TIDMCAML
RNS Number : 4314B
Central Asia Metals PLC
04 April 2017
4 April 2017
CENTRAL ASIA METALS PLC
("CAML" or the "Company" or "Group")
2016 Full Year Results
Central Asia Metals plc (AIM: CAML) today announces its full
year results for the 12 months ended 31 December 2016.
Operational summary
-- Record copper production of 14,020 tonnes, an increase of 16%
vs. 2015 (12,071 tonnes);
-- Record copper sales of 13,938 tonnes, an increase of 16% vs.
2015 (12,040 tonnes);
-- Kounrad Stage 2 Expansion materially complete, on schedule and
c.30% under budget;
-- Framework agreement signed to acquire 80% of Shuak copper-gold
exploration property in northern Kazakhstan;
-- Copper Bay definitive feasibility study ("DFS") completed on
schedule.
Financial summary
-- 10 pence final dividend proposed, bringing 2016 total dividend
per share to 15.5 pence, an increase of 24% vs. 2015 (12.5 pence);
-- Proposed full year dividend represents 31% of gross revenue for
the year (2015: 30%);
-- Group gross revenue of $69.3 million (2015: $67.3 million);
-- C1 cash cost of $0.43/lb, a reduction of 28% (2015: $0.60/lb);
-- Group EBITDA of $39.1 million (2015: $34.9 million), a margin
of 56%;
-- Group cash balance as at 31 December 2016 of $40.4 million (2015:
$42.0 million) with no debt.
2017 outlook
-- Kounrad copper production target of 13,000 to 14,000 tonnes;
-- Leaching from Western Dumps on track to commence April 2017;
-- Shuak exploration programme to commence Q2 2017;
-- Continued appraisal of business development opportunities to
create further shareholder value.
Nick Clarke, Executive Chairman of CAML, commented:
"We are pleased to report record annual copper production and
sales, which enables us to propose a record final dividend for 2016
of 10 pence per share, totalling 15.5 pence for the full year.
"While the generally weak copper price environment brought
challenges to the industry throughout the year, our continued low
cost base has helped us to maintain an EBITDA margin of over 50%,
which we have achieved every year since production commenced at
Kounrad in 2012. Our financial performance was aided by the 2015
devaluation of the Kazakh Tenge and by the efforts of our loyal and
experienced workforce in Kazakhstan.
"Our business development efforts resulted in the completion of
the Copper Bay DFS and, in addition, we signed the framework
agreement to acquire the Shuak Exploration Project in Kazakhstan.
2017 will mark an important year of development for CAML as we
commence leaching of the Western Dumps and exploration work at
Shuak in Q2 2017.
"We believe that all of our stakeholders should benefit from our
success. As a Company operating in Kazakhstan since 2005, we have
established a good working relationship with our surrounding
communities, and both the local and national governments. We pride
ourselves on employing local workers and contributing socially,
something we believe is particularly important when operating in
emerging markets."
Analyst presentation conference call
There will be an analyst presentation and conference call on
Tuesday 4 April 2017 at 09:30 (BST) at Bell Pottinger's offices.
The call can be accessed by dialling +44 (0)20 3059 8125 and
quoting the confirmation code 'Central Asia Metals Full Year
Results'. The results presentation slides will be available at
www.centralasiametals.com and a replay facility will be available
following the presentation.
For further information contact:
Central Asia Metals plc Tel: +44 (0) 20 7898 9001
Nick Clarke, Executive Chairman
Nigel Robinson, CFO
Louise Wrathall, Investor Relations
louise.wrathall@centralasiametals.com
Peel Hunt (Nominated Adviser & Joint
Broker) Tel: +44 (0) 20 7418 8900
Matthew Armitt
Ross Allister
Mirabaud Securities (Joint Broker) Tel: +44 (0) 20 7878 3362
Peter Krens
Bell Pottinger (PR Advisers) Tel: +44 (0) 20 3772 2500
Lorna Cobbett
Aarti Iyer
Marianna Bowes
Note to editors:
Central Asia Metals, an AIM-listed UK company based in London,
owns 100% of the Kounrad SX-EW copper project in Kazakhstan. The
Company also has a 75% equity interest in Copper Bay Ltd, which is
a private company that has conducted a definitive feasibility study
at its copper project in Chañaral Bay, Chile. In November 2016,
Central Asia Metals signed a framework agreement to acquire an
effective 80% interest in the Shuak copper exploration property in
northern Kazakhstan. For further information, please visit
www.centralasiametals.com.
EXECUTIVE CHAIRMAN'S STATEMENT
2016 has been another positive year for us. Our C1 cash cost
remained firmly in the lowest cost quartile of world copper
producers, we materially completed our Stage 2 Expansion into the
Western Dumps on schedule and expect to complete the project
approximately 30% under budget. We concluded the Copper Bay DFS and
signed a framework agreement to acquire the Shuak copper-gold
exploration project in Kazakhstan.
Key achievements
We have now been producing copper at Kounrad for almost five
years and to 31 December 2016 have produced 54,322 tonnes of copper
cathode, and paid $96 million in dividends and share buy-backs to
our shareholders. We have also self-funded two expansions at
Kounrad totalling $26 million, paid almost $82 million in taxes in
Kazakhstan and funded many worthy causes in the local
community.
During 2016, we made some changes to our Board structure as I
made the transition from Chief Executive Officer to Executive
Chairman and Nigel Hurst-Brown became Deputy Chairman. We also
welcomed Gavin Ferrar to the Board as Business Development
Director. I am pleased to report that these changes have been
effective and the Company has continued its strong performance
throughout 2016. Howard Nicholson stepped down from the Board but
remains our Technical Director with responsibility for the
day-to-day operations at Kounrad. Howard has been instrumental in
the development of Kounrad, having managed the project since before
the IPO. The Board owes a debt of gratitude to Howard as we
attribute much of the success of this operation to his hard work
and diligence.
We are proposing a final dividend for 2016 of 10p per share and,
once that total of $13 million has been distributed, we will have
paid dividends of $96 million to our shareholders in less than
seven years, since listing in late 2010.
Kounrad
During the year, we reported record copper cathode production of
14,020 tonnes (2015: 12,071 tonnes) representing a 16% increase
year on year.
Kounrad's position has been maintained firmly in the lowest
quartile of the industry cash cost curve. 2016 C1 cash costs were
$0.43 per pound (2015: $0.60 per pound) representing a 28% decrease
year on year. This is due to several factors, with the most
significant being the devaluation of the Kazakhstan Tenge in August
2015. The currency, which is now floating, has retained a similar
market value throughout 2016. That, coupled with the fact that we
have experienced little in-country inflation on our expenditure at
Kounrad, has ensured that our costs remain very low by industry
standards.
Corporate social responsibility ("CSR") is very important to us
as we believe that the copper we produce is for the benefit of all
of our stakeholders. We have now operated approaching 1.45 million
man hours without a lost time injury ("LTI"), and we are proud of
this as it demonstrates that we have a safe working culture at
Kounrad and this is an important philosophy.
We have undertaken numerous health and safety inspections during
2016. In addition to these inspections, the site has also been
subject to routine state health and safety and environmental
inspections and no major issues arose throughout these
processes.
In Q4 2016, CAML materially completed its Stage 2 Expansion on
schedule, which is expected to be approximately 30% below budget.
This expansion will enable CAML to commence leaching operations
from the Western Dumps in Q2 2017 and, in doing so, has extended
the life of the operation to beyond 2030. The Kazakhstan Tenge
devaluation again played a significant part in our reduced capital
expenditure versus budget, but we also secured some cost
improvements based on revised engineering solutions.
Copper Bay
We are pleased that the Copper Bay team has generated value in
delivering its DFS that has demonstrated a project worth $34.1
million based on a copper price of $3.00 per pound. Given the
current uncertainty with regard to the near and medium term
expectations for copper, the CAML Board has recommended that the
project remains in our development pipeline whilst we review our
options.
Shuak
In November 2016, we signed a framework agreement at the third
UK-Kazakhstan Inter-Governmental Commission (IGC) meeting in London
to acquire an 80% effective interest in the Shuak copper
exploration property in northern Kazakhstan. Shuak has potential to
host significant copper oxide mineralisation to which we can apply
our SX-EW experience from Kounrad.
