TIDMCAML
RNS Number : 5503S
Central Asia Metals PLC
25 September 2014
25 September 2014
Ticker: CAML (AIM)
Central Asia Metals plc ("the Group", "the Company" or
"CAML")
Interim Results for the Six Months Ended 30 June 2014
Central Asia Metals plc (AIM: CAML), a copper producing company
focussed on base metals in Central Asia is pleased to announce
unaudited interim results for the six months ended 30 June 2014
("H1 2014" or the "Period").
The Company is also pleased to declare an interim dividend of 5
pence per ordinary share (H1 2013: 4 pence) which represents a 25%
increase on the 2013 interim dividend and equates to 25.8% of the
attributable revenue for the period. The Company's dividend policy
is that it will return a minimum of 20% of the attributable
revenues to shareholders.
Operational highlights
Completion of the Kounrad Transaction and the commencement of
expansion plans on site
-- 5,094 tonnes of cathode copper produced and 4,698 tonnes sold
(H1 2013: 4,857 produced and 5,035 sold)
-- Full year production guidance maintained at 11,000 tonnes of
cathode copper production for 2014
-- On 23 May 2014, CAML completed the Kounrad Transaction and
became the 100% owner of the Kounrad project
-- Work commenced on site in late May for the Stage 1 expansion
programme to upgrade the Solvent Extraction - Electro Winning
(SX-EW) plant to 15,000 tonne per annum capacity
-- The installation of two new boilers to increase production
during the winter months was completed in September 2014 and the
final commissioning is underway
Financial highlights
Continued profitability driven by low cost operations supporting
the payment of a 5 pence interim dividend
-- H1 2014 attributable Group revenue of $33.7 million (H1 2013: $21.2 million)
-- Average copper price received of $7,049 per tonne (H1 2013: $6,996 per tonne)
-- Cost base effectively managed and the Company remains in the
lowest quartile on the industry cost curve:
o C1 cash costs of production of $1,586 per tonne of copper or
$0.72 per lb (H1 2013: $1,679 per tonne or $0.76 per lb)
o Fully absorbed unit costs of $3,578 per tonne of copper or
$1.62 per lb (H1 2013: $2,849 per tonne of copper or $1.29 per lb)
inclusive of $0.29 per lb arising from increased depreciation and
amortisation charges associated with the fair value uplift
resulting from the Kounrad Transaction
-- EBITDA of $21.8 million (H1 2013: $12.8 million) and EBITDA margin maintained at 65%
-- One-off gain in the period of $33.0 million as a result of
the completion of the Kounrad Transaction
-- 2014 interim dividend declared of 5 pence per ordinary share to be paid on 31 October 2014
-- Cash and cash equivalents of $29.0 million as at 30 June 2014
(31 December 2013: $44.5 million) together with $12.7 million in
trade receivables which were subsequently received in July 2014
-- Cash as at 24 September 2014 of $41.6 million
Outlook
-- On track for 11,000 tonnes of copper production in 2014 with
an increase to 15,000 tonnes by 2016
-- Stage 1 of the expansion plans for Kounrad commenced and on track for completion by Q2 2015
-- Pre-feasibility study for the Copper Bay project in Chile to be delivered in Q4 2014
-- Management continue to look for additional growth
opportunities to add value to the CAML portfolio
Nick Clarke, Chief Executive Officer, commented:
"I am delighted to be able to announce our interim financial
results for the six month period ended 30 June 2014. During this
period we have maintained a tight control on the C1 cash costs
which have reduced to $0.72 per lb whilst also continuing to
increase copper output at the Kounrad plant. In May 2014, we
completed the transaction to acquire 100% ownership of the Kounrad
project. This was a major landmark for the Company and I want to
take this opportunity to thank all our staff for their hard work,
patience and dedication in achieving this.
We are targeting an increase in copper production to 15,000
tonnes per annum by 2016 and the construction work that commenced
at Kounrad during the period is the first step towards achieving
this goal. Throughout the rest of 2014 and into 2015, our focus
will be on delivering on this objective and maintaining our low
cash cost of production.
We are also working towards Stage 2 of the expansion programme
which will see us install additional infrastructure to enable the
extraction of copper from the Western dumps on receipt of the
necessary permits from the State authorities, expected in early
2015.
The resulting revenues and cash-flows from production in the
period, together with the increased ownership to 100%, have enabled
the Board to declare an interim dividend for the period of 5 pence
per ordinary share which represents a 25% increase on the 2013
interim dividend. Indeed, we are extremely proud that almost 4
years after our initial listing on AIM in September 2010 we have
now managed to return over $40m to shareholders of the $60m
raised."
For further information please visit www.centralasiametals.com.
(The content of the CAML website should not be considered to form
part of or be incorporated into this announcement)
Enquiries:
Nick Clarke, Nigel +44 (0)20 7898
Central Asia Metals plc Robinson 9001
Peel Hunt LLP (Nominated Adviser Matthew Armitt, Ross +44 (0)20 7418
& Joint Broker) Allister 8900
---------------------- ---------------
Mark Antelme, Lorna +44 (0)20 3772
Bell Pottinger Cobbett 2500
---------------------- ---------------
Mirabaud Securities (Joint +44 (0)20 7321
Broker) Peter Krens 2508
---------------------- ---------------
Analyst presentation conference call
There will be an analyst presentation conference call on 25
September 2014 at 09:30 (BST). The call can be accessed by dialling
+44 (0) 203 -427-0503 and quoting the conference ID 9601918. There
will be a replay of the call available on 26 September 2014 at
http://www.centralasiametals.com.
