REG - Central Asia Metals - 2023 Full Year Results
25/03/2024 07:00
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RNS Number : 0583I Central Asia Metals PLC 25 March 2024
25 March 2024
CENTRAL ASIA METALS PLC
('CAML' or the 'Company')
2023 Full Year Results
Central Asia Metals plc (AIM: CAML) today announces its full year results for
the 12 months ended 31 December 2023.
Financial summary
‣ Group gross revenue(1) of $207.4 million (2022: $232.2 million)
- Group net revenue of $195.3 million (2022: $220.9 million)
‣ Group earnings before interest, tax, depreciation, and amortisation
('EBITDA')(1) of $96.5 million (2022: $131.6 million) at a margin of 47%
(2022: 57%)
‣ Group free cash flow ('FCF')(1) of $57.5 million (2022: $90.2(2) million)
‣ Capital investment of $27.8 million creating strong platform for long-term
operational performance and growth
‣ Cash in the bank of $57.2 million(3) (2022: $60.6million) as at 31 December
2023
‣ CAML remains debt free
‣ 2023 full year dividend of 18 pence per share (2022: 20 pence)
Operational overview
Safe and consistent production
‣ Zero lost time injuries ('LTIs') at Kounrad (2022: zero) and one LTI at Sasa
(2022: two)
‣ Copper production of 13,816 tonnes (2022: 14,254 tonnes)
‣ Zinc in concentrate production of 20,338 tonnes (2022: 21,473 tonnes)
‣ Lead in concentrate production of 27,794 tonnes (2022: 27,354 tonnes)
Investing in the future
‣ Completion of construction of Sasa's Paste Backfill ('PB') Plant and
commencement of transition to paste fill mining methods
‣ Completion of initial phase of Sasa's new Central Decline
‣ Updated 2023 Mineral Resource Estimate ('MRE') demonstrates that an additional
2.4 million tonnes have been identified at Sasa under CAML ownership
‣ Completion of Kounrad Solar Power Project
‣ Formation of CAML Exploration ('CAML X') in Kazakhstan and approval received
for two exploration licences to date
1. See Financial Review section for definition of non-IFRS alternative
performance measures
2. The definition of FCF was updated to include interest received which
changed the 2022 FCF to $90.2 million
3. The cash balance figure disclosed includes restricted cash balance
Post period end
‣ Intention to invest up to £5 million in Scottish copper and nickel explorer,
Aberdeen Minerals, announced separately today
2024 outlook
‣ Production guidance
- Copper, 13,000 to 14,000 tonnes
- Zinc in concentrate, 19,000 to 21,000 tonnes
- Lead in concentrate, 27,000 to 29,000 tonnes
‣ Completion of construction of Dry Stack Tailings ('DST') Plant and Landform at
Sasa
‣ Completion of development of second phase of Central Decline at Sasa
‣ Increased exploration work planned in Kazakhstan through CAML X subsidiary as
well as 6,600 metres of exploratory drilling planned at Sasa
‣ Continued active assessment of new business opportunities with increase in
activity in the last six months
‣ Reporting to Global Industry Standard for Tailings Management ('GISTM')
‣ Reduced carbon emissions expected in 2024 due to contribution of solar power
from new Kounrad facility
Nigel Robinson, Chief Executive Officer, commented:
"I am pleased to report a solid performance for CAML in 2023 in which we have
met our production guidance in a safe environment at both sites and achieved
an improvement in our lost time injury frequency rate ('LTIFR'). This
performance has been achieved despite a challenging economic environment with
metal prices deteriorating by an average of c.10% across our base metal
portfolio and ongoing inflationary cost pressures. The Company has performed
well due to our low-cost operations and strong balance sheet.
"It has also been a busy year of development and investment in our business
both at Sasa and Kounrad. At Sasa we made significant strides towards the
completion of our transition to paste fill mining, whilst at Kounrad we
completed the construction of the solar power project.
"Alongside the investment at both of our sites during 2023, we have been very
active in trying to grow our business and have reviewed 37 opportunities,
signed 17 NDAs and conducted seven site visits.
"As part of our growth strategy, we set up our new exploration subsidiary,
CAML X with a team of early-stage exploration geologists in Kazakhstan, and I
am pleased to report we have been awarded two exploration licences to date.
"Following this performance, we propose a 9 pence per share final dividend,
equating to a total dividend for 2023 of 18 pence per share. We are delighted
to be able to propose this above-policy dividend, underscoring our track
record of delivering attractive returns to shareholders in the absence of a
material business development transaction and / or level of debt during the
period.
"During 2024 we intend to complete the installation and commissioning of the
DST Plant at Sasa and the transition to paste fill mining. This will
complete our capital investment programme at Sasa and will ensure the maximum
extraction of resources in the safest and most environmentally friendly way
through to at least 2039.
"We were delighted to have announced separately today our intention to invest
up to £5 million in Scottish copper and nickel explorer, Aberdeen Minerals.
We have been impressed with the Aberdeen team and the company's exploration
potential and we look forward to working together to explore the prospective
Northeast area of Scotland. We will continue to search for additional growth
opportunities both at the early exploration stage and also the larger
transformational transactions which will enhance shareholder value in the
short to medium term."
Analyst conference call and webcast
A live conference call and webcast hosted by Nigel Robinson (Chief Executive
Officer), Gavin Ferrar (Chief Financial Officer) and Louise Wrathall (Director
of Corporate Development) will take place at 09:30 (GMT) today.
The conference call can be accessed by dialling +44 (0) 33 0551 0200 and
quoting the confirmation code 'Central Asia Metals - Results', and the
webcast can be accessed using the link:
https://brrmedia.news/CAML_FY (https://brrmedia.news/CAML_FY)
The presentation will be available on the Company's website and there will be
a replay of the call available following the presentation
at www.centralasiametals.com (https://www.centralasiametals.com/)
Presentation via Investor Meet Company
The Company will also hold a live presentation relating to the 2023 Full Year
Results via the Investor Meet Company platform on Monday 25 March 2023 at
16:30 (GMT). 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:
www.investormeetcompany.com/central-asia-metals-plc/register-investor
(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 louise.wrathall@centralasiametals.com
Director of Corporate Development
Emma Chetwynd Stapylton emma.chetwyndstapylton@centralasiametals.com
Investor Relations Manager
Peel Hunt (Nominated Advisor and Joint Broker) Tel: +44 (0) 20 7418 8900
Ross Allister
David McKeown
Georgina Langoulant
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
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. The CAML Exploration subsidiary was
recently formed to progress early exploration opportunities in Kazakhstan.
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
Fulfilling our purpose
Our purpose is to produce base metals, essential for modern living, profitably
in a safe and sustainable environment for all our stakeholders and we have
fulfilled this purpose during 2023.
Our solid operational performance in 2023 generated EBITDA of $96.5 million,
earnings per share ('EPS') of 20.51 cents and FCF of $57.5 million. Whilst
this was significantly less than the prior year due to reduced commodity
prices and inflationary cost pressures, it was a strong performance in a
difficult market.
2023 has been a notable year for several reasons, not least the fact that, in
Q3 2023, we reached the milestone of having generated over $1 billion in
revenue from our Kounrad project. Operationally, in addition to completing
construction of our Solar Power Project in Kazakhstan, we also completed the
first part of the development of our Central Decline at Sasa, by joining the
two tunnels totalling over two kilometres that had been simultaneously
constructed from within the mine and from surface. Also, at Sasa, we completed
construction of our PB Plant and began transitioning to our new paste fill
mining methods, while starting construction of the final phase of our capital
investment - the DST project.
In terms of developing our business for the long term, we continue to place
much focus on appraising opportunities for future growth. In 2023, we were
pleased to have entered into an arrangement with a team of experienced
early-stage exploration geologists with international and significant
Kazakhstan experience and a proven track record of discovery, and have set up
our new exploration subsidiary, CAML X. The team is reviewing a series of
potential target areas using historical data and its advanced database, and
applications for several exploration licences in Kazakhstan have been made,
with two already granted.
Sustainability
We have continued to advance our sustainability efforts during 2023. In Q2
2023, we published our fourth standalone Sustainability Report. This was the
Company's third report drafted in accordance with the Global Reporting
Initiative ('GRI') Standards, and the first to GRI's new Universal Standards.
We maintain our focus on minimising our environmental impacts on the areas
surrounding our operations while creating value for our local stakeholders
and, to that end, we have progressed in several key sustainability areas
during 2023. We have established the template to estimate our Scope 3
greenhouse gas ('GHG') emissions, and these will be detailed in our
forthcoming Climate Change Report for 2023 and also retrospectively for 2022.
Our efforts towards conforming with the new GISTM have intensified and we
remain confident that we will be able to comprehensively detail our progress
and status at the end of H1 2024.
During Q4 2023, we also commenced projects on both biodiversity and
occupational health, and we look forward to advancing our work and developing
strategies for these two areas in 2024.
Governance
In April 2023, Nurlan Zhakupov left the CAML Board, we thank him for his 11
years of service as a Non-Executive Director.
We remain committed to strong corporate governance practices. Aside from
Nurlan's departure, our Board and its committees have enjoyed a period of
stability. Our Technical Committee visited Sasa twice to see progress and
provide guidance to the team delivering the projects that will enable us to
complete the transition to paste fill mining methods.
Our Audit Committee continues to oversee the financial aspects of our business
as well as placing an increasing importance on risk management. CAML's
Remuneration Committee continues to ensure clear and measurable targets for
our Executive Directors and senior management team, which always incorporate
sustainability-related targets, while our Nomination Committee aims to ensure
we retain, develop, and attract the right talent for the future. Our
Sustainability Committee has this year advised our charitable foundations
regarding a longer-term approach to our community investments and has ensured
Board oversight on our climate change initiatives and tailings management in
particular.
Acknowledgements
At the end of 2023, Pavel Semenchenko retired as Kounrad's General Director.
Pavel has been with us for 17 years, overseeing the construction and the safe
and successful operation of Kounrad. My sincere thanks go to Pavel for all
that he has done for Kounrad and for CAML and I am delighted that he has
agreed to remain with us as our Regional Manager in Kazakhstan. I am confident
that his replacements, Raulan Kozgambayev and Vitaliy Logachev, will continue
to ensure Kounrad's success for the future.
I would like to thank the Board of Directors, our senior management team and
all our employees for their dedication to our business during 2023. Your
efforts are noted, and we very much appreciate your hard work. I would like to
extend my thanks to our stakeholders for their support.
CHIEF EXECUTIVE OFFICER'S STATEMENT
2023 Financial overview
During 2023 we reported gross revenue of $207.4 million, an EBITDA of $96.5
million, at a margin of 47% and generated free cash flow of $57.5 million.
Following this performance, we propose a 9 pence per share final dividend,
equating to a total dividend for 2023 of 18 pence. We are delighted to be able
to propose this above-policy dividend, underscoring our track record of
providing attractive returns to shareholders in the absence of a material
business development transaction during the period.
Our Kounrad operations continued to perform well, with production towards the
upper end of our guidance range at 13,816 tonnes of copper. Kounrad's C1 cash
cost of production remained very low by global standards at $0.74 per pound,
despite inflationary pressures.
Meanwhile, at Sasa we produced 20,338 tonnes of zinc in concentrate and 27,794
tonnes of lead in concentrate, which was in the middle of our guidance range,
at a C1 zinc equivalent cash cost of production of $0.68 per pound.
Despite the above solid financial and operational performance, CAML's shares
performed poorly over the course of the year due to the challenging economic
environment.
Kounrad
During the year at Kounrad, leaching operations performed well, as did the
solvent extraction - electrowinning ('SX-EW') processing facilities with
recorded 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, which has already delivered more copper than was originally
anticipated.
In July 2023, our Board paid a successful visit to site, viewing both the
leaching and SX-EW operations plus the construction progress of the Solar
Power Project. The Board also took the opportunity to hold meetings with local
management and various stakeholders in the area as well as visiting the
Kounrad Foundation projects to see their development.
In Q4 2023, the Solar Power Project construction was completed, and I was
delighted to officially open the facility. It is now generating renewable
power and anticipated to provide 16-18% of the site's electrical needs on an
annualised basis and reduce Kounrad's Scope 1 and 2 emissions by 10% versus
2020. The majority of the installation and other works were conducted
in-house, and the project was completed on schedule and under budget at a
final cost of $3.1 million.
I would like to join Nick Clarke in thanking Pavel Semenchenko who, after 17
years as General Director, is stepping away from the day-to-day running of the
operations at Kounrad.
Sasa
During 2023, significant construction work took place at site as we built the
infrastructure necessary for the transition to paste fill mining methods.
The initial development of the Central Decline is complete, and the decline is
now operational with the completion of Phase 1 connecting surface to the 910
level in H1 2023. Phase 2 is scheduled to be completed by the end of H1 2024
and will connect 910 level with the 800 level.
Construction of the PB Plant is complete, and the plant is now effectively
operational with cemented tailings being placed underground, and the
extraction of ore at the 800 level in line with our new paste fill mining
methods is underway.
In 2023, the final design and review process for the DST Plant was completed
and the construction of the plant foundations and clearing of vegetation for
the landform started in H2 2023. During 2024, the placement of dry stack
tailings will commence, and the project is due to be completed by the end of
the year.
Sustainability
To demonstrate our efforts and achievements, we will soon be publishing our
fifth sustainability report, our fourth to GRI standards and our second to the
new GRI 'universal standards'. During 2023, we undertook an internal review
process to check the materiality of the topics and their priorities, and the
new GRI mining sector standards were taken into account. From this process, we
have made the decision to include human rights as an additional material
topic. Diversity and inclusion have been identified as a key focus area and
have also been added as a material topic. Therefore, we have begun to develop
a diversity and inclusion strategy that will be built upon in 2024.
Additionally, to support employees during the current global inflationary
environment, all staff at both sites were given pay rises.
In 2023, we began to estimate our Scope 3 emissions for 2022 and 2023 and
have included this data in our forthcoming 2023 Climate Change Report.
Our Health and Safety performance across the Group continues to be strong and
we have always maintained a key focus on this aspect of our business. We
were disappointed to report one LTI at Sasa during the year but this is a
continued improvement on previous years. We recorded zero LTIs at Kounrad and
therefore our 2023 total as a Group was one, with a LTIFR of 0.40.
In Q4 2023, Sasa won a top national safety award from the Council of Health
and Safety at work in North Macedonia, recognising that our work to implement
effective safety training and supervision for our employees is a priority and
is crucial to achieving an improving safety record.
We remain committed to reporting to GISTM for our tailings storage facilities
('TSFs') by end of H1 2024. A working group has been formed, comprising
members of the production, tailings, sustainability and communications teams,
overseen by the Group Sustainability Director and Sasa's General Director, to
ensure all workstreams are effectively covered.
In 2023, we reported that we would increase funding to both of our local
Foundations from 0.25% from 0.50% of revenue. This is a vital aspect of what
we do in the areas close to our operations and, as a result, we enjoy good
relations with our neighbours, and we believe we have brought some real,
positive change. At Kounrad, the Foundation contributed to equipment for the
local hospital, computers for the medical college, educational support for
children from low-income families and sports equipment for various youth teams
amongst other causes. This year at Sasa, funds were allocated to various
projects, including the reconstruction of the medical centre, support of youth
sports teams and educational scholarships.
Additionally, we have purchased a foetal heart monitoring piece of equipment
in Balkhash and funds have been allocated for an x-ray machine at Sasa to
enhance the medical facilities for the local community.
In Kazakhstan, the Kounrad Foundation has engaged the Eurasia Foundation for
Central Asia ('EFCA') to develop a long-term community investment strategy
that will be implemented over the next five years. This plan will create new
opportunities for the residents of Balkhash, working with local authorities,
the community, and other stakeholders to improve their quality of life and the
environment. Representatives from the Kounrad Foundation undertook a tour
study of other Foundations in Kazakhstan in H1 2023, and a Strategic Plan has
been drafted.
At Sasa, Phase 1 of the Local Economic Development Plan ('LEDP') and Local
Environment Action Plan ('LEAP') activities was completed in 2023, comprising
the development of a community-based tourism concept and the establishment of
a brand identity for Makedonska Kamenica which was created by the community
itself through workshops with community leaders and existing businesses.
Outlook
While we do foresee global challenges, we are confident that CAML will
continue to perform robustly and that we have the teams in place to continue
to deliver safe, consistent and low-cost production.
At Kounrad, we expect to produce between 13,000 and 14,000 tonnes of copper
during 2024. Our production guidance for Sasa is 790,000 to 810,000 tonnes of
ore, which should deliver between 19,000 and 21,000 tonnes of zinc in
concentrate and between 27,000 and 29,000 tonnes of lead in concentrate. Our
focus at Sasa during 2024 will be the completion of DST Project as the final
component of our investment in the infrastructure required to transition to
the paste fill mining methods. Completion of these projects at Sasa will then
enable us to extract the maximum resources in a safer, more sustainable and
efficient manner.
In 2024, Sasa expects to spend between $8 million and $9 million in completing
the construction of the DST Plant and Landform and completing Phase 2 of the
Central Decline. This will bring to an end the major capital investment
programme undertaken at Sasa over the past three years. CAML also expects to
commit between $14 million and $16 million to sustaining capex across the
Group in 2024.
