REG - Central Asia Metals - Final Results <Origin Href="QuoteRef">CAML.L</Origin> - Part 2
11/04/2016 07:06
- Part 2: For the preceding part double click ID:nRSK7076Ua
- - - (598)
Repayment of loan from subsidiary 23 - - 27,940 11,270
Loans to subsidiaries 23 - - (510) (135)
Interest received 41 61 18 -
Investment in Copper Bay, net of cash acquired 14 1,053 327 (3,000) -
Net cash (used in)/generated from investing activities (7,266) (10,731) 24,435 10,530
Cash flows from financing activities
Dividends paid to owners of the parent 21 (20,368) (17,932) (20,368) (17,932)
Payment on completion of Kounrad transaction - (1,432) - (1,432)
Receipt on exercise of share options 127 168 127 168
Exercise of warrants 17 - 1,942 - 1,942
Restricted cash 16 (346) 1,586 (400) 1,649
Net cash used in financing activity (20,587) (15,668) (20,641) (15,605)
Effect of foreign exchange losses on cash and cash equivalents (257) (707) (129) (687)
Net (decrease)/increase in cash and cash equivalents (4,635) 3,364 (1,582) 4,712
Cash and cash equivalents at the beginning of the year 16 46,159 42,795 33,644 28,932
Cash and cash equivalents at the end of the year 16 41,524 46,159 32,062 33,644
Cash and cash equivalents at 31 December 2015 includes cash at bank on hand included in assets held for sale of $22,000 (31
December 2014: $15,000) (see note 16).
The notes below are an integral part of this condensed consolidated financial information.
Notes to the Condensed Financial Information
for the year ended 31 December 2015
1. General information
Central Asia Metals plc ("CAML" or the "Company") and its subsidiaries (the "Group") are a mining and exploration
organisation with operations primarily in Kazakhstan and a parent holding company based in the United Kingdom ("UK").
The Group's principal business activity is the production of copper cathode at its Kounrad operations in Kazakhstan. The
Group also owns two exploration projects in Mongolia which are held for sale and holds a 75% interest in the Copper Bay
tailings project in Chile.
CAML is a public limited company, which is listed on the AIM market of the London Stock Exchange and incorporated and
domiciled in the UK. The address of its registered office is Masters House, 107 Hammersmith Road, London, W14 0QH. The
Company's registered number is 5559627.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of this consolidated financial information are set out in the
2015 Annual Report. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation of the Condensed Financial Information
The financial information set out above does not constitute the Group's statutory financial statements for the year ended
31 December 2015, but is derived from the Group's audited full financial statements. The auditors have reported on the 2015
financial statements and their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act
2006. The 2015 Annual Report was approved by the Board of Directors on 8 April 2016, and will be mailed to shareholders in
April 2016. 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 information has been prepared in accordance with International Financial Reporting
standards ("IFRS") and IFRS Interpretations Committee ("IFRSIC") interpretations as adopted by the European Union, and the
Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial information has been prepared
under the historical cost convention with the exception of assets held for sale which have been held at fair value. The
accounting policies which follow set out those policies which apply in preparing the financial information for the year
ended 31 December 2015. The Group's financial information is presented in US Dollars ($) and rounded to the nearest
thousand.
The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial information are explained in note 3.
Going concern
The Group meets its day-to-day working capital requirements though its profitable operations at Kounrad. The Group has
substantial cash balances as at 31 December 2015 and on the date of issue of this financial information. The Directors have
a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable
future.
The Group sells and distributes its copper cathode product primarily through an off-take arrangement with 90% of the SX-EW
plant's forecasted output committed as sales for the period up until 31 December 2018.
The Group therefore continues to adopt the going concern basis in preparing its consolidated financial information. Please
refer to notes 5, 16 and 19 for information on the Group's revenues, cash balances and trade and other payables.