Operating & Financial Review
Kazakhstan (Kounrad)
Operations
During the first six months of 2014, operational performance
remained strong at Kounrad with production of 5,094 tonnes (H1
2013: 4,857 tonnes) of cathode copper. The SX-EW plant continued to
perform well with minimal downtime for routine maintenance or
unplanned repairs. Additional leaching cells were opened on dumps 6
and 7 in line with the planned leaching programme for the eastern
dumps and the overall grade achieved remained steady at 2.18 grams
of copper per litre. Management remain confident that the
production target of 11,000 tonnes (FY target 2013: 10,000 tonnes)
for 2014 will be achieved.
Deliveries of copper continued throughout the period on a
monthly basis and as at 30 June 2014 a total of 4,698 tonnes (H1
2013: 5,035 tonnes) of copper had been despatched from site. These
deliveries generated gross project revenues of $33.7 million (H1
2013: $35.4 million) with an average price received of $7,049 per
tonne (H1 2013: $6,996).
The technical quality of the cathode copper production remains
high and continues to meet the requirements of our main customers
and LME specifications.
Project Ownership & Expansion
Kounrad Project ownership
On 6 May 2014, the subsoil use contract ("SUC") was
re-registered under the 100% ownership of the Group. The agreed
consideration for the transaction was fulfilled on 23 May 2014 and
this represented the final part of the transaction with Mr Rakishev
by which the Group became the 100% owner of the Kounrad project.
Details of the impact on the financial results are provided in the
financial review.
Kounrad Expansion plans
Boiler-house
In late 2013, in anticipation of the completion of the ownership
transaction, the CAML Board reviewed the draft expansion plans for
increasing production at Kounrad. These plans included $2.3 million
of capital expenditure for the addition of 2 extra boilers in the
raffinate heating system which would increase capacity from 8.4MW
to 14MW. The intention is that the boilers will enable the volume
of solution which is irrigated in the winter period to be increased
by at least 300m(3) /hr.
The CAML Board approved this element of the expansion capital
expenditure and work has progressed well throughout the first six
months of the year. As at 30 June 2014, the construction and
installation works on the boiler house expansion were approximately
75% complete. Construction of the boilers was completed in
September 2014 and final commissioning checks are currently being
conducted.
Stage 1 - SX-EW Plant expansion
On 20 May 2014, following the completion of the Kounrad
Transaction, the Company announced details of its plans to increase
copper production capacity at the Kounrad plant to 15,000 tonnes
per annum by 2016. The projected capital cost to expand the plant
was estimated at $13.4 million and the works will be completed in
Q2 2015. Work commenced on site in late May 2014 using the same
CAML construction team and personnel as used during the
construction of the main SX-EW plant.
Stage 2 - Western Dumps
The application to the relevant authorities for the required
permits to allow copper extraction from the Western dumps was
submitted in June 2014. It is anticipated that final approval will
be received in early 2015 allowing preliminary site works and order
placement to proceed soon thereafter.
Corporate & Social Responsibility (CSR)
The main focus during the period has been the continued
development and implementation of the systems and procedures
associated with the Group's activities on site at Kounrad. A series
of objectives and targets have been developed for all aspects of
CSR activities at Kounrad and these are regularly monitored. During
the period, an independent audit of these procedures was undertaken
by North Coast Consulting Ltd. The results of the audit were
encouraging and management are making good progress on all CSR
activities at Kounrad.
Operations outside of Kazakhstan
Mongolia
The Group continues to hold for sale the assets it owns in
Mongolia and is actively seeking to sell the Ereen and Handgait
projects. The sale process remains extremely slow due to political
and regulatory uncertainties within the country and the
implications of a court case brought against Zuunmod UUL LLC by the
minority partner on the Ereen project.
In May 2014 the Group sold Bayanresources LLC for nil
consideration.
Copper Bay Project - Chile
In November 2013, CAML acquired a 53% interest in Copper Bay
Limited (CBL) having invested GBP2 million into the company. The
funds are being used to develop a pre-feasibility study (PFS) on
the copper tailings project at Chañaral Bay, some 120km north of
Copiapo. During the six month period to 30 June 2014, various
studies associated with the PFS were commenced and in September
2014 a drilling programme was completed on site.
CBL remains on track to deliver the PFS in Q4 2014. Should the
project economics appear favourable at that time, CAML has the
right to invest a further $3 million to increase its ownership to
75%. The funds would then be used to finance additional studies to
produce a Definitive Feasibility Study (DFS).
Financial Review
Income Statement
Group profit after tax from continuing operations was $47.2
million for the six month period ended 30 June 2014 (H1 2013: $8.5
million). The results were impacted by a one off gain of $33.0
million (H1 2013: nil) arising from the completion of the Kounrad
Transaction. Earnings per share from continuing operations were
52.06 cents (H1 2013: 9.97 cents).
Losses from discontinued operations reduced to $0.2 million (H1
2013: $13.6 million) following the full write down of all the
Mongolian assets during the first six months of 2013.
Comparative periods
During the comparable period in 2013, CAML only owned 60% of the
Kounrad project and consequently applied joint venture accounting
principles to report the Group's 60% share of revenues, costs and
associated assets and liabilities. During the first six months of
2014, the Group completed the remaining part of the Kounrad
Transaction and became the 100% owner of the project. The Group has
accounted for 100% of the Kounrad project throughout the six month
period ended 30 June 2014.