We were extremely active throughout 2023 in terms of business development,
having reviewed 37 opportunities, signed NDAs for 17 of them and conducted
seven site visits. In December 2023, we were delighted to receive confirmation
that one of our new licence applications for our target generation exploration
programme in Kazakhstan had been granted and, in Q1 2024, we received
confirmation of a second. We look forward to a full exploration season for our
new CAML X entity this year.
This business development momentum has continued into 2024 and we remain in a
strong position from which to grow through acquisition, building the business
for the future and producing the base metals essential for modern living.
OPERATIONAL REVIEW
Kazakhstan
Health and safety
There were no LTIs at Kounrad during 2023, and there have now been 2,054 days
since the last LTI to the end of 2023.
Leaching operations
Both the Eastern and Western Dumps were simultaneously leached during 2023,
with the production split being 32% and 68%, respectively.
At the Eastern Dumps, the team focused on irrigating the side slopes of Dump 7
which had been levelled by a bulldozer during 2022. Additionally, commencing
in early spring of 2023, the bulldozer was assigned to levelling the side
slopes of the Dump 5 perimeter, thus exposing additional resources of
previously unleached material. The leaching response from these two side slope
areas was excellent, with the Eastern Dumps producing 4,382 tonnes of copper,
a contribution last seen in 2020.
In other areas of the dumps, rotational 'rest and rinse' irrigation was
continued, which continues to generate economic levels of PLS in the region of
0.5 to 0.7 grammes per litre ('gpl') copper. The late autumn/early winter
temperatures were very mild in 2023 and allowed leaching of the uncovered
summer blocks to be extended by a month longer than normal, assisting in
overall production. The old winter blocks that are still covered with heat
retaining high density polyethylene ('HDPE') sheeting, were brought under
leach in the first week of December and will be on-line until Spring 2024. It
should be noted that winter leaching of the Eastern Dumps will not be
conducted after the current season has ended in March 2024, as the economics
of placing the HDPE cover materials and the cost of heating the raffinate to
this area are not justified. From 2024 onwards, leaching at the Eastern Dumps
will be conducted only during the eight/nine warmer months of the year.
2023 production takes the total quantity of copper recovered from the Eastern
Dumps, since operations commenced, to over 85,000 tonnes, higher than the
quantity forecast at the time of the CAML Initial Public Offering ('IPO') in
2010. Typically, the daily average area under irrigation at the Eastern Dumps
during the year was 22 hectares, noting that winter leaching is restricted to
an area of around 12 hectares.
The irrigation plan for 2024 is to focus on the 180,000 cubic metres of
materials that were relocated from the edge of the railway link and placed
atop Dumps 9-10. It is forecast that this material should produce
approximately 1,000 tonnes of copper and will be supplemented with continued
side slope irrigation of Dumps 5 and 7, together with rotational 'rest and
rinse' from older blocks. It has been noted that a typical ore block that has
been subjected to over 600 days of irrigation, through several 'rest/rinse'
cycles, is still capable of producing economical PLS grades containing 0.6 to
0.7 gpl of copper pick-up.
The continued successful and economic generation of copper from the Eastern
Dumps is anticipated to continue at least into 2025 and potentially beyond.
At the Western Dumps, the focus of irrigation remained on parts of Dumps 16,
21, 22 and 1A, from which 9,434 tonnes of copper were recovered, contributing
approximately 68% of the total Kounrad copper production. The average daily
area under irrigation on the Western Dumps slightly decreased to 34.6 hectares
(38.2 hectares in 2022) of both new and previously leached material. This was
as a result of the higher production level at the Eastern Dumps, allowing
Western ore blocks to be leached for longer whilst still generating economic
returns at planned production target levels. The volume of raffinate pumped
around the site averaged 1,299 cubic metres per hour ('m(3)/hr'), an increase
of 5% over 2022 rates. As in previous summer periods, 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.
Application rates of solution to the dumps were maintained at a level of 2.44
litres per square metre per hour ('l/m(2)/hr') throughout the year, slightly
higher than in 2022.
During the course of the year, the 890 metres of trenches excavated northwards
around Dump 16 edge in 2022 were fully lined with HDPE and brought into
operation. An extension of the trench encircling Dump 21 was undertaken this
year, with 900 metres being excavated of which 450 metres were lined with
HDPE, the balance to be completed in 2024.
Two bulldozers continued with levelling and shaping earthworks, primarily on
the Western Dumps. At the Eastern Dumps, bulldozer work was relatively limited
to the preparation of unleached side slope and road access areas.
The new winter irrigation/boiler measurement and control systems, which were
designed and prepared in late 2021, continue to operate very effectively.
Since 2021 there has been a stable reduction in coal consumption by 13%, with
both 2022 and 2023 being within 100 tonnes of each other.
SX-EW plant
The SX-EW plant continued to operate efficiently during 2023 and the overall
operational availability throughout the year was 99.4%. This was 0.1% above
that of 2022, primarily due to a reduced number of power supply interruptions
this year. With the process plant now having passed 10 years of permanent
operations, for the first time the number of planned maintenance schedules
were increased from two to three in an attempt to minimise unscheduled
stoppages due to mechanical or electrical failure.
With the average Western Dumps copper grade of around 0.1% and largely fully
leached Eastern Dump materials, the average PLS grade for the year was 2.05
gpl, approximately 0.2 gpl lower than in 2022. Solution flow rates through the
SX increased to 1,071 m(3)/hr for the year, with rates in Q3 2023 averaging
over 1,200 m(3)/hr. During the year, each of the four extract settler units
were taken off-line to facilitate inspection and undertake any necessary
repairs. In addition, a new heat exchanger was installed on the solution line
feeding the fourth mixer unit, which now allows it to be run through the
winter with the aim of mitigating and optimising organic reagent consumption
and therefore production costs through this period.
Operations within the electrowinning ('EW') sections were steady throughout
the year, with the operations teams focusing on minimising reagent
consumptions in the off gas scrubber units, whilst maintaining high efficiency
levels. A further focus was placed on improving ventilation within the EW
buildings, through comprehensive checks and renewal of the ventilation piping
and increased frequency of atmospheric measurements. To this end gas sampling
equipment was purchased, which allowed more frequent monitoring of this
parameter. The EW plating bath units were cleaned of accumulated lead sludge
in order to ensure high quality copper cathode quality. In Q4 2023, an order
was placed for 1,064 new anode plates, with expected delivery to site being Q3
2024 and installation scheduled for the start of Q4 2024.
During the year, the site management team continued their emphasis on reagent
consumptions and controls, particularly imported organic reagents such as LIX,
achieving a saving of 7.5% compared to 2022. As a consequence of the lower
copper grade entering the SX, levels of transferred iron into the rich
electrolyte increased by almost 12% and was ameliorated by a higher level of
bleeding and fresh make-up water. As such consumption levels of cobalt, acid
and smoothing agent were slightly higher but assisted in maintaining the
electrical power consumed per tonne of copper at a slightly lower level than
2022, at 4,252 kWh per tonne (4,266 kWh in 2022).
Copper sales
Throughout the year, the quality of CAML's copper cathode product has once
again been maintained at high levels. Regular in-house and independent
metallurgical analyses have consistently reported 2023 copper purity of around
99.998%. The Company continues to sell the majority of its copper production
through offtake arrangements with Traxys.
2024 production guidance
The 2024 guidance for Kounrad's copper cathode production is between 13,000
and 14,000 tonnes.
Solar Power Project
Following approvals for the Solar Power Project capital expenditure by the
CAML Board, all orders for the associated equipment and materials were placed
in 2022, with the majority of items received at site during Q1 2023. Working
with the technical oversight of a Kazakh licensed engineering consultant, TGS,
an in-house team of construction and installation engineers were assembled to
undertake the site installation works in March 2023 after earthworks
associated with levelling the 10 hectare site had been completed in 2022.
During Q4 2023, the installation of the 4.77 MW facility, comprising 8,850
solar panels, 24 DC-AC inverters and associated items was essentially
completed and the plant commissioned. In November, the facility was officially
opened by the CEO in the presence of regional dignitaries. Since then, the
facility has generated over 709,000 kWh to year end, equating to 7% of the
total site demand and in accordance with winter period forecasts estimated in
the feasibility study.
With the vast majority of the installation and other works being conducted
in-house, the project was completed under budget at a final cost of $3.1
million.
North Macedonia
In 2023, Sasa mined 805,621 tonnes of ore and processed 805,819 tonnes of ore.
The average head grades for the year were 2.97% zinc and 3.70% lead and the
average 2023 metallurgical recoveries were 85.0% for zinc and 93.1% for
lead.
Sasa production statistics
Units 2023 2022 2021
Ore mined t 805,621 806,069 818,609
Plant feed t 805,819 806,653 830,709
Zinc grade % 2.97 3.15 3.14
Zinc recovery % 85.0 84.6 84.9
Lead grade % 3.70 3.63 3.52
Lead recovery % 93.1 93.4 93.1
Zinc concentrate t (dry) 40,226 42,824 44,383
- Grade % 50.6 50.1 49.9
- Contained zinc t 20,338 21,473 22,167
Lead concentrate t (dry) 39,136 38,439 37,893
- Grade % 71.0 71.2 71.8
- Contained lead t 27,794 27,354 27,202
Health and safety
At Sasa, we continue to improve our health and safety standards reflected in a
reduction in our LTIFR to 0.40 in 2023.
Mining
The ore was mined using a combination of sub-level caving and cut and fill
mining methods during the year from the 990, 910 and 830 level production
areas. The ore and waste from the underground operations is transported to
surface via a combination of hoisting via the Golema Reka shaft and trucking
via the existing XIVb decline and increasingly the Central Decline using a
fleet of 20 tonne Epiroc trucks.
The average combined zinc and lead grade of the ore mined was 6.67%, compared
to 6.78% in 2022.
Ore development across the three working areas totalled 6,549 metres, which
was broadly in line with last year, included opening the new 830 production
area in Q3 2023. Waste development for the year totalled 2,574 metres,
approximately 8% above last year, and generated 104,048 tonnes of waste from
internal ramp access and crosscuts to the ore body, raise development and the
development of the Central Decline. The mine produced a total of 909,669
tonnes of ore and waste during the year, approximately 1% more than last year.
Maintenance
The computerised maintenance management system ('CCMS') for surface and
underground equipment is operational and in the process of being updated with
additional mobile equipment and fixed plant. As part of the strategy to
modernise the procedures, a new underground Wi-Fi communications system was
completed across the main areas of the mine and is now in the process of being
extended to all working areas.
During the year, certain equipment was purchased to maintain production and
improve efficiency:
‣ an Epiroc Bolting Drill Rig Boltec S, for the safe and efficient
installation of support including roof and cable bolts
‣ a Manitou MHT-X790 Mining, for installation of the underground
reticulation system
‣ a Paus MinCa people transporter
‣ a CAT 320 excavator
‣ a Simba S7 long hole drilling machine
Processing
Sasa processed 805,819 tonnes of ore during the year which is consistent with
2022 production, and the plant had an overall availability of 95%.
In addition to the planned maintenance works completed during the year, the
process of improving the automated oil lubrication systems and flow meter
continues with additional units installed and commissioned during 2023.
The tailings storage facility systems at Sasa ran to a high standard and
without incident during the year, managed by a designated tailings management
team. An internal GISTM review was completed in Q3 and the new system captures
all recommendations from the Knight Piésold Technical Reviewer, Independent
Technical Reviewer ('ITR') and the Engineer of Record ('EoR') reports. Over
the course of the year significant progress has been made towards conformance
with GISTM in 2024.
During the year, construction of the TSF4 waste rock toe continued with the
placement of 21,000 m(3) waste rock from the underground mine.
A seismic monitoring system and piezometer sensors were installed in 2022 and
additional piezometers have been added and commissioned in 2023 to continue
the drive to automate and improve the TSF monitoring systems.
The rehabilitation of the TSF3.2 facility continued throughout the year with
the placement of waste rock from the underground mine and is now 90% complete,
including placement of rock armouring and topsoil of the face of TSF3.2 to
reduce dust and comply with environmental legislation.
A total of 10,157 metres of exploitation drilling was completed during the
year across the three working areas, the 830, 910, and 990 levels, to provide
additional information on the grade and thickness of the three orebodies.
During H1 2024, an additional production area on the 750 level is planned to
come into operation to continue the transition to paste fill mining methods.
A total of 1,615 metres of exploration drilling was completed below the 830+14
metre level to improve the geological understanding of the mineralisation at
Svinja Reka at depth.
A total of 3,541 metres of exploration drilling in eight holes was completed
from surface at the Golema Reka deposit to improve understanding of the
geology at depth below the 700 metre level. One hole intersected three zones
of mineralisation down to at least the 580 metre level, demonstrating the
extension of the mineralisation at depth to the south-west and adding to the
Inferred Mineral Resources.
In Kozja Reka and the Gap target (the area between Golema Reka and Kozja
Reka), 4,300 metres of exploration drilling was completed in 2023.
Capital investments
The transition to using paste fill at Sasa will create a safer and more
sustainable underground mining operation for the long term and provide the
ability to improve the overall recovery of metal from the orebody. Investments
have been made in three key areas and consist of a PB Plant and the associated
surface and underground reticulation, a DST Plant and associated Landform and
the development of a new Central Decline.
PB Plant
Following the ESIA approval for the PB Plant in 2022, a contract was signed
with local construction company, Aktiva, and excavation and civil works began
shortly after. The PB Plant and associated surface and underground
infrastructure is now complete and in operation with extension to the
underground reticulation system continuing as the mine opens new production
areas.
Central Decline
The development of the Central Decline continues to progress well and is now
operational, with phase 1 complete in Q2 2023 connecting the surface to the
910 working level. During 2023, 1,056 metres of development were completed and
as at the end of 2023, the Central Decline had been developed for a total of
2,610 metres from surface.
The Central Decline has been equipped with a new paste fill reticulation line
and is fully serviced with power, stage pumping and cuddies mined at 200 metre
intervals. In Q4 2023, a surface 75 kW fan was installed and commissioned,
improving mine ventilation by up to 24m(3) per second.
DST Plant
During 2023 the final design and review process for the DST Plant was
completed, and construction of the plant foundations and clearing of
vegetation for the landform started in Q4 2023. In H1 2024, the project is due
to be complete and the placement of dry stack tailings will commence.
Tailings management
A key benefit to the transition to paste backfill mining is the improved
storage of tailings. Previously, all tailings generated from Sasa's processing
plant were stored in TSF4. For the remaining life of the mine, tailings will
be stored in the following three locations; underground paste backfill, DST
Landform and TSF4.
2024 Production guidance
The transition to the paste fill mining methods is underway. CAML maintains
its ore mined guidance year on year of 790,000 to 810,000 tonnes. Expected
metal production in 2024 is between 19,000 to 21,000 tonnes of zinc in
concentrate and 27,000 to 29,000 tonnes of lead in concentrate.
Sasa Mineral Resources, Ore Reserves and life of mine ('LOM')
During 2023, the technical services team updated Sasa's Mineral Resource
Estimate ('MRE') for the Svinja Reka and Golema Reka deposits and the Ore
Reserves for the Svinja Reka deposit.
The updated work took into account recent additional drilling, mining
depletion and changes to the metal price and transport charges used in the Net
Smelter Return ('NSR') calculation. Sasa's MRE and Ore Reserves are shown in
the following tables.
Total Sasa Mineral Resources increased by 0.9 million tonnes versus 2022.
Svinja Reka Mineral Resources decreased to 11.5 million tonnes at grades of
4.3% lead and 2.9% zinc (2022: 12.3 million tonnes at grades of 4.2% lead and
2.9% zinc) due to mining depletion. Total Golema Reka Mineral Resources
increased to 9.3 million tonnes at grades of 3.8% lead and 1.2% zinc (2022:
7.6 million tonnes at grades of 3.6% lead and 1.4%), due to changes in
geological reinterpretation based on the results of the 2023 drilling and the
use of a NSR cut-off value for reporting.
The Svinja Reka 2023 Ore Reserve is 9.0 million tonnes at grades of 4.0% lead
and 2.6% zinc (2022: 8.8 million tonnes at grades of 3.9% lead and 2.6% zinc).
Mining depletion of approximately 0.8 million tonnes has been offset by design
changes associated with increased metal prices and additional geotechnical
data. Based on the latest Mineral Resources and Ore Reserves, CAML expects
Sasa to maintain annual production rates of between 800,000 and 830,000 tonnes
per annum for an expected life of mine of 15 years until 2039.
Approximately 6,600 metres of exploration drilling is planned at Sasa for
2024, which will focus on underground drilling of the Kozja Reka deposit from
the Central Decline to explore for down dip and northern extensions of the
previously mined mineralisation. In addition, down dip exploration and infill
drilling at Svinja Reka below the 750 level is planned, as well as a
structural geology study of the Sasa area to assist with the definition of
exploration targets.
Mineral Resource Estimate for Svinja Reka and Golema Reka
Sasa's technical services team has updated the Mineral Resource Estimate
('MRE') for the Svinja Reka and Golema Reka deposits as of 31 December 2023:
Grades Contained metal
Classification Deposit Mt Pb (%) Zn (%) Ag(g/t) Pb (kt) Zn (kt) Ag (koz)
Indicated Mineral Resources Svinja Reka 9.6 4.6 3.0 34.6 441 286 10,634
Golema Reka 1.9 4.0 1.3 13.5 77 26 841
Total Indicated 11.5 4.5 2.7 31.0 518 312 11,475
Inferred Mineral Resources Svinja Reka 2.0 2.5 2.4 19.5 48 47 1,221
Golema Reka 7.3 3.7 1.2 12.8 274 87 3,031
Total Inferred 9.3 3.5 1.5 14.2 322 135 4,242
Total Indicated and Inferred Resources 20.8 4.0 2.1 23.5 840 446 15,717
Notes
- Mineral Resources have an effective date of 31 December 2023.
