TIDMCAML
RNS Number : 5235H
Central Asia Metals PLC
20 May 2014
20 May 2014
CENTRAL ASIA METALS PLC
("CAML" or the "Company")
Completion of the Kounrad Transaction and Expansion Plans
Central Asia Metals plc (AIM: CAML) is pleased to announce the
completion of the acquisition of the remaining 40 per cent of the
Kounrad copper project in Kazakhstan (the "Kounrad Transaction"),
the details of which were initially announced on 27 June 2013. The
Company is now the sole owner and operator of the Kounrad project
and is today also announcing its expansion plans for the
project.
The Company plans to increase copper production at Kounrad from
the existing 10,000 tonnes to 15,000 tonnes per annum by 2016 at an
estimated cost of US$35 million, phased over the next three years.
The programme of works on site will commence immediately, using the
same CAML construction personnel as used on the construction of the
current SX-EW plant.
All capital expenditure will be financed from current project
cash flows and is not anticipated to have any impact upon the CAML
Group's dividend policy subject to currently accepted long term
copper price estimates being maintained.
Nick Clarke, Chief Executive Officer commented:
"We are delighted to announce the completion of the Kounrad
Transaction, which is a key milestone for CAML. Significant efforts
have been made in achieving this goal and, on behalf of the Board,
I would like to extend our thanks to all the employees who have
worked tirelessly throughout this protracted process. We are
pleased to have such an influential Kazakhstani businessman as
Kenges Rakishev as a board member and a supportive major
shareholder, and we look forward to continuing to work with him in
the future. CAML can now, as the sole owner and operator of the
Kounrad project, announce our expansion plans to increase
production on site to 15,000 tonnes per annum by 2016 and provide
further value to our shareholders."
Kounrad transaction
CAML has now received all the outstanding Kazakhstan Government
waivers for the remaining 40 per cent of the subsoil use contract
associated with the Kounrad copper project. The completion of this
part of the transaction follows the transfer of the 40 per cent
interest in Kounrad Copper Company LLP to CAML which was completed
in October 2013.
As previously announced, Kenges Rakishev, a Non-Executive
Director of the Company, will now be issued 21,211,751 Ordinary
Shares of US$0.01 in CAML ("New Ordinary Shares"). Mr Rakishev's
total legal and beneficial interest in the Company post admission
of the New Ordinary Shares will be 21,211,751 ordinary shares,
representing 20.0 per cent of the issued ordinary share capital.
The current number of ordinary shares of US$0.01 ("Ordinary
Shares") in issue is 86,165,934, including 1,040,210 held in
Treasury by the Company ("Treasury Shares").
Mr Rakishev will also receive a cash consideration of 4 pence
per share in lieu of the interim dividend declared by CAML in
September 2013. This amounts to a cash payment of GBP848,470.
Application has been made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM. The shares
will rank pari passu in all respects with the Company's existing
Ordinary Shares. It is expected that the admission will become
effective and that trading in the New Ordinary Shares will commence
at or around 8.00 am on 23 May 2014.
Following admission of the above New Ordinary Shares, the
Company's enlarged issued share capital will comprise of
106,337,475 Ordinary Shares of US$0.01 each with voting rights,
excluding the Treasury Shares. This figure may be used by
shareholders in the Company as the denominator for the calculations
by which they will determine if they are required to notify their
interest in, or a change in their interest in, the share capital of
the Company under the FCA's Disclosure and Transparency Rules.
Kounrad expansion plans
The JORC compliant resources at Kounrad are estimated to be in
excess of 600,000 tonnes of contained copper, of which 27 per cent
are situated in the eastern dump area and the remaining 73 per cent
are situated in the western dump area. In total, it is estimated
that over 230,000 tonnes of copper is recoverable over the
project's life.
CAML plans a phased expansion of annual copper cathode
production to 15,000 tonnes over the next three years. Production
of 15,000 tonnes is scheduled for 2016 to be drawn from the eastern
dump area, followed by copper production from the western dumps
starting in mid-2017.
Eastern dumps
The existing 10,000 tonne per annum Kounrad SX-EW plant is
situated close to the eastern dumps. As at 30 April 2014, the plant
had recovered some 20,000 tonnes of cathode copper from these dumps
since the commencement of operations in May 2012. CAML forecasts
that it will be able to extract in the region of a further 55,700
tonnes of copper from the eastern dumps.
At current rates of output from the SX-EW plant this equates to
a further 5.6 years of operating life in the eastern dump area. In
contrast, it is estimated by management that the SX-EW plant has a
remaining useful life of at least 15 years.