Revenue
4,562 tonnes of copper cathode were sold to Traxys as part of
the Company's off-take arrangements at Kounrad and a further 136
tonnes were sold locally. The Group achieved an average selling
price of $7,049 (H1 2013: $6,996) per tonne and this generated
reported revenues for the Group of $33.7 million (H1 2013: $21.2
million).
Cost of sales
Costs of sales for the period were $10.8 million (H1 2013: $5.1
million). The C1 cash costs were $1,586 per tonne of copper or
$0.72 per lb (H1 2013: $1,679 per tonne or $0.76 per lb). Fully
absorbed unit costs for the CAML Group were $3,578 per tonne of
copper or $1.62 per lb (H1 2013: $2,849 or $1.29 per lb).
The main increase at the fully absorbed level comes from
increased depreciation and amortisation charges in the six month
period as a result of the fair value accounting for the acquisition
of the additional 40% share in the Kounrad project. This
contributed additional depreciation and amortisation charges of
$2.9 million for the period, equivalent to $0.29 per lb.
The overall cost base remained comparable between the two
periods due to a combination of strong management controls and the
devaluation of the local Kazakhstan currency by 20% in February
2014.
Foreign exchange
During the period, the Group reported a $2.5 million foreign
exchange gain (H1 2014: $0.1 million) resulting primarily from the
20% devaluation mentioned above. There was also a $0.6 million (H1
2013: nil) foreign exchange gain in revenue as a consequence of the
devaluation.
Acquisition of 100% of the Kounrad Project
As previously mentioned, on 23 May 2014 the Kounrad Transaction
was completed with Mr Rakishev resulting in the CAML Group owning
100% of the Kounrad project. Accordingly, the CAML Group accounted
for the increased ownership of the Kounrad project by derecognising
its previous interests held and recognising the fair value of the
assets and liabilities acquired at the time of completion. This
resulted in a one-off gain for the period of $33.0 million (H1
2013: nil). Details of the accounting are contained in note 14.
Dividend
The CAML Board has declared an interim dividend for the period
of 5 pence per ordinary share in accordance with its dividend
policy announced in December 2012. The interim dividend equates to
approximately 25.8% of the attributable Group revenue for the
period and will be payable on 31 October 2014 to shareholders
registered on 10 October 2014.
Balance Sheet
As a result of the completion of the Kounrad Transaction there
has been a significant uplift to the Group's intangible asset base
during the six month period ended 30 June 2014. Following the
acquisition of the remaining 40% in the SUC, intangible assets
increased to $82.9 million (31 December 2013: $16.7 million).
At 30 June 2014, non-current trade and other receivables was
$5.4 million (31 December 2013: $17.1 million). The large reduction
is a consequence of the change from joint venture accounting to
100% consolidation of the Kounrad entities which resulted in the
removal of the amounts recoverable from related parties (31
December 2013: $11.7 million). The outstanding balance of $5.4
million represents the amount currently owed to the Group by the
Kazakhstan Government for VAT.
At 30 June 2014, current trade and other receivables was $15.0
million (31 December 2013: $1.4 million). The large increase is a
consequence of $12.7 million owed for the sale of copper to Traxys
for the May and June deliveries. These funds were received in July
2014. The Group had $29.0 million of cash as at 30 June 2014 (31
December 2013: $44.5 million) and no debt.
At 30 June 2014, current trade and other payables were $3.9
million (31 December 2013: $11.9 million). The large decrease is a
consequence of $8.4 million of 2013 corporate income tax paid in
April 2014. The deferred tax liability has increased to $20.6
million (31 December 2013: $9.7 million) and this relates primarily
to completion of the Kounrad Transaction.
Significant changes to equity occurred during the period as a
direct consequence of the completion of the Kounrad Transaction and
the subsequent issue of 21,211,751 ordinary shares to Mr Kenges
Rakishev on 23 May 2014 as consideration for the transaction.
Outlook
The CAML management team remains focussed on producing 11,000
tonnes of cathode copper at Kounrad in 2014 and maintaining the
current low costs of production. Expansion plans for Kounrad are
well underway and management will provide a further update on
progress in due course.
The CAML management team will continue to work towards a sale of
its Mongolian assets over the next six months and work with CBL to
complete the pre-feasibility study for the Copper Bay project,
whilst also looking for additional business opportunities both
within Kazakhstan and elsewhere.