CAML intends to commence field-based exploration work in Q2
2017, predominantly at our priority target areas, Mongol V and
Mongol I and II. During the 2017 exploration season, the Company
plans to implement a 1,800 metre trenching programme and to
undertake some 22,000 metres of drilling. CAML's 2017 exploration
budget for Shuak is approximately $1.3 million.
Market performance
2016 was another challenging year for the copper price, and one
which saw the price of the metal reaching seven year lows of $4,311
per tonne in January 2016. The price increased during Q4, ending
2016 at a price of about $5,500 per tonne. This movement seemed to
signify renewed positive market sentiment in the copper sector and
this outlook has continued into 2017. That said, given our low cash
cost of production, we are able to produce profitably and maintain
our commitment to paying industry leading dividends even in
depressed copper price scenarios.
Outlook
2017 should be a year of development for CAML, as we look
forward to establishing our Kounrad copper leaching operations on
the Western Dumps. We have set our 2017 copper production target at
between 13,000 and 14,000 tonnes.
Over the coming years, the proportion of copper that Kounrad
produces from the Eastern Dumps will fall as production from the
Western Dumps gradually increases. This will result in slightly
higher electricity consumption and additional labour to manage the
Western Dumps operations. Importantly, after completing our Stage 2
Expansion capital expenditure programme, CAML is now fully invested
at Kounrad, with only annual sustaining capital expenditure at a
cost of approximately $2 million expected going forward.
We were pleased to have agreed terms to acquire a majority stake
in Shuak and we look forward to starting our exploration programme
on site and to appraising the copper oxide resource potential. As
mentioned above, our experience at Kounrad will allow us to develop
another similar leach and SX-EW operation at Shuak. Longer term, we
also plan to explore the primary copper porphyry target at depth.
We have built our business around our successful copper production
facilities at Kounrad and are very comfortable operating in
Kazakhstan. Notwithstanding this, we continue our business
development efforts in other jurisdictions.
As a Company operating in Kazakhstan since 2005, we have
established a good working relationship with our surrounding
communities, and both the local and national governments. We pride
ourselves on employing local workers and contribute to our
communities by supporting worthy local causes. In doing so, our
business has been able to flourish and we were recently ranked
first place in Kazakhstan's national business ratings.
We believe that all of our stakeholders should benefit from our
success, and this is particularly important when operating in
emerging markets. Since we commenced copper production at our
Kounrad operation almost five years ago, we have paid tax of almost
$82 million in Kazakhstan and have supported many local worthy
causes such as improving and modernising nearby schools and aiding
the elderly. We look forward to continuing our efforts in this
regard into 2017.
FINANCIAL REVIEW
Overview
Notwithstanding the fall in average copper price relative to
last year, CAML continued to be highly profitable due to sustained
low costs of production at its Kounrad operation. The combined
effects of the local currency devaluation, higher production
volumes and continued cost control resulted in a significant
reduction in Kounrad's C1 cash cost of production and further
cemented Kounrad's position in the lowest quartile of the industry
cost curve for copper production.
The Group generated EBITDA of $39.1 million (2015: $34.9
million), representing an EBITDA margin of 56% (2015: 52%) for the
year.
Income statement
Group profit after tax from continuing operations increased to
$26.2 million (2015: $22.4 million) and earnings per share from
continuing operations increased to 23.66 cents (2015: 20.21
cents).
Revenue
A total of 13,751 tonnes (2015: 11,750 tonnes) of copper cathode
from Kounrad were sold through the Company's off-take arrangements
with Traxys and a further 187 tonnes (2015: 290 tonnes) were sold
locally. Total sales at Kounrad were 13,938 tonnes (2015: 12,040
tonnes) representing a 16% increase in volumes.
While copper cathode sales volumes have increased during the
year when compared to 2015, Group revenue was adversely impacted by
the decline in copper prices. An average selling price of $4,994
per tonne was achieved in 2016 (2015: $5,336 per tonne),
representing a 6% decrease in the price of copper. This generated
gross revenues for the Group of $69.3 million (2015: $67.3
million).
During the year, following a competitive tender process, Traxys
was retained as CAML's off-take partner. The off-take contract has
been fixed for a three year period through to 31 December 2018. The
contractual commitment is for a minimum of 90% of the Kounrad
copper cathode production.
The Group reports both a gross revenue and a net revenue line
which reflects the offset of the off-takers fixed fee from the
price of the copper achieved. During 2016 the fixed fee was $2.6
million (2015: $2.9 million), a reduction of 10% despite the
increased export volumes due to a marked reduction in the cost per
tonne of exporting the copper cathode from the site at Kounrad.
Cost of sales
Cost of sales for the year was $18.4 million (2015: $25.5
million) representing a decrease of $7.1 million.
$5.3 million of the reduction in cost of sales was due to
changes to the depreciation policy. Total depreciation and
amortisation charges recognised within cost of sales for the year
were $5.0 million (2015: $10.3 million). Following receipt of the
regulatory approvals required for the Kounrad Stage 2 Expansion in
November 2015, management has extended the useful economic lives of
certain property, plant and equipment. The original estimate of 10
years useful economic life has now been increased through to 2034,
which represents the end of the subsoil use licence. This change in
estimate was applied from 1 January 2016 and in combination with
the Tenge devaluation has resulted in a reduction in the
depreciation and amortisation charge of $5.3 million for 2016
compared to 2015.
The remaining $1.8 million of the reduction in cost of sales is
due to lower on-site costs associated with the production of copper
cathode at Kounrad, primarily due to savings associated with the
Kazakhstan Tenge currency devaluation which started in August
2015.
The average exchange rate for the year was 342 KZT/USD (2015:
222 KZT/USD), resulting in the Kazakhstan Tenge being worth an
average 35% less in US Dollar terms in 2016 compared to 2015. Given
that the Group's operations in Kazakhstan generate income in US
Dollars through the export of copper cathode, the immediate
financial impact was positive for the Company as approximately 60%
of the total cost base in Kazakhstan is denominated in Tenge (70%
of C1 cash costs) and inflationary pressures on costs incurred at
Kounrad have been minimal. From 1 January 2016, the Board increased
salaries by 25% for staff at Kounrad to compensate employees for
the negative effects of the devaluation.
Cost of sales also includes mineral extraction tax ("MET")
charged by the Kazakhstan authorities at the rate of 5.7% on the
value of the metal recovered during the year. This amounted to a
cost of $3.9 million (2015: $3.8 million).
C1 cash cost of production
C1 cash cost of production is a standard metric used in the
copper mining industry to allow comparison across the sector. In
line with the Wood Mackenzie approach, CAML calculates C1 by
including all direct costs of production at Kounrad (reagents,
power, production labour and materials) as well as local
administrative expenses. Local taxes including MET and depreciation
and amortisation charges are excluded from C1 and reported within
the fully inclusive unit cost of production.
Kounrad's C1 cash cost of production remains firmly in the
lowest quartile of the industry cost curve for copper production at
$0.43 per pound (2015: $0.60 per pound). The combined effects of
the local currency devaluation, increased production and continued
cost control resulted in the significant year on year reduction of
28%.
The Group's fully inclusive unit cost for the year was $1.06 per
pound (2015: $1.58 per pound). This includes depreciation and
amortisation charges, local taxes including MET and corporate
overheads associated with the Kounrad project. The prior year cost
includes a non-cash one-off impairment charge of $0.6 million,
equating to $0.02 per pound, arising from the write-off of organic
inventory. The 33% overall reduction in the fully inclusive unit
cost is due to the lower C1 cash cost, lower depreciation and
amortisation charges and increased production volumes.
Over the coming years, the proportion of copper that Kounrad
produces from the Eastern Dumps will fall as production from the
Western Dumps gradually increases. This will result in slightly
higher electricity consumption and additional labour to manage the
Western Dumps operations.
Administrative expenses
During 2016, administrative expenses were $14.1 million (2015:
$14.1 million). The Group recognised a share based payment charge
of $3.0 million (2015: $2.4 million) in relation to the Company's
Share Option Schemes.
Balance sheet
During the year, there were additions to property, plant and
equipment of $12.3 million (2015: $7.8 million). The majority of
this expenditure was related to the Stage 2 Expansion. A further
$1.6 million was capitalised in relation to exploration and
evaluation costs incurred on the Copper Bay project feasibility
study.