- The Competent Person for the declaration of Mineral Resources is
Graham Greenway, BSc.Honours (Geology), PGeo. Graham Greenway, CAML's Group
Geologist, is a Practising Registrant of the Professional Geoscientists of
Ontario and has over 35 years' experience in the exploration, definition and
mining of precious and base metal Mineral Resources, and has sufficient
experience relevant to the style of mineralisation and type of deposit under
consideration, and to the type of activity which he is undertaking to qualify
as a 'Competent Person' as defined by JORC and as required by the June 2009
Edition of the AIM Note for Mining and Oil & Gas Companies. He has
reviewed, and consents to, the inclusion in the Annual Report of the matters
based on their information in the form and context in which it appears and
confirms that this information is accurate and not false or misleading.
- Mineral Resources are reported inclusive of Ore Reserves.
- The Svinja Reka Mineral Resource is reported based on a NSR cut-off of
$46 per tonne for Sub-Level Caving and $53 per tonne for Cut and Fill and
Long Hole Stoping and are based on metal price assumptions of $2,933 per tonne
for zinc, $2,300 per tonne for lead and $26 per ounce for silver (these being
15% higher than the prices assumed for the Ore Reserve so as to include
mineralisation that has "Reasonable prospects for eventual economic
exploitation" but which is not economic assuming the prices used for reporting
the Ore Reserve).
- The Golema Reka Mineral Resource is reported based on a NSR cut-off of
$53 per tonne for Cut and Fill Stoping.
- Mineral Resources are reported as undiluted. No mining recovery has
been applied in the Statement.
- Tonnages are reported in metric units, grades in percent (%) or grams
per tonne (g/t), and the contained metal in metric units or ounces. Tonnages,
grades, and contained metal totals are rounded appropriately.
- Rounding may result in apparent summation differences between tonnes,
grade and contained metal content.
Svinja Reka Ore Reserve statement
The following Ore Reserve Statement has been prepared by Sasa's technical
services team based on a LOM plan that includes a transition from the
Sub-Level Caving mining method to Cut and Fill as well as Long Hole Stoping
with paste backfill. The Ore Reserve Statement considers the updated Indicated
Resources constrained within a practical and economic mine design only.
Grades Contained metal
Svinja Reka Mt Pb (%) Zn (%) Ag(g/t) Pb (kt) Zn (kt) Ag(koz)
Probable 9.0 4.0 2.6 29.8 359 236 8,661
Total 9.0 4.0 2.6 29.8 359 236 8,661
Notes
- Ore Reserves have an effective date of 31 December 2023.
- The Competent Person who has reviewed the Ore Reserves is Scott
Yelland, C. Eng, FIMMM, MSc, who is a full-time employee and Chief Operating
Officer of CAML. He is a mining engineer with over 40 years' experience in the
mining and metals industry, including operational experience in underground
zinc and lead mines, and as such qualifies as a Competent Person
as defined in the JORC Code (2012).
- The Ore Reserve is reported using a NSR cut-off of $46 per tonne for
Sub-Level Caving, $53 per tonne for Cut and Fill and Long Hole Stoping and $37
per tonne for Ore Development drives that are required to establish stope
access and are based on metal price assumptions of $2,550 per tonne for zinc,
$2,000 per tonne for lead and $23 per ounce for silver.
- Rounding may result in apparent summation differences between tonnes,
grade and contained metal content.
- The Mineral Resources and Ore Reserves are reported in accordance with
the guidelines of the 2012 Edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (the 'JORC Code').
- Ore reserves have been estimated utilising 3D modelling software
(Deswik) and are reported within practical mining shapes.
SUSTAINABILITY SUMMARY
Sustainability is central in our approach to mining and how we do business.
For our investors, it is critical we not only manage our sustainability risks
but capture the opportunities that come with being a producer of sustainable
metals. This enables us to ensure we have a positive environmental and
socio-economic impact on the communities in which we work.
Overview
Producing base metals, essential for modern living, profitably in a safe and
sustainable environment drives CAML's strategy and business model. In turn,
our sustainability strategy is built upon the five pillars shown on page 34 in
our annual report. This means protecting the longevity of our operations and
working towards an enduring net positive outcome after the end of asset life
by upholding strong ethical practices throughout the Company and our supply
chain. Additionally, this allows 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.
CAML's Board has accountability for risk management, including those relating
to the Company's impacts on the economy, environment and people. Our
Sustainability Committee has overall responsibility for overseeing these
impacts, and its report can be found on page 93 in our annual report.
In our fourth year of reporting in line with GRI standards, we have worked to
further improve and develop disclosure. During 2023, we undertook an internal
review of our materiality topics and their prioritisation.
CAML's sustainability strategy and practices continue to develop, and we have
advanced our approach to contributing to the SDGs in 2023. We recognise that
all 17 SDGs are important and that many of them are interconnected; however,
for the purposes of our sustainability activities, we believe that it is
helpful to prioritise and have therefore identified these primary
and supporting SDGs.
Delivering value through stewardship
At CAML, we set high standards that are crucial for the effective running of
our operations and the long-term sustainability of our business. With a robust
framework to promote ethical behaviour and strong corporate governance, we
believe we can contribute to a responsible and stable value chain and business
environment.
Leading from the top, the Board is responsible for setting the appropriate
culture to drive good governance and ethical behaviour throughout the Company.
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 the communities in which we
operate.
Maintaining health and safety
Safety has been identified both by the Company and our stakeholders as one of
our key material issues and is at the heart of everything we do. Our goal of
achieving zero harm in the workplace for all employees, contractors and
visitors is laid out in the Company's Sustainability Policy, and we have a
clear safety improvement target for the Group.
With fully integrated and robust health and safety management systems at both
sites, we aim to ensure the wellbeing of all employees. We strive to implement
world-class health and safety practices across our operations. It is important
that both management and staff are aware of their responsibilities and
accountability, and that they feel empowered to prioritise health and safety
in the workplace.
Wherever possible, we look to eliminate occupational health risks and believe
that a strong workforce, supported by the appropriate programmes to monitor
and promote health, is paramount in achieving high levels of productivity.
Focusing on our people
We recognise core labour and human rights principles and acknowledge workers'
freedom of association and the right for our employees to bargain collectively
within prescribed laws, communicating issues to management through designated
employee representatives.
We believe that by encouraging employee development, we can also foster
satisfaction and fulfilment amongst our employees. This involves a targeted
approach to training facilitated by comprehensive needs analysis. Succession
planning is a key focus for the Group in order to develop our leaders of
tomorrow.
CAML attaches importance to diversity, specifically when considering the
breadth of thought, approach and opinion that can be fostered by a diverse
group. By embracing diversity and fostering inclusion, we believe we can
unlock the power of all talent and work collaboratively and effectively.
Site-level diversity focus groups have been put in place to identify areas for
improvement and we have implemented long-term targets to improve levels of
gender diversity in the Group. We do not tolerate discrimination in any form
and have mechanisms in place to raise any issues.
Caring for the environment
CAML has robust and comprehensive environmental management systems which aim
to substantially reduce (if not avoid) the risk of any potential negative
environmental impacts from our operations. We are mindful of our duty to
manage and minimise waste responsibly and are firmly committed to
environmental and socially responsible tailings and dump leach management,
with safety at the centre of our approach.
We employ water management strategies and aim to minimise freshwater or makeup
usage wherever possible. Biodiversity, rehabilitation and closure programmes
are in place across our assets to avoid or mitigate any adverse effects of our
operations.
Tackling climate change is one of the most important challenges of our time
and we believe that every government, community, company and individual has a
vital role to play in reducing carbon emissions and safeguarding the future of
the planet. We recognise the growing importance of understanding and
addressing the impact of climate change on the environment and its potential
impact on the business.
We conducted a scenario planning exercise in 2022 to increase our
understanding of transition risks that may affect our operations as well as to
extend our physical risk analysis to our supply chain. In 2023, we began to
implement key recommended actions from the scenario planning exercise,
including working on estimating our Scope 3 emissions for 2022 and 2023. Scope
3 emissions for 2023 were 272,123 tCO2e (2022: 267,892 tC02e), details of
which are in the Climate Change Report.
Creating value for our communities
CAML aims to provide demonstrable benefits to stakeholders in our local
communities and host countries. By contributing to the economic security of
local workers, the provision of employment opportunities is one of the primary
ways the Company can provide a positive impact and CAML therefore prioritises
local hiring.
The Company is committed to fostering sustainable development, facilitating
socio-economic progress (specifically in the field of community training and
education) and helping the youth and most vulnerable members of the community
in line with our human rights commitments.
Our economically robust business that underpins our ability to generate
profits and dividends for our shareholders also ensures that our successes are
shared with other important stakeholders. This aligns with international
priorities such as the UN SDGs, in particular SDG 8 'Decent Work and Economic
Growth'. 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.
CAML is proud of the value that it brings to its host countries, with total
taxes of $55.6 million paid to the Governments of North Macedonia and
Kazakhstan during the year and $349.2 million paid during our ownership.
Advancing our climate change work in 2023
We are committed to transparent disclosure of our climate impacts, risks, and
opportunities. We report under TCFD in our Sustainability and Climate Change
reports, despite the disbandment of TCFD in October 2023. We believe these
standards continue to offer a fitting framework for our disclosures.
Currently, we are reviewing the recommendations of the International
Sustainability Standards Board (ISSB), particularly IFRS S1 General
Requirements for Disclosure of Sustainability-related financial information
and IFRS S2 Climate-related Disclosures. The latter aligns closely with the
TCFD recommendations, and we aim to adhere to these standards in our reporting
moving forward.
We adopted the TCFD framework and recommendations as a guide for our efforts
to understand how climate change could impact a broad range of our business
drivers. This approach helps us integrate climate considerations into our
decision-making processes and allows us to leverage best practices in
reporting and disclosure. By building on our existing efforts in this area, we
aim to enhance the quality and transparency of our disclosures while
continuing our TCFD reporting roadmap. Through these actions, we seek to
improve stakeholders' understanding of CAML's operational and business
resilience to climate change, as well as our strategies for addressing
climate-related risks and opportunities within our business model.
climate-related reporting
Progress report and next steps
We shared our climate strategy and our medium- and long-term goals which were
the result of much internal work undertaken and we felt able to commit to a
50% reduction in our Kounrad and Sasa Scope 1 and Scope 2 emissions by 2030
from a 2020 base, and to being net zero by 2050. To that end, we were
delighted to report a 41% reduction in our CAML Group GHG emissions in 2023
versus our base year (2020).
During 2023, we finalised the construction and commissioning of the 4.77 MW
Solar Power Project at Kounrad. The facility is anticipated to contribute to
16-18% of Kounrad's total power needs, which equates to a 10% emissions (Scope
1 and Scope 2) reduction at Kounrad. Throughout 2023, we continued to receive
solely renewable power for our Sasa operation, as confirmed in North Macedonia
by PwC.
In 2021, we undertook a detailed review of fuel sources that could potentially
replace coal for generating heat at Kounrad. Though the proposed alternatives
were not considered viable due to a combination of limited GHG reduction
potential and significant operating and capital cost implications,
opportunities to reduce coal consumption were identified. One of which was the
installation of temperature sensors on the dripper lines on the Western Dumps
during the 2021-2022 and 2022-2023 winter periods. The sensors allow the site
team to monitor the temperature of the leaching solution at the end of the
dripper lines and fuel the boilers accordingly to ensure the solution is kept
at the optimum temperature and not heated unnecessarily.
During 2023, Sasa replaced its old compressors with three new and more
efficient air compressors and, in association with this project, four
air-water thermal pumps were installed to improve the regulation of heating
across the site and to allow the hot water from the compressors to be recycled
within the heating system. In 2023, Sasa planted 1,910 seedlings in the local
area and is working with Public Enterprise National Forests to identify other
areas for tree planting.
During 2023, we calculated our Scope 3 emissions for both 2022 and 2023, which
are fully disclosed and reported in our Climate Change Report and GHG
Methodology Report.
Financial review
CAML continues to plan for the future with significant capital investment in
2023 of $27.8 million across the Group including $14.0 million on the
transition to paste fill mining at Sasa and $3.0 million on finalising the
Solar Power Project at Kounrad.
CAML's strong operational performance during 2023 is reflected in our achieved
EBITDA of $96.5 million, underscoring our reliable production and ability to
control costs in an inflationary environment and despite the decline in the
prices of our metals. We continue to provide returns to our shareholders with
a final dividend announced of 9 pence equating to 18 pence for 2023.
We remain effectively debt free and have a strong balance sheet, ending 2023
with cash in the bank of $57.2 million.
2023 Market overview
In 2023, the CAML share price fluctuated between £1.57 and £2.93, closing
the year at £1.81 reflecting the challenging trading conditions and
geopolitical uncertainties experienced throughout the year.
Macroeconomic environment
Commodity prices
The prices of our base metals copper, zinc and lead are highly dependent on
global economic conditions, including supply and demand dynamics. The
fluctuation in prices directly affects our profitability, which has an impact
on our share price.
Inflation
2023 inflation rates of 9.8% in Kazakhstan and 9.4% in North Macedonia have
significantly impacted the cost of living for our local employees. As a
result, we have made appropriate pay rises to ensure our remuneration remains
competitive. Global inflationary rates have impacted the prices we pay for
inputs into our mining processes including electricity, reagents and spare
parts, which directly affect our profitability margins.
Currency fluctuations
Our operations' functional currencies are the North Macedonian Denar ('MKD')
for Sasa and the Kazakhstan Tenge ('KZT') for Kounrad and therefore
fluctuations in these currency exchange rates impact our financial results.
During the year, the MKD and the KZT strengthened against the US dollar
('USD') by 3% and 2% respectively, and this led to an increased cost base.
Historically, currencies have typically depreciated in value against the USD.
Copper
In 2023, copper prices peaked at $9,331 per tonne in January but stabilised
around $8,000 per tonne for most of the year, before rising to $8,500 per
tonne in December.
There was strong demand for copper in China, driven by its use in Lithium-ion
batteries for renewable energy projects. In terms of supply, there were
constraints driven by operational disruptions, labour strikes and regulatory
hurdles in major copper-producing regions like Chile, Indonesia and Peru.
Zinc
Zinc ended 2023 at elevated levels, reaching prices above $2,600 per tonne
after hitting lows of $2,200 per tonne in May. However, current prices remain
below the levels of $3,508 per tonne reached in the early part of 2023.
Overall, 2023 was a volatile year for zinc, which at one point fell by
approximately 36% from its year high. The weak pricing environment placed
renewed focus on mines' operating costs and margins, in turn leading to
multiple mine closures over the course of the year, including Boliden's Tara
mine in Ireland and Nyrstar's Gordonsville and Cumberland mines in Tennessee,
USA.
Lead
The lead price began 2023 at the $2,337 per tonne mark and remained relatively
stable throughout the year, trading around $2,100 per tonne. Despite recording
the best price performance of the year amongst base metals, lead ended 2023 on
the weaker side, slipping to around S$2,000 per tonne in early December.
Lead held up generally well in 2023, despite the headwinds facing base metals
markets. This can be attributed to strong auto sales and demand from China for
use in lead-acid batteries and relatively consistent demand from battery
replacement.
Geopolitical landscape
We continue to monitor the ongoing challenges of the geopolitical landscape
and uncertain global economic situation. The recent energy crisis, Ukraine
conflict and expanding sanctions regime, historically high inflation and
potential economic recession and their impact on our operations are matters
under close review.
Kazakhstan's proximity to Russia has a direct impact on its economy and has
put pressure on its treasury. The impact has led to two tax changes, which
translate to lower FCF from Kounrad. Effective from 1 January 2023, dividends
paid from our Kazakhstan entities to our parent company are subject to
withholding tax at a rate of 10%. Further to this, there was an increase in
the Mineral Extraction Tax ('MET') rate in Kazakhstan from 5.7% to 8.55%. The
tax is applied to the copper that we produce.
The conflict in Ukraine has had an impact on global inflation as there have
been increases in the cost of living and in the electricity prices in North
Macedonia in particular. The route to market for our copper has been altered
to divert away from Russia.
The Israel/Hamas War and tensions in the Middle East present challenges in
terms of transportation and, although the direct impact on global maritime
logistics is expected to be minimal, we have taken steps to ensure our supply
chain remains unaffected.
We continue to be proactive in managing our working capital by constantly
reviewing our supply chain to ensure sufficient levels of inventory and stock
are held on site to continue to operate without interruption.
How our metals support the drive to Net Zero and environmental sustainability
Copper
Copper demand continues to grow with the ongoing transition to a low-carbon
global economy and a global shift towards renewable energy sources, such as
wind and solar power. Copper is a vital component in renewable energy
technologies, including photovoltaic cells, wind turbines and electric vehicle
batteries. As countries commit to reducing carbon emissions and increasing
renewable energy capacity, the demand for copper in the renewable energy
sector increases.