CONDENSED INTERIM INCOME STATEMENT (Unaudited)
for the six months period ended 30 June 2014
Six months ended
----------------------
30-Jun-14 30-Jun-13
Note $'000 $'000
---------------------------------------------------- ------- ---------- ----------
Continuing operations
Gross Revenue 33,704 21,227
---------------------------------------------------- ------- ---------- ----------
Revenue 32,244 20,177
Cost of sales (10,758) (5,128)
---------------------------------------------------- ------- ----------
Gross Profit 21,486 15,049
---------------------------------------------------- ------- ---------- ----------
Distribution and selling costs (142) (203)
Administrative expenses (4,451) (3,357)
Other expenses (6) (37)
Exchange rate differences gain 2,495 108
Operating Profit 19,382 11,560
---------------------------------------------------- ------- ---------- ----------
Finance income 44 9
Finance costs (128) (115)
Gain on re-measuring to fair value the existing
interest on acquisition of control 14 33,039 -
---------------------------------------------------- ------- ---------- ----------
Profit before income tax 52,337 11,454
Income tax (5,150) (2,993)
----------
Profit from continuing operations 47,187 8,461
---------------------------------------------------- ------- ---------- ----------
Discontinuing operations
Loss from discontinuing operations (161) (13,567)
---------- ----------
Profit / (loss) for the period 47,026 (5,106)
---------------------------------------------------- ------- ---------- ----------
Profit / (loss) attributable to:
- Owners of the parent 47,026 (5,106)
---------------------------------------------------- ------- ---------- ----------
Earnings per share from continuing and discontinued
operations attributable to owners of the
parent during the period (expressed in cents
per share)
Basic earnings/(loss) per share
From continuing operations 6 52.06 9.97
From discontinued operations (0.18) (15.99)
From (loss) / profit for the period 51.88 (6.02)
-------------------------------------------------------- --- ---------- ----------
Diluted earnings/(loss) per share
From continuing operations 6 50.06 9.61
From discontinued operations (0.18) (15.99)
From (loss) / profit for the period 49.89 (5.80)
-------------------------------------------------------- --- ---------- ----------
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
for the six months period ended 30 June 2014
Six months ended
----------------------
30-Jun-14 30-Jun-13
$'000 $'000
---------------------------------------------- ---------- ----------
Profit / (loss) for the year 47,026 (5,106)
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
Currency translation differences (10,144) (482)
Other comprehensive income for the period,
net of tax (10,144) (482)
---------------------------------------------- ---------- ----------
Total comprehensive income for the period 36,882 (5,588)
---------------------------------------------- ---------- ----------
Attributable to:
- Owners of the parent 36,882 (5,588)
- Non-controlling interests - -
Total comprehensive income for the period 36,882 (5,588)
---------------------------------------------- ---------- ----------
Total comprehensive income attributable to equity shareholders
arises from:
- Continuing operations 37,043 7,979
- Discontinuing operations (161) (13,567)
36,882 (5,588)
----------------------------- ------- ---------
CONDENSED INTERIM BALANCE SHEET
as at 30 June 2014
Unaudited Audited Unaudited
---------- ---------- ----------
30-Jun-14 31-Dec-13 30-Jun-13
Note $'000 $'000 $'000
---------------------------------- ----- ---------- ---------- ----------
Assets
Non-current assets
Property, plant and equipment 7 73,677 77,716 19,675
Intangible assets 8 82,949 16,693 4,211
Investments - - 4,282
Trade and other receivables 9 5,406 17,090 11,784
162,032 111,499 39,952
---------------------------------- ----- ---------- ---------- ----------
Current assets
Inventory 3,700 3,916 2,377
Trade and other receivables 9 15,034 1,402 1,932
Restricted cash 120 1,734 -
Cash and cash equivalents 28,871 42,774 26,545
47,725 49,826 30,854
---------------------------------- ----- ---------- ---------- ----------
Assets of the disposal group
classified as held for sale 134 186 792
47,859 50,012 31,646
---------------------------------- ----- ---------- ---------- ----------
Total assets 209,891 161,511 71,598
---------------------------------- ----- ---------- ---------- ----------
Equity attributable to owners
of the parent
Ordinary shares 10 1,077 862 862
Share premium 10 56,464 - 61,431
Treasury shares (3,680) (4,100) (4,236)
Other reserves (5,079) 44,140 4,195
Retained earnings 132,889 94,827 (1,349)
181,671 135,729 60,903
---------------------------------- ----- ---------- ---------- ----------
Non-controlling interests - - -
Total equity 181,671 135,729 60,603
---------------------------------- ----- ---------- ---------- ----------
Liabilities
Non-current liabilities
Deferred tax liability 20,604 9,652 -
Provision for liabilities and
charges 3,171 3,667 2,126
23,775 13,319 2,126
---------------------------------- ----- ---------- ---------- ----------
Current liabilities
Obligations under finance leases - - 6
Trade and other payables 3,928 11,860 7,652
3,928 11,860 7,658
---------------------------------- ----- ---------- ---------- ----------
Liabilities of disposal group
classified as held for sale 517 603 911
---------------------------------- ----- ---------- ---------- ----------
4,445 12,463 8,569
Total liabilities 28,220 25,782 10,695
---------------------------------- ----- ---------- ---------- ----------
Total equity and liabilities 209,891 161,511 71,598
---------------------------------- ----- ---------- ---------- ----------
CONDENSED INTERIM STATEMENT OF CHANGES OF EQUITY (Unaudited)
for the six months period ended 30 June 2014
Ordinary Share Treasury Other Retained Total
Shares Premium Shares Reserves Earnings
$'000 $'000 $'000 $'000 $'000 $'000
At 31 December
2013 862 - (4,100) 44,140 94,827 135,729
----------------------- --------- --------- --------- ---------- ---------- --------
Total comprehensive
income - - - (10,144) 47,026 36,882
----------------------- --------- --------- --------- ---------- ---------- --------
Transactions with