The Stage 2 Expansion was materially complete by the end of the
year and is expected to be approximately 30% below the original
$19.5 million budget, due to a combination of cost savings
associated with the weaker local currency and engineering
efficiencies.
As at 31 December 2016, current trade and other receivables were
$0.9 million (31 December 2015: $2.6 million) and non-current trade
and other receivables were $2.7 million (31 December 2015: $4.3
million).
In February 2016, the Kazakhstan authorities refunded a portion
of outstanding VAT totalling $1.7 million and a further $1.8
million was refunded in August 2016 bringing the total VAT
successfully refunded in 2016 to $3.5 million. As at 31 December
2016, a total of $2.8 million (31 December 2015: $4.4 million) of
VAT receivable was still owed to the Group. A further amount of
$0.2 million was refunded in February 2017 and has been classified
as a current receivable as at 31 December 2016.
The Group is working closely with its advisors to recover the
remaining portion. The planned means of recovery will be through a
combination of the local sales of copper cathode to effectively
offset VAT liabilities and by a continued dialogue with the
authorities.
As at 31 December 2016, current trade and other payables were
$6.0 million (31 December 2016: $6.3 million). During 2016,
instalments of $8.7 million were paid towards the 2016 corporate
income tax liability in Kazakhstan and at 31 December 2016,
approximately $0.9 million remained outstanding.
On 31 December 2016, the Group had cash of $40.4 million (31
December 2015: $42.0 million) including restricted cash of $0.1
million (31 December 2015: $0.5 million) and no debt.
Shuak investment
On 22 November 2016, CAML signed a framework agreement to
acquire an 80% effective interest in the subsoil use contract
("SUC") for the Shuak copper-gold exploration property in northern
Kazakhstan. As at 31 December 2016, CAML wholly owned Shuak BV
which was incorporated on 20 September 2016. Under the terms of the
framework agreement, on 22 February 2017, CAML reduced its interest
in Shuak BV to 80%, with 20% being held by local partners. Ken
Shuak LLP, which was incorporated on 5 October 2016, is a wholly
owned subsidiary of Shuak BV. The consideration for this
acquisition is an investment in exploration activities of $2.0
million over five years, subject to continued positive results from
exploration activities and the general economic outlook for
commodity prices.
Discontinued operations - Mongolia
In December 2016, CAML Mongolia BV signed an agreement with a
third party to sell its entire interest in Monresources LLC for a
cash consideration of $100 with deferred consideration dependent on
the outcome of future events. Confirmation of the transfer of
shares to the third party was received in February 2017.
Following unsuccessful attempts to dispose of the Ereen project,
CAML have taken the decision to exit their position in Zuunmod UUL
LLC. It is envisaged that this process will be completed in
2017.
The Group continues to hold for sale the assets it owns in
Mongolia in this financial period and these assets were fully
written off in prior periods.
Cash flows
The continued strong operational performance of the Kounrad
project and the associated low costs of production resulted in
robust cash flows for the Group. Cash generated from operations
increased to $44.7 million (2015: $33.6 million) and during the
year $20.4 million was returned to shareholders as dividends (2015:
$20.4 million) and a further $12.3 million was invested in the
Kounrad Stage 2 Expansion project and sustaining capital
expenditure.
$9.2 million of Kazakhstan corporate income tax was paid during
2016 (2015: $10.0 million). Payments made during 2016 included $8.7
million towards the 2016 corporate income tax liability and $0.5
million of 2015 corporate income tax paid in April 2016.
Dividend
The Company's dividend policy is to return a minimum of 20% of
the gross revenues generated from the Kounrad project to
shareholders.
In conjunction with CAML's annual results, the Board proposes a
final 2016 dividend of 10.0 pence per Ordinary Share, bringing
total dividends declared for the year to 15.5 pence (2015: 12.5
pence). These dividends equate to approximately 31% of the gross
revenue for the year and will be payable on 7 June 2017 to
shareholders registered on 12 May 2017.
Having raised $60 million at IPO in September 2010, this latest
dividend will increase the amount returned to shareholders in
dividends and share buy-backs since the listing to $96 million.
Growth opportunities
As of 31 December 2016, the Group has a robust balance sheet
with no debt and $40.4 million in cash. This, combined with the
Company's strong financial performance and reducing Kounrad capital
commitments, means that CAML is well positioned to maintain its
dividend policy, finance the Shuak exploration programme and
continue to look for attractive growth opportunities.
Nigel Robinson
Chief Financial Officer
CONDENSED FINANCIAL INFORMATION
Consolidated Income Statement
for the year ended 31 December
2016 2015
Note $'000 $'000
----------------------------------------------------------- ---- --------- ---------
Continuing operations
Revenue 5 66,707 64,412
----------------------------------------------------------- ---- --------- ---------
Presented as:
Gross revenue 5 69,269 67,328
Less: off-take buyers' fees 5 (2,562) (2,916)
----------------------------------------------------------- ---- --------- ---------
Revenue 66,707 64,412
----------------------------------------------------------- ---- --------- ---------
Cost of sales 6 (18,388) (25,510)
----------------------------------------------------------- ---- --------- ---------
Gross profit 48,319 38,902
----------------------------------------------------------- ---- --------- ---------
Distribution and selling costs 7 (215) (264)
Administrative expenses 8 (14,083) (14,087)
Inventory write-off - (600)
Other income 192 66
Foreign exchange (loss)/gain 11 (1,234) 8,992
----------------------------------------------------------- ---- --------- ---------
Operating profit 32,979 33,009
----------------------------------------------------------- ---- --------- ---------
Finance income 67 41
Finance costs (158) (304)
Profit before income tax 32,888 32,746
Income tax 9 (6,661) (10,365)
----------------------------------------------------------- ---- --------- ---------
Profit for the year from continuing operations 26,227 22,381
----------------------------------------------------------- ---- --------- ---------
Discontinued operations
Loss for the year from discontinued operations (130) (163)
----------------------------------------------------------- ---- --------- ---------
Profit for the year 26,097 22,218
----------------------------------------------------------- ---- --------- ---------
Profit attributable to:
* Non-controlling interests (173) (167)
* Owners of the parent 26,270 22,385
----------------------------------------------------------- ---- --------- ---------
26,097 22,218
----------------------------------------------------------- ---- --------- ---------
Earnings/(loss) per share from continuing and discontinued
operations attributable to owners of the parent during
the year (expressed in cents per share) $ cents $ cents
----------------------------------------------------------- ---- --------- ---------
Basic earnings/(loss) per share
From continuing operations 10 23.66 20.21
From discontinued operations (0.12) (0.15)
----------------------------------------------------------- ---- --------- ---------
From profit for the year 23.54 20.06
----------------------------------------------------------- ---- --------- ---------
Diluted earnings/(loss) per share
From continuing operations 10 23.11 19.79
From discontinued operations (0.12) (0.15)
----------------------------------------------------------- ---- --------- ---------
From profit for the year 22.99 19.64
----------------------------------------------------------- ---- --------- ---------
Consolidated Statement of Comprehensive Income
2016 2015
for the year ended 31 December Note $'000 $'000
----------------------------------------------------------- ---- --------- ---------
Profit for the year 26,097 22,218
Other comprehensive income/(expense):
Items that may be subsequently reclassified to
profit or loss:
Currency translation differences 17 1,034 (77,352)
----------------------------------------------------------- ---- --------- ---------
Other comprehensive income/(expense) for the
year, net of tax 1,034 (77,352)
----------------------------------------------------------- ---- --------- ---------
Total comprehensive income/(expense) for the
year 27,131 (55,134)
----------------------------------------------------------- ---- --------- ---------
Attributable to:
- Non-controlling interests (173) (167)
- Owners of the parent 27,304 (54,967)
----------------------------------------------------------- ---- --------- ---------
Total comprehensive income/(expense) for the
year 27,131 (55,134)
----------------------------------------------------------- ---- --------- ---------
Total comprehensive income/(expense) attributable
to equity shareholders arises from:
- Continuing operations 27,261 (54,971)
- Discontinued operations (130) (163)
----------------------------------------------------------- ---- --------- ---------
27,131 (55,134)
----------------------------------------------------------- ---- --------- ---------
Consolidated Statement of Financial Position
as at 31 December
2016 2015
Note $'000 $'000
----------------------------------------- ----- ----- ------ ---------- ----------
