the goods have been delivered in accordance with the contractual
delivery terms.
Those sales of zinc and lead made abroad to China and Korea are
sold under Cost insurance and freight ('CIF') where legal title
transfers when the goods are loaded onto the ship and leave the
port. However, part of the transaction price is allocated to a
distinct 'shipping and insurance' as we are responsible for
arranging the freight and insurance on behalf of customer. This
amount is not material to the Group so no adjustment has been made
to the financial statements.
Sales of lead made to our new European smelter customer are sold
under Free on Board ('FOB') where legal title transfers when the
goods are loaded onto the ship and leave the port.
Revenue is measured at the fair value of consideration received
or receivable from sales of metal to an end user, net of any
buyers' discount, treatment charges and value added tax. The Group
recognises revenue when the amount of revenue can be reliably
measured and when it is probable that future economic benefits will
flow to the entity.
The value of consideration is fair value which equates to the
contractually agreed price. The offtake agreements provide for
provisional pricing i.e. the selling price is subject to final
adjustment at the end of the quotation period based on the average
price for the month following delivery to the buyer. Such a
provisional sale contains an embedded derivative which is not
required to be separated from the underlying host contract, being
the sale of the commodity. At each reporting date, if any sales are
provisionally priced, the provisionally priced copper cathode, zinc
and lead sales are marked-to-market using forward prices, with any
significant adjustments (both gains and losses) being recorded in
revenue in the Income Statement and in trade receivables in the
Statement of Financial Position.
The Company may mitigate commodity price risk by fixing the
price in advance for its copper cathode with the offtake partner
and also its zinc and lead sales with the banks where a facility
has been set up and agreed. The price fixing arrangements are
outside the scope of IFRS 9 Financial Instruments: Recognition and
Measurement and do not meet the criteria for hedge accounting.
The Group reports both a gross revenue and revenue line. Gross
revenue is reported after deductions of treatment charges but
before deductions of offtakers fees and silver purchases under the
Silver Stream (note 6).
Inventory
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the weighted average method.
The cost of finished goods and work in progress comprises raw
materials, direct labour and all other direct costs associated with
mining the ore and processing it to a saleable product.
Net realisable value is the estimated selling price in the
ordinary course of business, less any further costs expected to be
incurred to completion. Provision is made, if necessary, for
slow-moving, obsolete and defective inventory.
Non-current assets (or disposal groups) held for sale and
discontinued operations
Non-current assets (or disposal groups) are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a
sale is considered highly probable. They are measured at the lower
of their carrying amount and fair value less costs to sell, except
for assets such as deferred tax assets, assets arising from
employee benefits, financial assets and investment property that
are carried at fair value and contractual rights under insurance
contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any Initial or subsequent
write-down of the asset (or disposal group) to fair value less
costs to sell. A gain is recognised for any subsequent increases in
fair value less costs to sell an asset (or disposal group), but not
in excess of any cumulative impairment loss previously recognised.
A gain or loss not previously recognised by the date of the sale of
the non-current asset (or disposal group) is recognised at the date
of derecognition.
Non-current assets (including those that are part of a disposal
group) are not depreciated or amortised while they are classified
as held for sale. Interest and other expenses attributable to the
liabilities of a disposal group classified as held for sale
continue to be recognised.
Non-current assets classified as held for sale and the assets of
a disposal group classified as held for sale are presented
separately from the other assets in the balance sheet. The
liabilities of a disposal group classified as held for sale are
presented separately from other liabilities in the balance
sheet.
A discontinued operation is a component of the entity that has
been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area
of operations, is part of a single co-ordinated plan to dispose of
such a line of business or area of operations, or is a subsidiary
acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the Statement
of Comprehensive Income.
Current and deferred income tax
The current income tax charge is calculated based on the tax
laws enacted or substantively enacted at the reporting date in the
countries where the Group's subsidiaries operate and generate
taxable income.
Deferred income tax assets and liabilities are recognised where
the carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
-- The initial recognition of goodwill,
-- The initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit,
and
-- Investments in subsidiaries and joint arrangements where the
Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse
in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised. The amount
of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the reporting date and are
expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered). When there is uncertainty concerning the
Group's filing position regarding the tax bases of assets or
liabilities, the taxability of certain transactions or other
tax-related assumptions, then the Group:
-- Considers whether uncertain tax treatments should be
considered separately, or together as a group, based on which
approach provides better predictions of the resolution;
-- Determines if it is probable that the tax authorities will
accept the uncertain tax treatment; and
-- If it is not probable that the uncertain tax treatment will
be accepted, measure the tax uncertainty based on the most likely
amount or expected value, depending on whichever method better
predicts the resolution of the uncertainty. This measurement is
required to be based on the assumption that each of the tax
authorities will examine amounts they have a right to examine and
have full knowledge of all related information when making those
examinations.
Deferred income tax assets and liabilities are offset when the
Group has a legally enforceable right to offset current tax assets
and liabilities and the deferred tax assets and liabilities relate
to taxes levied by the same tax authority on either:
-- The same taxable group company, or
-- Different group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks and other short-term highly liquid investments
with original maturities of three months or less.
Restricted cash
Restricted cash is cash with banks that is not available for
immediate use by the Group. Restricted cash is shown separately
from cash and cash equivalents on the Statement of Financial
Position.
Investments
Investments in subsidiaries are recorded at cost less provision
for impairment.
Share capital
Ordinary Shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Treasury shares
Where any Group company purchases the Company's equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to the Company's equity holders
until the shares are cancelled or reissued. Where such Ordinary
Shares are subsequently reissued, any consideration received, net
of any directly attributable incremental transaction costs and the
related income tax effects, is included in equity attributable to
the Company's equity holders.
Share based compensation
Where equity settled share options are awarded to employees, the
fair value of the options at the date of grant is charged to the
consolidated statement of comprehensive income over the vesting
period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options that eventually vest. Non-vesting conditions and market
vesting conditions are factored into the fair value of the options
granted. As long as all other vesting conditions are satisfied, a
charge is made irrespective of whether the market vesting
conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied. An option pricing model is
used to measure the fair value of the options.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to
the consolidated statement of comprehensive income over the
remaining vesting period.
Trade and other receivables
Trade and other receivables are accounted for under IFRS 9 using
the expected credit loss model and are initially recognised at fair
value and subsequently measured at amortised cost less any
allowance for expected credit losses.
Impairment of financial assets
Impairment provisions for current and non-current trade
receivables are recognised based on the ' simplified approach '
within IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of the
expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. For trade
receivables, which are reported net, such provisions are recorded
in a separate provision account with the loss being recognised in
profit or loss. On confirmation that the trade receivable will not
be collectable, the gross carrying value of the asset is written
off against the associated provision.
Impairment provisions for receivables from subsidiaries and
loans to subsidiaries are recognised based on the 'general
approach' within IFRS 9. The methodology used to determine the
amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of
the financial asset with the assessment also taking into account
the ability of the subsidiary to repay the receivable or loan in
the event that it was called due. For those where the credit risk
has not increased significantly since initial recognition of the
financial asset, twelve month expected credit losses along with
gross interest income are recognised. For those for which credit
risk has increased significantly, lifetime expected credit losses
along with the gross interest income are recognised. For those that
are determined to be credit impaired, lifetime expected credit
losses along with interest income on a net basis are recognised.
Lifetime expected credit losses are the expected credit losses that
result from all possible default events over the expected life of
the loan whereas twelve month expected credit losses are a portion
of lifetime expected credit losses that represent the expected
credit losses that result from default events that are possible
within twelve months of the reporting date.
From time to time, the Group elects to renegotiate the terms of
trade receivables due from customers with which it has previously
had a good trading history. Such renegotiations will lead to
changes in the timing of payments rather than changes to the
amounts owed and, in consequence, the new expected cash flows are
discounted at the original effective interest rate and any
resulting difference to the carrying value is recognised in the
consolidated statement of comprehensive income (operating
profit).
Trade and other payables
Trade and other payables are not interest bearing and are
initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method.
Silver stream commitment
The silver stream arrangement has been accounted for as a
commitment as the Group has obligations to deliver silver to a
third party at a price below market value. On acquisition,
following completion of the business combination, the silver stream
commitment was identified as an unfavourable contract and recorded
at fair value. Payments received under the arrangement prior to the
acquisition by the Group were not considered to be a transaction
with a customer. Management has determined that the agreement is
not a derivative as it will be satisfied through the delivery of
non-financial items (i.e. silver commodity from the Company's
production), rather than cash or financial assets. Subsequent to
initial recognition the silver stream commitment is not revalued
and is amortised on a units of production basis to cost of
sales.
The fair value of consideration received for delivered silver
under the agreement is recorded as revenue. In addition, silver
produced in conjunction with the Group's lead and zinc production
and sold under the offtake agreement is recorded in gross revenue
with a corresponding deduction for silver purchased to deliver
under the silver stream recorded in arriving at net revenue.
Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss
as other income or finance costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
Derivative financial instruments
The Group uses commodity price contracts to reduce its exposure
to risks from commodity price movements. Derivative financial
instruments are primarily used as a means of managing exposure to
price in line with the Group risk management strategy. Derivative
financial liabilities are initially recognised and measured at fair
value on the date a derivative contract is entered into and then
subsequently re-measured at fair value by reference to valuation
models and the probability of outcome scenarios and categorised as
level 2 measurements:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1)
-- Inputs other than quoted prices within level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) (level 2)
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level 3).
For the derivative contracts held the Group are recognising the
financial instruments with level 2 data as the valuation is
obtained using MTM market data using the forward curve of the
commodity prices. However, there is no readily observable market
information for these exact derivative instruments. The realised
losses gains are recognised in other gains and losses in the income
statement.