owners
Share based payments - - - 799 - 799
Promise of shares
to be issued to
KR on the completion
of SK - - 16,845 - 16,845
Ordinary shares
issue 212 56,041 - (56,253) - -
Exercise of warrants 3 423 - - - 426
Exercised of options - - 420 (304) - 116
Dividends - - - - (9,018) (9,018)
Sale of Mongolian
assets - - - (162) 54 (108)
Total transactions
with owners 215 56,464 420 (39,075) (8,964) 9,060
----------------------- --------- --------- --------- ---------- ---------- --------
At 30 June 2014 1,077 56,464 (3,680) (5,079) 132,889 181,671
----------------------- --------- --------- --------- ---------- ---------- --------
Ordinary Share Treasury Other Retained Total
Shares Premium Shares Reserves Earnings
$'000 $'000 $'000 $'000 $'000 $'000
At 31 December
2012 (restated) 862 61,431 (4,236) 4,347 8,626 71,030
----------------------- --------- --------- --------- ---------- ---------- --------
Total comprehensive
income - - - (482) (5,106) (5,588)
----------------------- --------- --------- --------- ---------- ---------- --------
Transactions with
owners
Share based payments - - - 330 - 330
Dividend - - - - (4,869) (4,869)
Total transactions
with owners - - - 330 (4,869) (4,539)
----------------------- --------- --------- --------- ---------- ---------- --------
At 30 June 2013 862 61,431 (4,236) 4,195 (1,349) 60,903
----------------------- --------- --------- --------- ---------- ---------- --------
CONDENSED INTERIM STATEMENT OF CASH FLOWS (unaudited)
for the six months period ended 30 June 2014
Six months ended
----------------------
30-Jun-14 30-Jun-13
Note $'000 $'000
------------------------------------------- ----- ---------- ----------
Cash flows from operating activities
Cash generated from operations 11 8,620 13,170
Corporation tax paid (11,048) (4,477)
Interest paid (28) (17)
Net cash generated from operating
activities (2,456) 8,676
------------------------------------------- ----- ---------- ----------
Cash flows from investing activities
Increase in investments - (276)
Kounrad capital expenditure 7 (2,892) (787)
Proceeds from sale of property,
plant and equipment - 5
Purchase of intangible assets 8 (10) (10)
Exploration costs capitalised 8 (95) (219)
Interest received 44 9
Acquisition of subsidiary net of 327 -
cash acquired
Discontinued operations (115) (341)
Net cash used in investing activities (2,741) (1,619)
------------------------------------------- ----- ---------- ----------
Cash Flows from financing activities
Dividend paid to owners of the parent (9,031) (14,306)
KR payment on completion of Kounrad (1,432) -
Transaction
Receipt on exercise of share options 115 -
Exercise of warrants 426 -
Restricted cash 1,614 -
Net cash absorbed by financing activity (8,308) (14,306)
------------------------------------------- ----- ---------- ----------
Effect of foreign exchange rates
on cash and cash equivalents (364) (61)
Net decrease in cash and cash equivalents (13,869) (7,310)
Cash and cash equivalents at 1 January 42,795 33,855
Cash and cash equivalents at 30
June 28,926 26,545
------------------------------------------- ----- ---------- ----------
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
6 months ended 30 June 2014
1. General information
Central Asia Metals plc ("CAML" or the "Company") and its
subsidiaries (the "Group") are a mining organisation with
operations primarily in Kazakhstan and a parent holding company
based in the United Kingdom.
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 has recently invested in a copper tailings project in
Chile.
CAML is a public limited company, which is listed on the
Alternative Investment Market ("AIM") of the London Stock Exchange
Plc 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.
These condensed interim financial statements were approved for
issue on 24 September 2014 and are unaudited.
2. Basis of Preparation
These condensed interim financial statements for the six months
ended 30 June 2014 have been prepared in accordance with IAS 34,
'Interim financial reporting'. The condensed interim financial
statements should be read in conjunction with the annual financial
statements for the year ended 31 December 2013, which have been
prepared in accordance with IFRSs.
3. Accounting policies
The accounting policies, methods of computation and presentation
used in the preparation of the interim financial information are
the same as those used in the Group's audited financial statements
for the year ended 31 December 2013.
Following the completion of the Kounrad Transaction on 23 May
2014, the Group now owns 100% of the Kounrad project and during the
reported period has accounted for 100% of the income and
expenditure together with 100% of the assets and liabilities of the
legal entities associated with the Kounrad project. It should be
noted that this is in contrast to the comparative six month period
to 30 June 2013 when the Group only owned and accounted for its 60%
share of the Kounrad project.
Where a change in the presentational format between the prior
year and current year financial statements has been made during the
year, comparative figures have been restated accordingly.
After review of the Group's operations, financial position and
forecasts, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, the Directors continue to
adopt the going concern basis in preparing the unaudited interim
financial information.
4. Estimates
The preparation of interim financial statements 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 expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 December 2013.
5. Segmental Information
The Board is the Group's chief operating decision-maker.
Management has 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.
As at 30 June 2014, the Group only had one business segment
consisting of an SX-EW copper plant at Kounrad in Kazakhstan. The
Group operations are controlled from a head office in London, UK
but this does not represent a separate business segment.
Previously reported business segments within the Group, namely
all the Mongolian operations, are classified as held for sale as at
30 June 2014. Bayanresources LLC was sold for nil consideration in
June 2014.
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 project is also closely monitored and
controlled.