Assets
Non-current assets
Property, plant and equipment 12 50,324 40,800
Intangible assets 13 40,759 40,267
Other non-current receivables 14 2,738 4,250
------------------------------------------------------- ------ ---------- ----------
93,821 85,317
----------------------------------------------------- ------ ---------- ----------
Current assets
Inventories 3,319 3,031
Trade and other receivables 14 919 2,648
Restricted cash 15 118 494
Cash and cash equivalents 15 40,258 41,502
------------------------------------------------------- ------ ---------- ----------
44,614 47,675
----------------------------------------------------- ------ ---------- ----------
Assets of disposal group classified
as held for sale 45 83
------------------------------------------------------- ------ ---------- ----------
44,659 47,758
----------------------------------------------------- ------ ---------- ----------
Total assets 138,480 133,075
------------------------------------------------------- ------ ---------- ----------
Equity attributable to owners of
the parent
Ordinary shares 16 1,121 1,121
Treasury shares 16 (7,780) (7,810)
Currency translation reserve 17 (87,435) (88,469)
Retained earnings:
At 1 January 209,120 140,484
Profit/(loss) for the year attributable
to the owners 26,270 22,385
Other changes in retained earnings (19,911) 46,251
------------------------------------------------------- ------ ---------- ----------
215,479 209,120
----------------------------------------------------- ------ ---------- ----------
121,385 113,962
----------------------------------------------------- ------ ---------- ----------
Non-controlling interests 91 264
------------------------------------------------------- ------ ---------- ----------
Total equity 121,476 114,226
------------------------------------------------------- ------ ---------- ----------
Liabilities
Non-current liabilities
Deferred income tax liability 22 8,541 10,240
Provisions for other liabilities
and charges 2,087 1,916
10,628 12,156
----------------------------------------------------- ------ ---------- ----------
Current liabilities
Trade and other payables 18 6,020 6,261
------------------------------------------------------- ------ ---------- ----------
6,020 6,261
----------------------------------------------------- ------ ---------- ----------
Liabilities of disposal group classified
as held for sale 356 432
------------------------------------------------------- ------ ---------- ----------
6,376 6,693
----------------------------------------------------- ------ ---------- ----------
Total liabilities 17,004 18,849
------------------------------------------------------- ------ ---------- ----------
Total equity and liabilities 138,480 133,075
------------------------------------------------------- ------ ---------- ----------
Consolidated Statement of Changes in Equity
for the year ended 31 December
Non-controlling
Currency interests
Attributable to Ordinary Share Treasury translation Retained Total $'000 Total
owners of the shares premium shares reserve earnings $'000 equity
parent Note $'000 $'000 $'000 $'000 $'000 $'000
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Balance as at 1
January 2015 1,121 67,079 (9,644) (11,117) 140,484 187,923 - 187,923
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Profit/(loss) for
the year - - - - 22,385 22,385 (167) 22,218
Other
comprehensive
expense -
currency
translation
differences 17 - - - (77,352) - (77,352) - (77,352)
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Total
comprehensive
(expense)/income - - - (77,352) 22,385 (54,967) (167) (55,134)
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Transactions with
owners
Capital reduction 16 - (67,079) - - 67,079 - - -
Share based
payments 8 - - - - 2,396 2,396 - 2,396
Exercise of options 16 - - 1,663 - (1,546) 117 - 117
Sale of EBT shares 16 - - 171 - (171) - - -
Dividends 20 - - - - (20,358) (20,358) - (20,358)
Copper Bay Limited
acquisition - - - - (1,149) (1,149) 431 (718)
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Total
transactions
with owners,
recognised
directly in
equity - (67,079) 1,834 - 46,251 (18,994) 431 (18,563)
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Balance as at 31
December 2015 1,121 - (7,810) (88,469) 209,120 113,962 264 114,226
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Profit/(loss) for
the year - - - - 26,270 26,270 (173) 26,097
Other
comprehensive
expense -
currency
translation
differences 17 - - - 1,034 - 1,034 - 1,034
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Total
comprehensive
(expense)/income - - - 1,034 26,270 27,304 (173) 27,131
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Transactions with
owners
Share based
payments 8 - - - - 2,959 2,959 - 2,959
Sale of EBT shares 16 - - 30 - - 30 - 30
Exercise of options - - - - (2,466) (2,466) - (2,466)
Dividends 20 - - - - (20,404) (20,404) - (20,404)
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Total
transactions
with owners,
recognised
directly in
equity - - 30 - (19,911) (19,881) - (19,881)
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Balance as at 31
December 2016 1,121 - (7,780) (87,435) 215,479 121,385 91 121,476
------------------- -------- ----------- ---------- ----------- ------------ ------------ ------------ ---------------- ------------
Consolidated Statement of Cash Flows
for the year ended 31 December
2016 2015
Note $'000 $'000
------------------------------------------ ----- ----- -------- --------- ---------
Cash flows from operating activities
Cash generated from operations 19 44,746 33,595
Interest paid (4) (121)
Corporate income tax paid (9,208) (9,999)
Net cash generated from operating
activities 35,534 23,475
-------------------------------------------------------- -------- --------- ---------
Cash flows from investing activities
Purchase of property, plant and
equipment 12 (12,331) (7,804)
Purchase of intangible assets 13 (1,594) (556)
Proceeds from sale of property,
plant and equipment 147 -
Interest received 67 41
Investment in Copper Bay Limited,
net of cash acquired - 1,053
Restricted cash decrease/(increase) 15 376 (346)
Net cash used in investing activities (13,335) (7,612)
-------------------------------------------------------- -------- --------- ---------
Cash flows from financing activities
Dividends paid to owners of the
parent 20 (20,360) (20,368)
(Settlement)/receipt on exercise
of share options (2,436) 127
Net cash used in financing activity (22,796) (20,241)
-------------------------------------------------------- -------- --------- ---------
Effect of foreign exchange losses
on cash and cash equivalents (669) (257)
Net decrease in cash and cash equivalents (1,266) (4,635)
Cash and cash equivalents at the
beginning of the year 15 41,524 46,159
-------------------------------------------------------- -------- --------- ---------
Cash and cash equivalents at the
end of the year 15 40,258 41,524
-------------------------------------------------------- -------- --------- ---------
Cash and cash equivalents at 31 December 2016 includes cash at
bank and on hand included in assets held for sale of nil (31
December 2015: $22,000) (see note 15).
The notes below are an integral part of this condensed
consolidated financial information.
Notes to the Condensed Financial Information
for the year ended 31 December 2016
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 a parent
holding company based in the United Kingdom ("UK").
CAML owns 100% of the Kounrad SX-EW copper project in
Kazakhstan. The Company also has a 75% equity interest in Copper
Bay Limited, which is a private company that has conducted a
definitive feasibility study at its copper project in Chañaral Bay,
Chile. In November 2016, CAML signed a framework agreement to
acquire an effective 80% interest in the Shuak copper exploration
property in northern Kazakhstan. During the year, the Group also
held for sale two exploration projects in Mongolia and in February
2017 the Group disposed of its interest in one of the projects (see
note 23).
CAML is a public limited company, which is listed on the AIM
market of the London Stock Exchange and incorporated and domiciled
in the 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
this consolidated financial information are set out in the 2016
Annual Report. These policies have been consistently applied to all
the years presented, unless otherwise stated.
Basis of preparation of the Condensed Financial Information
The financial information set out herein does not constitute the
Group's statutory financial statements for the year ended 31
December 2016, but is derived from the Group's audited full
financial statements. The auditors have reported on the 2016
financial statements and their reports were unqualified and did not
contain statements under s498(2) or (3) Companies Act 2006. The
2016 Annual Report was approved by the Board of Directors on 4
April 2017, and will be mailed to shareholders in April 2017. 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 2016 Annual Report, have been prepared in accordance with
International Financial Reporting standards ("IFRS") and IFRS
Interpretations Committee ("IFRSIC") interpretations as adopted by
the European Union, and the Companies Act 2006 applicable to
companies reporting under IFRS. 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 accounting policies which follow set out those
policies which apply in preparing the financial information for the
year ended 31 December 2016. The Group financial information is
presented in US Dollars ($) and rounded to the nearest
thousand.
