Central Asia Metals PLC – CAML – 2020 Operations Update

Central Asia Metals PLC – CAML – 2020 Operations Update

Central Asia Metals plc (AIM: CAML) today provides a Q4 and full year 2020 operations update for the Kounrad dump leach, solvent extraction and electro-winning ('SX-EW') copper recovery plant in Kazakhstan ('Kounrad') and the Sasa zinc-lead mine in North Macedonia ('Sasa').

Summary

-      No lost time injuries ('LTIs') at either Kounrad or Sasa during 2020

-      2020 copper production at Kounrad within increased guidance range

13,855 tonnes produced

-      Strong 2020 zinc and lead production at Sasa despite tailings storage facility 4 ('TSF4') related shutdown

Zinc in concentrate production within guidance range at 23,815 tonnes

Lead in concentrate production within 1% of guidance range at 29,742 tonnes

-      Cash in the bank on 31 December 2020 of $47.9 million

-      Gross debt as at 31 December 2020 of $80.4 million (including drawn North Macedonian overdraft facilities totalling $9.7 million)

2020 Group corporate debt repayments of $38.4 million

2021 production guidance

-      Copper, 12,500 to 13,500 tonnes

-      Zinc in concentrate, 23,000 to 25,000 tonnes

-      Lead in concentrate, 30,000 to 32,000 tonnes

CAML production summary

Metal production (tonnes)

Q4 2020

2020

2019

Copper

3,365

13,855

13,771

Zinc

5,848

23,815

23,369

Lead

7,442

29,742

29,201

 

Nigel Robinson, Chief Executive Officer, commented:

"We are pleased to report strong production at both of our operations despite the challenges of 2020. We are also delighted to be able to report that CAML Group has recorded zero LTIs during 2020. Effective safety training and supervision for our employees will always be a priority and are crucial to maintaining this positive trend into 2021.

"We enter 2021 with a strong balance sheet, having repaid $38.4 million of our corporate debt package during 2020, and we look forward to the year ahead in a period of improving metal prices.

"Our 2020 annual results are scheduled to be released on 30 March 2021, when our final dividend for 2020 will also be announced."

 

COVID-19 update

There are currently zero Sasa employees and one Kounrad employee positive for COVID-19. All previously stated COVID-19 related health measures remain in place at the two sites. 

Safety

No LTIs were reported at either Kounrad or Sasa during 2020. By the end of 2020, there had been 959 days since the last LTI at Kounrad and 702 days since the last LTI at Sasa.  

Kounrad

Kounrad Q4 2020 copper production of 3,365 tonnes brings output for 2020 to 13,855 tonnes. Total Kounrad copper production since operations commenced in 2012 is now 110,100 tonnes.

Copper sales during Q4 2020 were 3,272 tonnes, bringing the total for 2020 to 13,860 tonnes.

Sasa

Environmental update

The river remediation programme implemented following the TSF4 incident has progressed well during Q4 2020, with Phase 1 now complete. It is estimated that, by 31 December 2020, in excess of 95% of the tailings deposited during the leakage had been removed from the river. Efforts to remove the remaining tailings will continue into 2021, with the necessary sediment traps already in place and collecting material. Biodiversity efforts can now accelerate in 2021, with revegetation and tree planting activities to be undertaken along the riverbanks, as well as the long-term monitoring of algae and macro-invertebrate regeneration.

Production

In Q4 2020, mined and processed ore were 208,181 tonnes and 207,499 tonnes respectively, bringing the total for 2020 to 826,421 tonnes of ore mined and 820,215 tonnes of ore processed. The average head grades for the quarter were 3.28% zinc and 3.80% lead, and for the year were 3.37% and 3.85% respectively. The average 2020 metallurgical recoveries were 86.1% for zinc and 94.3% for lead.

Sasa produces a zinc concentrate and a separate lead concentrate. In Q4 2020, 11,625 tonnes of concentrate containing 50.3% zinc and 10,284 tonnes of concentrate containing 72.4% lead were produced. Total production for 2020 was 47,583 tonnes of zinc concentrate at an average grade of 50.0% and 41,289 tonnes of lead concentrate at an average grade of 72.0%.  

 

Units

Q4 2020

2020

2019

Ore mined

t

208,181

826,421

817,714

Plant feed

t

207,499

820,215

820,491

Zinc grade

%

3.28

3.37

3.29

Zinc recovery

%

86.1

86.1

86.5

Lead grade

%

3.80

3.85

3.77

Lead recovery

%

94.5

94.3

94.5

Zinc concentrate

t (dry)

11,625

47,583

47,104

-      Grade

%

50.3

50.0

49.6

-      Contained zinc

t

5,848

23,815

23,369

Lead concentrate

t (dry)

10,284

41,289

40,366

-      Grade

%

72.4

72.0

72.3

-      Contained lead

t

7,442

29,742

29,201

 

Sales

Sasa typically receives from smelters approximately 84% of the value of its zinc in concentrate and approximately 95% of the value of its lead in concentrate. Accordingly, Q4 2020 payable production of zinc was 4,918 tonnes and of lead was 7,070 tonnes, bringing total 2020 payable production to 20,008 tonnes of zinc and 28,254 tonnes of lead.

Payable base metal in concentrate sales from Sasa in Q4 2020 were 4,783 tonnes of zinc and 6,913 tonnes of lead and for 2020 were 19,930 tonnes of zinc and 28,218 tonnes of lead.

During Q4 2020, Sasa sold 72,057 ounces of payable silver to Osisko Gold Royalties and during 2020 sold 341,633 ounces, in accordance with its streaming agreement. 

Cut and Fill Project (formerly 'Life of Mine study')

Since completing the technical and financial work on the Sasa Cut and Fill Project during 2020, implementation of this project has commenced.

The proposed new underground access decline, which was at the time of previous update pending Board approval, has subsequently been approved and its construction will commence in Q2 2021.

A Capital Projects team has been formed at Sasa to ensure appropriate focus on this key project and ensure delivery on time and on budget in Q4 2022.  Further details of progress will be advised at the time of the 2020 annual results in March 2021.  

2021 guidance

CAML targets 2021 Kounrad copper production of between 12,500 and 13,500 tonnes of cathode.

At Sasa, CAML expects 2021 underground ore production of between 825,000 and 850,000 tonnes. This should result in zinc in concentrate of between 23,000 and 25,000 tonnes and lead in concentrate of between 30,000 and 32,000 tonnes.

Given the Cut and Fill Project underway, as stated in the H1 2020 report, CAML expects Group 2021 capital expenditure of between $15 million and $17 million, of which between $10 million and $12 million is expected to be committed to sustaining capex.

Given the increased capital expenditure required to deliver the Cut and Fill Project, CAML has put in place hedging arrangements for a portion of its 2021 metal production. Kounrad's Zero Cost Collar contract for 30% of copper production includes a put option of $6,900 per tonne and a call option of $8,380 per tonne. Sasa's zinc and lead arrangements are swap contracts, with 30% of Sasa's payable zinc production to be sold at $2,804 per tonne and 30% of its payable lead production to be sold at $2,022 per tonne.  

These arrangements ensure that CAML retains its leverage to strong copper, zinc and lead prices, while protecting a meaningful proportion of revenues during the higher capex period and continuing to rapidly deleverage.

Cash and debt

As of 31 December 2020, CAML had cash in the bank of $47.9 million and gross debt of $80.4 million, inclusive of drawn North Macedonian overdraft facilities totalling $9.7 million.

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