The segmental results for the six months period ended 30 June
2014 are as follows:
Segmental result
----------------------
Unaudited Unaudited
Six months ended
----------------------
30-Jun-14 30-Jun-13
$'000 $'000
---------- ----------
Gross revenue 33,704 21,227
------------------------------------------------------ ---------- ----------
Traxys buyers' fees (1,460) (1,050)
---------- ----------
Revenue 32,244 20,177
------------------------------------------------------ ---------- ----------
Kounrad EBITDA 24,970 15,313
Unallocated costs including corporate (3,125) (2,539)
------------------------------------------------------ ---------- ----------
Group continuing operations EBITDA 21,845 12,774
Gain on re-measuring to fair value the existing 33,039 -
interest on acquisition of control
Depreciation and amortisation (4,952) (1,285)
Gain on foreign exchange 2,495 108
Other income / (expenses), net (6) (37)
Finance income 44 9
Finance costs (128) (115)
---------- ----------
Profit before income tax 52,337 11,454
------------------------------------------------------ ---------- ----------
Income tax (5,150) (2,993)
---------- ----------
Profit for the period after taxation from continuing
operations 47,187 8,461
------------------------------------------------------ ---------- ----------
Loss from discontinued operations (161) (13,567)
------------------------------------------------------ ---------- ----------
Profit / (loss) for the period 47,026 (5,106)
------------------------------------------------------ ---------- ----------
The segmental assets and liabilities for the six months ended 30
June 2014 are as follows:
Segmental Assets Segmental Liabilities
---------------------- ------------------------
30-Jun-14 31-Dec-13 30-Jun-14 31-Dec-13
$'000 $'000 $'000 $'000
Kounrad 183,749 130,473 (27,396) (23,165)
Assets held for sale 134 186 (517) (603)
Unallocated including corporate 26,008 30,852 (307) (2,014)
---------- ---------- ----------- -----------
Total 209,891 161,511 (28,220) (25,782)
--------------------------------- ---------- ---------- ----------- -----------
6. Earnings per share
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.
(a) Basic Six months ended
------------------------
30-Jun-14 30-Jun-13
$'000 $'000
----------------------------------------------------- ----------- -----------
Profit from continuing operations attributable
to owners of the parent 47,187 8,461
Loss from discontinued operations attributable
to owners of the parent (161) (13,567)
Total 47,026 (5,106)
----------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
in issue 90,645,415 84,847,005
----------------------------------------------------- ----------- -----------
Earnings per share from continuing and discontinued
operations attributable to owners of the parent
during the period (expressed in cents per share) $ cents $ cents
From continuing operations 52.06 9.97
From discontinued operations (0.18) (15.99)
From profit/ (loss) for the period 51.88 (6.02)
----------------------------------------------------- ----------- -----------
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.
Six months ended
(b) Diluted
------------------------
30-Jun-14 30-Jun-13
$'000 $'000
------------------------------------------------ ----------- -----------
Profit from continuing operations attributable
to owners of the parent 47,187 8,461
Loss from discontinued operations attributable
to owners of the parent (161) (13,567)
Total 47,026 (5,106)
------------------------------------------------ ----------- -----------
Weighted average number of ordinary shares
in issue 90,645,415 84,847,005
Adjusted for:
- Share Options 2,673,812 1,964,074
- Mirabaud Securities warrants 932,053 1,192,053
Weighted average number of ordinary shares
for diluted earnings per share 94,251,280 88,003,132
------------------------------------------------ ----------- -----------
Diluted earnings per share $ cents $ cents
From continuing operations 50.06 9.61
From discontinued operations (0.18) (15.99)
From profit/ (loss) for the period 49.89 (5.80)
------------------------------------------------ ----------- -----------
Upon the successful completion of the Initial Public Offering
(IPO) on 30 September 2010, Mirabaud Securities ("MS") were granted
1,192,053 warrants. These warrants had an exercise price of 96
pence and on 30 June 2014, MS exercised a total of 260,000 for
which the Company received GBP249,600. MS exercised a further
932,053 warrants on 31 July 2014, see note 16.
7. Property, Plant and Equipment
Motor Vehicles
Construction
in Plant and and Office
Progress Equipment Equipment Total
Group $'000 $'000 $'000 $'000
----------------------------- ------------- ---------- --------------- ---------
Cost
At 1 January 2013 44 21,617 863 22,524
Additions 933 617 412 1,962
Disposals - (160) (43) (203)
Transfers (526) 482 - (44)
Change in JV Accounting - 4,509 - 4,509
Derecognition of previously
held interests(1) (44) (16,194) (530) (16,767)
Acquisition of Subsidiary
100%(1) 73 73,381 884 74,338
Exchange differences (4) (589) (25) (619)
------------- ---------- --------------- ---------
At 31 December 2013 476 83,663 1,561 85,700
Additions 2,048 683 161 2,892
Disposals (148) (1) (22) (171)
Transfers (768) 768 - -
Derecognition of previously
held interests(2) (260) (3,510) (231) (4,001)
Acquisition of Subsidiary
100%(2) 434 6,900 385 7,719
Exchange differences (131) (6,044) (236) (6,411)
------------- ---------- --------------- ---------
At 30 June 2014 1,651 82,459 1,618 85,728
Accumulated depreciation
At 1 January 2013 - 1,926 311 2,237
Provided during the period - 3,937 195 4,132
Disposals - (210) (29) (239)
Change in JV Accounting - 1,336 - 1,336
Derecognition of previously
held interests(1) - (803) (105) (908)
Acquisition of Subsidiary
100%(1) - 1,338 175 1,513
Exchange differences - (79) (8) (87)
------------- ---------- --------------- ---------
At 31 December 2013 - 7,445 539 7,984
Provided during the period - 4,730 106 4,836
Disposals - (128) (22) (150)
Derecognition of previously
held interests(2) - (1,315) (169) (1,484)
Acquisition of Subsidiary
100%(2) - 2,192 281 2,473
Exchange differences - (1,515) (93) (1,608)
------------- ---------- --------------- ---------
At 30 June 2014 - 11,409 642 12,051
Net book value at 1 January
2014 476 76,218 1,022 77,716
-----------------------------
Net book value at 30 June
2014 1,651 71,050 976 73,677
----------------------------- ------------- ---------- --------------- ---------
1. On completion of the KCC Transaction on 21 October 2013, the
Group derecognised its previously held 60% interest and recognised
its 100% interest at cost together with the fair value uplift
associated with the transaction of $46,392,000. On completion of
the whole Kounrad Transaction on 23 May 2014, the Group recognised
an additional fair value uplift of $1,049,798 due to the
reallocation of the cash consideration - see note 14.