The preparation of financial information in conformity with IFRS
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 3.
Going concern
The Group meets its day-to-day working capital requirements
though its profitable operations at Kounrad. The Group has
substantial cash balances and is in a net current asset position as
at 31 December 2016. The Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future.
The Group sells and distributes its copper cathode product
primarily through an off-take arrangement with a minimum of 90% of
the SX-EW plant's forecasted output committed as sales for the
period up until 31 December 2018.
The Group therefore continues to adopt the going concern basis
in preparing its consolidated financial information. Please refer
to notes 5, 15 and 18 for information on the Group's revenues, cash
balances and trade and other payables.
3. Critical accounting estimates and judgments
The Group has five key areas where critical accounting estimates
and judgements are required that could have a material impact on
the financial information:
Mineral reserves and resources
The major value associated with the Group is the value of its
mineral resources. The value of the resources have an impact on the
Group's accounting judgements 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.
Significant judgement is required to generate an estimate based
on the geological data available. 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 information.
The Kounrad resources have been independently verified by
Wardell Armstrong International and were classified as JORC
Compliant in 2013. As part of the 2016 Copper Bay Definitive
Feasibility Study, Cube Consulting Pty Ltd, Australia, undertook a
Mineral Resource estimate to JORC (2012) standards.
Impairment of non-current assets
Estimates are required periodically to assess assets for
impairment. The critical accounting estimates are future commodity
prices, ore reserves, discount rates and projected future costs of
development and production. This includes an assessment of the
carrying values of assets held for sale.
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")
requires an annual impairment review. This review will determine
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 business. The key assumptions used in the Group's
impairment assessments are disclosed in note 13.
Functional currency
The functional currency of the Kazakhstan subsidiaries is
Kazakhstan Tenge, which is the primary economic environment in
which the entity operates. Determination of functional currency may
involve certain judgments to determine the primary economic
environment and this is re-evaluated for each new entity, or if
conditions change.
Decommissioning and site rehabilitation estimates
Provision is made for the costs of decommissioning and site
rehabilitation costs when the related environmental disturbance
takes place. Provisions are recognised at the net present value of
future expected costs using a discount rate of 8.07% (2015: 7.22%)
representing the risk-free rate (pre-tax) for Kazakhstan.
The provision recognised represents management's best estimate
of the costs that will be incurred, but significant judgement is
required, as 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; however significant changes in the
estimates of contamination, restoration standards and techniques
will result in changes to provisions from period to period.
VAT recoverability
The Group's main receivable is the VAT incurred on purchases
within Kazakhstan as explained in note 14. As at 31 December 2016 a
total of $2,838,000 (2015: $4,423,000) of VAT receivable was still
owed to the Group by the Kazakhstan authorities. In 2016, the
authorities refunded $3,494,000 and a further amount of $238,000
was refunded from the authorities in February 2017 and has been
classified as current trade and other receivables as at 31 December
2016. The Group is working closely with its advisors to recover the
remaining portion. The planned means of recovery will be through a
combination of the local sales of cathode copper by effectively
offsetting VAT liabilities and by a continued dialogue with the
authorities.
4. Segmental information
The Board is the Group's chief operating decision maker.
Management have determined the operating segments based on the
information reviewed by the Board for the purposes of allocating
resources and assessing performance. The Board considers the
business from a project perspective.
The Group has two business segments consisting of an SX-EW
copper plant at Kounrad in Kazakhstan and the Copper Bay project in
Chile. The Group operations are controlled from a head office in
London, UK, but this does not represent a separate business
segment. The Shuak exploration project will be reported as a
segment in future reporting periods once the exploration programme
commences.
The Board assesses the performance of the Kounrad project based
on a number of key operational and financial measures which relate
to copper production output, revenues from the sales of copper and
the overall costs of producing the copper.
The segmental results for the year ended 31 December 2016 are as
follows:
Copper
Kounrad Bay Unallocated Total
$'000 $'000 $'000 $'000
------------------------------------------------ ------------- --------- ----------------- -----------
Gross revenue 69,269 - - 69,269
Off-take buyers' fees (2,562) - - (2,562)
------------------------------------------------ ------------- --------- ----------------- -----------
Revenue 66,707 - - 66,707
------------------------------------------------ ------------- --------- ----------------- -----------
Kounrad EBITDA 51,321 - - 51,321
Copper Bay administrative expenses - (817) - (817)
Unallocated costs including corporate overheads - - (11,400) (11,400)
------------------------------------------------ ------------- --------- ----------------- -----------
Group continuing operations EBITDA 51,321 (817) (11,400) 39,104
------------------------------------------------ ------------- --------- ----------------- -----------
Depreciation and amortisation (5,028) - (55) (5,083)
Foreign exchange (loss)/gain (271) 18 (981) (1,234)
Other income 192 - - 192
Finance income 8 - 59 67
Finance costs (158) - - (158)
------------------------------------------------ ------------- --------- ----------------- -----------
Profit/(loss) before income tax 46,064 (799) (12,377) 32,888
------------------------------------------------ ------------- --------- ----------------- -----------
Income tax (6,661)
------------------------------------------------ ------------- --------- ----------------- -----------
Profit for the year after tax from continuing
operations 26,227
------------------------------------------------ ------------- --------- ----------------- -----------
Loss from discontinued operations (130)
------------------------------------------------ ------------- --------- ----------------- -----------
Profit for the year 26,097
------------------------------------------------ ------------- --------- ----------------- -----------
The segmental results for the year ended 31 December 2015 are as
follows:
Copper
Kounrad Bay Unallocated Total
$'000 $'000 $'000 $'000
---------------------------------------------- ------------- --------- ----------------- -----------
Gross revenue 67,328 - - 67,328
Off-take buyers' fees (2,916) - - (2,916)
---------------------------------------------- ------------- --------- ----------------- -----------
Revenue 64,412 - - 64,412
---------------------------------------------- ------------- --------- ----------------- -----------
Kounrad EBITDA 46,068 - - 46,068
Copper Bay administrative expenses - (475) - (475)
Unallocated costs including corporate - - (10,656) (10,656)
---------------------------------------------- ------------- --------- ----------------- -----------
Group continuing operations EBITDA 46,068 (475) (10,656) 34,937
---------------------------------------------- ------------- --------- ----------------- -----------
Depreciation and amortisation (10,339) - (47) (10,386)
Foreign exchange gain/(loss) 8,744 (253) 501 8,992
Other income 66 - - 66
Inventory write-off (600) - - (600)
Finance income 23 - 18 41
Finance costs (304) - - (304)
---------------------------------------------- ------------- --------- ----------------- -----------
Profit/(loss) before income tax 43,658 (728) (10,184) 32,746
---------------------------------------------- ------------- --------- ----------------- -----------
Income tax (10,365)
---------------------------------------------- ------------- --------- ----------------- -----------
Profit for the year after tax from continuing
operations 22,381
---------------------------------------------- ------------- --------- ----------------- -----------
Loss from discontinued operations (163)
---------------------------------------------- ------------- --------- ----------------- -----------
Profit for the year 22,218
---------------------------------------------- ------------- --------- ----------------- -----------
The total production at Kounrad for 2016 was 14,020 tonnes
(2015: 12,071 tonnes) whilst the total quantity of copper sold was
13,938 tonnes (2015: 12,040 tonnes). The average gross price
achieved from the sale of copper was $4,994 per tonne (2015: $5,336
per tonne).
EBITDA is a non-IFRS financial measure. CAML calculates EBITDA
as profit or loss for the year excluding the following items:
-- Income tax expense;
-- Exceptional items;
-- Finance income and expense;
-- Other income;
-- Foreign exchange;
-- Depreciation and amortisation; and
-- Discontinuing operations;
EBITDA is intended to provide additional information to
investors and analysts. It does not have any standardised meaning
prescribed by IFRS and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with IFRS. EBITDA excludes the impact of cash costs of financing
activities and taxes, and the effects of changes in operating
working capital balances, and therefore is not necessarily
indicative of operating profit or cash flow from operations as
determined under IFRS. Other companies may calculate EBITDA
differently.