Copper Bay investment
Following completion of the pre-feasibility study ("PFS") on 30 June 2015, CAML subscribed for 135,621,610 newly allotted
ordinary shares in Copper Bay for a cash consideration of $3,000,000, which increased CAML's shareholding from 50% to 75%
and commenced consolidation of Copper Bay Ltd.
Previously this investment was treated as a mineral right. This has resulted in a reduction in Group retained earnings at
30 June 2015 of $1,149,000. An intangible asset of $3,222,000 recognised in 2013 equal to the cash consideration paid for
the initial 50% shareholding has been reduced by $1,581,000. The resulting value of the intangible exploration and
evaluation assets acquired in the Copper Bay Group on 30 June 2015 were $1,641,000 (see note 14).
3. Critical accounting estimates and judgments
The Group has six key areas where critical accounting estimates and judgements are required that could have a material
impact on the financial information:
Impairment
As mentioned above estimates are required periodically to assess assets for impairment. The critical accounting estimates
are future commodity prices, ore reserves, discount rates and projected future costs of development and production. This
includes an assessment of the carrying values of assets held for sale.
The carrying value of the goodwill generated by accounting for the business combination of the Group acquiring an
additional 40% in the Kounrad project in May 2014 requires an annual impairment review. This review will determine whether
the value of the goodwill can be justified by reference to the carrying value of the business assets and the future
discounted cash flows of the business.
Functional currency
The functional currency of the Kazakhstan subsidiaries is Kazakh Tenge, which is the primary economic environment in which
the entity operates. Determination of functional currency may involve certain judgments to determine the primary economic
environment and this is re-evaluated for each new entity, or if conditions change.
Mineral reserves and resources
The major value associated with the Group is the value of its mineral resources. The value of the resources have an impact
on the Group's accounting judgements in relation to depreciation and amortisation, impairment of assets and the assessment
of going concern. These resources are the Group's best estimate of product that can be economically and legally extracted
from the relevant mining property. The Group's estimates are supported by geological studies and drilling samples to
determine the quantity and grade of each deposit.
Significant judgement is required to generate an estimate based on the geological data available. Ore resource estimates
may vary from period to period. This judgement has a significant impact on impairment consideration and the period over
which capitalised assets are depreciated within the financial information.
The Kounrad resources have been independently verified by Wardell Armstrong International and were classified as JORC
Compliant in 2013.
Decommissioning and site rehabilitation estimates
Provision is made for the costs of decommissioning and site rehabilitation costs when the related environmental disturbance
takes place. Provisions are recognised at the net present value of future expected costs using a discount rate of 7.22%
(2014: 8.65%) representing the risk free rate (pre-tax) for Kazakhstan.
The provision recognised represents management's best estimate of the costs that will be incurred, but significant
judgement is required, as many of these costs will not crystallise until the end of the life of the mine. Estimates are
reviewed annually and are based on current contractual and regulatory requirements and the estimated useful life of mines.
Engineering and feasibility studies are undertaken periodically; however significant changes in the estimates of
contamination, restoration standards and techniques will result in changes to provisions from period to period.
Business combination
The Kounrad Transaction which completed in two stages during 2013 and 2014, resulted in the Group acquiring the 40% of the
joint venture project at Kounrad that it did not previously own. The assessment of the fair value uplift of the underlying
assets acquired and the treatment of the two legal entities involved in the project required a high degree of judgement.
The assessment of the overall project as a business combination for both legal entities, Kounrad Copper Company LLP and
Sary Kazna LLP, and the impact on that judgement caused by the different stages of completion required a careful review of
the overall transaction as opposed to the specific nature of the assets being acquired.
The fair value uplift of the assets acquired as a result of that judgement and the resulting accounting treatment have
resulted in a significant change to both the income statement in prior periods and the statement of financial position of
the business.
Further details on the accounting treatment of the business combination are set out in the 2014 Annual Report and note 33
of the 2014 financial statements.