Western dumps
The western dumps have an estimated total recoverable copper
resource of 157,000 tonnes and CAML will shortly submit the
detailed technical application for a mining permit to the relevant
State authorities to enable the Company to exploit these resources.
The Company anticipates the relevant State approval to be granted
in the first half of 2015.
Increased copper production to 15,000 tonnes per annum
CAML has considered a number of factors regarding the physical
location of the resource at Kounrad and the estimated remaining
lives of both the SX-EW plant and the resource in the eastern area
of the site, and concluded that the following plan is the most cost
effective approach to expansion to 15,000 tonne per annum.
Stage 1
The existing SX-EW plant will now be expanded to facilitate an
annual output of 15,000 tonnes of copper.
Work on site has already begun towards installing two new coal
fired boiler units that will increase capacity in the winter
solution heating system from 8.4MW to 14MW and progress and costs
are very much on schedule. This will allow a higher volume of
solution to be processed during the winter months between December
and March, increasing copper production by up to 600 tonnes per
annum. The boiler units will be commissioned in October 2014 at an
estimated cost of US$2.1 million.
The Company will now commence the construction programme for an
additional mixer settler unit (SX), a new 5,000 tonne per annum
capacity Electro-Winning (EW) facility and an upgrade to the
existing electrical sub-station. The additional mixer settler unit
will facilitate the processing of higher volumes of solution
through the SX-EW plant and will enable up to 1,400 tonnes of
solution to be processed per hour as opposed to the current
capacity of 950 tonnes per hour.
It is anticipated that the building structures will be erected
and clad by November 2014 in order that the installation of the
SX-EW equipment can be undertaken without interruption during the
winter months. Commissioning of the expanded plant will then take
place during Q2 2015 with the plant targeted to be fully
operational by Q3 2015. The capital cost of the Stage 1 expansion
is estimated at US$13.4 million and will be incurred over the next
12 months.
Stage 2
The Stage 2 expansion will only commence on receipt of the State
approval to exploit the copper resource from the western dumps.
Extraction of copper from the western dump area will be facilitated
by the installation of two 12km pipelines to allow for the pregnant
leach solution (PLS) and raffinate solution flows to be cross
transferred to the expanded SX-EW plant. Receipt of the State
mining permit will allow procurement of materials and equipment to
commence in Q3 2015 at the same time as the final detailed
engineering studies are completed.
In addition, the exploitation of the western dumps will require
the construction of a three unit coal fired boiler house for
solution heating, a pond collection system and approximately 3km of
collector trenches.
The capital cost of the Stage 2 expansion is currently estimated
at US$19.5 million and will be largely committed during 2016. It is
anticipated that the pipeline will be commissioned during Q2
2017.
Summary
The total capital cost for the Kounrad expansion is estimated at
US$35 million phased over the next three years. The expansion will
facilitate an increased copper production from the existing 10,000
tonnes to 15,000 tonnes per annum by 2016. This expenditure is in
addition to the estimated US$6.5 million that will be spent on
sustaining capital expenditure for the plant and Kounrad site
during the three year period. The Stage 1 SX-EW expansion programme
of works on site will commence immediately, using the same CAML
construction personnel as used on the construction of the current
plant from 2010 through to 2012.
All capital expenditure will be financed from current project
cash flows and is not anticipated to have any impact upon the CAML
Group's dividend policy subject to currently accepted long term
copper price estimates being maintained. The production objectives
for 2014 remain focussed on an increased output target of 11,000
tonnes of copper cathode and to maintain tight control on
costs.
Analyst conference call
There will be an analyst conference call to discuss the
expansion at Kounrad at 10:30 am (BST) on Tuesday 20 May 2014. The
call can be accessed using the following dial-in number, +44 (0)20
8515 2334, and quoting 'Update on Kounrad'.
For further information contact:
Central Asia Metals plc Tel: +44 (0) 20 7898 9001
Nick Clarke, CEO
Nigel Robinson, CFO
Peel Hunt LLP (Nominated Adviser & Joint
Broker) Tel: +44 (0) 20 7418 8900
Matthew Armitt / Ross Allister
Mirabaud Securities LLP (Joint Broker) Tel: +44 (0) 20 7878 3362
Peter Krens
Bell Pottinger Tel: +44 (0) 20 7861 3232
Mark Antelme / Lorna Cobbett
Notes to Editors:
Central Asia Metals is an AIM-listed UK company based in London.
Its countries of operation are Kazakhstan and Mongolia. CAML is a
copper producing company focussed on base metals. It also has a 50%
equity interest in Copper Bay Ltd, who is developing the Chañaral
Bay Copper Project in Chile. For further information please visit:
www.centralasiametals.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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