Provisions
a) Asset retirement obligation
Provisions for environmental restoration of mining operations
are recognised when the Group has a present legal or constructive
obligation as a result of past events; it is probable that an
outflow of resources will be required to settle the obligation; and
the amount can be reliably estimated. Provisions are not recognised
for future operating losses.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the cash flows incorporate assessments of risk. The
increase in the provision due to passage of time is recognised as
interest expense.
b) Employee benefits - pension
The Group, in the normal course of business, makes payments on
behalf of its employees for pensions, health-care, employment and
personnel tax, which are calculated based on gross salaries and
wages according to legislation. The cost of these payments is
charged to the Consolidated Statement of Comprehensive Income in
the same period as the related salary cost.
c) Employee benefits - retirement benefits and jubilee awards
Pursuant to the labour law prevailing in the North Macedonian
subsidiaries, the Group is obliged to pay retirement benefits for
an amount equal to two average monthly salaries, at their
retirement date. According to the collective labour agreement, the
Group is also obliged to pay jubilee anniversary awards for each
ten years of continuous service of the employee. Due to the
long-term nature of these plans, such estimates are subject to
significant uncertainty. In addition, the Group is not obligated to
provide further benefits to current and former employees.
Retirement benefit obligations arising on severance pay are
stated at the present value of expected future cash payments
towards the qualifying employees. These benefits have been
calculated by an independent actuary in accordance with the
prevailing rules of actuarial mathematics and recognised as a
liability with no pension plan assets. Actuarial gains and losses
arising from experience adjustments and changes in actuarial
assumptions are charged or credited to profit and loss over the
employees' expected average remaining working lives.
3. Financial instruments - risk management
The Group's activities expose it to a variety of financial
risks; market price risk (including foreign currency exchange risk,
commodity price risk and interest rate risk), liquidity risk,
capital risk and credit risk. These risks are mitigated wherever
possible by the Group's financial management policies and practices
described below. The Group's risk management is carried out by a
central treasury department (Group treasury) under policies
approved by the Board. Group treasury identifies, evaluates and
hedges financial risks in close co-operation with the Group's
operating units.
Foreign currency exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures. The primary
Group currency requirements are US Dollar, British Pound,
Kazakhstan Tenge, Euro and North Macedonian Denar.
The following table highlights the major currencies the Group
operates in and the movements against the US Dollar during the
course of the year:
Average rate Reporting date
spot rate
2021 2020 Movement 2021 2020 Movement
Kazakhstan Tenge 4 25.91 412.95 3% 4 31.67 420.71 3%
Macedonian Denar 5 2.06 54.02 (4%) 5 4.37 50.24 8%
Euro 0.84 0.88 (5%) 0.88 0.81 9%
British Pound 0.73 0.78 (6%) 0.74 0.74 -
----------------- ---------- --------- -------- --------- -------- --------
Foreign exchange risk does not arise from financial instruments
that are non-monetary items or financial instruments denominated in
the functional currency. Kazakhstan Tenge and North Macedonian
Denar denominated monetary items are therefore not reported in the
tables below, as the functional currency of the Group's
Kazakhstan-based and North Macedonian-based subsidiaries is the
Tenge and Denar respectively.
The Group's exposure to foreign currency risk based on US Dollar
equivalent carrying amounts at the reported date:
Group
---------------------------- ---------------------------------------- --------------------------------------------------------
2021
--------------------------------------------------------------------------------------------------
In $'000 equivalent USD EUR GBP
---------------------------- ---------------------------------------- --------------- ---------------------------------------
Cash and cash equivalents 10,495 865 2,452
Trade and other receivables 203 151 187
Trade and other payables (66) (353) (3,395)
---------------------------- ---------------------------------------- --------------- ---------------------------------------
Net exposure 10,632 663 (756)
---------------------------- ---------------------------------------- --------------- ---------------------------------------
Group
---------------------------- ---------------------------------------- --------------------------------------------------------
2020
--------------------------------------------------------------------------------------------------
In $'000 equivalent USD EUR GBP
---------------------------- ---------------------------------------- --------------- ---------------------------------------
Cash and cash equivalents 2,637 208 2,397
Trade and other receivables 285 - -
Trade and other payables (15) (398) (2,542)
---------------------------- ---------------------------------------- --------------- ---------------------------------------
Net exposure 2,907 (190) (145)
---------------------------- ---------------------------------------- --------------- ---------------------------------------
Trade and other receivables excludes prepayments and VAT
receivable and trade and other payables excludes corporation tax,
social security and other taxes as they are not considered
financial instruments.
At 31 December 2021, if the foreign currencies had
weakened/strengthened by 10% against the US Dollar, post-tax Group
profit for the year would have been $1,021,000 lower/higher (2020:
$205,000 lower/higher).
Commodity price risk
The Group has a hedging policy in place to allow us to manage
commodity price risk and during the year the Group had put in place
hedging arrangements with ING, a relationship bank for a portion of
its 2021 metal production. Kounrad's Zero Cost Collar contract for
30% of copper production included a put option of $6,900 per tonne
and a call option of $8,380 per tonne. Sasa's zinc and lead
arrangements were Swap contracts, with 30% of Sasa's zinc
production sold at $2,804 per tonne and 30% of its lead sold at
$2,022 per tonne.
The offtake agreement at Kounrad provides for the option of
provisional pricing i.e. the selling price is subject to final
adjustment at the end of the quotation period based on the average
price for the month following delivery to the buyer. The Company
may mitigate commodity price risk by fixing the price in advance
for its copper cathode sales with the offtake partner.
The following table details the Group's sensitivity to a 10%
increase and decrease in the copper, zinc and lead price against
the invoiced price. 10% is the sensitivity used when reporting
commodity price internally to management and represents
management's assessment of the possible change in price. A positive
number below indicates an increase in profit for the year and other
equity where the price increases.
Estimated effect on earnings and equity
2021 2020
$'000 $'000
-------------------------------------------- -------- --------
10% increase in copper, zinc and lead price 17,312 18,230
-------------------------------------------- -------- --------
10% decrease in copper, zinc and lead price (17,535) (18,230)
-------------------------------------------- -------- --------
Liquidity risk
Liquidity risk relates to the ability of the Group to meet
future obligations and financial liabilities as and when they fall
due. The Group currently has sufficient cash resources to service
the debt and a material income stream from the Kounrad and Sasa
projects. The Group has no undrawn borrowings as at 31 December
2021 (2020: nil).
Future expected payments: Group
31 Dec 31 Dec
21 $'000 20 $'000
-------------------------------------------- --------- ---------
Trade and other payables within one year 8,224 9,221
Borrowings payable within one year (note
31) 32,978 48,092
Borrowings payable later than one year but
not later than five years (note 31) - 32,320
Lease liability payable within one year 334 432
Lease liability payable later than one year
but not later than five years 302 248
41,838 90,313
-------------------------------------------- --------- ---------
Capital risk
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal structure to reduce the
cost of capital.
The Group manages its capital in order to provide sufficient
funds for the Group's activities. Future capital requirements are
regularly assessed and Board decisions taken as to the most
appropriate source for obtaining the required funds, be it through
internal revenue streams, external fund raising, issuing new shares
or selling assets. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or
sell assets to reduce debt.
The financial covenants of the debt which include the monitoring
of gearing and leverage ratios are all continuously monitored by
management and the Group is both currently compliant and forecast
to continue to be compliant with significant headroom.
Consistent with others in the industry, the Group monitors
capital on the basis of the following gearing ratio:
Net cash/(debt)
2021 2020
Note $'000 $'000
------------------------------------ --- --- ----- ---------- ----------
Cash and cash equivalents excluding
restricted cash 25 55,695 44,231
Bank overdraft 31 (9,572) (9,692)
Borrowings, variable interest rates
- repayable within one year 31 (23,406) (38,400)
Borrowings, variable interest rates
- repayable after one year 31 - (32,320)
Net cash/(debt) 22,717 (36,181)
---------------------------------------------- ----- ---------- ----------
Total equity 409,247 392,752
---------------------------------------------- ----- ---------- ----------
Net cash/(debt) to equity ratio 6% (9%)
---------------------------------------------- ----- ---------- ----------
Changes in liabilities arising from financing activities
The total borrowings as at 1 January 2021 were $80,412,000 (1
January 2020: $108,768,000). During the year, total repayments were
$48,400,000 (2020: $38,400,000). During the year, there were
drawdowns on our unsecured overdrafts of $644,000 (2020:
$9,105,000) and repayments of $nil (2020: $1,110,000). Other
changes amounted to $322,000 (2020: $2,049,000) leading to a
closing debt balance of $32,978,000 (2020: $80,412,000). See note
31 for more details.
The cash and cash equivalents including cash at bank and on hand
in assets held for sale brought forward were $44,287,000 (2020:
$28,672,000) with a net $11,444,000 inflow (2020: $15,615,000
inflow) during the year and therefore a closing balance of
$55,731,000 (2020: $44,287,000).
Credit risk
Credit risk refers to the risk that the Group's financial assets
will be impaired by the default of a third party. The Group is
exposed to credit risk primarily on its cash and cash equivalents
as set out in note 25 and on its trade and other receivables as set
out in note 23. The Group sells a minimum of 95% of Kounrad's
copper cathode production to the offtake partner which pays on the
day of dispatch and during the year 100% of Sasa's zinc and lead
concentrate was sold to Traxys which assumes the credit risk.
For banks and financial institutions, only parties with a
minimum rating of BBB- are accepted. 98% of the Group's cash and
cash equivalents including restricted cash at the year-end were
held by banks with a minimum credit rating of A- (2020: 98%). The
rest of the Group's cash was held with a mix of institutions with
credit ratings between A to BB- (2020: A to BB-). The Directors
have considered the credit exposures and do not consider that they
pose a material risk at the present time. The credit risk for cash
and cash equivalents is managed by ensuring that all surplus funds
are deposited only with financial institutions with high quality
credit ratings.
The expected credit loss for intercompany loans receivable is
considered immaterial (note 23).
Interest rate risk
The Group's main interest rate risk arises from long-term
borrowings with variable rates, which expose the Group to cash flow
interest rate risk. During 2021, the Group's borrowings at variable
rates were denominated in US Dollars. The Group's borrowings are
carried at amortised cost. The Group has borrowings at variable
interest rates and a 1% point rise in market interest rate would
have caused the interest paid to increase by $526,000 (2020:
$843,000) while a similar decrease would have caused the same
decrease in interest paid. The Group does not hedge its exposure to
interest rate risk.
The Group had $31,655,000 of cash balances on short-term deposit
as at 31 December 2021 (2020: $28,896,000). The average fixed
interest rate on short-term deposits during the year was 0.2%
(2020: 0.3%).