Copper itself is an essential component of the mass electrification at the
heart of this transition, as it is used in wiring, electric motors, wind
turbines and many other technologies. This is due to its unique properties
with high conductivity, ductility, efficiency and recyclability.
The metal will continue to maintain a significant role in the transition
towards a green economy, powered by renewable power, and accompanied by an
expectation of increased governmental incentives and subsidies that will
steadily increase the uptake of copper-intensive clean technologies.
Zinc
Zinc will have a crucial role in the clean energy transition due to its
versatile properties. It offers natural corrosion resistance, forming
protective layers, and readily forms alloys with other metals, enhancing
versatility. Zinc is utilised in various battery technologies, such as
zinc-air batteries, contributing to energy storage solutions in the shift
towards cleaner energy sources. Furthermore, its high recyclability promotes
sustainability and aligns with the principles of a circular economy,
supporting efficient material production and use.
It can be applied to battery technology, solar energy, galvanisation for
corrosion protection, water purification and wind turbines.
Zinc demand is closely related to its uses in the manufacturing and
construction sectors. Its importance, in particular from the sustainability
perspective, is its anti-corrosion properties that prolong the useful life of
steel products, thereby limiting the use for those raw materials.
Lead
Lead remains essential in lead-acid batteries and also in many healthcare
applications, such as equipment for radiologists.
The market for lead is dependent on lead acid batteries which account of over
80% of its usage. There is potential for an increase in demand for lead for
static battery storage systems. As the world transitions toward electric
vehicles that are powered by technologies such as Lithium-ion batteries, we
are reminded that electric vehicles also require a smaller lead acid battery.
Therefore, we see an important use and maintained demand for lead into the
future.
2024 Outlook
Copper
The outlook for 2024 is improved, with analysts reducing their forecasts of
potential inventory build-ups, mostly due to a combination of limited new
copper projects along with existing assets falling short of production
targets. Hence, the small deficit experienced in 2023 is likely to carry over
to 2024, as supply side challenges continue to mount amidst a backdrop of
strong demand coming out of China.
Zinc
With multiple mine closures in 2023 and a major fire at the Ozernoe mine,
global output is expected to fall, at least in the early part of 2024. This
would help buoy short-term zinc prices. Longer term, supply of both
concentrate and refined zinc is expected to rise, with increased mine
production coming from new projects and mine life extensions to coincide with
steadily growing demand.
Lead
In 2024, a modest market surplus is to be expected, while high energy costs
and supply chain disruptions continue to affect lead production. Demand for
lead is well positioned in the long term with the transition towards the green
economy, as lead-acid batteries continue to be used in electric vehicles and
energy storage potentially becomes a major demand driver.
Performance overview
CAML's 2023 gross revenue was down 11% versus 2022 to $207.4 million (2022:
$232.2 million). The decrease was primarily driven by lower commodity prices
for all base metals, especially the zinc price, which declined by 24% compared
to the prior year.
The Group generated 2023 EBITDA of $96.5 million (2022: $131.6 million), at an
EBITDA margin of 47% (2022: 57%) reflecting the lower revenue as well as an
increase in our cost base. This increase was driven by higher MET rates
introduced in 2023 in Kazakhstan and increased salaries across the Group in
response to local inflationary pressures.
Group profit before tax from continuing operations increased by 19% versus
2022 to $65.1 million (2022: $54.6 million) primarily due to a non-cash
impairment charge in the prior year. There was a foreign exchange loss of $3.4
million (2022: gain of $6.8 million) caused by the weakening of the US dollar
against our local currencies.
EPS from continuing operations was higher than the previous year at 20.54
cents (2022: EPS of 19.10 cents). CAML generated free cash flow of $57.5
million (2022: $90.2 million), with a healthy net cash balance of $56.5
million (2022: $58.9 million), allowing the Board to propose a final 9 pence
dividend.
Kounrad's 2023 EBITDA was $82.3 million (2022: $94.9 million), with a margin
of 71% (2022: 77%). Kounrad's reduced EBITDA margin reflects lower gross
revenue and an increase in costs due to higher MET rate, increased payroll and
reagent prices.
Sasa's 2023 EBITDA was $35.7 million (2022: $56.4 million), with a margin of
39% (2022: 52%). The margin declined predominantly due to the average zinc
price received, which decreased by 24% compared to 2022. Zinc treatment
charges increased from April 2023 onwards due to reduced European smelter
capacity resulting from the energy price crisis at the time of price
negotiations. During the year, Sasa increased its headcount, and salaries were
increased; however, the impact of cost increases has been largely mitigated by
the 40% reduction in electricity prices.
Income statement
Revenue
CAML generated 2023 gross revenue of $207.4 million (2022: $232.2 million),
reported after deduction of treatment charges but before deductions of offtake
buyers' fees and silver purchases related to the Sasa silver stream. Net
revenue after these additional deductions was $195.3 million (2022: $220.9
million).
Kounrad
Total Kounrad copper sales were 13,687 tonnes in 2023 (2022: 14,342 tonnes).
The offtake arrangement with Traxys has been extended from 1 January 2023 on a
one-year rolling basis. The commitment is for a minimum of 95% of Kounrad's
annual production.
Gross revenue decreased due to lower production than in 2022, a minor increase
in copper inventory during 2023 and a 2% decrease in the copper price received
to an average of $8,466 per tonne (2022: $8,625 per tonne). This generated
gross revenue for Kounrad of $116.3 million (2022: $123.7 million). During
2023, the offtaker's fee for Kounrad decreased to $3.0 million (2022: $3.1
million) due to lower sales made during the year.
Sasa
Overall, Sasa generated 2023 gross revenue of $91.1 million (2022: $108.5
million). A total of 17,113 tonnes (2022: 17,862 tonnes) of payable zinc in
concentrate and 26,298 tonnes (2022: 26,320 tonnes) of payable lead in
concentrate were sold during 2023.
The zinc price received decreased by 24% to an average of $2,552 per tonne
(2022: $3,358 per tonne), and for lead, the price decreased by 1% to an
average of $2,085 per tonne (2022: $2,113 per tonne), resulting in an overall
decrease in gross revenue generated from the mine.
Treatment charges during the year increased to $17.6 million (2022: $16.2
million) due to reduced European smelters' capacity resulting from the energy
price crisis at the time of price negotiations. Going forward, Zinc treatment
charges have been negotiated at a reduced rate for the period from April 2024
to April 2025.
During 2023, the offtake buyers' fee for Sasa, was $1.0 million (2022: $1.2
million). Zinc and lead concentrate sales agreements have been extended with
Traxys on a one-year rolling basis for 100% of Sasa production.
Under a silver streaming agreement with Osisko Gold Royalties, Sasa receives
approximately $6 per ounce for its silver production for the life of the mine.
Cost of sales
The Group cost of sales for the year was $92.9 million (2022: $87.3 million).
This includes depreciation and amortisation charges of $27.4 million (2022:
$26.7 million). The increase in cost of sales is due to higher MET rates in
Kazakhstan and wages as the Group responded to local inflationary pressures by
ensuring employee remuneration remains competitive. The Company continues to
focus on factors such as disciplined capital investments, working capital
initiatives, and other cost control measures.
Kounrad
Kounrad's 2023 cost of sales increased to $31.2 million (2022: $26.5 million).
The main factor behind this was outside our control with a significant
increase in the MET rate to 8.55% (2022: 5.7%). This led to an increase of
$3.0 million with the total MET reaching $10.2 million (2022: $7.2 million).
Additionally, there was a $1.0 million salary increase, $0.4 million increase
in reagent prices for Escaid and sulphuric acid and $0.2 million increase in
power costs due to higher electricity rates.
Sasa
Sasa's cost of sales for the year increased only marginally by 1% compared to
the previous year, reaching $61.7 million (2022: $60.8 million). Sasa faced
some cost increases partially offset by a 40% decrease in electricity prices
to an average of 11c/kWh.
Concession fees for 2023 were reduced to $2.5 million (2020: $2.9 million) due
to lower zinc sales resulting from lower zinc production and the lower actual
realised price, down 24%. This tax is calculated at the rate of 2% (2022: 2%)
on the value of metal recovered during the year.
Distribution and selling costs
There was an increase in distribution and selling costs to $2.8 million (2022:
$2.2 million) due to additional freight and forwarding costs incurred while
shipping our lead concentrate further afield as we continue to diversify our
customer base. The increase in costs was partly offset by some savings in lead
treatment charges with new customers which had decreased since April
negotiations during the energy crisis.
C1 cash cost of production
C1 cash cost of production is a standard metric used in the mining industry to
allow comparison across the sector. 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 not included in the calculation of the C1 cash cost.
Kounrad
Kounrad's C1 cash cost of copper production in 2023 was $0.74 per pound (2022:
$0.65 per pound) remaining among the lowest in the copper industry. The
increase in C1 cash cost compared to 2022 is primarily due to higher costs
resulting from employee pay increases, higher reagent costs, higher
electricity prices and lower production.
Sasa
Sasa's on-site operating costs increased by 5% to $47.2 million (2022: $44.8
million). The on-site unit cost increased by 5% to $58.6 per tonne (2022:
$55.6 per tonne) due to the higher costs of salaries and increased spare parts
expenditure while the total tonnes of ore mined remained consistent year on
year.
Sasa's total C1 cash cost base, including realisation costs, increased to
$68.6 million (2022: $64.3 million), and Sasa's C1 zinc equivalent cash cost
of production decreased to $0.68 per pound (2022: $0.78 per pound). The $0.10
per pound decrease in the C1 calculation was primarily due to the change in
pro-rata calculation of zinc sales.
Group
CAML reports its Group C1 cash cost on a copper equivalent basis,
incorporating the production costs at Sasa and by also converting lead and
zinc production into copper equivalent tonnes. The Group's C1 copper
equivalent cash cost in 2023 was $1.63 per pound (2022: $1.39 per pound). This
figure is calculated based on Sasa's zinc and lead payable production in 2023,
equivalent to 11,636 copper equivalent tonnes (2022: 13,402 copper equivalent
tonnes), added to Kounrad's copper production in 2023 of 13,816 tonnes (2022:
14,254 tonnes). The C1 cash cost increase on a copper equivalent basis is due
to the higher C1 cost base at both Sasa and Kounrad as well as lower copper
equivalent tonnes produced.
CAML also reports a fully inclusive cost that encompasses sustaining capital
expenditure, local taxes (including MET and concession fees), and corporate
overheads associated with the Kounrad and Sasa projects, as well as the C1
cost component. The Group's fully inclusive copper equivalent unit cost for
the year was $2.25 per pound (2022: $1.92 per pound).
Administrative expenses
During the year, administrative expenses increased to $31.2 million (2022:
$27.1 million). The increase reflects our business development activities,
including due diligence on new projects and work related to obtaining
exploration licenses in Kazakhstan. Additionally, we committed to an increase
in our annual contributions to our charitable foundations to 0.5% of revenue,
with further focus on initiatives to promote sustainable development. Finally,
there was also an increase in employee-related costs due to pay rises and
appointments of senior technical staff overseeing the capital projects.
Foreign exchange loss
The Group incurred a non-cash foreign exchange loss of $3.4 million in 2023
(2022: gain $6.8 million). This loss resulted from the re-translation of
USD-denominated monetary assets held by foreign subsidiaries with a local
functional currency. The loss was due to the strengthening of the Kazakhstan
Tenge and North Macedonian Denar versus the US dollar during the year.
Finance costs
The Group incurred finance costs of $1.9 million (2022: $2.1 million) which in
2023 primarily relate to non-cash unwinding charges of Group asset retirement
obligations. The costs have lowered compared to last year resulting from
reduced overdraft balances compared to prior year.
Taxation
In 2023, the Group's income tax rose to $27.7 million (2022: $20.6 million).
This increase was primarily driven by the introduction of a 10% withholding
tax on intercompany dividend distributions from Kazakhstan to the UK,
effective from 1 January 2023, resulting in an additional charge to $7.5
million (2022: $nil). Additionally, the adoption of IAS 12 led to an increase
in deferred tax liability on our asset retirement provisions and a $1.0
million non-cash increase in income tax (2022: decrease of $4.6 million)
However, the actual corporate income tax charge was reduced to $19.2 million
(2022: $25.1 million), mainly due to lower profits at Kounrad, where taxes are
levied at a corporate income tax rate of 20%, and at Sasa, taxed at a rate of
10%.
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
Capital expenditure
During the year, there were additions to property, plant, and equipment of
$27.8 million (2022: $17.4 million).
Kounrad
The capital expenditure additions were a combination of $1.5 million (2022:
$2.5 million) sustaining capital expenditure and $3.0 million on the
construction of the Solar Power Project.
Kounrad's sustaining capital expenditure includes $0.5 million on a new
irrigation system, $0.2 million down payment on new anodes and $0.2 million on
dripper pipes. The $3.0 million on the Solar Power Project is an investment in
our future working towards decarbonisation and will replace approximately
16-18% of the project's energy consumption with renewable energy.
Sasa
At Sasa, there was a total of $8.7 million (2022: $7.7 million) spent on
sustaining capital and $14.0 million (2022: $7.2 million) in relation to the
transition to paste fill mining.
Sasa's sustaining capital expenditure included capitalised mine development of
$2.8 million, $1.7 million on flotation equipment and $2.8 million on mining
equipment including underground fleet.
Transition to paste fill mining
The Group continues to invest significantly at Sasa with the continued
transition to paste fill mining. During the year the PB Plant construction was
completed with capital expenditure of $2.4 million in 2023 and is now
operational. At year end, the total expenditure on this plant of $10.3 million
was transferred from construction in progress to plant, property and
equipment. The associated underground reticulation infrastructure expenditure
amounted to $0.9 million in 2023.
The DST Plant and associated landform expenditure totalled $7.5 million in
2023 for the construction of the plant, equipment including the conveyor, and
electrical installations.
The development of the Central Decline and equipment totalled $2.8 million in
2023 and it is now operational.
Exploration
During the year, CAML developed an arrangement with a team of experienced
explorers and formed a new subsidiary, CAML X. Potential target areas have
been reviewed and remain under review, and currently two exploration licences
have been granted, with others in application. No significant expenditure has
yet been incurred; however, the Company expects to spend between $2 million
and $3 million during 2024 on continuing its target generation work in
Kazakhstan and those post-licence exploration costs will be capitalised as
intangible assets.
2024
CAML expects 2024 capital expenditure of between $22 million and $24 million,
of which between $14 million and $16 million is expected to be committed to
sustaining capex. CAML expects transition to paste fill mining capital
expenditure in the order of between $8 and $9 million in 2024. This will be
largely related to completion of the DST Plant and Landform, as well as
further advancing the Central Decline.
Working capital
As at 31 December 2023, current trade and other receivables were $12.2 million
(31 December 2022: $8.7 million). This increase from the prior year is mainly
due to an overpaid Group corporate income tax balance of $6.8 million (31
December 2022: $1.1 million) which will be offset against corporate income tax
liabilities arising in the same entities in the next financial year.
Additionally, this balance also includes trade receivables from the offtake
sales of $1.4 million (31 December 2022: $2.4 million) and $2.3 million in
relation to prepayments and accrued income (31 December 2022: $3.0 million).
Non-current trade and other receivables were $13.8 million (31 December 2022:
$11.5 million). This balance includes advances for plant, property and
equipment amounting to $9.3 million (31 December 2022: $8.2 million) as our
capital investment programme continues. As of 31 December 2023, a total of
$4.5 million (31 December 2022: $3.4 million) of VAT receivable was owed to
the Group by the Kazakhstan authorities. Recovery is still expected through a
continued dialogue with the authorities for cash recovery and further offsets.
As at 31 December 2023, current trade and other payables were $17.3 million
(31 December 2022: $16.6 million).
Cash and borrowings
As at 31 December 2023, the Group had cash in the bank of $57.2 million (31
December 2022: $60.6 million) and current borrowings of $0.3 million (31
December 2022: $1.4 million) which is our North Macedonian overdraft
facilities.
Cash flows
Net cash flow generated from operations was $66.4 million (2022: $99.8
million).
In 2023, corporate income tax payments to governments totalled $27.5 million
(2022: $22.2 million). This included $19.2 million (2022: $20.5 million) of
Kazakhstan corporate income tax and the newly introduced Kazakhstan WHT of 10%
on dividends amounting to $7.5 million (2022: nil) paid during the year. In
North Macedonia $0.6 million (2022: $1.7 million) of corporate income tax was
paid in cash in addition to a $5.5 million (2022: $4.5 million) non-cash
payment offset against VAT and corporate income tax receivable. As a result,
there was overpaid Group income tax of $6.8 million (31 December 2022: $1.1
million) which will be offset against corporate income tax liabilities arising
in the same entities in the next financial year.
Taking into consideration the sustaining capital expenditure of $10.8 million,
which excludes project capex of $17.0 million, CAML's free cash flow for 2023
was $57.5 million (2022: $90.2 million).
Dividend
The Company's dividend policy is to return to shareholders a range of between
30% and 50% of free cash flow, defined as net cash generated from operating
activities less sustaining capital expenditure plus interest received. The
dividends will only be paid provided there is sufficient cash remaining in the
Group to meet any contractual debt repayments and that any banking covenants
are not breached.
During the year, the Company paid $41.5 million (2022: $48.2 million) which
consisted of a 2023 interim dividend of 9 pence per share and 2022 final
dividend of 10 pence per share (2022: 2022 interim dividend of 10 pence per
share and 2021 final dividend of 12 pence per share).