VAT recoverability
The Group's main receivable is the VAT incurred on purchases within Kazakhstan as explained in note 15. As at 31 December
2015 a total of $4,423,000 (2014: $6,392,885) of VAT receivable was still owed to the Group by the Kazakhstan authorities.
The decrease in this balance is as a result of the devaluation of the Kazakh Tenge during 2015. In February 2016, the
authorities refunded a portion of this outstanding amount totalling $1,666,060. The Group still remains confident about
its prospects to recover the remaining portion of $2,757,000 and is working closely with its advisers and local partners to
achieve this. The planned means of recovery will be through a combination of the local sales of cathode copper to
effectively offset VAT liabilities and by a successful appeal to the authorities.
4. Segmental information
The Board is the Group's chief operating decision maker. Management have determined the operating segments based on the
information reviewed by the Board for the purposes of allocating resources and assessing performance. The Board considers
the business from a geographic perspective.
The Group has two business segments consisting of an SX-EW copper plant at Kounrad in Kazakhstan and the Copper Bay project
in Chile. The Copper Bay project has been reported as a segment for the first time for the year ended 31 December 2015
following the additional 25% investment made by CAML on 30 June 2015. The Group operations are controlled from a head
office in London, UK, but this does not represent a separate business segment.
The Board assesses the performance of the Kounrad project based on a number of key operational and financial measures which
relate to copper production output, revenues from the sales of copper and the overall costs of producing the copper.
All capital related expenditure at the Kounrad and Copper Bay projects are closely monitored and controlled.
The segmental results for the year ended 31 December 2015 are as follows:
Kounrad $'000 Copper Bay $'000 Unallocated $'000 Total$'000
Gross revenue 67,328 - - 67,328
Off-take buyers' fees (2,916) - - (2,916)
Revenue 64,412 - - 64,412
Kounrad EBITDA 46,068 - - 46,068
Copper Bay administrative expenses - (475) - (475)
Unallocated costs including corporate - - (10,656) (10,656)
Group continuing operations EBITDA 46,068 (475) (10,656) 34,937
Depreciation and amortisation (10,339) - (47) (10,386)
Exchange rate differences gain/(loss) 8,744 (253) 501 8,992
Other income 66 - - 66
Inventory write-off (600) - - (600)
Finance income 23 - 18 41
Finance costs (304) - - (304)
Profit/(loss) before income tax 43,658 (728) (10,184) 32,746
Income tax (10,365)
Profit for the year from continuing operations 22,381
Loss from discontinued operations (163)
Profit for the year 22,218
The segmental results for the year ended 31 December 2014 are as follows:
Kounrad $'000 Unallocated $'000 Total$'000
Gross revenue 76,561 - 76,561
Off-take buyers' fees (3,420) - (3,420)
Revenue 73,141 - 73,141
Kounrad EBITDA 55,960 - 55,960
Unallocated costs including corporate - (8,638) (8,638)
Group continuing operations EBITDA 55,960 (8,638) 47,322
Gain on re-measuring to fair value the existing interest on acquisition of control 33,039 - 33,039
Depreciation and amortisation (11,366) (46) (11,412)
Exchange rate differences gain/(loss) 2,215 (320) 1,895
Other expense (295) - (295)
Finance income 61 - 61
Finance costs (323) (11) (334)
Profit/(loss) before income tax 79,291 (9,015) 70,276
Income tax (10,548)
Profit for the year from continuing operations 59,728
Loss from discontinued operations (257)
Profit for the year 59,471
The total production at Kounrad for 2015 was 12,071 tonnes (2014: 11,136 tonnes) whilst the total quantity of copper sold
was at 12,040 tonnes (2014: 11,163 tonnes). The average gross price achieved from the sale of copper was $5,335 per tonne
(2014: $6,794 per tonne).
EBITDA is a non-IFRS financial measure. CAML calculates EBITDA as profit or loss for the year excluding the following
items:
· Income tax expense;
· Exceptional items such as inventory write-off;
· Finance income and expense;
· Depreciation and amortisation; and
· Discontinuing operations; and
· Gain on re-measuring to fair value and other income or expenses.