Categories of financial instruments
Financial assets
Group
----------------------------------------------- --------------------
31 Dec 31 Dec
Cash and receivables: 21 $'000 20 $'000
----------------------------------------------- --------- ---------
Cash and cash equivalents including restricted
cash (note 25) 59,211 47,872
Trade and other receivables 2,343 5,058
------------------------------------------------- --------- ---------
61,554 52,930
----------------------------------------------- --------- ---------
Trade and other receivables excludes prepayments and VAT
receivable as they are not considered financial instruments. All
trade and other receivables are receivable within one year for both
reporting years.
Financial liabilities
Group
-------------------------------------------- --------------------
31 Dec 31 Dec
Measured at amortised cost: 21 $'000 20 $'000
-------------------------------------------- --------- ---------
Trade and other payables within one year 8,224 9,221
Borrowings payable within one year (note
31) 32,978 48,092
Borrowings payable later than one year but
not later than five years (note 31) - 32,320
Lease liability within one year 334 432
Lease liability payable later than one year
but not later than five years 302 248
41,838 90,313
-------------------------------------------- --------- ---------
Trade and other payables excludes the silver streaming
commitment, corporation tax, social security and other taxes as
they are not considered financial instruments.
4. Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The following are key areas where
critical accounting estimates and judgements are required that
could have a material impact on the Financial Statements:
Impairment of non-current assets
Significant accounting judgements
The carrying value of the goodwill generated by accounting for
the business combination of the Group acquiring an additional 40%
in the Kounrad project in May 2014 (the "Kounrad Transaction") and
the CMK Resources Limited acquisition in November 2017 requires an
annual impairment review. This review determines whether the value
of the goodwill can be justified by reference to the carrying value
of the business assets and the future discounted cash flows of the
respective CGUs. The key assumptions used in the Group's impairment
assessments are disclosed in note 20.
Key sources of estimation uncertainty
Estimates are required periodically to assess assets for
impairment. The critical accounting estimates are future commodity
prices, treatment charges, future ore production, discount rates
and projected future costs of development and production. Ore
reserves and resources included in the forecasts include certain
resources considered to be sufficiently certain and economically
viable. The Group's resources statements include additional
resources which are not included in the life of mine plan or
impairment test.
Decommissioning and site rehabilitation estimates
Significant accounting judgements
Provision is made for the costs of decommissioning and site
rehabilitation costs when the related environmental disturbance
takes place. External expert consultants conducted an independent
assessment and judgement and experience is used in determining the
expected timing, closure and decommissioning methods, which can
vary in response to changes in the relevant legal requirements or
decommissioning technologies. The estimated costs included a
re-assessment of the surrounding managing surface water in-line
with the GISTM and lining of the tailings facilities as well as
updating the discount rate using latest assumptions on inflation
rates and discount rates.
Key sources of estimation uncertainty
The discounted provision recognised represents management's best
estimate of the costs that will be incurred, and many of these
costs will not crystallise until the end of the life of the mine.
Estimates are reviewed annually and are based on current
contractual and regulatory requirements and the estimated useful
life of mines. Engineering and feasibility studies are undertaken
periodically and in the interim management make assessments for
appropriate changes based on the environmental management strategy;
however significant changes in the estimates of contamination,
restoration standards, timing of expenditure and techniques will
result in changes to provisions from period to period.
A 1% change in the discount rate on the Group's rehabilitation
estimates would result in an impact of $2,520,000 (2020: $948,000)
on the provision for environmental rehabilitation. A 5% change in
cost on the Group's rehabilitation estimates would result in an
impact of $919,000 (2020: $460,000) on the provision for
environmental rehabilitation.
Mineral reserves and resources
Key sources of estimation uncertainty
The major value associated with the Group is the value of its
mineral reserves and resources. The value of the reserves and
resources have an impact on the Group's accounting estimates in
relation to depreciation and amortisation, impairment of assets and
the assessment of going concern. These resources are the Group's
best estimate of product that can be economically and legally
extracted from the relevant mining property. The Group's estimates
are supported by geological studies and drilling samples to
determine the quantity and grade of each deposit.
Ore resource estimates may vary from period to period. This
judgement has a significant impact on impairment consideration and
the period over which capitalised assets are depreciated within the
Financial Statements.
The Kounrad resources were classified as JORC Compliant in 2013
and mineral resources were estimated in June 2017 and the Sasa JORC
ore reserves and mineral resources were estimated on 31 December
2021.
Tax
Significant accounting judgements
Management make judgements in relation to the recognition of
various taxes payable and receivable by the Group and VAT
recoverability for which the recoverability and timing of recovery
is assessed. The Group operates in jurisdictions which necessarily
require judgment to be applied when assessing the applicable tax
treatment for transactions and the Group obtains professional
advice where appropriate to ensure compliance with applicable
legislation.
5. Segmental information
The segmental results for the year ended 31 December 2021 are as
follows:
Kounrad Sasa Unallocated Total
$'000 $'000 $'000 $'000
---------------------------------------------- ------------- ----------- ----------------- -----------
Gross revenue 132,039 103,113 - 235,152
Silver stream purchases - (8,040) - (8,040)
Offtake buyers' fees (2,586) (1,154) - (3,740)
---------------------------------------------- ------------- ----------- ----------------- -----------
Revenue 129,453 93,919 - 223,372
---------------------------------------------- ------------- ----------- ----------------- -----------
EBITDA 105,966 57,472 (21,934) 141,504
Depreciation and amortisation (4,007) (25,321) (244) (29,572)
Foreign exchange gain/(loss) 673 599 (58) 1,214
Other income (note 11) 147 7 12 166
Other expenses (note 10) (4) - (135) (139)
Finance income (note 15) 14 - 60 74
Finance costs (note 16) (157) (479) (3,284) (3,920)
---------------------------------------------- ------------- ----------- ----------------- -----------
Profit/(loss) before income tax 102,632 32,278 (25,583) 109,327
---------------------------------------------- ------------- ----------- ----------------- -----------
Income tax (25,147)
---------------------------------------------- ------------- ----------- ----------------- -----------
Profit for the year after tax from continuing
operations 84,180
---------------------------------------------- ------------- ----------- ----------------- -----------
Loss from discontinued operations (4)
---------------------------------------------- ------------- ----------- ----------------- -----------
Profit for the year 84,176
---------------------------------------------- ------------- ----------- ----------------- -----------
Depreciation and amortisation includes amortisation on the fair
value uplift on acquisition of Sasa and Kounrad of $16.9m.
The segmental results for the year ended 31 December 2020 are as
follows:
Kounrad Sasa Unallocated Total
$'000 $'000 $'000 $'000
---------------------------------------------- ------------- ----------- ----------------- -----------
Gross revenue 87,667 82,668 - 170,335
Silver stream purchases - (6,796) - (6,796)
Offtake buyers' fees (2,546) (863) - (3,409)
---------------------------------------------- ------------- ----------- ----------------- -----------
Revenue 85,121 75,009 - 160,130
---------------------------------------------- ------------- ----------- ----------------- -----------
EBITDA 65,473 42,347 (12,137) 95,683
Depreciation and amortisation (4,007) (24,890) (251) (29,148)
Foreign exchange gain/(loss) 221 (889) (22) (690)
Other income (note 11) 166 359 10 535
Other expenses (note 10) (3) (5) (20) (28)
Finance income (note 15) 9 - 107 116
Finance costs (note 16) (162) (586) (5,925) (6,673)
---------------------------------------------- ------------- ----------- ----------------- -----------
Profit/(loss) before income tax 61,697 16,336 (18,238) 59,795
---------------------------------------------- ------------- ----------- ----------------- -----------
Income tax (16,035)
---------------------------------------------- ------------- ----------- ----------------- -----------
Profit for the year after tax from continuing
operations 43,760
---------------------------------------------- ------------- ----------- ----------------- -----------
Loss from discontinued operations (70)
---------------------------------------------- ------------- ----------- ----------------- -----------
Profit for the year 43,690
---------------------------------------------- ------------- ----------- ----------------- -----------
Depreciation and amortisation includes amortisation on the fair
value uplift on acquisition of Sasa and Kounrad of $17.7m.
A reconciliation between profit for the year and EBITDA is
presented in the Financial Review section.
Group segmental assets and liabilities for the year ended 31
December 2021 are as follows:
Segmental assets Additions to non-current Segmental liabilities
assets
---------------------- -------------------- -------------------------- --------------------------
31 Dec 21 31 Dec 20 31 Dec 21 31 Dec 20 31 Dec 21 31 Dec 20
$'000 $'000 $'000 $'000 $'000 $'000
---------------------- --------- --------- ------------ ------------ ------------ ------------
Kounrad 70,316 66,562 2,704 1,255 (11,637) (11,142)
Sasa 405,928 435,141 12,104 7,265 (69,980) (62,792)
Assets held for
sale (note 22) 38 58 - - (28) (25)
Unallocated including
corporate 44,307 41,707 17 4 (29,697) (76,757)
---------------------- --------- --------- ------------ ------------ ------------ ------------
520,589 543,468 14,825 8,524 (111,342) (150,716)
---------------------- --------- --------- ------------ ------------ ------------ ------------
6. Revenue
2021 2020
Group $'000 $'000
International customers (Europe) - copper
cathode 131,464 87,110
International customers (Europe) - zinc
and lead concentrate 101,241 80,652
Domestic customers (Kazakhstan) - copper
cathode 574 557
International customers (Europe) - silver 1,873 2,016
---------------------------------------------------- ---------- ----------
Total gross revenue 235,152 170,335
---------------------------------------------------- ---------- ----------
Less:
Silver stream purchases (8,040) (6,796)
Offtake buyers' fees (3,740) (3,409)
Revenue 223,372 160,130
---------------------------------------------------- ---------- ----------
Kounrad
The Group sells and distributes its copper cathode product
primarily through an offtake arrangement with Traxys, which has
been retained as CAML's offtake partner through to December 2022.
The offtake arrangements are for a minimum of 95% of the SX-EW
plant's output. Revenue is recognised at the Kounrad mine gate when
the goods have been delivered in accordance with the contractual
delivery terms.
The offtake agreement provides for the option of provisional
pricing i.e. the selling price is subject to final adjustment at
the end of the quotation period based on the average price for the
month following delivery to the buyer. The Company may mitigate
commodity price risk by fixing the price in advance for its copper
cathode sales with the offtake partner.
The costs of delivery to the end customers have been effectively
borne by the Group through means of an annually agreed buyer's fee
which is deducted from the selling price.