In conjunction with CAML's 2023 annual results, the Board proposes a final
2023 dividend of 9 pence per Ordinary Share. This brings total dividends
(proposed and declared) for the year to 18 pence (2022: 20 pence) which
represents 69% of free cash flow. The final dividend is payable on 22 May 2024
to shareholders registered on 26 April 2024. This latest dividend will
increase the amount returned to shareholders in dividends since the 2010 IPO
listing to 170p per share or $339.0 million.
Going concern
The Group sells and distributes its copper cathode product primarily through
an annual rolling offtake arrangement with Traxys Europe S.A. with a minimum
of 95% of the Kounrad SX-EW plant's forecasted output committed under this
contract. The Group sells Sasa's zinc and lead concentrate product through an
annual rolling offtake arrangement with Traxys. 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 2023.
The Board has reviewed forecasts for the period to December 2026 to assess the
Group's liquidity which demonstrate substantial headroom. The Board has
considered additional sensitivity scenarios in terms of the Group's commodity
price forecasts, expected production volumes, operating cost profile and
capital expenditure. The Board has assessed the key risks which could impact
the prospects of the Group over the going concern period including commodity
price outlook, cost inflation and supply chain disruption with reverse stress
testing of the forecasts in line with best practice. Liquidity headroom was
demonstrated in each reasonably possible scenario. Accordingly, the Directors
continue to adopt the going concern basis in preparing the consolidated
financial information.
Non-IFRS financial measures
The Group uses alternative performance measures, which are not defined by
generally accepted accounting principles ('GAAP') such as IFRS, as additional
indicators. 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:
Earnings before interest, tax, depreciation and amortisation
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:
2023 2022
$'000 $'000
Profit for the year 37,382 33,805
Plus/(less):
Income tax expense 27,703 20,588
Depreciation and amortisation 28,192 27,285
Impairment of non-current assets - 55,116
Foreign exchange loss/(gain) 3,378 (6,829)
Other income (75) (86)
Finance income (1,992) (515)
Finance costs 1,852 2,060
Loss from discontinued operations 63 187
EBITDA 96,503 131,611
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
Net cash is a measure used by the Board for the purposes of capital management
and is calculated as the total of the borrowings held plus the cash and cash
equivalents held at the end of the year. This balance does not include the
restricted cash balance of $0.3 million (31 December 2022: $0.3 million):
31-Dec-23 31-Dec-22
$'000 $'000
Borrowings (326) (1,390)
Cash and cash equivalents excluding restricted cash 56,832 60,298
Net cash 56,506 58,908
Free cash flow
Free cash flow is a non-IFRS financial measure of the cash from operations
less sustaining capital expenditure on property, plant and equipment and
intangible assets plus interest received and is presented as follows:
2023 2022
$'000 $'000
Net cash generated from operating activities 66,410 99,845
Less: Purchase of property, plant and equipment (10,726) (10,124)
Less: Purchase of intangible assets (54) (68)
Add: Interest received 1,916 515
Free cash flow 57,546 90,168
The purchase of sustaining property, plant and equipment figure above does not
include the $17.0 million (2022: $7.2 million) of capitalised expenditure on
the transition to Sasa paste fill mining and Solar Power Project. These costs
are not considered sustaining capital expenditure as they are expansionary
development costs required for the transition to the paste fill mining
techniques and our net zero commitment. The definition of FCF was updated to
include interest received which changed the 2022 FCF to $90.2 million.
Sustainability reporting standards
Sustainability is at the core of our business values, and we have reported in
accordance with GRI Standards for the period 1 January 2023 to 31 December
2023. 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 2023.
Stakeholder 2023 2022
$'m $'m
Direct economic value generated 207.4 232.2
Economic value distributed:
Operating expenses Suppliers & contractors 53.7 57.8
Wages and other payments to employees Employees 39.9 35.8
Dividend payments to shareholders Shareholders 41.5 48.2
Payment to creditors: Interest payments on loans Lenders - 0.5
Payments of tax(1) Government 39.8 35.5
Community investments Local communities 1.1 0.5
Economic value distributed 176.0 178.4
Economic value retained (generated - distributed) 31.4 53.8
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
24 March 2023
Consolidated Income Statement
for the year ended 31 December 2023
Group
Note 2023 2022
$'000
$'000
Continuing operations
Revenue 6 195,280 220,855
Presented as:
Gross revenue1 6 207,416 232,206
Less:
Silver stream purchases 6 (8,181) (7,080)
Offtake buyers' fees 6 (3,955) (4,271)
Revenue 195,280 220,855
Cost of sales 7 (92,894) (87,271)
Distribution and selling costs 8 (2,844) (2,166)
Gross profit 99,542 131,418
Administrative expenses 9 (31,231) (27,092)
Impairment of non-current assets 18,19 - (55,116)
Other income 10 75 86
Foreign exchange (loss)/gain (3,378) 6,829
Operating profit 65,008 56,125
Finance income 14 1,992 515
Finance costs 15 (1,852) (2,060)
Profit before income tax 65,148 54,580
Income tax 16 (27,703) (20,588)
Profit for the year from continuing operations 37,445 33,992
Discontinued operations
Loss for the year from discontinued operations 21 (63) (187)
Profit for the year 37,382 33,805
Profit attributable to:
Non-controlling interests 20 68 (6)
Owners of the parent 37,314 33,811
Profit for the year 37,382 33,805
Earnings/(loss) per share from continuing and discontinued $ cents $ cents
operations attributable to owners of the parent during the year (expressed in
cents per share)
Basic earnings/(loss) per share
From continuing operations 17 20.54 19.10
From discontinued operations (0.03) (0.10)
From profit for the year 20.51 19.00
Diluted earnings/(loss) per share
From continuing operations 17 19.64 18.39
From discontinued operations (0.03) (0.10)
From profit for the year 19.61 18.29
1. Gross revenue is a non-IFRS financial measure that 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
for the year ended 31 December 2023
Group
Note 2023 2022
$'000
$'000
Profit for the year 37,382 33,805
Other comprehensive income/(expense):
Items that may be subsequently reclassified to profit or loss:
Currency translation differences 26 12,925 (29,311)
Other comprehensive income/(expense) for the year, net of tax 12,925 (29,311)
Total comprehensive income for the year 50,307 4,494
Attributable to:
Non-controlling interests 68 (6)
Owners of the parent 50,239 4,500
Total comprehensive income for the year 50,307 4,494
Total comprehensive income/(expense) attributable to equity shareholders 50,370 4,681
arises from:
Continuing operations
Discontinued operations (63) (187)
50,307 4,494
Statements of Financial Position
as at 31 December 2023
Registered no. 5559627
Group Company
Note 2023 2022 2023 2022
$'000
$'000
$'000
$'000
Assets
Non-current assets
Property, plant and equipment 18 338,121 322,197 1,851 184
Intangible assets 19 25,425 26,552 - -
Deferred income tax asset 36 512 328 - -
Investments 20 - - 5,107 5,107
Other non-current receivables 22 13,801 11,478 282,244 268,750
377,859 360,555 289,202 274,041
Current assets
Inventories 23 14,879 13,149 - -
Trade and other receivables 22 12,224 8,715 11,515 19,577
Restricted cash 24 318 264 - -
Cash and cash equivalents 24 56,832 60,298 45,326 35,812
84,253 82,426 56,841 55,389
Assets of disposal group classified as held for sale 21 76 64 - -
84,329 82,490 56,841 55,389
Total assets 462,188 443,045 346,043 329,430
Equity attributable to owners of the parent
Ordinary shares 25 1,821 1,821 1,821 1,821
Share premium 25 205,725 205,437 205,725 205,437
Treasury shares 25 (15,413) (15,831) (15,413) (15,831)
Currency translation reserve 26 (121,167) (134,092) - -
Retained earnings 310,345 312,107 117,365 94,354
381,311 369,442 309,498 285,781
Non-controlling interests 20 (1,254) (1,322) - -
Total equity 380,057 368,120 309,498 285,781
Liabilities
Non-current liabilities
Silver streaming commitment 29 16,042 17,085 - -
Deferred income tax liability 36 18,983 17,286 - -
Lease liability 1,325 10 1,197 -
Provisions for other liabilities and charges 31 26,801 20,744 94 -
63,151 55,125 1,291 -
Current liabilities
Borrowings 30 326 1,390 - -
Silver streaming commitment 29 1,002 1,095 - -
Trade and other payables 28 17,327 16,643 35,116 43,471
Lease liability 176 295 138 178
Provisions for other liabilities and charges 31 55 333 - -
18,886 19,756 35,254 43,649
Liabilities of disposal group classified as held for sale 21 94 44 - -
18,980 19,800 35,254 43,649
Total liabilities 82,131 74,925 36,545 43,649
Total equity and liabilities 462,188 443,045 346,043 329,430
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 $62,087,000 (2022: $62,066,000).
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Attributable to owners of the parent Note Ordinary Share Treasury Currency translation reserve Retained earnings Total Non-controlling interests Total
shares
premium
shares
$'000
$'000
$'000
$'000
equity
$'000
$'000
$'000
$'000
Balance as at 1 January 2022 1,765 191,988 (2,360) (104,781) 323,951 410,563 (1,316) 409,247
Profit/(loss) for the year - - - - 33,811 33,811 (6) 33,805
Other comprehensive expense - currency translation differences 26 - - - (29,311) - (29,311) - (29,311)
Total comprehensive income/(expense) - - - (29,311) 33,811 4,500 (6) 4,494
Transactions with owners
Shares issued 25 56 13,440 (13,496) - - - - -
Share-based payments 27 - - - - 3,818 3,818 - 3,818
Exercise of options 27 - 9 25 - (1,263) (1,229) - (1,229)
Dividends 34 - - - - (48,210) (48,210) - (48,210)
Total transactions with owners, recognised directly in equity 56 13,449 (13,471) - (45,655) (45,621) - (45,621)
Balance as at 31 December 2022 1,821 205,437 (15,831) (134,092) 312,107 369,442 (1,322) 368,120
Profit for the year - - - - 37,314 37,314 68 37,382
Other comprehensive income - currency translation differences 26 - - - 12,925 - 12,925 - 12,925
Total comprehensive income - - - 12,925 37,314 50,239 68 50,307
Transactions with owners
Share-based payments 27 - - - - 4,540 4,540 - 4,540
Exercise of options 27 - 288 418 - (2,091) (1,385) - (1,385)
Dividends 34 - - - - (41,525) (41,525) - (41,525)
Total transactions with owners, recognised directly in equity - 288 418 - (39,076) (38,370) - (38,370)
Balance as at 31 December 2023 1,821 205,725 (15,413) (121,167) 310,345 381,311 (1,254) 380,057
Company Statement of Changes in Equity
for the year ended 31 December 2023
Company Note Ordinary Share Treasury Retained Total
Shares
premium
shares
earnings
equity
$'000
$'000
$'000
$'000
$'000
Balance as at 1 January 2022 1,765 191,988 (2,360) 77,943 269,336
Profit for the year - - - 62,066 62,066
Total comprehensive income - - - 62,066 62,066
Transactions with owners
Shares issued 25 56 13,440 (13,496) - -
Share-based payments 27 - - - 3,818 3,818
Exercise of options 27 - 9 25 (1,263) (1,229)
Dividends 34 - - - (48,210) (48,210)
Total transactions with owners, recognised directly in equity 56 13,449 (13,471) (45,655) (45,621)
Balance as at 31 December 2022 1,821 205,437 (15,831) 94,354 285,781
Profit for the year - - - 62,087 62,087
Total comprehensive income - - - 62,087 62,087
Transactions with owners
Share-based payments 27 - - - 4,540 4,540
Exercise of options 27 - 288 418 (2,091) (1,385)
Dividends 34 - - - (41,525) (41,525)
Total transactions with owners, recognised directly in equity - 288 418 (39,076) (38,370)
Balance as at 31 December 2023 1,821 205,725 (15,413) 117,365 309,498
Consolidated Statement of Cash Flows
for the year ended 31 December 2023
Note 2023 2022
$'000
$'000
Cash flows from operating activities
Cash generated from operations 32 93,985 122,565
Interest paid (94) (554)
Corporate income tax paid (27,481) (22,166)
Net cash flow generated from operating activities 66,410 99,845
Cash flows from investing activities
Purchase of property, plant and equipment (27,807) (17,396)
Proceeds from sale of property, plant and equipment 27 7
Purchase of intangible assets (54) (68)
Interest received 1,916 515
(Increase)/decrease in restricted cash (50) 3,252
Net cash used in investing activities (25,968) (13,690)
Cash flows from financing activities
Repayment of overdraft 30 (1,090) (7,531)
Repayment of borrowings 30 - (23,820)
Dividends paid to owners of the parent 34 (41,525) (48,210)
Cash settlement of share options (1,394) (1,939)
Receipt on exercise of share options 27 7 6
Net cash used in financing activities (44,002) (81,494)
Effect of foreign exchange gain/(loss) on cash and cash equivalents 105 (31)
Net (decrease)/increase in cash and cash equivalents (3,455) 4,630
Cash and cash equivalents at the beginning of the year 24 60,361 55,731
Cash and cash equivalents at the end of the year 24 56,906 60,361
Cash and cash equivalents at 31 December 2023 includes cash at bank and on
hand included in assets held for sale of $74,000 (31 December 2022: $63,000)
(Note 21). The consolidated statement of cash flows does not include the
restricted cash balance of $318,000 (2022: $264,000) (Note 24).
Corporate income tax paid includes $7,547,000 (2022: nil) of Kazakhstan
withholding tax paid on intercompany dividend distributions.
The notes below are an integral part of the consolidated financial
information.
Notes to the Financial information
for the year ended 31 December 2023
1. General information
Central Asia Metals plc ('CAML' or the 'Company') and its subsidiaries (the
'Group') are a mining organisation with operations in Kazakhstan and North
Macedonia and a parent holding company based in England 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 76% equity interest in Copper Bay
Limited, which is currently held for sale. See Note 21 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 the
consolidated financial information 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 2023, but is
derived from the Group's audited financial statements. The auditors have
reported on the 2023 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 2023
Annual Report was approved by the Board of Directors on 24 March 2024, and
will be mailed to shareholders in April 2024. 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 2023
Annual Report, have been prepared in accordance with international accounting
standards as adopted in the United Kingdom and the Companies Act 2006. The
consolidated financial statements have been prepared under the historical cost
convention with the exception of assets held for sale that have been held at
fair value. The accounting policies that follow set out those policies that
apply in preparing the financial statements for the year ended 31 December
2023. 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 CAML.
The preparation of the Group financial information in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
consolidated financial information, are explained in Note 4.
Going concern
The Group sells and distributes its Kounrad copper cathode product primarily
through an annual rolling offtake arrangement with Traxys Europe S.A.
('Traxys') with a minimum of 95% of the SX-EW plant's forecasted output
committed as sales. The Group sells Sasa's zinc and lead concentrate product
through an annual rolling offtake arrangement with Traxys. 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 2023.
The Board has reviewed forecasts for the period to December 2026 to assess the
Group's liquidity, which demonstrates substantial headroom. The Board has
considered additional sensitivity scenarios in terms of the Group's commodity
price forecasts, expected production volumes, operating cost profile and
capital expenditure. The Board has assessed the key risks that could impact
the prospects of the Group over the going concern period including commodity
price outlook, cost inflation and supply chain disruption with reverse stress
testing of the forecasts in line with best practice. Liquidity 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, 24 and 28 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 the annual reporting period commencing 1 January 2023. The following
have no impact on the current reporting period as they are either not relevant
to the Group's activities or require accounting that is consistent with the
Group's current accounting policies:
‣ IFRS 17 Insurance Contracts;
‣ Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of
Financial Statements and IFRS Practice Statement 2);
‣ Definition of Accounting Estimates (Amendments to IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors);
‣ International Tax Reform - Pillar Two Model Rules (Amendment to IAS 12
Income Taxes);
‣ Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12 Income Taxes);
In May 2021, the IASB issued amendments to IAS 12, which clarify whether the
initial recognition exemption applies to certain transactions that result in
both an asset and a liability being recognised simultaneously (e.g. a lease in
the scope of IFRS 16). The amendments introduce an additional criterion for
the initial recognition exemption, whereby the exemption does not apply to the
initial recognition of an asset or liability that at the time of the
transaction, gives rise to equal taxable and deductible temporary differences.
An entity applying these amendments shall also, at the beginning of the
earliest comparative period presented i.e. 1 January 2022:
a. recognise a deferred tax asset to the extent that it is probable that
taxable profit will be available against which the deductible temporary
difference can be utilised and a deferred tax liability for all deductible and
taxable temporary differences associated with:
i. right-of-use assets and lease liabilities; and
ii. decommissioning, restoration and similar liabilities and the corresponding
amounts recognised as part of the cost of the related asset; and
b. recognise the cumulative effect of initially applying the amendments as an
adjustment to the opening balance of retained earnings at that date.
The application of this amendment for the first time in the current year
resulted in an increase in Group deferred tax assets of $514,000, an increase
in deferred tax liabilities of $2,075,000 and a net increase in the income tax
expense of $1,561,000. There was no material impact on the comparative year
consolidated financial statements. There was no significant impact on the
Company financial statements.