EBITDA is intended to provide additional information to investors and analysts. It does not have any standardised meaning
prescribed by IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in
accordance with IFRS. EBITDA excludes the impact of cash costs of financing activities and taxes, and the effects of
changes in operating working capital balances, and therefore is not necessarily indicative of operating profit or cash flow
from operations as determined under IFRS. Other companies may calculate EBITDA differently.
A reconciliation between net profit for the year and EBITDA is presented below:
2015$'000 2014$'000
Profit for the year 22,218 59,471
Plus/(less):
Gain on re-measuring to fair value the existing interest on acquisition of control - (33,039)
Depreciation and amortisation 10,386 11,412
Exchange rate differences gain (8,992) (1,895)
Inventory write-off 600 -
Other (income)/expenses (66) 295
Finance income (41) (61)
Finance costs 304 334
Income tax expense 10,365 10,548
Loss from discontinued operations 163 257
Group continuing operations EBITDA 34,937 47,322
Corporate and Copper Bay administrative expenses 11,131 8,638
Kounrad EBITDA 46,068 55,960
Group segmental assets and liabilities for the year ended 31 December 2015 are as follows:
Segmental assets Segmental liabilities
31 Dec 15 $'000 31 Dec 14 $'000 31 Dec 15 $'000 31 Dec 14 $'000
Kounrad 94,666 173,154 (15,536) (26,688)
Copper Bay 5,369 - (330) -
Assets held for sale 83 80 (432) (464)
Unallocated including corporate 32,957 43,065 (2,551) (1,224)
133,075 216,299 (18,849) (28,376)
5. Revenue Group 2015$'000 2014$'000
International customers 65,794 73,532
Domestic customers 1,534 3,029
Total gross revenue 67,328 76,561
Less: Off-take buyers' fees (2,916) (3,420)
Revenue 64,412 73,141
The Group sells and distributes its copper cathode product primarily through an off-take arrangement with Traxys, which has
been retained as CAML's off-take partner through to 31 December 2018. The off-take arrangements are for a minimum of 90% of
the SX-EW plant's output. The copper cathodes are delivered from the Kounrad site by rail under an FCA (Incoterms 2010)
contractual basis and delivered to the end customers primarily in Turkey. As part of the off-take arrangements, the Group
sells the copper cathodes at a price linked to the London Metal Exchange (LME) copper price based on an agreed quotational
period.
The costs of delivery to the end customers have been effectively borne by the Group through means of an annually agreed
buyer's fee which is offset from the selling price.
During 2015, the Group sold 11,750 tonnes (2014: 10,687 tonnes) of copper through the off-take arrangements. Some of the
copper cathodes are also sold locally and during 2015, 290 tonnes (2014: 476 tonnes) were sold to local customers.
6. Cost of sales
Group 2015$'000 2014$'000
Mineral extraction tax 3,834 4,431
Taxes and duties 813 914
Reagents and materials 6,229 5,041
Depreciation and amortisation 10,264 11,291
Employee benefit expense 3,333 3,321
Consulting and other services 1,037 1,019
25,510 26,017
The 2014 comparative figures include a reclassification of land rental, property tax and contractual payments under the subsoil use contract incurred at Kounrad from administrative expenses to cost of sales totalling $914,000.
7. Distribution and selling costs Group 2015$'000 2014$'000
Transportation costs 31 15
Employee benefit expense 83 80
Taxes and duties 30 52
Depreciation and amortisation 36 45
Materials and other expenses 84 100
264 292
292
The above distribution and selling costs are those incurred at the Kounrad site in addition to the costs associated with
the off-take arrangements. Note 5 refers to the costs associated with the off-take arrangements.