2. On completion of the SUC Transaction on 23 May 2014, the
Group derecognised its previously held 60% interest and recognised
its 100% interest at cost. There was no fair value uplift to
property, plant and equipment associated with the SUC
transaction.
3. There was an additional depreciation charge during the period
of $2,613,634 as a result of the fair value uplift in property,
plant and equipment.
8. Intangible Assets
Deferred
Exploration Mining
and Licences Computer
Evaluation
Goodwill Costs and Permits Software Total
Group $'000 $'000 $'000 $'000 $'000
------------------------------- --------- ------------ ------------ --------- --------
Cost
At 1 January 2013 - 6,408 1,050 57 7,515
Additions - 260 5,476 14 5,750
Addition Goodwill 9,278 - - - 9,278
Disposals - - (1) (32) (33)
Joint Venture adjustment - - 33 9 42
Transfer of Bayan Resources
to disposal group classified
as held for sale - (4,505) (1,000) - (5,505)
Exchange differences - (222) (23) (1) (246)
--------- ------------ ------------ --------- --------
At 31 December 2013 9,278 1,941 5,535 47 16,801
Additions - 95 - 10 105
Addition Goodwill 11,013 - - - 11,013
Disposal - - - (1) (1)
Derecognition of previously
held interests(1) - (1,649) (1,947) (16) (3,612)
Acquisition of subsidiary
100%(1) - 2,748 57,261 27 60,036
Exchange differences - (385) (426) (7) (818)
--------- ------------ ------------ --------- --------
At 30 June 2014 20,291 2,750 60,423 60 83,524
--------- ------------ ------------ --------- --------
Accumulated amortisation
At 1 January 2013 - - 1 40 41
Provided during the
year - 52 4 12 68
Disposal - - 24 (26) (2)
Change in JV accounting - - 1 3 4
Exchange differences - (1) (1) (1) (3)
--------- ------------ ------------ --------- --------
At 31 December 2013 - 51 29 28 108
Provided during the
year - 2 458 7 467
Disposal - - - (1) (1)
Derecognition of previously
held interests(1) - (41) (22) (9) (72)
Acquisition of subsidiary
100%(1) - 69 37 15 121
Exchange differences - (16) (26) (6) (48)
--------- ------------ ------------ --------- --------
At 30 June 2014 - 65 476 34 575
--------- ------------ ------------ --------- --------
Net book value at
1 January 2014 9,278 1,890 5,506 19 16,693
--------- ------------ ------------ --------- --------
Net book value at
30 June 2014 20,291 2,685 59,947 26 82,949
------------------------------- --------- ------------ ------------ --------- --------
1. On completion of the SUC Transaction on 23 May 2014, the
Group derecognised its previously held 60% interest and recognised
its 100% interest at cost together with the fair value uplift
associated with the transaction of $54,015,555.
2. There was an additional amortisation charge during the period
of $280,055 as a result of the fair value uplift in intangible
assets.
9. Trade and Other Receivables
30-Jun-14 31-Dec-13
$'000 $'000
----------------------------------- ---------- ----------
Trade receivables 18,438 5,715
Less: provision for impairment of
trade receivables (13) (33)
----------------------------------- ---------- ----------
Trade receivables, net 18,425 5,682
Receivables from related parties - 11,654
Prepayments 2,015 1,156
20,440 18,492
----------------------------------- ---------- ----------
Less: non - current portion
Trade and other receivables (5,406) (5,436)
Receivables from related parties - (11,654)
Current Portion 15,034 1,402
----------------------------------- ---------- ----------
The carrying value of all the above receivables is a reasonable
approximation of fair value.
10. Share Capital and Premium
Number Ordinary Share Premium Treasury Total Equity
of Shares Shares Shares
No $'000 $'000 $'000 $'000
At 1 January 2013 86,165,934 862 61,431 (4,236) 58,057
-------------------- ------------ --------- -------------- --------- -------------
Capital reduction - - (61,431) - (61,431)
Sale of treasury
shares - - - 136 136
At 31 December
2013 86,165,934 862 - (4,100) (3,238)
-------------------- ------------ --------- -------------- --------- -------------
Ordinary shares
issue 21,211,751 212 56,041 - 56,253
Exercised options - - - 420 420
Exercised warrants 260,000 3 423 - 426
At 30 June 2014 107,637,685 1,077 56,464 (3,680) 53,861
-------------------- ------------ --------- -------------- --------- -------------
On the completion of the Kounrad transaction a total of
21,211,751 ordinary shares were issued to Kenges Rakishev.
During 6 months ended 30 June 2014 the Group had no balances
attributable to non-controlling interests (31 December 2013:
nil).