A reconciliation between net profit for the year and EBITDA is
presented below:
2016 2015
$'000 $'000
------------------------------------------------- ------ -------
Profit for the year 26,097 22,218
------------------------------------------------- ------ -------
Plus/(less):
Income tax expense 6,661 10,365
Depreciation and amortisation 5,083 10,386
Foreign exchange loss/(gain) 1,234 (8,992)
Inventory write-off - 600
Other income (192) (66)
Finance income (67) (41)
Finance costs 158 304
Loss from discontinued operations 130 163
Group continuing operations EBITDA 39,104 34,937
------------------------------------------------- ------ -------
Corporate and Copper Bay administrative expenses 12,217 11,131
------------------------------------------------- ------ -------
Kounrad EBITDA 51,321 46,068
------------------------------------------------- ------ -------
Group segmental assets and liabilities for the year ended 31
December 2016 are as follows:
Segmental assets Segmental liabilities
------------------------
31 Dec 31 Dec 31 Dec 31 Dec
16 15 16 15
$'000 $'000 $'000 $'000
-------------------------------- -------- -------- ----------- -----------
Kounrad 98,275 94,666 (13,700) (15,536)
Copper Bay 4,766 5,369 (259) (330)
Assets held for sale 45 83 (356) (432)
Unallocated including corporate 35,394 32,957 (2,689) (2,551)
-------------------------------- -------- -------- ----------- -----------
138,480 133,075 (17,004) (18,849)
2016 2015
5. Revenue $'000 $'000
-------------------------------- -------- -------- ----------- -----------
International customers 68,442 65,794
Domestic customers 827 1,534
-------------------------------- -------- -------- ----------- -----------
Total gross revenue 69,269 67,328
-------------------------------- -------- -------- ----------- -----------
Less: off-take buyers' fees (2,562) (2,916)
-------------------------------- -------- -------- ----------- -----------
Revenue 66,707 64,412
-------------------------------- -------- -------- ----------- -----------
The Group sells and distributes its copper cathode product
primarily through an off-take arrangement with Traxys, which has
been retained as CAML's off-take partner through to 31 December
2018. The off-take arrangements are for a minimum of 90% of the
SX-EW plant's output. The copper cathodes are delivered from the
Kounrad site by rail under an FCA (Incoterms 2010) contractual
basis and delivered to the end customers in Turkey.
The off-take 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 off-take 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 offset from the selling price.
During 2016, the Group sold 13,751 tonnes (2015: 11,750 tonnes)
of copper through the off-take arrangements. Some of the copper
cathodes are also sold locally and during 2016, 187 tonnes (2015:
290 tonnes) were sold to local customers.
6. Cost of sales
2016 2015
$'000 $'000
----------------------------------------------- -------- --------
Reagents and materials 5,291 6,229
Depreciation and amortisation (note 12 and 13) 4,975 10,264
Mineral extraction tax 3,858 3,834
Employee benefit expense 2,670 3,333
Consulting and other services 1,138 1,037
Taxes and duties 456 813
18,388 25,510
----------------------------------------------- -------- --------
2016 2015
7. Distribution and selling costs $'000 $'000
----------------------------------------------- -------- --------
Transportation costs 44 31
Employee benefit expense 61 83
Taxes and duties 20 30
Depreciation and amortisation 16 36
Materials and other expenses 74 84
----------------------------------------------- -------- --------
215 264
----------------------------------------------- -------- --------
The above distribution and selling costs are those incurred at
the Kounrad site in addition to the costs associated with the
off-take arrangements. Note 5 refers to the costs associated with
the off-take arrangements (off-take buyers' fee).
8. Administrative expenses
2016 2015
$'000 $'000
----------------------------------- ------- -------
Employee benefit expense 6,411 6,077
Share based payments 2,959 2,396
Consulting and other services 3,146 3,359
Office-related costs 991 1,170
Taxes and duties 484 999
Depreciation and amortisation 92 86
----------------------------------- ------- -------
Total from continuing operations 14,083 14,087
----------------------------------- ------- -------
Total from discontinued operations 130 163
----------------------------------- ------- -------
14,213 14,250
----------------------------------- ------- -------
9. Income tax
2016 2015
$'000 $'000
------------------------------------ ---- ---- ------------ -----------
Current tax on profits for the year 9,580 10,386
Deferred tax credit (note 22) (2,919) (21)
------------------------------------------------ ------------ -----------
Income tax expense 6,661 10,365
------------------------------------------------ ------------ -----------
Taxation for each jurisdictions 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:
2016 2015
$'000 $'000
----------------------------------------------------------- -------- --------
Profit before taxation including loss from discontinued
operations 32,758 32,583
----------------------------------------------------------- -------- --------
Tax calculated at domestic tax rates applicable to profits
in the respective countries 6,553 7,432
Tax effects of:
Expenses not deductible for tax purposes 1,758 2,224
Movement on unrecognised deferred tax - tax losses 2,120 1,187
Movement on unrecognised deferred tax - other (851) -
Movement on recognised deferred tax (note 22) (2,919) -
Utilisation of previously unrecognised tax losses - (478)
Income tax expense 6,661 10,365
----------------------------------------------------------- -------- --------
Corporate income tax is calculated at 20% (2015: 20.25%) of the
assessable profit for the year for the UK parent company and 20%
for the operating subsidiaries in Kazakhstan (2015: 20%).
Expenses not deductible for tax purposes includes share based
payment charges and transfer pricing adjustments in accordance with
Kazakhstan tax legislation.
Deferred tax assets have not been recognised on tax losses
primarily at the parent company and Copper Bay subsidiaries as it
remains uncertain whether these entities will have sufficient
taxable profits in the future to utilise these losses.
10. 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 16).
2016 2015
$'000 $'000
--------------------------------------------------------- ----------- -----------
Profit from continuing operations attributable to owners
of the parent 26,400 22,548
Loss from discontinued operations attributable to owners
of the parent (130) (163)
--------------------------------------------------------- ----------- -----------
Profitable attributable to owners of the parent 26,270 22,385
--------------------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares in issue 111,558,091 111,558,091
--------------------------------------------------------- ----------- -----------
2016 2015
$ 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 23.66 20.21
From discontinued operations (0.12) (0.15)
----------------------------------------------------------- -------- --------
From profit for the year 23.54 20.06
----------------------------------------------------------- -------- --------
(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.
2016 2015
$'000 $'000
--------------------------------------------------------- ----------- -----------
Profit from continuing operations attributable to owners
of the parent 26,400 22,548
Loss from discontinued operations attributable to owners
of the parent (130) (163)
Profitable attributable to owners of the parent 26,270 22,385
--------------------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares in issue 111,558,091 111,558,091
--------------------------------------------------------- ----------- -----------
Adjusted for
* Share options 2,670,098 2,396,361
Weighted average number of Ordinary Shares for diluted
earnings per share 114,228,189 113,954,452
--------------------------------------------------------- ----------- -----------
2016 2015
Diluted earnings/(loss) per share $ cents $ cents
---------------------------------- -------- --------
From continuing operations 23.11 19.79
From discontinued operations (0.12) (0.15)
---------------------------------- -------- --------
From profit for the year 22.99 19.64
---------------------------------- -------- --------
11. Foreign exchange loss/(gain)
The Tenge devalued by 85% during 2015 which resulted in the
recognition of exchange gains through the prior year income
statement for the year ended 31 December 2015 of $8,992,000,
arising mostly on US Dollar denominated monetary assets and
liabilities held by the Group's Kazakhstan based subsidiaries whose
functional currency is the Tenge.