During 2021, the Group sold 13,983 tonnes (2020: 13,763 tonnes)
of copper through the offtake arrangements. Some of the copper
cathodes are also sold locally and during 2021, 68 tonnes (2020: 97
tonnes) were sold to local customers.
Sasa
The Group sells Sasa's zinc and lead concentrate product to
smelters through an offtake arrangement with Traxys which has been
fixed through to 31 March 2023. The commitment is for 100% of the
Sasa concentrate production. The agreements with the smelters
provide for provisional pricing i.e. the selling price is subject
to final adjustment at the end of the quotation period based on the
average price for the month, two months or three months following
delivery to the buyer and subject to final adjustment for assaying
results.
The Group sold 18,856 tonnes (2020: 19,930 tonnes) of payable
zinc in concentrate and 25,257 tonnes (2020: 28,218 tonnes) of
payable lead in concentrate. The lead in concentrate is lower than
prior year as the final shipment did not depart from the port until
4 January 2022 and, under the Free on Board ('FOB') terms, this
revenue will be recognised in 2022.
The revenue arising from silver relates to a contract with
Osisko Gold Royalties where the Group has agreed to sell all of its
silver at a fixed price of $5.96/oz, significantly below market
value and arising from the silver stream commitment inherited on
acquisition (note 30).
7. Cost of sales
2021 2020
Group $'000 $'000
------------------------------------ -------- ---------
Reagents, electricity and materials 21,157 18,321
Depreciation and amortisation 28,937 28,587
Silver stream commitment (note 30) (1,873) (2,017)
Royalties 10,062 7,488
Employee benefit expense 16,356 14,931
Consulting and other services 5,491 4,352
Taxes and duties 381 375
80,511 72,037
------------------------------------ -------- ---------
8. Distribution and selling costs
2021 2020
Group $'000 $'000
------------------------------ --------- ---------
Freight costs 1,800 2,224
Transportation costs 19 30
Employee benefit expense - 3
Depreciation and amortisation 11 13
Materials and other expenses 286 296
------------------------------ --------- ---------
2,116 2,566
------------------------------ --------- ---------
The above distribution and selling costs are those incurred at
Kounrad and Sasa in addition to the costs associated with the
offtake arrangements.
9. Administrative expenses
2021 2020
Group $'000 $'000
--------------------------------------------- ------- --------
Employee benefit expense 10,360 9,352
Share based payments (note 28) 2,449 964
Consulting and other services 7,114 6,166
Auditors remuneration (note 12) 430 381
Office-related costs 922 923
Taxes and duties 178 658
Depreciation and amortisation 624 548
--------------------------------------------- ------- --------
Total from continuing operations 22,077 18,992
--------------------------------------------- ------- --------
Total from discontinued operations (note 22) 18 83
--------------------------------------------- ------- --------
22,095 19,075
--------------------------------------------- ------- --------
10. Other losses
2021 2020
Group $'000 $'000
----------------------------------------- ------- --------
Realised losses on financial derivatives 6,736 -
Other expenses 139 28
6,875 28
----------------------------------------- ------- --------
The Group entered into derivative financial instruments to
manage the Groups commodity price risk during the year and has made
a realised loss of $6,736,000 (2020: nil) as the actual commodity
prices were in excess of the agreed financial instruments. The
Kounrad Zero Cost Collar contract for 30% of copper production has
made a realised loss of $3,953,000 (2020: nil). Sasa's zinc and
lead arrangements were Swap contracts, with 30% of Sasa's zinc
production making a realised loss of $1,182,000 (2020: nil) and 30%
of its lead sold making a realised loss of $1,601,000 (2020: nil).
The derivative financial instruments were classified as Fair Value
Through Profit and Loss ('FVTPL') and expired at the end of the
year so therefore have a zero fair value at year end and therefore
no unrealised losses have been recognised.
11. Other income
2021 2020
Group $'000 $'000
-------------------------------------------------- ------- --------
Gain on disposal of property, plant and equipment 2 306
Other income 164 229
166 535
-------------------------------------------------- ------- --------
12. Auditors' remuneration
During the year, the Group obtained the following services from
the Company's Auditors and its associates:
2021 2020
$'000 $'000
-------------------------------------------------------- -------- ---------
Fees payable to BDO LLP the Company's Auditors for the
audit of the parent company and Consolidated Financial
Statements 230 190
Fees payable to BDO LLP the Company's Auditors and its
associates for other services:
- The audit of Company's subsidiaries 145 139
Fees payable to BDO LLP the Company's Auditors and its
associates for other services:
- Other assurance services 55 52
430 381
-------------------------------------------------------- -------- ---------
13. Employee benefit expense
The aggregate remuneration of staff, including Directors, was as
follows:
Group 2021 2020
$'000 $'000
--------------------------------------------- --------- ---------
Wages and salaries 19,878 18,019
Social security costs and similar taxes 2,802 2,569
Staff healthcare and other benefits 2,141 2,168
Other pension costs 3,238 2,990
Share based payment expense (note 28) 2,449 964
--------------------------------------------- --------- ---------
Total for continuing operations 30,508 26,710
--------------------------------------------- --------- ---------
Total for discontinuing operations (note 22) 75 74
--------------------------------------------- --------- ---------
30,583 26,784
--------------------------------------------- --------- ---------
The total employee benefit expense includes an amount of
$1,418,000 (2020: $1,346,000) which has been capitalised within
property, plant and equipment.
Company 2021 2020
$'000 $'000
Wages and salaries 6,091 5,464
Social security costs 1,098 1,137
Staff healthcare and other benefits 595 413
Other pension costs 114 161
Share based payments (note 28) 2,449 964
------------------------------------ --------- ---------
10,347 8,139
------------------------------------ --------- ---------
Key management remuneration is disclosed in the Remuneration
Committee report.
14. Monthly average number of people employed
Group 2021 2020
Number Number
Operational 934 905
Construction - 5
Management and administrative 133 133
------------------------------ --------- ----------
1,067 1,043
------------------------------ --------- ----------
The monthly average number of staff employed by the Company
during the year was 18 (2020: 16).
15. Finance income
Group 2021 2020
$'000 $'000
----------------------- ------------ ---------
Bank interest received 74 116
----------------------- ------------ ---------
74 116
----------------------- ------------
16. Finance costs
Group 2021 2020
$'000 $'000
Provisions: unwinding of discount (note 32) 347 528
Interest on borrowings (note 31) 3,483 6,060
Lease interest expense and bank charges 90 85
Total for continuing operations 3,920 6,673
Total for discontinuing operations (note 22) - -
3,920 6,673
17. Income tax
2021 2020
Group $'000 $'000
Current tax on profits for the year 26,610 16,998
Deferred tax credit (note 37) (1,463) (963)
Income tax expense 25,147 16,035
Taxation for each jurisdiction is calculated at the rates
prevailing in the respective jurisdictions.
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the consolidated entities as
follows:
2021 2020
Group $'000 $'000
Profit before income tax 109,327 59,795
Tax calculated at domestic tax rates applicable to
profits in the respective countries 19,244 9,473
Tax effects of:
Expenses not deductible for tax purposes 4,309 3,711
Movement on deferred tax (note 37) (1,463) (963)
Movement on unrecognised deferred tax - tax losses 3,057 3,814
Income tax expense 25,147 16,035
Corporate income tax is calculated at 19% (2020: 19%) of the
assessable profit for the year for the UK parent company, 20% for
the operating subsidiaries in Kazakhstan (2020: 20%) and 10% (2020:
10%) for the operating subsidiaries in North Macedonia.
Expenses not deductible for tax purposes includes share-based
payment charges, transfer pricing adjustments in accordance with
local tax legislation and depreciation and amortisation charges.
Non-taxable income includes intercompany dividend income.
Deferred tax assets have not been recognised on tax losses
primarily at the parent company as it remains uncertain whether
this entity will have sufficient taxable profits in the future to
utilise these losses.
18. Earnings/(loss) per share
(a) Basic
Basic earnings/(loss) per share is calculated by dividing the
profit/(loss) attributable to owners of the Company by the weighted
average number of Ordinary Shares in issue during the year
excluding Ordinary Shares purchased by the Company and held as
treasury shares (note 26).
2021 2020
$'000 $'000
Profit from continuing operations attributable to owners
of the parent 84,181 43,740
Loss from discontinued operations attributable to owners
of the parent (4) (70)
Profit attributable to owners of the parent 84,177 43,670
2021 2020
No. No.
Weighted average number of Ordinary Shares in issue 176,498,266 176,498,266
2021 2020
$ cents $ cents
Earnings/(loss) per share from continuing and discontinued
operations attributable to owners of the parent during
the year (expressed in $ cents per share)
From continuing operations 47.69 24.78
From discontinued operations - (0.04)
From profit for the year 47.69 24.74
(b) Diluted
The diluted earnings/(loss) per share is calculated by adjusting
the weighted average number of Ordinary Shares outstanding after
assuming the conversion of all outstanding granted share
options.
2021 2020
$'000 $'000
Profit from continuing operations attributable to owners
of the parent 84,181 43,740
Loss from discontinued operations attributable to owners
of the parent (4) (70)
Profit attributable to owners of the parent 84,177 43,670
2021 2020
No. No.