New standards, interpretations, and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations
that have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January
2024:
‣ Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases);
‣ Classification of Liabilities as Current or Non-Current (Amendments to
IAS 1 Presentation of Financial Statements);
‣ Non-current Liabilities with Covenants (Amendments to IAS 1
Presentation of Financial Statements); and
‣ Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash
Flows and IFRS 7 Financial Instruments: Disclosures).
The following amendment is effective for the period beginning 1 January 2025:
‣ Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes
in Foreign Exchange Rates).
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 information consolidates the financial statements of CAML
and the entities it controls drawn up to 31 December 2023.
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 with unrealised
losses/gains eliminated on consolidation. 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, 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 (CGU) expected to benefit from the business combination
in which the goodwill arose. See Note 19 for managements determination of
CGUs. 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. 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 (see
Note 20).
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 Central Asia
Metals Plc and other companies within the Group that 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 information is presented in US dollars, which is the
Group and Company 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 other
comprehensive income ('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 US
dollar 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 OCI 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
2023, the remaining useful lives were as follows:
‣ Construction in progress - not depreciated
‣ Land - not depreciated
‣ Plant and equipment - over 5 to 15 years
‣ Mining assets - over 2 to 15 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 that 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 values
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 amortisation and
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 2 to 5 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 CGU'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 CGU 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 that 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.
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. Revenue is net of treatment charges, as the cost
of smelting and refining is borne by the customer and the transaction price is
agreed to be net of these charges. 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 Group 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
offtaker fees and silver purchases under the Silver Stream (Note 6). Offtaker
fees and silver purchases are deducted from revenue as they represent a
reduction in the amount of net revenue received by the company rather than a
direct cost of sale being incurred.
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
coordinated 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 that
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, measures 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 that 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. Additionally, the fair value of
the options includes considerations of dividends employees are entitled to
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.
The Company may in limited circumstances have no choice but to settle in cash.
The cash payment is accounted for as the repurchase of an equity interest,
i.e. as a deduction from equity..
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, that 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 months
of 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 UoP 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.
Leases
Lease liabilities are recognised in non-current and current liabilities. On
inception, the lease liability is recognised as the present value of the
expected future lease payments, calculated using a discount rate.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured if there is a change to the forecast lease payments.
When the lease liability is remeasured, an adjustment is made to the
corresponding right-of-use asset.
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 drawdown 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 may use 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.
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 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
The Group has recognised provisions for liabilities of uncertain timing or
amount including those for leasehold dilapidations, legal disputes and the
following:
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 an interest expense.
b) Employee benefits - pension
The Group, in the normal course of business, makes payments on behalf of its
employees for pensions, healthcare, 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 to employees 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
uncertainty.
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 (Note 31). 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 cooperation 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
2023 2022 Movement 2023 2022 Movement
Kazakhstan tenge 456.18 460.15 -1% 454.56 462.65 -2%
Macedonian denar 56.85 58.36 -3% 55.65 57.65 -3%
British pound 0.81 0.80 +1% 0.79 0.83 -5%
Foreign exchange risk does not arise from financial instruments that are
non-monetary items or financial instruments denominated in the functional
currency. Kazakhstan tenge and North Macedonian denar denominated monetary
items are therefore not reported in the tables below, as the functional
currency of the Group's Kazakhstan-based and North Macedonian-based
subsidiaries is the tenge and denar respectively.
The Group's exposure to foreign currency risk based on US dollar equivalent
carrying amounts at the reported date:
Group
2023
In $'000 equivalent USD EUR GBP
Cash and cash equivalents 3,942 226 505
Trade and other receivables 109 - 10
Trade and other payables - (268) (3,516)
Net exposure 4,051 (42) (3,001)
Group
2022
In $'000 equivalent USD EUR GBP
Cash and cash equivalents 20,055 556 886
Trade and other receivables - 2 167
Trade and other payables (20) (333) (3,268)
Net exposure 20,035 225 (2,215)
Trade and other receivables excludes prepayments and tax receivable, and trade
and other payables excludes corporation tax, social security and other taxes
as they are not considered financial instruments.
At 31 December 2023, if the foreign currencies had weakened/strengthened by
10% against the US dollar, post-tax Group profit for the year would have been
$101,000 lower/higher (2022: $1,804,000 lower/higher).
Commodity price risk
The Group has a hedging policy in place to manage commodity price risk;
however, the Directors elected not to hedge during the year and the prior
year.
The offtake agreement at Kounrad and Sasa 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. This could result in fluctuations of revenue
recognised ultimately. The Group may mitigate commodity price risk by fixing
the price in advance for its copper cathode sales with the offtake partner;
however, this option was not utilised during the year and the prior year.
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
2023 2022
$'000
$'000
10% increase in copper, zinc and lead price 21,437 23,931
10% decrease in copper, zinc and lead price (21,437) (23,931)
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 and a material income stream from the Kounrad and
Sasa projects.
The following table sets out the contractual maturities (representing
undiscounted contractual cash flows) of financial liabilities.
Group
Future expected payments: 31 Dec 23 31 Dec 22
$'000
$'000
Trade and other payables within one year 13,101 12,751
Borrowings payable within one year (Note 30) 326 1,390
Lease liability payable within one year 248 295
Lease liability payable later than one year but not later than five years 1,487 10
15,162 14,446
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.
Consistent with others in the industry, the Group monitors capital on the
basis of the following gearing ratio:
Net cash
Note 2023 2022
$'000
$'000
Cash and cash equivalents excluding restricted cash 24 56,832 60,298
Bank overdraft 30 (326) (1,390)
Net cash 56,506 58,908
Total equity 380,057 368,120
Net cash to equity ratio 15% 16%
Changes in liabilities arising from financing activities
The total borrowings as at 1 January 2023 were $1,390,000 (1 January 2022:
$32,978,000). During the year, there were repayments on unsecured overdrafts
of $1,090,000 (2022: $7,531,000). The corporate debt package was repaid in
August 2022 (2022: $23,820,000). Other changes amounted to an increase of
$26,000 (2022: reduction of $237,000) leading to a closing debt balance of
$326,000 (2022: $1,390,000). See note 30 for more details.
The cash and cash equivalents including cash at bank and on hand in assets
held for sale brought forward were $60,361,000 (2022: $55,731,000) with a net
$3,455,000 outflow (2022: $4,630,000 inflow) during the year and, therefore, a
closing balance of $56,906,000 (2022: $60,361,000).
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 24 and on its
trade and other receivables as set out in note 22. 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. 92% 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- (2022: 91%). The rest of the Group's cash was held with a mix of
institutions with credit ratings between A and BBB+ (2022: A and 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 22).
Interest rate risk
The Group's North Macedonian bank overdrafts denominated in Euros are payable
at fixed interest rates ranging from 3.24% to 5.3%. The amount of interest
paid during the year amounted to $46,000. There is some interest rate risk
exposure linked to US dollar interest-earning bank balances with variable
rates. At 31 December 2023, if interest rates on variable interest earning US
dollar bank balances had been 150 basis points higher/lower, profit after tax
for the year would have been $577,000 higher/lower. The Directors consider
that 150 basis points is the maximum likely change in interest rates over the
next year, being the period up to the next point at which the Group expects to
make these disclosures.
Categories of financial instruments
Financial assets
Group
Cash and receivables 31 Dec 23 31 Dec 22
$'000
$'000
Cash and cash equivalents including restricted cash (Note 24) 57,150 60,562
Trade and other receivables 1,899 3,083
59,049 63,645
Trade and other receivables excludes prepayments and tax receivable as they
are not considered financial instruments. All trade and other receivables are
receivable within one year for both reporting years.
Financial liabilities
Group
Measured at amortised cost 31 Dec 23 $'000 31 Dec 22 $'000
Trade and other payables within one year 13,101 12,751
Borrowings payable within one year (Note 30) 326 1,390
Lease liability within one year 176 295
Lease liability payable later than one year but not later than five years 1,325 10
14,928 14,446
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 preparation of the consolidated financial information requires management
to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses. Actual results may differ from these judgements and estimates.
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.
Significant accounting estimates and judgements
The following are significant accounting estimates and judgements that have a
significant risk of a material change to the carrying value of assets and
liabilities within the next financial year:
Impairment and impairment reversals of non-current assets
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. The carrying values of
property, plant and equipment are reviewed for impairment or impairment
reversal if updated events or changes in circumstances indicate the carrying
value has significantly changed. This review determines whether the value of
the goodwill and property, plant and equipment 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 and sensitivity analysis are disclosed in Note 19.
Assets (other than goodwill) that have been previously impaired must be
assessed for indicators of both impairment and impairment reversal. Such
assets are generally carried on the balance sheet at a value close to their
recoverable amount at the last assessment. Therefore, in principle any change
to operational plans or assumptions or economic parameters could result in
further impairment or impairment reversal if an indicator is identified.
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 that are not included in the life of mine plan or impairment test.
Decommissioning and site rehabilitation estimates
Provision is made for the costs of decommissioning and site rehabilitation
costs ('asset retirement obligation') when the related environmental
disturbance takes place. External expert consultants conducted an independent
assessment, and judgement 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
Sasa decommissioning costs included a reassessment of the lining of the
tailing's facilities. Judgement is applied in determining appropriate
contingency rates to cost estimates. Asset retirement obligations have
been updated using latest assumptions on inflation rates and discount rates
and to update the estimated costs at Sasa for the lining of the tailings
facilities following discussions with the Regulators.
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.
The Group has performed a sensitivity analysis of reasonable possible changes
in the significant assumptions taking into account historical experience;
however, the estimates may vary by greater amounts. A 2% change in the
discount rate would result in an impact of $5,234,000 on the provision for
asset retirement obligation. A 2% change in the inflation rate would result in
an impact of $7,046,000 on the provision for asset retirement obligation. A
20% change in cost would result in an impact of $2,647,000 on the provision
for asset retirement obligation.
Mineral reserves and resources
The major value associated with the Group is the value of its mineral reserves
and resources. The value of the reserves and resources has 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. The Group estimates its
mineral reserves and resources based on information compiled by Competent
Persons as defined in accordance with the Joint Ore Reserves Committee (JORC)
code. 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 2023.
The estimation of mineral reserves and resources requires judgement to
interpret available geological data to select an appropriate mining method.
Estimation requires assumptions about future commodity prices, exchange rates,
production costs, closure costs and discount rates. Ore resource estimates
may vary from period to period. This judgement has a significant impact on
impairment consideration and the period over which capitalised assets are
depreciated within the financial information.
Tax
Management makes 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 judgements 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. To the extent that a final tax outcome is different from the
amounts recorded, such differences will impact income tax in the period in
which such determination is made.
5. Segmental information
The segmental results for the year ended 31 December 2023 are as follows:
Kounrad Sasa Unallocated Total
$'000
$'000
$'000
$'000
Gross revenue 116,323 91,093 - 207,416
Silver stream purchases - (8,181) - (8,181)
Offtake buyers' fees (3,005) (950) - (3,955)
Revenue 113,318 81,962 - 195,280
EBITDA 82,308 35,663 (21,468) 96,503
Depreciation and amortisation (4,168) (23,672) (352) (28,192)
Foreign exchange loss (2,819) (453) (106) (3,378)
Other income (Note 10) 75 - - 75
Finance income (Note 14) 14 - 1,978 1,992
Finance costs (Note 15) (430) (1,372) (50) (1,852)
Profit/(loss) before income tax 74,980 10,166 (19,998) 65,148
Income tax (24,866) (2,837) - (27,703)
Profit for the year after tax from continuing operations 50,024 7,329 (19,998) 37,445
Loss from discontinued operations (63)
Profit for the year 37,382
Depreciation and amortisation include $15,057,000 on the fair value uplift on
the acquisition of Sasa and Kounrad.
The segmental results for the year ended 31 December 2022 are as follows:
Kounrad Sasa Unallocated Total
$'000
$'000
$'000
$'000
Gross revenue 123,657 108,549 - 232,206
Silver stream purchases - (7,080) - (7,080)
Offtake buyers' fees (3,090) (1,181) - (4,271)
Revenue 120,567 100,288 - 220,855
EBITDA 94,920 56,397 (19,706) 131,611
Depreciation and amortisation (3,705) (23,330) (250) (27,285)
Foreign exchange gain 3,287 3,318 224 6,829
Impairment of non-current assets (Note 18,19) - (55,116) - (55,116)
Other income (Note 10) 50 36 - 86
Finance income (Note 14) 29 - 486 515
Finance costs (Note 15) (214) (1,040) (806) (2,060)
Profit/(loss) before income tax 94,367 (19,735) (20,052) 54,580
Income tax (19,573) (1,015) - (20,588)
Profit for the year after tax from continuing operations 74,794 (20,750) (20,052) 33,992
Loss from discontinued operations (187)
Profit for the year 33,805
Depreciation and amortisation include $15,419,000 on the fair value uplift on
the acquisition of Sasa and Kounrad.
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 2023 are
as follows:
Segmental assets Additions to Segmental liabilities
non-current assets
31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22
$'000
$'000
$'000
$'000
$'000
$'000
Kounrad 72,097 82,258 4,389 2,525 (17,570) (13,928)
Sasa 342,197 324,197 22,066 14,920 (56,054) (54,718)
Assets held for sale (Note 21) 76 64 - - (94) (44)
Unallocated including corporate 47,818 36,526 2,092 19 (8,413) (6,235)
462,188 443,045 28,547 17,464 (82,131) (74,925)
6. Revenue
Group 2023 2022
$'000
$'000
International customers (Europe) - copper cathode 116,086 122,371
International customers (Europe) - zinc and lead concentrate 88,844 106,578
Domestic customers (Kazakhstan) - copper cathode 237 1,286
International customers (Europe) - silver 2,249 1,971
Total gross revenue 207,416 232,206
Less:
Silver stream purchases (8,181) (7,080)
Offtake buyers' fees (3,955) (4,271)
Revenue 195,280 220,855
Kounrad
The Group sells and distributes its copper cathode product primarily through
an offtake arrangement with Traxys. 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 Group 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 2023, the Group sold 13,658 tonnes (2022: 14,192 tonnes) of copper
through the offtake arrangements. Some of the copper cathodes are also sold
locally, and during 2023, 29 tonnes (2022: 150 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. 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 17,113 tonnes (2022: 17,862 tonnes) of payable zinc in
concentrate and 26,298 tonnes (2022: 26,320 tonnes) of payable lead in
concentrate.
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
approximately $6 per ounce for the life of the mine, significantly below
market value and arising from the silver stream commitment inherited on
acquisition (Note 29).
7. Cost of sales
Group 2023 2022
$'000
$'000
Reagents, electricity and materials 26,622 27,989
Depreciation and amortisation 27,443 26,709
Silver stream commitment (Note 29) (1,136) (1,269)
Royalties 12,692 10,117
Employee benefit expense 20,674 17,951
Consulting and other services 6,085 5,404
Taxes and duties 514 370
92,894 87,271
8. Distribution and selling costs
Group 2023 2022
$'000
$'000
Freight costs 2,169 1,934
Transportation costs 28 24
Depreciation and amortisation 5 5
Materials and other expenses 642 203
2,844 2,166
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 2023 2022
$'000
$'000
Employee benefit expense 12,139 11,382
Share-based payments (Note 27) 4,540 4,494
Consulting and other services 10,730 8,090
Auditor's remuneration (Note 11) 574 486
Office-related and travel costs 2,089 1,652
Taxes and duties 415 417
Depreciation and amortisation 744 571
Total from continuing operations 31,231 27,092
Total from discontinued operations (Note 21) 382 179
31,613 27,271
10. Other income
Group 2023 2022
$'000
$'000
Other income 75 86
75 86
11. Auditors' remuneration
During the year, the Group obtained the following services from the Company's
auditor and its associates:
2023 2022
$'000
$'000
Fees payable to BDO LLP the Company's auditor for the audit of the parent 297 243
company and consolidated financial statements
Fees payable to BDO LLP the Company's auditor and its associates for other 208 183
services:
‣ The audit of Company's subsidiaries
Fees payable to BDO LLP the Company's auditor and its associates for other 69 60
services:
‣ Other assurance services
574 486
12. Employee benefit expense
The aggregate remuneration of staff, including Directors, was as follows:
Group 2023 2022
$'000
$'000
Wages and salaries 24,689 22,374
Social security costs and similar taxes 2,846 2,859
Staff healthcare and other benefits 3,668 3,187
Other pension costs 4,158 2,929
Share-based payment expense (Note 27) 4,540 4,494
Total for continuing operations 39,901 35,843
Total for discontinuing operations (Note 21) 75 74
39,976 35,917
The total employee benefit expense includes an amount of $2,548,000 (2022:
$2,016,000), which has been capitalised within property, plant and equipment.
Company 2023 2022
$'000
$'000
Wages and salaries 6,961 6,779
Social security costs 1,016 1,328
Staff healthcare and other benefits 584 584
Other pension costs 145 108
Share-based payments (Note 27) 4,540 4,494
13,246 13,293
Key management remuneration is disclosed in the Remuneration Committee Report.
13. Monthly average number of people employed
Group 2023 2022
Number
Number
Operational 962 937
Management and administrative 180 155
1,142 1,092
The monthly average number of staff employed by the Company during the year
was 20 (2022: 19).