12. Property, plant and equipment
Motor
Construction Plant Mining vehicles
in and assets and office
progress equipment $'000 equipment Total
$'000 $'000 $'000 $'000
-------------------------------------- -------------- ------------- ---------- --------------- -------------
Cost
At 1 January 2015 7,683 81,990 - 1,715 91,388
Additions 6,416 935 - 486 7,837
Disposals - (76) - (65) (141)
Change in asset retirement obligation
estimate - 207 - - 207
Transfers (9,668) 9,658 - 10 -
Acquisition of Copper Bay - 3 - - 3
Transfer from intangible assets - - 1,601 - 1,601
Exchange differences (2,428) (43,309) - (845) (46,582)
-------------------------------------- -------------- ------------- ---------- --------------- -------------
At 31 December 2015 2,003 49,408 1,601 1,301 54,313
Additions 11,572 557 - 202 12,331
Disposals - (246) - (3) (249)
Change in estimate - asset retirement
obligation - (22) - - (22)
Transfers (10,443) 10,427 - 16 -
Exchange differences 67 985 30 26 1,108
At 31 December 2016 3,199 61,109 1,631 1,542 67,481
Accumulated depreciation
At 1 January 2015 - 16,000 - 727 16,727
Provided during the year - 7,630 - 164 7,794
Disposals - (69) - (56) (125)
Transfer from intangible assets - - 62 - 62
Exchange differences - (10,608) - (337) (10,945)
-------------------------------------- -------------- ------------- ---------- --------------- -------------
At 31 December 2015 - 12,953 62 498 13,513
Provided during the year - 3,445 38 155 3,638
Disposals - (246) - (3) (249)
Exchange differences - 213 - 42 255
-------------------------------------- -------------- ------------- ---------- --------------- -------------
At 31 December 2016 - 16,365 100 692 17,157
-------------------------------------- -------------- ------------- ---------- --------------- -------------
Net book value at 31 December 2015 2,003 36,455 1,539 803 40,800
-------------------------------------- -------------- ------------- ---------- --------------- -------------
Net book value at 31 December 2016 3,199 44,744 1,531 850 50,324
-------------------------------------- -------------- ------------- ---------- --------------- -------------
Following receipt of the regulatory approvals required for the
Kounrad Stage 2 Expansion in November 2015, management has extended
the useful economic lives of certain property, plant and equipment
and the fair value uplift on the Kounrad Transaction. The original
estimate of 10 years useful economic life has now been increased
through to 2034 which represents the end of the subsoil user
licence. This change in estimate was applied from 1 January 2016
and has resulted in a reduction in the Group's annual depreciation
charge.
During 2016, $10,443,000 was transferred from construction in
progress to plant and equipment following the material completion
of the Kounrad Stage 2 Expansion in late 2016. The amount remaining
in construction in progress as at 31 December 2016 relates to
equipment for the Stage 2 Expansion including the Lake Balkhash
pipeline which will be commissioned in 2017.
The devaluation of the Tenge during 2015 resulted in non-cash
foreign exchange losses within property, plant and equipment during
the year ended 31 December 2015. This is due to the translation on
consolidation of the Group's Kazakhstan-based subsidiaries whose
functional currency is the Tenge as well as the goodwill and fair
value uplift adjustments to the carrying amounts of assets and
liabilities arising on the Kounrad Transaction which are
denominated in Tenge.
The reduction in estimate in relation to the asset retirement
obligation of $22,000 (2015: increase of $207,000) is due to a
combination of adjusting the provision recognised at the net
present value of future expected costs using an inflation rate of
6.02% (2015: 5.68%) and discount rate of 8.07% (2015: 7.22%)
representing the risk-free rate (pre-tax) for Kazakhstan 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 and the estimated useful life of mine to 2034.
13. Intangible assets
Exploration
and Mining Computer
evaluation licences software
Goodwill costs and permits and website Total
$'000 $'000 $'000 $'000 $'000
----------------------------------- --------- ------------- ------------ ------------- ---------
Cost
At 1 January 2015 20,291 2,805 60,399 55 83,550
----------------------------------- --------- ------------- ------------ ------------- ---------
Additions - 542 - 14 556
Transfers to property, plant and
equipment - (1,601) - - (1,601)
Acquisition of Copper Bay Limited - 1,641 (3,222) - (1,581)
Exchange differences (10,185) (1,348) (26,546) (31) (38,110)
----------------------------------- --------- ------------- ------------ ------------- ---------
At 31 December 2015 10,106 2,039 30,631 38 42,814
----------------------------------- --------- ------------- ------------ ------------- ---------
Additions - 1,561 14 19 1,594
Exchange differences 187 - 306 1 494
----------------------------------- --------- ------------- ------------ ------------- ---------
At 31 December 2016 10,293 3,600 30,951 58 44,902
----------------------------------- --------- ------------- ------------ ------------- ---------
Accumulated amortisation
At 1 January 2015 - 64 1,850 31 1,945
Provided during the year - 41 2,668 11 2,720
Transfers to property, plant and
equipment - (62) - - (62)
Exchange differences - (43) (1,994) (19) (2,056)
----------------------------------- --------- ------------- ------------ ------------- ---------
At 31 December 2015 - - 2,524 23 2,547
----------------------------------- --------- ------------- ------------ ------------- ---------
Provided during the year - - 1,554 9 1,563
Exchange differences - - 30 3 33
----------------------------------- --------- ------------- ------------ ------------- ---------
At 31 December 2016 - - 4,108 35 4,143
----------------------------------- --------- ------------- ------------ ------------- ---------
Net book value at 31 December 2015 10,106 2,039 28,107 15 40,267
----------------------------------- --------- ------------- ------------ ------------- ---------
Net book value at 31 December 2016 10,293 3,600 26,843 23 40,759
----------------------------------- --------- ------------- ------------ ------------- ---------
The devaluation of the Tenge during 2015 resulted in non-cash
foreign exchange losses within intangible assets for the prior year
ended 31 December 2015. This is due to the translation on
consolidation of the Group's Kazakhstan-based subsidiaries whose
functional currency is the Tenge as well as the goodwill and fair
value uplift adjustments to the carrying amounts of assets and
liabilities arising on the Kounrad Transaction which are
denominated in Tenge.
Impairment assessment
Kounrad project
The Kounrad project located in Kazakhstan has an associated
goodwill balance. 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 real 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 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 copper
price $6,280 per tonne and a discount rate of 8%. Assumptions in
relation to operational and capital expenditure are based on the
latest budget approved by the Board.
Copper Bay project
The Group has reviewed the indicators for impairment under IFRS
6 Exploration and Evaluation of Mineral Resources and has not
identified any indicators of impairment.
The carrying value of the net assets is not currently sensitive
to any reasonable changes in key assumptions.
31 Dec 31 Dec
14. Trade and other receivables 16 $'000 15
$'000
Current receivables
--------- -------
Prepayments 347 836
VAT receivable 548 1,769
Other receivable 24 43
------------------------------------- --------- -------
919 2,648
------------------------------------ --------- -------
Non-current receivables
-------------------------------- --- --------- -------
Prepayments 368 1,493
VAT receivable 2,370 2,757
2,738 4,250
------------------------------------ --------- -------
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. Management's policy
is to assess all trade and other receivables for recoverability on
a regular basis. A provision is made where doubt exists and amounts
are fully written-off when information becomes known that the
amounts due will not be recovered.
As at 31 December 2016, the total Group VAT receivable was
$2,918,000 (2015: $4,526,000) which includes an amount of
$2,838,000 (2015: $4,423,000) of VAT owed to the Group by the
Kazakhstan authorities. In 2016, the authorities refunded
$3,494,000 and a further amount of $238,000 was refunded from the
authorities in February 2017 and has been classified as current
trade and other receivables as at 31 December 2016. The Group is
working closely with its advisors to recover the remaining portion.
The planned means of recovery will be through a combination of the
local sales of cathode copper to effectively offset VAT liabilities
and by a continued dialogue with the authorities.
15. Cash and cash equivalents
31 Dec 31 Dec
16 15
$'000 $'000
-------------------------------------------- --- --- ---------- ----------
Cash at bank and on hand 32,209 33,498
Short-term deposits 8,049 8,004
------------------------------------------------------ ---------- ----------
40,258 41,502
---------------------------------------------------- ---------- ----------
Cash at bank and on hand included in assets
held for sale - 22
------------------------------------------------------ ---------- ----------
Total cash and cash equivalent 40,258 41,524
------------------------------------------------------ ---------- ----------
Restricted cash 118 494
------------------------------------------------------ ---------- ----------
Total cash and cash equivalent including
restricted cash 40,376 42,018
------------------------------------------------------ ---------- ----------
The restricted cash amount of $118,000 is held to cover SUC
licence requirements.