Weighted average number of Ordinary Shares in issue 176,498,266 176,498,266
Adjusted for:
* Share options 5,589,467 5,215,770
Weighted average number of Ordinary Shares for diluted
earnings per share 182,087,733 181,714,036
2021 2020
Diluted earnings/(loss) per share $ cents $ cents
From continuing operations 46.23 24.07
From discontinued operations - (0.04)
From profit for the year 46.23 24.03
19. Property, plant and equipment
Motor
Construction Plant Mining vehicles Mineral
in and assets and ROU Land rights
progress equipment $'000 assets $'000 $'000 Total
Group $'000 $'000 $'000 $'000
Cost
At 1 January 2020 14,373 128,655 1,426 2,985 619 341,801 489,859
Additions 8,399 49 - 74 - - 8,522
Disposals (41) (1,623) - (39) (1,703)
Change in estimate - asset
retirement obligation
(note 32) - 448 - - - - 448
Transfers (18,441) 18,441 - - - - -
Exchange differences 447 829 (134) (146) 58 27,228 28,282
At 31 December 2020 4,737 146,799 1,292 2,874 677 369,029 525,408
Additions 14,268 456 - 45 - 14,769
Disposals (17) (24) - - - (41)
Change in estimate - asset
retirement obligation
(note 32) - 8,981 - - 8,981
Transfers (9,846) 9,843 - 3 - -
Exchange differences (499) (5,643) (33) (38) (51) (23,259) (29,523)
At 31 December 2021 8,643 160,412 1,259 2,884 626 345,770 519,594
Accumulated depreciation
At 1 January 2020 - 42,850 316 1,301 - 39,005 83,472
Provided during the year - 10,702 115 343 - 16,159 27,319
Disposals - (1,620) - (39) - - (1,659)
Exchange differences - (1,666) (30) (73) - - (1,769)
At 31 December 2020 - 50,266 401 1,532 - 55,164 107,363
Provided during the year - 12,006 112 380 - 15,374 27,872
Disposals - (19) - (8) - - (27)
Exchange differences - (471) (10) (22) - - (503)
At 31 December 2021 - 61,782 503 1,882 - 70,538 134,705
Net book value at 31
December
2020 4,737 96,533 891 1,342 677 313,865 418,045
Net book value at 31
December
2021 8,643 98,630 756 1,002 626 275,232 384,889
The Company had $410,000 of office equipment at net book value
as at 31 December 2021 (2020: $638 ,000 ).
The increase in estimate in relation to the Kounrad asset
retirement obligation of $270,000 (2020: decrease of $160,000) is
due to adjusting the provision recognised at the net present value
of future expected costs using latest assumptions on inflation
rates and discount rates (note 32).
The increase in estimate in relation to the Sasa asset
retirement obligation of $8,711,000 (2020: increase of $608,000) is
due to a combination of adjusting the provision recognised at the
net present value of future expected costs using latest assumptions
on inflation rates and discount rates as well as updating the
provision for management's best estimate of the costs that will be
incurred based on current contractual and regulatory requirements
(note 32).
During the year there were total disposals of plant, property
and equipment at cost of $41,000 (2020: $1,703,000) with
accumulated depreciation of $27,000 (2020: $1,659,000). The Group
received $16,000 (2020: $350,000) consideration for these assets
and therefore a gain of $2,000 was recognised in other income (note
11) (2020: gain of $306,000 recognised in other expenses).
Amounts recognised in the income statement
The income statement shows the following amounts relating to
leases:
2021 2020
$'000 $'000
Depreciation charge of right-of-use assets
Office 171 171
Other 121 24
292 195
Interest expense included in finance
costs 77 45
As at 31 December 2021 there are no indications of impairment
with the fair value of the assets exceeding the net book value.
20. Intangible assets
Mining Computer
licences software
Goodwill and permits and website Total
Group $'000 $'000 $'000 $'000
Cost
At 1 January 2020 30,672 37,494 529 68,695
Additions - - 2 2
Disposals - - (253) (253)
Exchange differences 881 (1,334) (7) (460)
At 31 December 2020 31,553 36,160 271 67,984
Additions - - 56 56
Exchange differences (1,681) (1,136) (3) (2,820)
At 31 December 2021 29,872 35,024 324 65,220
Accumulated amortisation
At 1 January 2020 - 9,492 527 10,019
Provided during the year - 1,864 10 1,874
Disposals - - (253) (253)
Exchange differences (274) (22) (296)
At 31 December 2020 - 11,082 262 11,344
Provided during the year - 1,847 17 1,864
Exchange differences - (79) 1 (78)
At 31 December 2021 - 12,850 280 13,130
Net book value at 31 December 2020 31,553 25,078 9 56,640
Net book value at 31 December 2021 29,872 22,174 44 52,090
The Company had nil computer software and website costs at net
book value as at 31 December 2021 (2020: nil).
Impairment assessment
Kounrad project
The Kounrad project located in Kazakhstan has an associated
goodwill balance of $7,948,000 (2020: $8,154,000). In accordance
with IAS 36 'Impairment of assets' and IAS 38 'Intangible Assets',
a review for impairment of goodwill is undertaken annually or at
any time an indicator of impairment is considered to exist and in
accordance with IAS 16 'Property, plant and equipment', a review
for impairment of long-lived assets is undertaken at any time an
indicator of impairment is considered to exist. The discount rate
applied to calculate the present value is based upon the nominal
weighted average cost of capital applicable to the cash generating
unit ('CGU'). A CGU is the smallest identifiable group of assets
that generates cash inflows that are largely independent of the
cash inflows from other assets or groups of assets. The recoverable
amount of the CGU is assessed by reference to the higher of value
in use ('VIU'), being the net present value ('NPV') of future cash
flows expected to be generated by the asset, and fair value less
costs to dispose ('FVLCD'). The FVLCD is considered to be higher
than VIU and has been derived using discounted cash flow techniques
(NPV of expected future cash flows of a CGU), which incorporate
market participant assumptions.
The discount rate reflects equity risk premiums over the
risk-free rate, the impact of the remaining economic life of the
CGU and the risks associated with the relevant cash flows based on
the country in which the CGU is located. These risk adjustments are
based on observed equity risk premiums, historical country risk
premiums and average credit default swap spreads for the
period.
The key economic assumptions used in the review were a five-year
forecast average nominal copper price of $7,914 per tonne (2020:
$6,851 per tonne) and a long-term price of $7,592 per tonne (2020:
$6,724 per tonne) and a discount rate of 8% (2020: 8%). Assumptions
in relation to operational and capital expenditure are based on the
latest budget approved by the Board. The carrying value of the net
assets is not currently sensitive to any reasonable changes in key
assumptions. Management concluded and the net present value of the
asset is significantly in excess of the net book value of assets,
and therefore no impairment has been identified.
Sasa project
The Sasa project located in North Macedonia has an associated
goodwill balance of $21,924,000 (2020: $23,399,000). The business
combination in 2017 was accounted for at fair value under IFRS 3
and therefore recoverable value is sensitive to changes in
commodity prices, operational performance, treatment charges,
future cash costs of production and capital expenditures. In
accordance with IAS 36 'Impairment of assets' and IAS 38
'Intangible Assets', a review for impairment of goodwill is
undertaken annually or at any time an indicator of impairment is
considered to exist and in accordance with IAS 16 'Property, plant
and equipment', a review for impairment of long-lived assets is
undertaken at any time an indicator of impairment is considered to
exist.
The assessment compared the recoverable amount of the Sasa Cash
CGU with its carrying value for the year ended 31 December 2021.
The recoverable amount of the CGU is assessed by reference to the
higher of VIU, being the NPV of future cash flows expected to be
generated by the asset, and FVLCD. The FVLCD is considered to be
higher than VIU and has been derived using discounted cash flow
techniques (NPV of expected future cash flows of a CGU), which
incorporate market participant assumptions. Cost to dispose is
based on management's best estimates of future selling costs at the
time of calculating FVLCD. Costs attributable to the disposal of
the CGU are not considered significant. The methodology used for
the fair value is a level 3 valuation.
The expected future cash flows utilised in the FVLCD model are
derived from estimates of projected future revenues based on broker
consensus commodity prices, treatment charges, future cash costs of
production and capital expenditures contained in the life of mine
('LOM') plan, and as a result FVLCD is considered to be higher than
VIU. The Group's discounted cash flow analysis reflects probable
reserves as well as indicated resources and certain inferred
resources which are considered sufficiently certain and
economically viable, and is based on detailed research, analysis
and modelling. The forecast operational and capital expenditure
reflects the transition of mining method from sub-level caving to
cut and fill stoping.
At 31 December 2021, the Group has reviewed the indicators for
impairment, including forecasted commodity prices, treatment
charges, discount rates, operating and capital expenditure, and the
mineral reserves and resources' estimates and an impairment is not
necessary. For the purposes of the impairment review a discount
rate of 10.21% (2020: 9.13%) was applied to calculate the present
value of the CGU. The discount rate was supported by a detailed
WACC calculation considering both the country and company risk
premiums. The key economic assumptions used in the review were a
five-year forecast average nominal zinc and lead price of $2,529
(2020: $2,391) and $1,947 (2020: $2,093) per tonne respectively and
a long-term price of $2,435 (2020: $2,291) and $2,070 (2020:
$2,095) per tonne respectively. Management forecasts factor in a
decrease in zinc and lead treatment charges which are currently
high but are forecast to return to historic averages by 2022.
Management then performed sensitivity analyses whereby certain
parameters were flexed downwards by reasonable amounts for the CGU
to assess whether the recoverable value for the CGU would result in
an impairment charge. The following sensitivities when applied in
isolation would result in a breakeven position:
Long-term zinc price reduced by 7%
Long-term lead price reduced by 5%
Discount rate increased to 11.5%
Production decreased by 3.5%
Treatment charges increased by 20%
Operational expenditure increased by 6%
Capital expenditure increased by 25%
In isolation, none of the changes set out above would result in
an impairment. This sensitivity analysis also does not take into
account any of management's mitigation factors should these changes
occur or the planned production optimisation in future years. The
Board considers the base case forecasts to be appropriate and
balanced best estimates.
21. Investments
Shares in Group undertakings:
Company
31 Dec 31 Dec
21 $'000 20 $'000
At 1 January 5,491 5,491
Investment in Shuak BV - 23
Impairment of investment in Shuak BV - (23)
Impairment of investment in KBV (384) -
At 31 December 5,107 5,491
Investments in Group undertakings are recorded at cost which is
the fair value of the consideration paid, less impairment.
Details of the Company holdings are included in the table
below:
Non-controlling
interest
%
2021 Date
of incorporation
CAML % CAML
%
Registered office 2021 2020
Subsidiary address Activity
CAML Kazakhstan Herikerbergweg Holding - - 100 23 Jun
BV 238, Company 08
1101 CM Amsterdam,
The Netherlands
Masters House, 107
Hammersmith Road,
London, W14 0QH,
United Holding 28 June
CAML KZ Limited Kingdom Company 100 - 100 2021
Masters House, 107
Hammersmith Road,
London, W14 0QH, Seller of
United zinc and 5 Sep
CAML MK Limited Kingdom lead concentrate 100 - 100 17
Prins
Bernhardplein
200
1097 JB
Amsterham, Holding 30 June
CMK Mining B.V. The Netherlands Company 100 - 100 2015
Ivo Lola Ribar no.