8. Administrative expenses
Group 2015$'000 2014$'000
Employee benefit expense 6,077 5,848
Share based payments 2,396 1,914
Consulting and other services 3,359 1,527
Office related costs 1,170 1,445
Taxes and duties 999 112
Depreciation and amortisation 86 76
Total from continuing operations 14,087 10,922
Total from discontinued operations 163 249
14,250 11,171
The 2014 comparative figures include a reclassification of land rental, property tax and contractual payments under the
subsoil use contract costs incurred at Kounrad from administrative expenses to cost of sales totalling $914,000.
9. Inventory write-off
An incident occurred on site on 26 June 2015, which resulted in approximately a third of the organic inventory being lost
to the dumps within a very short time frame. The incident resulted in the write-off of inventory totalling $600,000 (2014:
nil).
Following the incident an insurance claim was submitted. In March 2016, the Group received notification that the merits of
the claim had been accepted and negotiations are ongoing as to the quantum. The Group has not recognised a receivable for
the claim.
10. Income tax
Group Company
2015$'000 2014$'000 2015$'000 2014$'000
Current tax:
Current tax on profits for the year 10,386 10,588 - -
Total current tax 10,386 10,588 - -
Deferred tax (note 24) (21) (40) - -
Income tax expense 10,365 10,548 - -
From 1 April 2015, the main UK Corporation tax rate reduced from 21% to 20% and UK corporate income tax is therefore
calculated at an average annual rate of 20.25% (2014: 21.5%) of the estimated assessable profit for the year. Taxation for
other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average
tax rate applicable to profits of the consolidated entities as follows:
Group
2015$'000 2014$'000
Profit before taxation including loss from discontinued operations 32,583 70,019
Tax calculated at domestic tax rates applicable to profits in the respective countries 7,432 13,858
Tax effects of:
Gain on re-measuring to fair value to existing interest on acquisition of control - (7,103)
Expenses not deductible for tax purposes 2,224 2,771
Tax losses for which no deferred income tax asset was recognised 1,187 1,592
Utilisation of previously unrecognised tax losses (478) (570)
Income tax expense 10,365 10,548
11. Earnings/(loss) per share
(a) Basic
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to owners of the Company by the
weighted average number of Ordinary Shares in issue during the year excluding Ordinary Shares purchased by the Company and
held as treasury shares (note 17).
2015$'000 2014$'000
Profit from continuing operations attributable to owners of the parent 22,548 59,728
Loss from discontinued operations attributable to owners of the parent (163) (257)
Total 22,385 59,471
Weighted average number of Ordinary Shares in issue 111,558,091 106,126,062
2015$ cents 2014$ 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 20.21 56.28
From discontinued operations (0.15) (0.24)
From profit for the year 20.06 56.04
(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 and exercise of outstanding security warrants.
2015$'000 2014$'000
Profit from continuing operations attributable to owners of the parent 22,548 59,728
Loss from discontinued operations attributable to owners of the parent (163) (257)
Total 22,385 59,471
Weighted average number of Ordinary Shares in issue 111,558,091 106,126,062
Adjusted for
- Share options 2,396,361 2,183,927
Weighted average number of Ordinary Shares for diluted earnings per share 113,954,452 108,309,989
Diluted earnings/(loss) per share 2015 $ cents 2014 $ cents
From continuing operations 19.79 55.15
From discontinued operations (0.15) (0.24)
From profit for the year 19.64 54.91
12. Foreign exchange rate gains GroupExchange rate gain from: 2015$'000 2014$'000
Continuing operations 8,992 1,895
1,895
The Tenge ended the year at 339.47 Tenge per US Dollar which has resulted in the recognition of exchange gains through the
income statement of $8,992,000 (2014: $1,895,000), arising mostly on US Dollar denominated monetary assets and liabilities
held by the Group's Kazakhstan based subsidiaries whose functional currency is the Tenge.
