REG - Central Asia Metals - 2021 Full Year Results
29/03/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220329:nRSc3068Ga&default-theme=true
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 EBITDA1 of $141.5 million (2020: $95.7 million)
· EBITDA margin1 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 FCF1 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
(https://www.google.com/url?q=https://webcasting.brrmedia.co.uk/broadcast/6214e5f7599ba174a3a33776&sa=D&source=calendar&ust=1646153820402606&usg=AOvVaw0DflY02ANXUhncQj3U6JvC)
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 (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 Relations louise.wrathall@centralasiametals.com
Peel Hunt (Nominated Advisor and Joint Broker) Tel: +44 (0) 20 7418 8900
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
(http://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 £2.19 to £2.93,
ending the year at £2.59, which represents an 8% increase on the 31 December
2020 price of £2.40. 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.
Stakeholder 2021 2020
$'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
Note 2021 2020
$'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 during the year (expressed in cents per share)
$ cents $ cents
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
for the year ended 31 December Note 2021 2020
$'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 52,897 70,735
arises from:
- Continuing operations
- Discontinued operations (4) (70)
52,893 70,665
Statements of Financial
Position
Registered no. 5559627
as at 31 December 2021
Group
Company
Note 2021 2020 2021 2020
$'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
Note Ordinary shares Share Treasury Currency translation reserve Retained earnings Non-controlling interests Total
$'000 premium shares $'000 $'000 $'000 equity
Attributable to owners of the parent $'000 $'000 Total $'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 - - - 26,975 - 26,975 - 26,975
27
- - - 26,975 43,670 70,645 20 70,665
Total comprehensive income
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 - - - (31,283) - (31,283) - (31,283)
27
- - - (31,283) 84,177 52,894 (1) 52,893
Total comprehensive income
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
Company Ordinary Share Treasury Retained Total
Note Shares premium shares earnings equity $'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
Note 2021 2020
$'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 425.91 412.95 3% 431.67 420.71 3%
Macedonian Denar 52.06 54.02 (4%) 54.37 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:
In $'000 equivalent
Group
2021
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)
In $'000 equivalent
Group
2020
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 21 $'000 31 Dec 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
Cash and receivables: Group
31 Dec 21 $'000 31 Dec 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
Measured at amortised cost: Group
31 Dec 21 $'000 31 Dec 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 $'000 Sasa Unallocated Total
$'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 $'000 Sasa Unallocated Total
$'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 assets Segmental liabilities
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
Group 2021 2020
$'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
Group 2021 2020
$'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
Group 2021 2020
$'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
Group 2021 2020
$'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 145 139
services:
- The audit of Company's subsidiaries
Fees payable to BDO LLP the Company's Auditors and its associates for other
services:
55 52
- Other assurance services
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
Group 2021 2020
$'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 19,244 9,473
countries
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
Diluted earnings/(loss) per share 2021 2020
$ 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
Group Construction in Plant and Motor vehicles and ROU assets $'000 Total
progress equipment Mining Mineral $'000
$'000 $'000 assets Land rights
$'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
Group Goodwill Mining licences and permits Computer Total
$'000 $'000 software and website $'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 21 $'000 31 Dec 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:
Subsidiary Registered office address Activity Non-controlling interest %
2021 Date of incorporation
CAML % CAML %
2021 2020
CAML Kazakhstan BV Herikerbergweg 238, 1101 CM Amsterdam, The Netherlands Holding Company - - 100 23 Jun 08
CAML KZ Limited Masters House, 107 Hammersmith Road, London, W14 0QH, United Kingdom Holding Company 100 - 100 28 June 2021
CAML MK Limited Masters House, 107 Hammersmith Road, London, W14 0QH, United Kingdom Seller of zinc and lead concentrate 100 - 100 5 Sep 17
CMK Mining B.V. Prins Bernhardplein 200 Holding Company 100 - 100 30 June 2015
1097 JB Amsterham, The Netherlands