57-1/6, 1000
CMK Europe SPLLC Skopje, Holding 10 July
Skopje North Macedonia Company 100 - 100 2015
CMK Resources Cannon's Court, 22 Holding - - 100 19 June
Limited Victoria St, Company 2015
Hamilton
HM12, Bermuda
Masters House, 107
Hammersmith Road,
London, W14 0QH,
Copper Bay United Holding 29 Oct
Limited Kingdom Company 75* 25 75* 10
Masters House, 107
Hammersmith Road,
London, W14 0QH,
Copper Bay (UK) United Holding 9 Nov
Ltd Kingdom Company 75* 25 75* 11
Ebro 2740, Oficina
603, Las Condes,
Copper Bay Chile Santiago, Holding 12 Oct
Limitada Chile Company 75* 25 75* 11
Business Centre
No.
2, 4 Mira Street,
Balkhash, Shuak project 5 Oct
Ken Shuak LLP Kazakhstan (exploration) 10 90 10 16
Business Centre
No.
2, 4 Mira Street, Kounrad
Kounrad Copper Balkhash, project 29 Apr
Company LLP Kazakhstan (SX-EW plant) 100 - 100 08
Ebro 2740, Oficina
603, Las Condes,
Minera Playa Santiago, Exploration 20 Oct
Verde Limitada Chile - Copper 75* 25 75* 11
28 Rudarska Str,
Makedonska
Rudnik SASA DOOEL Kamenica, 2304,
Makedonska North 22 June
Kamenica Macedonia Sasa project 100 - 100 2005
Business Centre
No.
2, 4 Mira Street, Kounrad
Balkhash, project 6 Feb
Sary Kazna LLP Kazakhstan (SUC operations) 100 - 100 06
*Fully diluted basis
CAML Kazakhstan BV
In December 2021, the Group liquidated CAML Kazakhstan BV
following a restructure of the Group where CAML KZ Limited was
incorporated and became the new holding Company of Kounrad Copper
Company LLP.
CAML MK
For the year ended 31 December 2021, CAML MK Limited (registered
number: 10946728) has opted to take advantage of a statutory
exemption from audit under section 479A of the Companies Act 2006
relating to subsidiary companies. The members of CAML MK Limited
have not required it to obtain an audit of their Financial
Statements for the year ended 31 December 2021. In order to
facilitate the adoption of this exemption, Central Asia Metals plc,
the parent company of the subsidiaries concerned, undertakes to
provide a guarantee under Section 479C of the Companies Act 2006 in
respect of CAML MK Limited.
Shuak
In February 2020, the Group reduced its effective interest in
Ken Shuak LLP from 80% to 10% and in April 2020 liquidated Shuak
BV. The Group will not be required to contribute towards future
costs of the project.
CMK Resources Limited
CMK Resources Limited was liquidated in February 2020.
Non-controlling interest
31 Dec 31 Dec
21 20
$'000 $'000
Balance at 1 January 1,315 1,324
Loss/(profit) attributable to non-controlling
interests 1 (20)
Disposal of subsidiaries - 11
Balance at 31 December 1,316 1,315
Non-controlling interests were held at year end by third parties
in relation to Copper Bay Limited, Copper Bay (UK) Limited, Copper
Bay Chile Limitada and Minera Playa Verde Limitada. During the
prior year the Group reduced its effective interest in Ken Shuak
LLP from 80% to 10% and in April 2020 liquidated Shuak BV and
therefore these are treated as a disposal of non-controlling
interest.
22. Assets held for sale
The assets and liabilities of the Copper Bay entities continue
to be presented as held for sale in the Statement of Financial
Position as the Company progresses its sale process with a party
currently holding exclusive due diligence rights. The exploration
assets and property, plant and equipment held in Copper Bay were
fully written off in prior periods. The results of the Copper Bay
entities for the year ended 31 December 2021 and the comparative
year ended 31 December 2020 are shown within discontinued
operations in the Consolidated Income Statement.
Assets of disposal group classified as held for sale: 31 Dec 31 Dec
21 $'000 20 $'000
Cash and cash equivalents 36 56
Trade and other receivables 2 2
38 58
Liabilities of disposal group classified 31 Dec 31 Dec
as held for sale: 21 $'000 20 $'000
Trade and other payables 28 25
28 25
During the year the following have been recognised in
discontinued operations:
2021 2020
(Loss)/profit from discontinued operations: $'000 $'000
General and administrative expenses (18) (97)
Foreign exchange gain 14 27
Loss from discontinued operations (4) (70)
2021 2020
Cash flows of disposal group classified
as held for sale: $'000 $'000
Operating cash flows (19) (50)
Total cash flows (19) (50)
23. Trade and other receivables
Group Company
--------------------
31 Dec 31 Dec 31 Dec 31 Dec
Current receivables 21 $'000 20 $'000 21 $'000 20 $'000
--------- ---------
Receivable from subsidiary - - 581 444
Loans due from subsidiaries - - 32,900 16,200
Trade receivables 1,249 1,928 - -
Prepayments and accrued income 2,545 2,627 422 353
VAT receivable 1,322 1,260 110 92
Other receivables 1,094 3,130 191 270
6,210 8,945 34,204 17,359
Non-current receivables
Loans due from subsidiaries - - 269,241 309,296
Prepayments 4,308 760 - -
VAT receivable 3,039 3,082 - -
7,347 3,842 269,241 309,296
The carrying value of all the above receivables is a reasonable
approximation of fair value. There are no amounts past due at the
end of the reporting period that have not been impaired apart from
the VAT receivable balance as explained below. Trade and other
receivables and loans due from subsidiaries are accounted for under
IFRS 9 using the expected credit loss model and are initially
recognised at fair value and subsequently measured at amortised
cost less any allowance for expected credit losses.
The loan due from subsidiaries is owed by CAML MK Limited, a
directly owned subsidiary for $302,141,000 (2020: $325,496,000),
which accrues interest at a rate of 2.25% per annum (2020: 5%)
effective from 1 July 2021. $309,296,000 of the comparative loans
due from subsidiaries have been reclassified from current to
non-current assets reflecting the expected realisation profile of
the asset at 31 December 2020. The balance was previously
classified as a current asset however the balance should have been
reflected as a non-current asset notwithstanding it is
contractually payable on demand given the expected realisation
profile. The loan has been assessed for expected credit loss under
IFRS 9, however as the Group's strategies are aligned there is no
realistic expectation that repayment would be demanded early ahead
of the current repayment plans. The expected future cash flows
arising from the asset exceed the intercompany loan value under
various scenarios considered which are outlined in the intangible
assets impairment assessment so it is believed this loan can be
repaid and the expected credit loss is immaterial.
As at 31 December 2021, the total Group VAT receivable was
$4,361,000 (2020: $4,342,000) which includes an amount of
$3,299,000 (2020: $3,396,000) of VAT owed to the Group by the
Kazakhstan authorities. In 2021, the Kazakhstan authorities
refunded $1,357,000 and a further $173,000 was received in February
2022 and this has been classified as current trade and other
receivables as at 31 December 2021. The Group is working closely
with its advisers to recover the remaining portion. The planned
means of recovery will be through a combination of the local sales
of cathode copper to offset VAT recoverable and by a continued
dialogue with the authorities for cash recovery and further
offsets.
24. Inventories
31 Dec 31 Dec
21 20
Group $'000 $'000
Raw materials 9,208 6,986
Finished goods 1,244 844
10,452 7,830
The Group did not have any slow-moving, obsolete or defective
inventory as at 31 December 2021 and therefore there were no
write-offs to the Income Statement during the year (2020: nil). The
total inventory recognised through the Income Statement was
$6,599,000 (2020: $4,808,000).
25. Cash and cash equivalents and restricted cash
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
21 20 21 20
$'000 $'000 $'000 $'000
Cash at bank and on hand 24,040 15,335 38,271 3,777
Short-term deposits 31,655 28,896 1,918 28,896
Cash and cash equivalents 55,695 44,231 40,189 32,673
Restricted cash 3,516 3,641 3,284 3,441
Total cash and cash equivalent including
restricted cash 59,211 47,872 43,473 36,114
The restricted cash amount of $3,516,000 (2020: $3,641,000) is
held at bank to cover corporate debt service compliance and Kounrad
subsoil user licence requirements. Short-term deposits are held at
call with banks.
The Group holds an overdraft facility in Sasa and these amounts
are disclosed in note 31 Borrowings.
Reconciliation to cash flow statements
The above figures reconcile to the amount of cash shown in the
statement of cash flows at the end of the financial year as
follows:
Group
31 Dec 31 Dec
21 $'000 20 $'000
Cash and cash equivalents as above (excluding
restricted cash) 55,695 44,231
Cash at bank and on hand in assets held
for sale (note 22) 36 56
Balance per statement of cash flows 55,731 44,287
26. Share capital and premium
Ordinary Share Treasury
Number of Shares premium shares
shares $'000 $'000 $'000
At 1 January 2020 176,498,266 1,765 191,184 (6,526)
Exercise of options - - 353 2,686
At 31 December 2020 176,498,266 1,765 191,537 (3,840)
Exercise of options - - 451 1,480
At 31 December 2021 176,498,266 1,765 191,988 (2,360)
The par value of Ordinary Shares is $0.01 per share and all
shares are fully paid. During the year there was an exercise of
share options by employees and Directors which were settled by
selling both trust and treasury shares. The proceeds of disposal of
trust and treasury shares exceeded the purchase price by $451,000
(2020: $353,000) and has been recognised in share premium.
Treasury Trust Employee
Shares Shares benefit
No. No. trust shares
No.
At 1 January 2020 511,647 1,621,783 2,436,317
Disposal of treasury shares (40,000) (1,005,467) -
At 31 December 2020 471,647 616,316 2,436,317
Disposal of treasury shares - (515,886) (196,715)
At 31 December 2021 471,647 100,430 2,239,602
27. Currency translation reserve
Currency translation differences arose primarily on the
translation on consolidation of the Group's Kazakhstan-based and
North Macedonian-based subsidiaries whose functional currency is
the Tenge and North Macedonian Denar respectively. In addition,
currency translation differences arose on the goodwill and fair
value uplift adjustments to the carrying amounts of assets and
liabilities arising on the Kounrad Transaction and CMK Resources
acquisition which are denominated in Tenge and Denar respectively.