16. Share capital and premium
Ordinary Share Treasury
Number of shares premium shares
shares $'000 $'000 $'000
------------------------- ------------------ ------------ --------------- --------------
At 1 January 2015 112,069,738 1,121 67,079 (9,644)
-------------------------- ------------------ ------------ --------------- --------------
Exercise of options - - - 1,663
Sales of EBT shares - - - 171
Capital reduction scheme - - (67,079) -
------------------------- ------------------ ------------ --------------- --------------
At 31 December 2015 112,069,738 1,121 - (7,810)
-------------------------- ------------------ ------------ --------------- --------------
Sale of EBT shares - - - 30
-------------------------- ------------------ ------------ --------------- --------------
At 31 December 2016 112,069,738 1,121 - (7,780)
-------------------------- ------------------ ------------ --------------- --------------
The par value of Ordinary Shares is $0.01 per share and all
shares are fully paid.
During 2015, the Company completed a court approved capital
reduction scheme, which resulted in $67,079,000 being transferred
from the share premium account to distributable reserves.
17. Currency translation reserve
Currency translation differences arose primarily on the
translation on consolidation of the Group's Kazakhstan-based
subsidiaries whose functional currency is the Tenge as well as the
goodwill and fair value uplift adjustments to the carrying amounts
of assets and liabilities arising on the Kounrad Transaction which
are denominated in Tenge. The Tenge was relatively stable during
2016 and resulted in a non-cash currency translation gain of
$1,034,000 recognised within equity. The devaluation of the Tenge
during 2015, resulted in a non-cash currency translation loss of
$77,352,000 recognised within equity in the prior year ended 31
December 2015.
18. Trade and other payables
31 Dec 31 Dec
16 $'000 15
$'000
-------------------------------------------- --- --- --------- -------
Trade and other payables including accruals 3,762 3,907
Corporation tax, social security and other
taxes 2,258 2,354
------------------------------------------------------ --------- -------
6,020 6,261
---------------------------------------------------- --------- -------
The carrying value of all the above payables is equivalent to
fair value.
The Group made a net provision for the 2016 Kazakhstan corporate
income tax liability of $940,000 (2015: $638,000) having paid an
amount of $8,675,000 in advance during the year (2015: $9,325,000).
$533,000 was also paid during the year in relation to 2015
corporate income tax.
All Group trade and other payables are payable within less than
one year for both reporting periods.
19. Cash generated from operations
2016 2015
Note $'000 $'000
------------------------------------- ------ ----- ----- --------- ---------
Profit before income tax including
discontinued operations 32,758 32,583
Adjustments for:
Depreciation 12 3,520 7,666
Amortisation 13 1,563 2,720
(Gain)/loss on disposal of property,
plant and equipment (64) 16
Foreign exchange loss/(gain) 11 1,234 (8,992)
Change in provision for doubtful
receivables - (41)
Share based payments 2,959 2,396
Write-off of inventory - 600
Finance income (67) (41)
Finance costs 158 304
Changes in working capital:
Inventories (288) (1,454)
Trade and other receivables 14 3,241 (1,647)
Trade and other payables 18 (268) (515)
Cash generated from operations 44,746 33,595
------------------------------------- ------ ----- ----- --------- ---------
20. Dividend per share
In line with the Company dividend policy, the Company paid
$20,360,000 in 2016 (2015: $20,368,000) which consisted of a 2016
interim dividend of 5.5 pence per share and a final dividend for
2015 of 8.0 pence per share (2015: interim dividend of 4.5 pence
per share and a final dividend for 2014 of 7.5 pence per share).
The dividend declared amount recognised in the statement of changes
in equity of $20,404,000 is different to the dividend paid
recognised in the cash flow statement of $20,360,000 due to
dividends payable as at 31 December 2016 recognised in trade and
other payables and foreign exchange differences on the GBP declared
dividend.
The Directors will propose a final dividend in respect of the
year ended 31 December 2016 of 10.0 pence per share at the
forthcoming Annual General meeting (AGM).
21. Related party transactions
Key management remuneration
Key management remuneration comprises the Directors'
remuneration, including Non-Executive Directors, disclosed in the
Remuneration Committee Report of the 2016 Annual Report and other
key management personnel of $428,000.
Kenges Rakishev
Mr Kenges Rakishev became a major shareholder of CAML on 23 May
2014 following completion of the Kounrad Transaction. He was
appointed to the CAML Board on 9 December 2013 following the
completion of the first part of the transaction. Consequently,
Kenges Rakishev is considered a related party in any dealings he
has with the Group. As part of the obligations on Kenges Rakishev
for completing the Kounrad Transaction, he signed a relationship
agreement with CAML setting out the terms of the relationship
between himself and the Group.
Kenges Rakishev is the chairman of the board of directors of JSC
Kazkommertsbank ("KKB") and has full control over the voting and
other rights of a combined 71.31% stake in KKB's issued and
outstanding share capital, made up of shares in KKB held by Kenges
Rakishev directly and indirectly. The Group uses the facilities of
KKB within Kazakhstan for its normal day-to-day banking and as at
31 December 2016, the Group held $4,053,000 with KKB (31 December
2015: $6,107,000). The Group incurred expenditure of $23,000 on
insurance premiums with a subsidiary of KKB. The Group has made an
insurance claim under which a syndicate of insurers including a
subsidiary of KKB and other insurers, of which Kenges Rakishev is
an interested party through shareholdings, have a potential
liability (see note 23).
22. Deferred income tax liability
The movements in the Group's deferred tax assets and liabilities
which are expected to be recovered or settled more than 12 months
after the reporting period are as follows:
Currency Credit
translation to income At 31
At 1 January differences statement December
2016 $'000 $'000 $'000 2016 $'000
------------------------------------- ------------------ ------------- ----------- --------------------
Other timing differences (134) - 52 (82)
Deferred tax liability on fair value
adjustment on Kounrad Transaction (10,106) (1,220) 2,867 (8,459)
Deferred tax liability, net (10,240) (1,220) 2,919 (8,541)
-------------------------------------- ------------------ ------------- ----------- --------------------
A taxable temporary difference arose as a result of the Kounrad
Transaction, 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 this
taxable temporary difference has been reduced by $2,867,000 during
the year ended 31 December 2016 to reflect the tax consequences of
depreciating and amortising the recognised fair values of the
assets since the date of acquisition.
Currency Credit
translation to income At 31
At 1 January differences statement December
2015 $'000 $'000 $'000 2015 $'000
------------------------------------- ------------------ ------------- ----------- --------------------
Other timing differences (276) 121 21 (134)
Deferred tax liability on fair value
adjustment on Kounrad Transaction (20,291) 10,185 - (10,106)
Deferred tax liability, net (20,567) 10,306 21 (10,240)
-------------------------------------- ------------------ ------------- ----------- --------------------
The devaluation of the Tenge during 2015 resulted in a currency
translation difference on the deferred tax liability of $10,306,000
during the year ended 31 December 2015. This is primarily due to
the translation of the goodwill arising on the Kounrad Transaction
which is denominated in Tenge.
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 $7,991,000 (2015: $5,385,000) as there is
insufficient evidence of future taxable profits within the entities
concerned. Unrecognised losses can be carried forward
indefinitely.
At 31 December 2016, the Group had other deferred tax assets of
$1,543,000 (2015: $934,000) 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 2016 and 2015, respectively.
23. Events after the reporting period
Kazakhstan VAT recoverability
As at 31 December 2016 a total of $2,838,000 (2015: $4,423,000)
of VAT receivable was still owed to the Group by the Kazakhstan
authorities. A portion of this amount totalling $238,000 was
refunded from the authorities in February 2017 and has been
classified as current trade and other receivables as at 31 December
2016.
Insurance claim
In relation to the insurance claim in respect of the operational
incident at Kounrad in June 2015, the Group continues negotiations
with the insurer in an attempt to achieve a successful outcome.
Mongolia
In December 2016, CAML Mongolia BV signed an agreement with a
third party to sell its entire interest in Monresources LLC for
cash consideration of $100 with deferred consideration dependent on
the outcome of future events. Confirmation of the transfer of
shares to the third party was received in February 2017.
Following unsuccessful attempts to dispose of the Ereen project,
CAML has taken the decision to exit its position in Zuunmod UUL
LLC. It is envisaged that this process will be completed in
2017.
Shuak
Under the terms of the Shuak framework agreement, on 22 February
2017, CAML reduced its interest in Shuak BV to 80%, with 20%
effectively being held by local partners. The transfer of the SUC
is expected to occur during Q2 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKNDNPBKDBQK
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