13. Property, plant and equipment
Group Construction inprogress $'000 Plant and equipment $'000 Mining assets$'000 Motor vehicles and office equipment $'000 Total $'000
Cost
At 1 January 2014 476 83,663 - 1,561 85,700
Additions 9,496 1,602 - 227 11,325
Disposals - (1,292) - (38) (1,330)
Transfers (856) 856 - - -
Derecognition of previously held interests (260) (3,510) - (231) (4,001)
Acquisition of subsidiary 100% 434 6,900 - 385 7,719
Exchange differences (1,607) (6,229) - (189) (8,025)
At 31 December 2014 7,683 81,990 - 1,715 91,388
Additions 6,416 935 - 486 7,837
Disposals - (76) - (65) (141)
Change in estimate - asset retirement obligation - 207 - - 207
Transfers (9,668) 9,658 - 10 -
Acquisition of Copper Bay - 3 - - 3
Transfer from intangible assets - - 1,601 - 1,601
Exchange differences (2,428) (43,309) - (845) (46,582)
At 31 December 2015 2,003 49,408 1,601 1,301 54,313
Accumulated depreciation
At 1 January 2014 - 7,445 - 539 7,984
Provided during the year - 9,307 - 169 9,476
Disposals - (778) - (58) (836)
Derecognition of previously held interests - (1,315) - (169) (1,484)
Acquisition of subsidiary 100% - 2,192 - 281 2,473
Exchange differences - (851) - (35) (886)
At 31 December 2014 - 16,000 - 727 16,727
Provided during the year - 7,630 - 164 7,794
Disposals - (69) - (56) (125)
Transfer from intangible assets - - 62 - 62
Exchange differences - (10,608) - (337) (10,945)
At 31 December 2015 - 12,953 62 498 13,513
Net book value at 1 January 2015 7,683 65,990 - 988 74,661
Net book value at 31 December 2015 2,003 36,455 1,539 803 40,800
The Company had $124,465 of office equipment at net book value as at 31 December 2015 (2014: $158,916).
The fall in value of the Tenge has resulted in non-cash foreign exchange losses within property, plant and equipment. This
is due to the translation on consolidation of the Group's Kazakhstan based subsidiaries whose functional currency is the
Tenge as well as the goodwill and fair value uplift adjustments to the carrying amounts of assets and liabilities arising
on the Kounrad Transaction which are denominated in Tenge. Further details on the accounting treatment of the Kounrad
Transaction business combination are set out in note 33 of the 2014 financial statements.
The change in estimate in relation to the asset retirement obligation of $207,000 is as a result of adjusting the provision
recognised at the net present value of future expected costs using an inflation rate of 5.68% (2014: 6.6%) and discount
rate of 7.22% (2014: 8.65%) representing the risk free rate (pre-tax) for Kazakhstan.
Following receipt of the regulatory approvals in November 2015 required for the Kounrad Stage 2 Expansion to exploit the
copper contained in the Western dumps, management have transferred deferred exploration and evaluation costs within
intangible assets (note 19) to mining assets within property, plant and equipment at net book value $1,539,000.
Following receipt of the regulatory approvals required for the Kounrad Stage 2 Expansion in November 2015, management has
extended the useful economic lives of certain property, plant and equipment and the fair value uplift on the Kounrad
Transaction. The original estimate of 10 years useful economic life has now been increased through to 2034 which
represents the end of the subsoil user licence. This change in estimate will be applied from 1 January 2016. In future
years, this change will result in a reduction in the annual depreciation and amortisation charge of approximately $4.0
million, but this amount is dependent on the Tenge exchange rate. Such changes are always subject to future periodic
reviews of the Group's depreciation policy.