During 2021, a non-cash currency translation loss of $31,283,000
(2020: gain of $26,975,000) was recognised within equity.
28. Share based payments
The Company provides rewards to staff in addition to their
salaries and annual discretionary bonuses, through the granting of
share options in the Company. The Company share option scheme has
an exercise price of effectively nil for the participants.
The share options granted during 2012 until 2018 were based on
the achievement by the Group and the participant of the performance
targets as determined by the CAML Remuneration Committee that are
required to be met in year one and then options could be exercised
one third annually from the end of year one. Options granted during
2012 to 2018 had straight forward conditions attached and were
valued using a Black-Scholes model.
Share options granted in 2019 vest after three years depending
on achievement of the Group of performance target relating to the
level of absolute total shareholder return compound annual growth
rate of the value of the Company's shares over the performance
period of three financial years ending 31 December 2021. This
calculation for these vesting conditions was performed at year end
and 67.91% of the share options were deemed to vest while the
remainder have lapsed.
Share options granted in 2020 and 2021 vest after three years
depending on a combination of the achievement of the Group of
performance target relating to the level of absolute total
shareholder return compound annual growth rate of the value of the
Company's shares over the performance period of three financial
years relative to the constituents of a selected group mining index
of companies as well as sustainability performance targets.
The fair value at grant date of the 2019, 2020 and 2021 grants
are independently determined using a Monte Carlo simulation model
that takes into account the exercise price, the term of the option,
the impact of dilution (where material), the share price at grant
date and expected price volatility of the underlying share, the
expected dividend yield, the risk-free interest rate for the term
of the option, and the correlations and volatilities of the share
price.
The assessed fair value at grant date of options granted during
the year ended 31 December 2021 was $2,545,000 in total which is
recognised over the vesting period commencing 15 July 2021 until 31
March 2024 and $435,000 was recognised during the year. For the
2020 options $980,403 was expensed for the year ended 31 December
2021. For the 2019 share options $290,000 (2020: $483,000) was
expensed for the year ended 31 December 2021. An additional
dividend related share option charge of $720,000 (2020: $308,000)
was recognised and also additional costs associated when share
options were exercised of $24,000 (2020: $173,000). The number of
shares covered by such awards is increased by up to the value of
dividends declared as if these were reinvested in Company shares at
the dates of payment. The outstanding share options included in the
calculation of diluted earnings/(loss) per share (note 18) includes
these additional awards but they are excluded from the disclosures
in this note. In total, an amount of $2,449,000 (2020: $964,000)
has been expensed within employee benefits expense from continuing
operations for share based payment charges for the year ended 31
December 2021.
The model inputs for options granted during the year
included:
31 Dec 2021 31 Dec 2020
Vesting period 2 years 9 months 2 years 3 months
Exercise price $0.01 $0.01
Grant date: 15 July 2021 16 December
2020
Expiry date: 14 July 2031 15 December
2030
Share price at grant date $3.27 $3.02
Risk-free interest rate 0.38% 0.55%
As at 31 December 2021, 4,594,192 (2020: 4,420,348) options were
outstanding. Share options are granted to Directors and selected
employees. The exercise price of the granted options is presented
in the table below for every grant. The Company has the option but
not the legal or constructive obligation to repurchase or settle
the options in cash.
Movements in the number of share options outstanding and their
related weighted average price are as following:
2021 2020
Average Average
exercise exercise
price price
in $ per in $ per
share Options share Options
option (number) option (number)
At 1 January 0.01 4,420,348 0.01 4,182,729
Granted 0.01 1,009,284 0.01 1,039,126
Exercised 0.01 (439,020) 0.01 (801,507)
Non-vesting 0.01 (396,420) - -
At 31 December 0.01 4,594,192 0.01 4,420,348
Non-vesting shares relates to options granted for which the
performance targets were not met. Out of the outstanding options
of
4,594,192 (2020: 4,420,348), 1,741,528 options (2020: 1,932,717)
were exercisable as at 31 December 2021 excluding the value of
additional share options for dividends declared on those
outstanding. The related weighted average share price at the time
of exercise was $3.30 (2020: $3.26) per share.
Share options exercised by the Directors during the year are
disclosed in the Remuneration Committee Report.
Share options outstanding at the end of the year have the
following expiry date and exercise prices:
Option
Expiry exercise 2021 2020
Grant - vest date price Share options (number)
of option $
7 May
8 May 12 22 0.01 76,032 76,032
23 Jul
24 Jul 13 23 0.01 36,801 36,801
2 Jun
3 Jun 14 24 0.01 143,064 143,064
7 Oct
8 Oct 14 24 0.01 160,000 160,000
21 Apr
22 Apr 15 25 0.01 212,121 212,121
17 Apr
18 Apr 16 26 0.01 338,940 338,940
20 Apr
21 Apr 17 27 0.01 296,591 482,872
1 May
2 May 18 28 0.01 560,428 806,515
29 May
30 May 19 29 0.01 752,068 1,124,877
15 Dec
16 Dec 20 30 0.01 1,008,863 1,039,126
14 Jul
15 Jul 21 31 0.01 1,009,284 -
4,594,192 4,420,348
Employee Benefit Trust
The Company set up an Employee Benefit Trust ('EBT') during 2009
as a means of incentivising certain Directors and senior management
of CAML prior to the Initial Public Offering ('IPO'). All of the
shares awarded as part of the EBT scheme vested on the successful
completion of the IPO on 30 September 2010.
2,534,688 Ordinary Shares were initially issued as part of the
arrangements in December 2009 followed by a further issue of
853,258 in September 2010. The shares were issued at the exercise
price of $0.68, which was the best estimate of the Company's
valuation at the time. Details of the awards to Directors of the
Company are contained in the Remuneration Committee Report.
29. Trade and other payables
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
21 20 21 20
$'000 $'000 $'000 $'000
Trade and other payables 3,363 4,652 363 131
Accruals 4,861 4,569 4,401 4,142
Corporation tax, social security and
other taxes 7,832 3,674 1,147 1,151
Loan due to subsidiary - - 53,400 -
16,056 12,895 59,311 5,424
The carrying value of all the above payables is equivalent to
fair value.
The loan due to subsidiary is owed by Kounrad Copper Company
LLP, an indirectly owned subsidiary for $53,400,000 (2020: $nil),
which accrues interest at a rate of 2.25% per annum and is
repayable on demand.
All Group and Company trade and other payables are payable
within less than one year for both reporting periods.
30. Silver streaming commitment
The carrying amounts of the silver streaming commitment for
silver delivery are as follows:
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
21 20 21 $'000 20 $'000
$'000 $'000
Current 1,229 1,573 - -
Non-current 18,220 19,246 - -
19,449 20,819 - -
On 1 September 2016, the CMK Group entered into a Silver
Purchase Agreement. The Group acquired this agreement as part of
the acquisition of the CMK Group and inherited a silver streaming
commitment related to the production of silver during the life of
the mine. The reduction in the silver streaming commitment is
recognised in the Income Statement within cost of sales as the
silver is delivered based on the units of production.
31. Borrowings
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
21 20 21 20
$'000 $'000 $'000 $'000
Secured: Non-current
Bank loans - 32,320 - 32,320
Secured: Current
Bank loans 23,406 38,400 23,406 38,400
Unsecured: Current
Bank overdraft 9,572 9,692 - -
Total Current 32,978 48,092 23,406 38,400
Total borrowings 32,978 80,412 23,406 70,720
The carrying value of loans approximates fair value:
Carrying amount Fair value
31 Dec 31 Dec 31 Dec 31 Dec
21 $'000 20 $'000 21 $'000 20 $'000
Traxys Europe S.A. 23,406 70,720 23,406 70,720
Bank overdrafts 9,572 9,692 9,572 9,692
32,978 80,412 32,978 80,412
The movement on borrowings can be summarised as follows:
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
21 20 21 20
$'000 $'000 $'000 $'000
Balance at 1 January 80,412 108,768 70,720 107,873
Repayment of borrowings (48,400) (38,400) (48,400) (38,400)
Finance charge interest 2,398 4,813 2,162 4,627
Finance charge unwinding of directly
attributable fees 1,086 1,247 1,086 1,247
Interest paid (2,398) (4,794) (2,162) (4,627)
Drawdown of overdraft 644 9,105 - -
Repayments of overdraft - (1,110) - -
Foreign exchange (764) 783 - -
Balance at 31 December 32,978 80,412 23,406 70,720
During the year, $48,400,000 (2020: $38,400,000) of the
principal amount of Group debt was repaid as well as a further
$2,398,000 (2020: $4,794,000) interest.
The Group holds one corporate debt package with Traxys repayable
on 4 November 2022. Interest was payable at LIBOR plus 4.75% and
reduced to LIBOR plus 4.00% with effect from 27 March 2020.
Security is provided over the shares in CAML Kazakhstan BV, certain
bank accounts and the Kounrad offtake agreement as well as over the
Sasa offtake agreement.
The financial covenants of the debt which include the monitoring
of gearing and leverage ratios are all continuously monitored by
management and the Group is both currently compliant and forecast
to continue to be compliant with significant headroom.
The overdraft facility previously agreed with Komercijalna Banka
AD Skopje with a fixed interest rate of 2.4% to 2.5% dependent on
conditions denominated in Macedonian Denar previously repayable in
July 2021 was extended for a further year to 30 July 2022. This
overdraft as at 31 December 2021 was $4,645,000 (31 December 2020:
$4,809,000).
In June 2020 an overdraft facility was agreed with Ohridska
Banka A.D. Skopje with a fixed interest rate of 2.5% denominated in
Macedonian Denar repayable on 26 June 2021 and this was extended
for a further year to 26 June 2022. This overdraft as at 31
December 2021 was $4,927,000 (31 December 2020: $4,883,000).
As at 31 December 2021, the Group measured the fair value using
techniques for which all inputs which have a significant effect on
the recorded fair value are observable, either directly or
indirectly (Level 2).