14. Finance income
Group 2023 2022
$'000
$'000
Bank interest received 1,992 515
1,992 515
15. Finance costs
Group 2023 2022
$'000
$'000
Provisions: unwinding of discount (Note 31) 1,707 1,088
Interest on borrowings (Note 30) 46 910
Lease interest expense and bank charges 99 62
Total for continuing operations 1,852 2,060
16. Income tax
Group 2023 2022
$'000
$'000
Current tax on profits for the year 19,150 25,142
Withholding tax on intercompany dividend distributions 7,547 -
Deferred tax debit/(credit) (Note 36) 1,006 (4,554)
Income tax expense 27,703 20,588
Taxation for each jurisdiction is calculated at the rates prevailing in the
respective jurisdictions. The payment of 10% withholding tax on intercompany
dividends from Kazakhstan was introduced from 1 January 2023.
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 is as follows:
2023 2022
$'000
$'000
Group
Profit before income tax 65,148 54,580
Tax calculated at domestic tax rates applicable to profits in the respective 12,202 10,117
countries
Tax effects of:
Expenses not deductible for tax purposes 5,112 12,546
Withholding tax on intercompany dividend distributions 7,547 -
Deferred income tax debit/(credit) (Note 36) 1,006 (4,554)
Movement on unrecognised deferred tax - tax losses 1,836 2,479
Income tax expense 27,703 20,588
Corporate income tax is calculated at 23.5% (2022: 19%) of the assessable
profit for the year for the UK parent company, 20% for the operating
subsidiaries in Kazakhstan (2022: 20%) and 10% (2022: 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,
impairment and depreciation and amortisation charges.
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.
17. 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 25).
2023 2022
$'000
$'000
Profit from continuing operations attributable to owners of the parent 37,377 33,998
Loss from discontinued operations attributable to owners of the parent (63) (187)
Profit attributable to owners of the parent 37,314 33,811
2023 2022
No.
No.
Weighted average number of Ordinary Shares in issue 181,904,941 177,955,800
2023 2022
$ 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 20.54 19.10
From discontinued operations (0.03) (0.10)
From profit for the year 20.51 19.00
(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.
2023 2022
No.
No.
Weighted average number of Ordinary Shares in issue 181,904,941 177,955,800
Adjusted for:
‣ Share options 8,399,686 6,914,311
Weighted average number of Ordinary Shares for diluted earnings per share 190,304,627 184,870,111
Diluted earnings/(loss) per share 2023 2022
$ cents
$ cents
From continuing operations 19.64 18.39
From discontinued operations (0.03) (0.10)
From profit for the year 19.61 18.29
18. Property, plant and equipment
Group Construction in progress Plant and Mining Motor vehicles, office equipment and right-of-use assets Land Mineral Total
equipment
assets
$'000
$'000
rights
$'000
$'000
$'000
$'000
$'000
Cost
At 1 January 2022 8,643 160,412 1,259 2,884 626 345,770 519,594
Additions 17,054 143 - 199 - - 17,396
Disposals - (244) - (43) - - (287)
Change in estimate - asset retirement obligation (Note 31) - 1,153 - - - - 1,153
Transfers (9,282) 9,282 - - - - -
Exchange differences (410) (6,153) (84) (96) (36) (15,809) (22,588)
At 31 December 2022 16,005 164,593 1,175 2,944 590 329,961 515,268
Additions 26,235 82 - 2,176 - - 28,493
Disposals - (412) - (1,398) - - (1,810)
Change in estimate - asset retirement obligation (Note 31) - 3,687 - - - - 3,687
Transfers (29,713) 29,080 - 633 - - -
Exchange differences 511 3,040 22 38 22 7,329 10,962
At 31 December 2023 13,038 200,070 1,197 4,393 612 337,290 556,600
Group Construction in progress Plant and Mining Motor vehicles and right-of-use assets Land Mineral Total
equipment
assets
$'000
$'000
rights
$'000
$'000
$'000
$'000
$'000
Accumulated depreciation
and impairment
At 1 January 2022 - 61,782 503 1,882 - 70,538 134,705
Provided during the year - 11,659 111 381 - 13,581 25,732
Impairment (Note 19) - - - - 34,195 34,195
Disposals - (144) - (42) - - (186)
Exchange differences - (1,281) (34) (60) - - (1,375)
At 31 December 2022 - 72,016 580 2,161 - 118,314 193,071
Provided during the year - 12,576 90 641 - 13,298 26,605
Transfers - (277) - 277 - - -
Disposals - (204) - (1,375) - - (1,579)
Exchange differences - 354 11 17 - - 382
At 31 December 2023 - 84,465 681 1,721 - 131,612 218,479
Net book value at 31 December 2022 16,005 92,577 595 783 590 211,647 322,197
Net book value at 31 December 2023 13,038 115,605 516 2,672 612 205,678 338,121
The Company had $1,851,000 of property, plant and equipment at net book value
as at 31 December 2023 (2022: $184,000).
The increase in estimate in the asset retirement obligation of $3,687,000, in
relation to both Kounrad and Sasa, 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 31).
During the year, there were total disposals of plant, property and equipment
at a cost of $1,810,000 (2022: $287,000) with accumulated depreciation of
$1,579,000 (2022: $186,000). The Group received $27,000 (2022: $7,000)
consideration for these assets and, therefore, a loss of $204,000 was
recognised (2022: loss of $94,000).
Amounts recognised in the income statement
The income statement shows the following amounts relating to leases -
depreciation charge right-of-use assets:
Depreciation charge of right-of-use assets 2023 2022
$'000
$'000
Office 366 48
Other 30 123
Total depreciation 396 171
Interest expense included in finance costs 50 18
19. Intangible assets
Group Goodwill Mining licences and permits Computer Total
$'000
$'000
software and website
$'000
$'000
Cost
At 1 January 2022 29,872 35,024 324 65,220
Additions - - 68 68
Exchange differences (1,536) (1,654) (3) (3,193)
At 31 December 2022 28,336 33,370 389 62,095
Additions - - 54 54
Exchange differences 132 571 3 706
At 31 December 2023 28,468 33,941 446 62,855
Accumulated amortisation and impairment
At 1 January 2022 - 12,850 280 13,130
Provided during the year - 1,689 23 1,712
Impairment 20,921 - - 20,921
Exchange differences - (219) (1) (220)
At 31 December 2022 20,921 14,320 302 35,543
Provided during the year - 1,778 47 1,825
Exchange differences - 62 - 62
At 31 December 2023 20,921 16,160 349 37,430
Net book value at 31 December 2022 7,415 19,050 87 26,552
Net book value at 31 December 2023 7,547 17,781 97 25,425
The Company had nil intangible assets at net book value as at 31 December 2023
(2022: nil).
Impairment assessment
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 recoverable amounts of the goodwill and property, plant and
equipment were measured based on net present value. The net present value of
all CGUs is determined by discounted cash flow techniques based on the most
recent approved financial budgets, underpinned and supported by the
life-of-asset plans of the respective operations.
The valuation models use a combination of internal sources and those inputs
available to a market participant, which comprise the most recent reserve and
resource estimates, relevant cost assumptions and, where possible, market
forecasts of commodity price and foreign exchange rate assumptions and
discount rates.
The valuations generally remain most sensitive to price and a
deterioration/improvement in the pricing outlook may result in additional
impairments/reversals. When undertaken, an impairment review is completed for
each CGU.
Kounrad project
The Kounrad project, located in Kazakhstan, has an associated goodwill balance
of $7,547,000 (2022: $7,415,000), the movement being solely due to foreign
exchange differences.
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 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, country
risk premiums and average credit default swap spreads for the period.
The Kounrad cash flows have been projected until 2034, the remaining life of
operation, and the key economic assumptions used in the review were a
five-year forecast average nominal copper price of $8,696 per tonne (2022:
$7,777 per tonne) and a long-term price of $8,444 per tonne (2022: $7,436 per
tonne) based on market consensus prices and a discount rate of 8.07%
(2022: 8.07%) as well as market inflation rates. Assumptions in relation to
operational and capital expenditure are based on the latest budget approved by
the Board. The climate change impacts are also considered including potential
impact of regulatory changes and physical risks to assets such as
consideration of the impact on the Group asset retirement obligations.
The carrying value of the net assets is not currently sensitive to any
reasonable changes in key assumptions. Management concluded that 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 associated goodwill balance of the Sasa project was impaired by
$20,921,000 to nil during the prior year. The business combination in 2017 was
accounted for at fair value under IFRS 3, and 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 cash
flows projected until 2040, over the remaining life of mine and post closure
costs with its carrying value for the year ended 31 December 2023. 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 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. The climate change impacts are
also considered including potential impact of regulatory changes and physical
risks to assets such as consideration of the impact on the Group asset
retirement obligations.
As at 31 December 2023, the Group has reviewed the indicators for
impairment/reversal of impairment, including forecasted commodity prices,
treatment charges, discount rates, operating and capital expenditure, foreign
exchange rates and the mineral reserves and resources' estimates.
The key changes in economic assumptions used in the review were:
1. A discount rate of 9.72% (31 December 2022: 12.52%) supported by a detailed
WACC calculation applied to calculate the present value of the CGU. The
reduction in discount rate from the prior year end was attributed to several
factors. These include a reduction in the country risk premium, equity risk
premium and favourable changes to the company risk premium and levered beta,
driven by favourable mining market conditions.
2. The five-year forecast average nominal zinc and lead price of $2,537 (31
December 2022: $2,760) and $1,983 (2022: $2,081) per tonne, respectively, and
a long-term real price of $2,535 (31 December 2022: $2,467) and $1,968 (31
December 2022: $1,874) per tonne, respectively, based on market consensus
prices and then inflated at 3.5% over the life of mine.
At the balance sheet date, the impairment test concluded that an impairment or
reversal of the prior year impairment is not necessary as there have been no
significant indicators of a possible reversal identified due to commodity
price risk and judgements applied in the discount rate. Management 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:
‣ discount rate increased to 11%;
‣ zinc price reduced by 6.3%;
‣ lead price reduced by 4.5%;
‣ operating expenditure increased by 5.5%; and
‣ capital expenditure increased by 23%.
The Group exercises judgement in making assumptions on the inputs into the
model and are comfortable the most reliable inputs have been applied in
assessment the FVLCD and, therefore, the downward sensitivities outlined above
are as likely as upward sensitivities and, therefore, consider that no
reversal of impairment (excluding goodwill) or further impairment is
necessary.
The Group has measured the FVLCD using various fair value measurements
obtaining inputs from market data. It has used quoted prices (level 1) inputs
for its commodity price assumptions, inflation rates, exchange rates and
discount rate. The treatment charges have been forecast over life of mine
using assumptions based on market data (level 2).
At the balance sheet date, the Board considers the base case forecasts to be
appropriate and balanced best estimates.
20. Investments
Shares in Group undertakings:
Company
31 Dec 23 31 Dec 22
$'000
$'000
At 1 January / 31 December 5,107 5,107
Investments in Group undertakings are recorded at cost, which is the fair
value of the consideration paid, less impairment.
Details of the Company holdings consolidated in the financial information are
included in the table below:
Subsidiary Registered office address Activity CAML % Non-controlling interest % CAML % Date of incorporation
2023
2023
2022
CAML Exploration Limited 16, Turkistan Street, Office 56 Exploration 100 - - 18 August 2023
Astana, District Esmil, Z05X0B4, Kazakhstan
CAML KZ Limited Masters House, Holding company 100 - 100 28 June 2021
107 Hammersmith Road,
London, W14 0QH, United Kingdom
CAML MK Limited Masters House, Seller of zinc and lead concentrate 100 - 100 5 September 2017
107 Hammersmith Road,
London, W14 0QH, United Kingdom
CAML Limited Masters House, Dormant company 100 - - 25 April 2023
107 Hammersmith Road,
London, W14 0QH, United Kingdom
CMK Mining B.V. Prins Bernhardplein 200 1097 Holding company 100 - 100 30 June 2015
JB Amsterdam,
The Netherlands
CMK Europe SPLLC Skopje Ivo Lola Ribar no. 57-1/6, Holding company 100 - 100 10 July 2015
1000 Skopje,
North Macedonia
Copper Bay Limited Masters House, Holding company 76 24 76 29 October 2010
107 Hammersmith Road,
London, W14 0QH, United Kingdom
Copper Bay (UK) Ltd Masters House, Dormant company 76 24 76 9 November 2011
107 Hammersmith Road,
London, W14 0QH, United Kingdom
Copper Bay Chile Limitada Ebro 2740, Oficina 603, Holding company 76 24 76 12 October 2011
Las Condes,
Santiago, Chile
Kounrad Copper Company LLP Business Centre No. 2, Kounrad project (SX-EW plant) 100 - 100 29 April 2008
4 Mira Street,
Balkhash, Kazakhstan
Minera Playa Verde Limitada Ebro 2740, Oficina 603, Exploration - Copper 76 24 76 20 October 2011
Las Condes,
Santiago, Chile
Rudnik SASA DOOEL Makedonska Kamenica 28 Rudarska Str, Sasa project 100 - 100 22 June 2005
Makedonska Kamenica, 2304,
North Macedonia
Sary Kazna LLP Business Centre No. 2, Kounrad project (SUC operations) 100 - 100 6 February 2006
4 Mira Street,
Balkhash, Kazakhstan
Details of the Company holdings that are not consolidated in the financial
information are:
Ken Shuak LLP Business Centre No. 2, 4 Mira Street, Shuak project (exploration) 10 90 10 5 October 2016
Balkhash, Kazakhstan
CAML MK Limited
For the year ended 31 December 2023, 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 2023. 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.
CAML KZ Limited
For the year ended 31 December 2023, CAML KZ Limited (registered number:
13479896) 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 KZ Limited have not required it to obtain an audit of
their financial statements for the year ended 31 December 2023. 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 KZ Limited.
CAML Exploration Limited
During the year, CAML incorporated CAML Exploration Limited, in the Astana
International Finance Centre ('AIFC'), initially owned 100% by CAML. In
February 2024, CAML transferred a 20% ownership to a team of experienced
explorers, Thaler Minerals LLP, a company organised by Terra Associates. The
activity of CAML Exploration Limited is to look for exploration opportunities
in Kazakhstan.
CAML Limited
For the year ended 31 December 2023, CAML Limited (registered number:
14826287) 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 Limited have not required it to obtain an audit of their
financial statements for the year ended 31 December 2023. 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 Limited. As a
dormant companies CAML Limited are also exempt from the requirement to prepare
and file accounts at Companies House under s394A-C and s448A-C respectively.
Non-controlling interest
31 Dec 23 31 Dec 22
$'000
$'000
Balance at 1 January 1,322 1,316
(Profit)/loss attributable to non-controlling interests (68) 6
Balance at 31 December 1,254 1,322
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.
21. 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. 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 2023 and the comparative year ended 31 December 2022 are
shown within discontinued operations in the consolidated income statement.
Assets of disposal group classified as held for sale:
31 Dec 23 31 Dec 22 $'000
$'000
Cash and cash equivalents 74 63
Trade and other receivables 2 1
76 64
Liabilities of disposal group classified as held for sale:
31 Dec 23 $'000 31 Dec 22 $'000
Trade and other payables 94 44
94 44
During the year the following have been recognised in discontinued operations:
Loss from discontinued operations:
2023 2022
$'000
$'000
General and administrative expenses (382) (179)
Foreign exchange gain/(loss) 319 (8)
Loss from discontinued operations (63) (187)
Cash flows of disposal group classified as held for sale:
2023 2022
$'000
$'000
Operating cash flows 11 27
Total cash flows 11 27
22. Trade and other receivables
Group Company
31 Dec 23 $'000 31 Dec 22 $'000 31 Dec 23 $'000 31 Dec 22 $'000
Current receivables
Receivable due from subsidiary - - 681 744
Loans due from subsidiary - - 10,100 18,100
Trade receivables 1,449 2,362 - -
Prepayments and accrued income 2,328 2,991 342 334
VAT receivable 1,247 1,546 184 109
Corporate income tax receivable 6,750 1,095 - -
Other receivables 450 721 208 290
12,224 8,715 11,515 19,577
Non-current receivables
Loans due from subsidiary - - 282,244 268,750
Prepayments 9,326 8,221 - -
VAT receivable 4,475 3,257 - -
13,801 11,478 282,244 268,750
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 loan due from subsidiary 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.
There are two loans due from subsidiaries. One loan is due from CAML MK
Limited, a directly owned subsidiary for $292,142,000 (2022: $286,850,000),
which accrues interest at a rate of 2.25% per annum (2022: 2.25%). There is
another loan due from CAML Exploration Limited, a subsidiary, for $202,000
(2022: nil), which accrues interest at a rate of 6.90% per annum and is
repayable on demand. The loans have 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 these loans can be repaid and the expected credit loss is immaterial.
Overpaid Group income tax of $6,750,000 (31 December 2022: $1,095,000) will be
offset against corporate income tax liabilities arising in the same entities
in the next financial year.
As at 31 December 2023, the total Group VAT receivable was $5,722,000 (2022:
$4,803,000), which included an amount of $4,475,000 (2022: $3,399,000) of VAT
owed to the Group by the Kazakhstan authorities. The Group is working closely
with its advisors to recover the remaining portion. The planned means of
recovery will be through a combination of the local sales of cathode copper to
offset VAT recoverable and by a continued dialogue with the authorities for
cash recovery and further offsets.
Non-current prepayments primarily consists of prepaid capital expenditure on
the Sasa Dry Stack Tailings Project.