14. Intangible assets
Group Goodwill$'000 Deferredexploration andevaluation costs$'000 Mining licences and permits $'000 Computersoftware $'000 Total $'000
Cost
At 1 January 2014 9,278 1,941 5,535 47 16,801
Additions 11,013 98 - 17 11,128
Disposals - (92) - (11) (103)
Derecognition of previously held interests - (1,649) (1,947) (16) (3,612)
Acquisition of subsidiary 100% - 2,748 57,261 27 60,036
Exchange differences - (241) (450) (9) (700)
At 31 December 2014 20,291 2,805 60,399 55 83,550
Additions - 542 - 14 556
Transfers to property, plant and equipment - (1,601) - - (1,601)
Acquisition of Copper Bay - 1,641 (3,222) - (1,581)
Exchange differences (10,185) (1,348) (26,546) (31) (38,110)
At 31 December 2015 10,106 2,039 30,631 38 42,814
Accumulated amortisation
At 1 January 2014 - 51 29 28 108
Provided during the year - 65 1,857 14 1,936
Disposal - (92) - (11) (103)
Derecognition of previously held interests - (42) (22) (9) (73)
Acquisition of subsidiary 100% - 70 37 15 122
Exchange differences - 12 (51) (6) (45)
At 31 December 2014 - 64 1,850 31 1,945
Provided during the year - 41 2,668 11 2,720
Transfers to property, plant and equipment - (62) - - (62)
Exchange differences - (43) (1,994) (19) (2,056)
At 31 December 2015 - - 2,524 23 2,547
Net book value at 1 January 2015 20,291 2,741 58,549 24 81,605
Net book value at 31 December 2015 10,106 2,039 28,107 15 40,267
The Company had no intangible assets as at 31 December 2015 (2014: nil).
The fall in value of the Tenge has resulted in non-cash foreign exchange losses within intangible assets. This is due to
the translation on consolidation of the Group's Kazakhstan based subsidiaries whose functional currency is the Tenge as
well as the goodwill and fair value uplift adjustments to the carrying amounts of assets and liabilities arising on the
Kounrad Transaction which are denominated in Tenge. Further details on the accounting treatment of the Kounrad Transaction
business combination are set out in note 33 of the 2014 financial statements.
Deferred exploration and evaluation costs
Following receipt of the regulatory approvals in November 2015 required for the Kounrad Stage 2 Expansion to exploit the
copper contained in the western dumps, the deferred exploration and evaluation costs at Kounrad have been reclassified to
mining assets within property, plant and equipment (note 13). The net book value of deferred exploration and evaluation
costs of $2,039,000 as at 31 December 2015 relates solely to the Copper Bay project.
Copper Bay investment
Following completion of the pre-feasibility study ("PFS") on 30 June 2015, CAML subscribed for 135,621,610 newly allotted
ordinary shares in Copper Bay for a cash consideration of $3,000,000, which increased CAML's shareholding from 50% to 75%
and commenced consolidation of Copper Bay Ltd
Previously this investment was treated as a mineral right. This has resulted in a reduction in Group retained earnings at
30 June 2015 of $1,149,000. An intangible asset of $3,222,000 recognised in 2013 equal to the cash consideration paid for
the initial 50% shareholding has been reduced by $1,581,000. The resulting value of the intangible exploration and
evaluation assets acquired in the Copper Bay Group on 30 June 2015 were $1,641,000.
Impairment test for goodwill
The Kounrad project located in Kazakhstan has an associated goodwill balance. In accordance with IAS 36 'Impairment of
assets' and IAS 38 'Intangible Assets', a review for impairment of goodwill is undertaken annually or at any time an
indicator of impairment is considered to exist and in accordance with IAS 16 'Property, plant and equipment', a review for
impairment of long-lived assets is undertaken at any time an indicator of impairment is considered to exist.
The discount rate applied to calculate the present value is based upon the real weighted average cost of capital applicable
to the cash generating unit ("CGU"). A CGU is the smallest identifiable group of assets that generates cash inflows that
are largely independent of the cash inflows from other assets or groups of assets.
The discount rate reflects equity risk premiums over the risk-free rate, the impact of the remaining economic life of the
CGU and the risks associated with the relevant cash flows based on the country in which the CGU is located. These risk
adjustments are based on observed equity risk premiums, historical country risk premiums and average credit default swap
spreads for the period.