The different levels have been defined as follows:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
32. Provisions for other liabilities and charges
Group
Asset Employee Other
retirement retirement employee
obligation benefits benefits Legal claims Total
$'000 $'000 $'000 $'000 $'000
At 1 January 2020 8,398 199 186 290 9,073
Change in estimate 448 43 47 351 889
Settlements of provision - (23) (19) (631) (673)
Unwinding of discount (note
16) 528 - - - 528
Exchange rate difference (178) 20 21 6 (131)
At 31 December 2020 9,196 239 235 16 9,686
Change in estimate 8,981 48 56 6 9,091
Settlements of provision - (23) (12) (20) (55)
Unwinding of discount (note
16) 347 - - - 347
Exchange rate difference (64) (19) (20) - (103)
At 31 December 2021 18,460 245 259 2 18,966
Non-current 18,460 207 248 2 18,917
Current - 38 11 - 49
At 31 December 2021 18,460 245 259 2 18,966
a) Asset retirement obligation
The Group provides for the asset retirement obligation
associated with the mining activities at Kounrad, estimated
internally to be required in 2034. The provision is recognised at
the net present value of future expected costs using a discount
rate of 8.07% (2020: 8.07%). The increase in estimate in relation
to the asset retirement obligation of $270,000 (2020: decrease of
$160,000) is due to adjusting the provision recognised at the net
present value of future expected costs using an inflation rate of
3.77% (2020: 3.86%) and review of costs.
In 2021 at year end Sasa engaged external expert consultants to
conduct an independent assessment on the environment of the mining
activities of the Group and to prepare a report on the restoration
and the relevant costs connected with the closure of the mine, and
the mining properties. The asset retirement obligation used this
external assessment to estimate the future potential obligations.
The expected current cash flows were projected over the useful life
of the mining site and discounted to 2021 terms using a discount
rate of 5.50% (2020: 4.94%). The cost of the related assets are
depreciated over the useful life of the assets and are included in
property, plant and equipment. The increase in estimate in relation
to the asset retirement obligation of $8,711,000 (2020: increase of
$608,000) is primarily due to additional estimated costs
surrounding managing surface water in-line with the GISTM and
lining of the tailings facilities as well as updating the discount
rate using latest assumptions on inflation rates and discount
rates.
b) Employee retirement benefit
All employers in North Macedonia are obliged to pay employees
minimum severance pay on retirement equal to two months of the
average monthly salary applicable in the country at the time of
retirement. The retirement benefit obligation is stated at the
present value of expected future payments to employees with respect
to employment retirement pay. The present value of expected future
payments to employees is determined by an independent authorised
actuary in accordance with the prevailing rules of actuarial
mathematics.
c) Other employee benefit
The Group is also obliged to pay jubilee anniversary awards in
North Macedonia for each ten years of continuous service of the
employee. Provisions for termination and retirement obligations are
recognised in accordance with actuary calculations. Basic 2021
actuary assumptions are used as follows:
Discount rate: 2.75%
Expected rate of salary increase: 2.5%
d) Legal claims
The Group is party to certain legal claims and the recognised
provision reflects management's best estimate of the most likely
outcome. The Group reviews outstanding legal cases following
developments in the legal proceedings and at each reporting date,
in order to assess the need for provisions and disclosures in its
financial statements. Among the factors considered in making
decisions on provisions are the nature of litigation, claim or
assessment, the legal process and potential level of damages in the
jurisdiction in which the litigation, claim or assessment has been
brought, the progress of the case (including the progress after the
date of the financial statements but before those statements are
issued), the opinions or views of legal advisers, experience on
similar cases and any decision of the Group's management as to how
it will respond to the litigation, claim or assessment.
33. Cash generated from operations
(Group) 2021 2020
Note $'000 $'000
Profit before income tax including discontinued
operations 109,323 59,725
Adjustments for:
Depreciation and amortisation 29,572 29,148
Silver stream commitment (1,369) (2,017)
Gain on disposal of property, plant and
equipment 11 (2) (306)
Foreign exchange (loss)/gain (1,214) 690
Share based payments 28 2,449 964
Finance income 15 (74) (116)
Finance costs 16 3,920 6,673
Changes in working capital:
Inventories 24 (2,622) (546)
Trade and other receivables 23 (6,216) (7,009)
Trade and other payables 29 2,843 46
Provisions for other liabilities and charges 32 (55) (232)
Cash generated from operations 136,555 87,020
The increase in trade and other receivables of $6,216,000 (2020:
$7,009,000) includes movement in Sasa VAT receivable balance of
$3,468,000 (2020: $4,018,000) which during the year is offset
against the corporate income tax payments during the year.
34. Commitments
Significant expenditure contracted for at the end of the
reporting period but not recognised as liabilities is as
follows:
Group 31 Dec 31 Dec
21 $'000 20 $'000
Property, plant and equipment 8,241 3,046
Other 396 194
8,637 3,240
35. Dividend per share
In line with the Company dividend policy, the Company paid
$38,847,000 in 2021 (2020: $13,850,000) which consisted of a 2021
interim dividend of 8 pence per share and 2020 final dividend of 8
pence per share (2020: interim dividend of 6.0 pence per
share).
36. Related party transactions
Key management remuneration
Key management remuneration comprises the Directors'
remuneration, including Non-Executive Directors and is as
follows:
2021 2021 2021 2021 2021 2021 2020
Basic Annual Benefits Employers
salary bonus Pension in Kind NI Total Total
/ fees $'000 $'000 $'000 $'000 $'000 $'000
$'000
Executive Directors:
Nigel Robinson 533 393 - 12 123 1,061 1,145
Gavin Ferrar 434 323 3 - 251 1,011 934
Non-Executive Directors:
Nick Clarke 242 - - - 31 273 270
Nigel Hurst-Brown 82 - - - 9 91 145
Robert Cathery 110 - - - 14 124 117
Nurlan Zhakupov 51 - - - - 51 72
David Swan 110 - - - 14 124 117
Roger Davey 103 - - - 13 116 109
Dr Gillian Davidson 110 - - - 15 125 118
Mike Prentis 80 - - - 11 91 -
1,855 716 3 12 481 3,067 3,027
During the year, Gavin Ferrar exercised 330,000 shares for a
total gain of $1,095,000.
Kounrad foundation
The Kounrad foundation, a vehicle through which Kounrad donates
to the community, was advanced $214,000 (2020: $198,000). This is a
related party by virtue of common Directors.
Sasa foundation
The Sasa foundation, a vehicle created during the year through
which Sasa donates to the community, was advanced $320,000 (2020:
$nil). This is a related party by virtue of common Directors.
37. Deferred income tax asset and liability
Group
The movements in the Group's deferred tax assets and liabilities
are as follows:
Currency (Debit)/credit
translation to income
At 1 differences statement At 31 December
January $'000
2021 $'000 2021 $'000
$'000
Other temporary differences (553) 11 193 (349)
Deferred tax liability on fair value adjustment
on Kounrad Transaction (5,501) 136 296 (5,069)
Deferred tax liability on fair value adjustment
on CMK acquisition (19,909) 1,476 974 (17,459)
Deferred tax liability, net (25,963) 1,623 1,463 (22,877)
Reflected in the statement of financial 31 Dec 31 Dec
position as: 21 20
$'000 $'000
Deferred tax asset 352 236
Deferred tax liability (23,229) (26,199)
Currency (Debit)/credit
translation to income
At 1 differences statement At 31 December
January $'000
2020 $'000 2020 $'000
$'000
Other temporary differences (190) 27 (390) (553)
Deferred tax liability on fair value adjustment
on Kounrad Transaction (6,428) 599 328 (5,501)
Deferred tax liability on fair value adjustment
on CMK acquisition (19,205) (1,729) 1,025 (19,909)
Deferred tax liability, net (25,823) (1,103) 963 (25,963)
Reflected in the statement of financial 31 Dec 31 Dec
position as: 20 19
$'000 $'000
Deferred tax asset 236 266
Deferred tax liability (26,199) (26,089)
A taxable temporary difference arose as a result of the Kounrad
Transaction and CMK Resources Limited acquisition, where the
carrying amount of the assets acquired were increased to fair value
at the date of acquisition but the tax base remained at cost. The
deferred tax liability arising from these taxable temporary
differences has been reduced by $1,270,000 during the year (2020:
$1,353,000) to reflect the tax consequences of depreciating and
amortising the recognised fair values of the assets during the
year.
31 Dec 31 Dec
2021 2020
$'000 $'000
Deferred tax liability due within
12 months (1,463) (963)
Deferred tax liability due after
12 months (21,766) (25,236)
Deferred tax liability (23,229) (26,199)
All deferred tax assets are due after 12 months.
Where the realisation of deferred tax assets is dependent on
future profits, the Group recognises losses carried forward and
other deferred tax assets only to the extent that the realisation
of the related tax benefit through future taxable profits is
probable.
The Group did not recognise other potential deferred tax assets
arising from losses of $18,471,000 (2020: $12,016,000) as there is
insufficient evidence of future taxable profits within the entities
concerned. Unrecognised losses can be carried forward
indefinitely.
At 31 December 2021, the Group had other deferred tax assets of
$1,440,000 (2020: $1,071,000) in respect of share-based payments
and other temporary differences which had not been recognised
because of insufficient evidence of future taxable profits within
the entities concerned.
There are no significant unrecognised temporary differences
associated with undistributed profits of subsidiaries at 31
December 2021 and 2020, respectively.
Company
At 31 December 2021 and 2020 respectively, the Company had no
recognised deferred tax assets or liabilities.
At 31 December 2021, the Company had not recognised potential
deferred tax assets arising from losses of $18,471,000 (2020:
$12,016,000) as there is insufficient evidence of future taxable
profits. The losses can be carried forward indefinitely.
At 31 December 2021, the Company had other deferred tax assets
of $1,440,000 (2020: $1,071,000) in respect of share-based payments
and other temporary differences which had not been recognised
because of insufficient evidence of future taxable profits.
38. Events after the reporting period
Post year end, the situation in Ukraine has increased global
economic uncertainty and continues to be monitored. The outlook in
this regard is uncertain and the full extent of consequences cannot
be assessed at this stage. Energy and commodity prices have risen
adding to the inflationary pressures already faced by CAML. CAML
management's focus is to ensure full compliance with sanctions
imposed on Russia across all operations, as well as to proactively
address any anticipated issues with logistics and supply chains by
increasing stock levels of reagents and critical spare parts.
[1] See Financial Review section for definition of non-IFRS
alternative performance measures
2 The cash balance figure disclosed includes restricted cash
balance
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FR BKFBKFBKDONB
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