CMK Europe SPLLC Skopje Ivo Lola Ribar no. 57-1/6, 1000 Skopje, North Macedonia Holding Company 100 - 100 10 July 2015
CMK Resources Limited Cannon's Court, 22 Victoria St, Hamilton HM12, Bermuda Holding Company - - 100 19 June 2015
Copper Bay Limited Masters House, 107 Hammersmith Road, London, W14 0QH, United Kingdom Holding Company 75* 25 75* 29 Oct 10
Copper Bay (UK) Ltd Masters House, 107 Hammersmith Road, London, W14 0QH, United Kingdom Holding Company 75* 25 75* 9 Nov 11
Copper Bay Chile Limitada Ebro 2740, Oficina 603, Las Condes, Santiago, Chile Holding Company 75* 25 75* 12 Oct 11
Ken Shuak LLP Business Centre No. 2, 4 Mira Street, Balkhash, Kazakhstan Shuak project (exploration) 10 90 10 5 Oct 16
Kounrad Copper Company LLP Business Centre No. 2, 4 Mira Street, Balkhash, Kazakhstan Kounrad project (SX-EW plant) 100 - 100 29 Apr 08
Minera Playa Verde Limitada Ebro 2740, Oficina 603, Las Condes, Santiago, Chile Exploration - Copper 75* 25 75* 20 Oct 11
Rudnik SASA DOOEL Makedonska Kamenica 28 Rudarska Str, Makedonska Kamenica, 2304, North Macedonia Sasa project 100 - 100 22 June 2005
Sary Kazna LLP Business Centre No. 2, 4 Mira Street, Balkhash, Kazakhstan Kounrad project (SUC operations) 100 - 100 6 Feb 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 21 31 Dec 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 21 $'000 31 Dec 20 $'000
Cash and cash equivalents 36 56
Trade and other receivables 2 2
38 58
Liabilities of disposal group classified as held for sale: 31 Dec 21 $'000 31 Dec 20 $'000
Trade and other payables 28 25
28 25
During the year the following have been recognised in discontinued operations:
(Loss)/profit from discontinued operations: 2021 2020
$'000 $'000
General and administrative expenses (18) (97)
Foreign exchange gain 14 27
Loss from discontinued operations (4) (70)
Cash flows of disposal group classified as held for sale: 2021 2020
$'000 $'000
Operating cash flows (19) (50)
Total cash flows (19) (50)
23. Trade and other receivables
Group Company
Current receivables
31 Dec 21 $'000 31 Dec 20 $'000 31 Dec 21 $'000 31 Dec 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
Group 31 Dec 21 31 Dec 20
$'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 21 31 Dec 20 31 Dec 21 31 Dec 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 21 $'000 31 Dec 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 benefit
Shares Shares trust shares
No. No. 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 exercise Options (number) Average exercise Options (number)
price in $ per price in $ per
share option share option
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 exercise
Expiry date price $ 2021 2020
Grant - vest of option Share options (number)
8 May 12 7 May 22 0.01 76,032 76,032
24 Jul 13 23 Jul 23 0.01 36,801 36,801
3 Jun 14 2 Jun 24 0.01 143,064 143,064
8 Oct 14 7 Oct 24 0.01 160,000 160,000
22 Apr 15 21 Apr 25 0.01 212,121 212,121
18 Apr 16 17 Apr 26 0.01 338,940 338,940
21 Apr 17 20 Apr 27 0.01 296,591 482,872
2 May 18 1 May 28 0.01 560,428 806,515
30 May 19 29 May 29 0.01 752,068 1,124,877
16 Dec 20 15 Dec 30 0.01 1,008,863 1,039,126
15 Jul 21 14 Jul 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 21 31 Dec 20 31 Dec 21 31 Dec 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 21 31 Dec 20 31 Dec 21 $'000 31 Dec 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 21 31 Dec 20 31 Dec 21 31 Dec 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 21 $'000 31 Dec 20 $'000 31 Dec 21 $'000 31 Dec 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 21 31 Dec 20 31 Dec 21 31 Dec 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 retirement Other
retirement obligation benefits employee
$'000 $'000 benefits Legal claims Total
$'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) Note 2021 2020
$'000 $'000
109,323 59,725
Profit before income tax including discontinued operations
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 21 $'000 31 Dec 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 Employers NI 2021 2020
Basic salary / fees Annual Benefits in Kind $'000
$'000 bonus Pension $'000 Total Total
$'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 translation (Debit)/credit to income
At 1 January differences $'000 statement At 31 December
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 position as: 31 Dec 21 31 Dec 20
$'000 $'000
Deferred tax asset 352 236
Deferred tax liability (23,229) (26,199)
Currency translation (Debit)/credit to income
At 1 January differences $'000 statement At 31 December
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 position as: 31 Dec 20 31 Dec 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 2021 31 Dec 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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR BKFBKFBKDONBRecent news on Central Asia Metals
See all newsREG - Central Asia Metals - Annual Report and Accounts 2024 and Notice of AGM
AnnouncementREG - Central Asia Metals - Publication of 2024 Sustainability Report
AnnouncementREG - Central Asia Metals - Disposal of Copper Bay
AnnouncementREG - Central Asia Metals - Q1 2025 Operations Update
AnnouncementREG - Central Asia Metals - Director Shareholdings
Announcement