The value in use ("VIU") of a CGU is generally lower than its fair value less costs of disposal ("FVLCD"), due primarily to
the fact that the optimisation of the mine plans has been taken into account when determining its FVLCD. Consequently, the
recoverable amount of a CGU for impairment testing purposes is determined based on its FVLCD.
The key economic assumptions used in the review were copper price $6,000 per tonne and a discount rate of 8%. Assumptions
in relation to operational and capital expenditure are based on the latest budget approved by the Board.
The carrying value of the net assets is not currently sensitive to any reasonable changes in key assumptions.
15. Trade and other receivables Current portion Group Company
31 Dec 15 $'000 31 Dec 14 $'000 31 Dec 15 $'000 31 Dec 14 $'000
Trade receivables - 41 - -
Less: provision for impairment of trade receivables - (41) - -
Receivables from related parties (note 23) - - 1,914 29,571
Prepayments 836 2,695 255 222
VAT receivable 1,769 73 82 73
Other receivable 43 446 - 304
2,648 3,214 2,251 30,170
Non-current portion
Prepayments 1,493 - - -
VAT receivable 2,757 6,393 - -
4,250 6,393 - -
-
The carrying value of all the above receivables is a reasonable approximation of fair value. There are no amounts past due
at the end of the reporting period that have not been impaired apart from the VAT receivable balance as explained below.
Management's policy is to assess all trade and other receivables for recoverability on a regular basis. A provision is made
where doubt exists and amounts are fully written off when information becomes known that the amounts due will not be
recovered.
As at 31 December 2015 a total of $4,423,000 (2014: $6,392,885) of VAT receivable was still owed to the Group by the
Kazakhstan authorities. In February 2016, the authorities refunded a portion of this outstanding amount totalling
$1,666,060, which is classified within current receivables. The Group still remains confident about its prospects to
recover the remaining portion of $2,757,000 and is working closely with its advisers and local partners to achieve this.
The planned means of recovery will be through a combination of the local sales of cathode copper to effectively offset VAT
liabilities and by a successful appeal to the authorities.
16. Cash and cash equivalents
Group Company
31 Dec 15 $'000 31 Dec 14 $'000 31 Dec 15 $'000 31 Dec 14 $'000
Cash at bank and on hand 33,498 46,144 24,058 33,644
Short term deposits 8,004 - 8,004 -
41,502 46,144 32,062 33,644
Cash at bank and on hand included in assets held for sale 22 15 - -
Total cash and cash equivalent 41,524 46,159 32,062 33,644
Restricted cash 494 148 400 -
Total cash and cash equivalent including restricted cash 42,018 46,307 32,462 33,644
On 13 May 2015, the Company completed a court approved capital reduction scheme (see note 17), which resulted in
$67,079,000 being transferred from the share premium account to distributable reserves. A condition of the capital
reduction scheme was to set aside an amount into a restricted bank account, which would cover certain creditors as of the
effective date of the capital reduction. The balance of the restricted bank account in relation to the capital reduction
scheme as at 31 December 2015 was $400,297. The remaining amount of $93,553 is held to cover SUC legislation requirements
(2014: $148,072).
The average fixed interest rate on short-term deposits during the year was 0.3% (2014: nil).
66% of the Group's cash and cash equivalents including restricted cash at the year-end were held by an AA- rated bank
(2014: 73% by an AA- bank). The rest of Group's cash was held within mix of institutions with credit rating between A+ to
B- (2014: B to B-).
17. Share capital and premium
Number of shares Ordinary shares $'000 Sharepremium $'000 Treasury shares $'000
At 1 January 2014 86,165,934 862 - (4,100)
Ordinary shares issue 21,211,751 212 56,041 -
EBT shares granted 3,500,000 35 9,110 (9,145)
Exercise of warrants 1,192,053 12 1,928 -
Exercise of options - - - 3,399
Sales of EBT shares - - - 202
At 31 December 2014 112,069,738 1,121 67,079 (9,644)
Exercise of options - - - 1,663
Sales of EBT shares - - - 171
Capital
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