23. Inventories
Group 31 Dec 23 31 Dec 22
$'000
$'000
Raw materials 12,955 11,917
Finished goods 1,924 1,232
14,879 13,149
The Group recognises all inventory at the lower of cost and net realisable
value and did not have any slow-moving, obsolete or defective inventory as at
31 December 2023 and, therefore, there were no write-offs to the income
statement during the year (2022: nil). The total inventory recognised through
the income statement was $7,697,000 (2022: $6,527,000).
24. Cash and cash equivalents and restricted cash
Group Company
31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22
$'000
$'000
$'000
$'000
Cash at bank and on hand 56,832 60,298 45,326 35,812
Cash and cash equivalents 56,832 60,298 45,326 35,812
Restricted cash 318 264 - -
Total cash and cash equivalent including restricted cash 57,150 60,562 45,326 35,812
The restricted cash amount of $318,000 (2022: $264,000) is held at bank to
cover Kounrad subsoil user licence requirements.
The Group holds an overdraft facility in North Macedonia, and these amounts
are disclosed in Note 30 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 23 $'000 31 Dec 22 $'000
Cash and cash equivalents as above (excluding restricted cash) 56,832 60,298
Cash at bank and on hand in assets held for sale (Note 21) 74 63
Balance per statement of cash flows 56,906 60,361
25. Share capital and premium
Number of Ordinary Share Treasury
shares
shares
premium
shares
$'000
$'000
$'000
At 1 January 2022 176,498,266 1,765 191,988 (2,360)
Shares issued 5,600,000 56 13,440 (13,496)
Exercise of options - - 9 25
At 31 December 2022 182,098,266 1,821 205,437 (15,831)
Exercise of options - - 288 418
At 31 December 2023 182,098,266 1,821 205,725 (15,413)
The par value of Ordinary Shares is $0.01 per share and all shares are fully
paid. During the prior year, the Company issued and allotted 5,600,000
Ordinary Shares to the trustee of the Central Asia Metals employee benefit
trust ('EBT). These new Ordinary Shares were issued for the purposes of
satisfying awards granted under the Company's Employee Share Plans.
During the year, there was an exercise of share options by employees and
Directors that were partly settled by selling treasury shares. The proceeds of
disposal of treasury shares exceeded the purchase price by $288,000 (2022:
$9,000) and has been recognised in share premium. The remaining share options
exercises during the year were cash settled amounting to $1,394,000 (2022:
$1,939,000) and, therefore, a reduction in the share option reserve of
$2,091,000 (2022: $1,263,000) to account for those share options now
exercised.
Treasury shares EBT shares
No.
No.
At 1 January 2022 471,647 2,340,032
Disposal of trust shares - (9,280)
Shares issued - 5,600,000
At 31 December 2022 471,647 7,930,752
Disposal of treasury shares (278,322) -
At 31 December 2023 193,325 7,930,752
26. 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 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 2023, a non-cash currency
translation gain of $12,925,000 (2022: loss of $29,311,000) was recognised
within equity.
27. 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 from 2012 to 2018 had straightforward conditions attached and
were valued using the Black-Scholes model.
Share options granted in 2019 vested after three years depending on the
achievement of the Group of the 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.
Share options granted in 2020 to 2023 vest after three years depending on a
combination of the achievement of the Group of the 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 to 2023 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 2023 was $3,403,000 in total, which is recognised over the vesting
period commencing 12 April 2023 until 31 March 2026. The following amounts
were expensed during the year:
Group 2023 2022
$'000
$'000
2023 grants 826 -
2022 grants 1,165 613
2021 grants 938 938
2020 grants 232 942
2019 grants - 82
Dividend related 1,379 1,242
Exercise of options - 677
Total share-based payment charge 4,540 4,494
The model inputs for options granted during the year included:
31 Dec 2023 31 Dec 2022
Vesting period 3 years 0 months 2 years 10 months
Exercise price $0.01 $0.01
Grant date: 12 April 2023 22 June 2022
Expiry date: 11 April 2033 21 June 2032
Share price at grant date $2.73 $2.82
Risk-free interest rate 3.48% 2.19%
As at 31 December 2023, 6,425,720 (2022: 5,467,454) 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 follows:
2023 2022
Average exercise Options Average exercise Options
price in $ per
(number)
price in $ per
(number)
share option
share option
At 1 January 0.01 5,467,454 0.01 4,594,192
Granted 0.01 1,748,642 0.01 1,500,223
Exercised 0.01 (580,459) 0.01 (473,303)
Non-vesting 0.01 (209,917) 0.01 (153,658)
At 31 December 0.01 6,425,720 0.01 5,467,454
Non-vesting shares relates to options granted for which the performance
targets were not met. Out of the outstanding options of 6,425,720 (2022:
5,467,454), 2,285,498 options (2022: 2,096,325) were exercisable as at 31
December 2023 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 $2.63 (2022: $3.32) 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:
Grant - vest Expiry date Option 2023 2022
of option
exercise
Options
Options
price $
(number)
(number)
8 May 12 7 May 22 0.01 - 76,032
24 Jul 13 23 Jul 23 0.01 36,801 36,801
3 Jun 14 2 Jun 24 0.01 93,064 143,064
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 0.01 279,763 296,591
2 May 18 1 May 28 0.01 484,090 484,090
30 May 19 29 May 29 0.01 349,269 355,103
16 Dec 20 15 Dec 30 0.01 337,866 979,548
15 Jul 21 14 Jul 31 0.01 974,392 974,392
22 Jun 22 21 Jun 32 0.01 1,410,772 1,410,772
22 Apr 23 21 Apr 33 0.01 1,748,642 -
6,425,720 5,467,454
Employee Benefit Trust
The Company set up an 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.
28. Trade and other payables
Group Company
31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22
$'000
$'000
$'000
$'000
Trade and other payables 5,473 6,722 462 365
Accruals 7,628 6,029 6,214 5,451
Corporation tax, social security and other taxes 4,226 3,892 294 246
Loan due to subsidiary - - 28,146 37,409
17,327 16,643 35,116 43,471
The carrying value of all the above payables is equivalent to fair value.
The loan due to subsidiary is payable to Kounrad Copper Company LLP, an
indirectly owned subsidiary for $28,146,000 (2022: $37,409,000), which accrues
interest at a rate of 6.90% 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.
29. Silver streaming commitment
The carrying amounts of the silver streaming commitment for silver delivery
are as follows:
Group Company
31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22
$'000
$'000
$'000
$'000
Current 1,002 1,095 - -
Non-current 16,042 17,085 - -
17,044 18,180 - -
On 1 September 2016, the CMK Group entered into a Silver Purchase Agreement.
The CAML 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 and is updated to reflect
the latest estimate of reserves.
30. Borrowings
Group Company
31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22
$'000
$'000
$'000
$'000
Unsecured: current
Bank overdraft 326 1,390 - -
Total current 326 1,390 - -
The carrying value of loans approximates fair value:
Carrying amount Fair value
31 Dec 23 $'000 31 Dec 22 $'000 31 Dec 23 $'000 31 Dec 22 $'000
Bank overdrafts 326 1,390 326 1,390
326 1,390 326 1,390
The movement on borrowings can be summarised as follows:
Group Company
31 Dec 23 31 Dec 22 31 Dec 23 31 Dec 22
$'000
$'000
$'000
$'000
Balance at 1 January 1,390 32,978 - 23,406
Repayment of corporate borrowings - (23,820) - (23,820)
Repayments of overdraft (1,090) (7,531) - -
Finance charge interest 46 496 - 374
Finance charge unwinding of directly attributable fees - 414 - 414
Interest paid (46) (511) - (374)
Foreign exchange 26 (636) - -
Balance at 31 December 326 1,390 - -
During the year, overdrafts of $1,090,000 were repaid (2022: $7,531,000) with
total interest paid of $46,000 (2022: $511,000). The corporate debt package
with Traxys was repaid in full in August 2022.
The overdrafts are held with North Macedonian banks and are denominated in
Euro and payable at fixed interest rates ranging from 3.24% to 5.3%.
As at 31 December 2023, the Group measured the fair value using techniques for
which all inputs that 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); and
‣ inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
31. Provisions for other liabilities and charges
Group
Asset Employee retirement Other Legal claims Total
retirement obligation
benefits
employee
$'000
$'000
$'000
$'000
benefits Leasehold dilapidation
$'000
$'000
At 1 January 2022 18,460 245 259 - 2 18,966
Change in estimate 1,153 40 62 - - 1,255
Settlements of provision - (23) (11) - - (34)
Unwinding of discount (Note 15) 1,088 - - - - 1,088
Exchange rate difference (158) (18) (22) - - (198)
At 31 December 2022 20,543 244 288 - 2 21,077
Change in estimate 3,687 62 99 93 - 3,941
Settlements of provision - (34) (21) - - (55)
Unwinding of discount (Note 15) 1,707 - - - - 1,707
Exchange rate difference 163 10 12 1 - 186
At 31 December 2023 26,100 282 378 94 2 26,856
Non-current 26,100 242 363 94 2 26,801
Current - 40 15 - - 55
At 31 December 2023 26,100 282 378 94 2 26,856
a) Asset retirement obligation
The Group provides for the asset retirement obligation associated with the
mining activities at Kounrad, estimated to be required in 2034. During 2022,
the Group engaged an external expert consultant to prepare a conceptual
closure plan and asset retirement obligation for the leaching and Kounrad
operation and associated infrastructure. The expected current cash flows,
including a cost contingency of 10%, were projected over the useful life of
the mining site and inflated using an inflation rate of 6.30% (2022: 5.85%)
and discounted to 2023 terms using a nominal pre-tax risk-free discount rate
of 6.70% (2022: 7.43%). The cost of the related assets are depreciated over
the useful life of the assets and are included in property, plant and
equipment.
The Group also provides for the asset retirement obligation associated with
the mining activities at Sasa, estimated to be primarily required in 2039.
During 2021, Sasa engaged an external expert consultant to prepare an updated
conceptual closure plan. The expected current cash flows, including a cost
contingency of 10%, were projected over the useful life of the mining site and
inflated using a compounded inflation rate of 4.68% (2022: 3.53%) and
discounted to 2023 terms using a discount rate of 9.14% (2022: 9.17%). 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
$3,687,000 is due to a combination of additional estimated costs at Sasa
surrounding the lining of the tailings facilities following discussions with
Regulators and an update to the Kounrad and Sasa discount rates
and inflations rates as explained above using latest assumptions.
b) Employee retirement benefits
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 benefits
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 2023 actuary assumptions are used as follows:
Discount rate: 5.5%
Expected rate of salary increase: 5.0%
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 information. 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.
32. Cash generated from operations
Group Note 2023 2022
$'000
$'000
Profit before income tax including discontinued operations 65,085 54,393
Adjustments for:
Depreciation and amortisation 28,192 27,285
Silver stream commitment (1,136) (1,971)
Loss on disposal of property, plant and equipment 18 204 94
Foreign exchange loss/(gain) 3,378 (6,829)
Share-based payments 27 4,540 4,494
Impairment of non-current assets 18,19 - 55,116
Finance income 14 (1,992) (515)
Finance costs 15 1,852 2,060
Changes in working capital:
Increase in inventories (1,846) (2,538)
Increase in trade and other receivables (5,784) (10,503)
Increase in trade and other payables 1,547 1,513
Provisions for other liabilities and charges (55) (34)
Cash generated from operations 93,985 122,565
The increase in trade and other receivables of $4,719,000 (2022: $10,503,000)
includes a movement in the Sasa VAT receivable balance of $5,530,000 (2022:
$4,472,000), which is offset against corporate income tax payable during the
year.
33. Commitments
Significant expenditure contracted for at the end of the reporting period but
not recognised as liabilities is as follows:
Group 31 Dec 23 31 Dec 22
$'000
$'000
Property, plant and equipment 4,524 6,159
Other - 170
4,524 6,329
34. Dividend per share
During the year, the Company paid $41,525,000 (2022: $48,210,000), which
consisted of a 2023 interim dividend of 9 pence per share and 2022 final
dividend of 10 pence per share (2022: 2022 interim dividend of 10 pence per
share and 2021 final dividend of 12 pence per share).
35. Related party transactions
Key management remuneration
Key management remuneration comprises the Directors' remuneration, including
Non-Executive Directors and is as follows:
2023 2023 2023 2023 2023 Employers 2023 2022
Basic salary/ fees
Annual
Pension
Benefits in kind
NI
Total
Total
$'000
bonus
$'000
$'000
$'000
$'000
$'000
$'000
Executive Directors:
Nigel Robinson 531 449 - 12 137 1,129 1,050
Gavin Ferrar 424 367 11 6 176 984 957
Louise Wrathall1 359 323 2 6 92 782 349
Non-Executive Directors:
Nick Clarke 217 - - - 29 246 246
Mike Armitage2 93 - - - 11 104 106
Roger Davey 106 - - - 13 119 110
Dr Gillian Davidson 106 - - - 14 120 113
Mike Prentis 107 - - - 15 122 115
David Swan 106 - - - 13 119 112
Nurlan Zhakupov3 23 - - - - 23 93
Robert Cathery4 - - - - - - 49
2,072 1,139 13 24 500 3,748 3,300
1. Appointed on 26 May 2022
2. Appointed on 10 January 2022
3. Resigned on 3 April 2023
4. Resigned on 26 May 2022
During the year Gavin Ferrar exercised 203,442 (2022: 226,612) shares for a
total share option gain of $505,000 (2022: $719,000); see the Directors'
option awards table in the Remuneration Committee Report.
Kounrad Foundation
The Kounrad Foundation, a charitable foundation through which Kounrad donates
to the community, was advanced $611,000 (2022: $300,000). This is a related
party by virtue of common Directors.
Sasa Foundation
The Sasa Foundation, a charitable foundation through which Sasa donates to the
community, was advanced $455,000 (2022: $220,000). This is a related party by
virtue of common Directors.
36. Deferred income tax asset and liability
Group
The movements in the Group's deferred tax asset and liability are as follows:
At Currency translation (Debit)/credit to income At
1 January
differences $'000
statement
31 December
2023
$'000
2023
$'000
$'000
Other temporary differences (326) (5) (2,050) (2,381)
Fair value adjustment on Kounrad Transaction (4,457) (79) 277 (4,259)
Fair value adjustment on CMK acquisition (12,175) (423) 767 (11,831)
Deferred tax liability, net (16,958) (507) (1,006) (18,471)
Reflected in the statement of financial position as: 31 Dec 23 31 Dec 22
$'000
$'000
Deferred tax asset 512 328
Deferred tax liability (18,983) (17,286)
At Currency translation Credit to income At
1 January
differences $'000
statement
31 December
2022
$'000
2022
$'000
$'000
Other temporary differences (349) 23 - (326)
Fair value adjustment on Kounrad Transaction (5,069) 338 274 (4,457)
Fair value adjustment on CMK acquisition (17,459) 1,004 4,280 (12,175)
Deferred tax liability, net (22,877) 1,365 4,554 (16,958)
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 $1,042,000 during the year (2022:
$4,554,000) to reflect the tax consequences of depreciating (2022:
depreciating and impairing) the recognised fair values of the assets during
the year.
As explained in Note 2, the application of the amendment to IAS 12 for the
first time in the current year resulted in an increase in Group deferred tax
assets of $514,000, an increase in deferred tax liabilities of $2,075,000 and
a net increase in the income tax expense of $1,561,000, which is reported
within other temporary differences.
31 Dec 2023 31 Dec 2022
$'000 $'000
Deferred tax liability due within 12 months (723) -
Deferred tax liability due after 12 months (18,260) (17,286)
Deferred tax liability (18,983) (17,286)
All deferred tax assets are due after 12 months.
All amounts are shown as non-current on the face of the statement of financial
position as required by IAS 12 Income Taxes.
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 $14,362,000 (2022: $13,917,000), arising from asset retirement
obligations of $2,815,000 (2022: nil) and in respect of share-based payments
of $260,000 (2022: $1,271,000) as there is insufficient evidence of future
taxable profits within the entities concerned. Unrecognised losses can be
carried forward indefinitely.
Company
At 31 December 2023 and 2022, respectively, the Company had no recognised
deferred tax assets or liabilities.
At 31 December 2023, the Company had not recognised potential deferred tax
assets arising from losses of $14,362,000 (2022: $12,911,000) as there is
insufficient evidence of future taxable profits. The losses can be carried
forward indefinitely.
At 31 December 2023, the Company had other deferred tax assets of $260,000
(2022: $1,271,000) in respect of share-based payments and other temporary
differences that had not been recognised because of insufficient evidence of
future taxable profits.
37. Events after the reporting period
During the year, CAML incorporated CAML Exploration Limited, in the Astana
International Finance Centre ('AIFC'), initially owned 100% by CAML. In
February 2024, CAML transferred a 20% ownership to a team of experienced
explorers, Thaler Minerals LLP, a company organised by Terra Associates. The
activity of CAML Exploration Limited is to look for exploration opportunities
in Kazakhstan.
On the 24 March 2024, a Subscription Agreement was signed in respect of a
conditional subscription for CAML to subscribe for 28.7% shareholding in
Aberdeen Minerals Limited for £3.0 million. The investment is a subscription
of 35,294,117 new ordinary shares at a price of 8.5 pence per ordinary share.
In addition, CAML will receive warrants to invest an additional £2 million at
a price of 11 pence per share, which would increase CAML's ownership of
Aberdeen to 37.8%, assuming no further changes to Aberdeen's issued share
capital.
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