11. Cash Generated from operations
Six months ended
---------------------------------
30-Jun-14 30-Jun-13
$'000 $'000
---------- ---------------------
Profit before income tax including
discontinued operations 52,176 11,454
--------------------------------------- ---------- ---------------------
Adjustments for:
Depreciation 4,485 1,259
Amortisation 467 26
Foreign exchange (2,495) (108)
Gain on re-measuring to fair value (33,039) -
the existing interest on acquisition
of control
Share options 799 330
Finance income (44) (9)
Finance costs 128 115
Charges in working capital:
Inventories 437 215
Trade and other receivables (13,453) 941
Trade and other payables (725) (1,012)
Movement in provisions (116) (41)
Cash generated from operations 8,620 13,170
--------------------------------------- ---------- ---------------------
12. Commitments
30-Jun-14 31-Dec-13
$'000 $'000
------------------------------- ---------- ----------
Kazakhstan 2,398 737
UK 1,116 1,095
Mongolia 42 90
Total 3,556 1,922
------------------------------- ---------- ----------
30-Jun-14 31-Dec-13
$'000 $'000
------------------------------- ---------- ----------
Property, plant and equipment 1,253 178
Intangible assets 314 218
Other 1,989 1,526
Total 3,556 1,922
------------------------------- ---------- ----------
At 30 June 2014 the amounts contracted for but not provided for
in the financial statements amounted to $3,556,098 for the Group
(31 December 2013: $1,922,398).
13. Dividend per share
An interim dividend of 5 pence per ordinary share (2013: 4 pence
per share) was declared by the CAML Board on 24 September 2014.
14. Business combination
The Company has been working on the completion of the
acquisition of the remaining 40% of the Kounrad Project since early
2012. The acquisition (collectively known as the "Kounrad
Transaction") consisted of two key parts;
-- The first transaction involving the transfer of an additional
40% ownership of Kounrad Copper Company LLP ("KCC") was completed
on 21 October 2013.
-- The second transaction involving the transfer of the
remaining 40% economic interest in the subsoil use contract ("SUC")
remained outstanding as at 31 December 2013. This was completed on
23 May 2014.
On completion of the Kounrad Transaction and in line with the
agreements, a total of 21,211,751 ordinary shares were issued to Mr
Kenges Rakishev ("KR") on 23 May 2014. In addition a cash payment
of GBP848,470 ($1,432,047) was paid to KR on that date in line with
the agreements.
As a consequence of the completion of both transactions, the
CAML Group became 100% owner of the Kounrad Project and, in
accordance with IFRS 3 "Business Combinations", recognized the
acquired assets and liabilities of both KCC and the SUC based upon
their fair values.
Consideration
The fair value of the 21,211,751 Ordinary Shares issued as part
of the consideration for the Kounrad Transaction was determined
based on the published share price of the Company on the relevant
dates. In the case of KCC this was 21 October 2013 when the
remaining 40% of KCC Shares were re-registered and in the case of
the SUC transfer it was deemed to be 23 May 2014 when the Kounrad
Transaction was finally completed and the agreed consideration paid
to KR.
In addition an agreed cash consideration of $1,432,047 was paid
on 23 May 2014. This was all allocated as consideration for the
additional 40% shares in KCC as per the legal agreements resulting
in a minor adjustment of $1,049,798 to the fair values associated
with the assets and liabilities of KCC as reported at 31 December
2013.
The total purchase consideration amounted to $57,685,494.
The table below summarises the consideration paid for both KCC
and the SUC together with the fair value of all the assets acquired
and the liabilities assumed for both the KCC and SUC parts of the
Kounrad Transaction;
Kounrad
Copper
Company
SUC LLP Total
Consideration $'000 $'000 $'000
--------------------- ------- --------- -------
Equity instrument 16,845 39,409 56,254
Cash consideration - 1,432 1,432
------- ---------
Total consideration 16,845 40,841 57,686
--------------------- ------- --------- -------
Kounrad
Recognised amounts of identifiable Copper
assets acquired and liabilities Company
acquired SUC LLP Total
------------------------------------ --------- --------- ---------
Property, plant and
equipment 4,196 73,875 78,071
Intangible assets 59,914 - 59,914
Inventories 554 4,075 4,629
Cash and cash equivalents 816 8,233 9,049
Trade and other receivables 2,225 35,855 38,080
Trade and other payables (23,159) (9,853) (33,012)
Borrowings (2,075) - (2,075)
Other liabilities and
charges (359) (10,083) (10,442)
Deferred tax liabilities (10,803) (9,488) (20,291)
Total identifiable net
assets at fair value 31,309 92,614 123,923
------------------------------------ --------- --------- ---------
Derecognition of previously
held interests 60%
Removal of book value 7,142 (32,796) (25,654)
Removal of fair value
uplift (32,409) (28,465) (60,874)
------------------------------------ --------- --------- ---------
Total interests acquired
40% 6,042 31,353 37,395
Purchase consideration 16,845 40,841 57,686
Provisional goodwill 10,803 9,488 20,291
------------------------------------ --------- --------- ---------
Note - the numbers presented in the table above are provisional
and subject to review.
Completion of the SUC Transaction
As stated above, the second transaction involving the transfer
of the remaining 40% economic interest in the subsoil use contract
("SUC") completed on 23 May 2014. In accordance with IFRS 3
"Business Combinations", the Group recognised the assets and
liabilities based upon their fair values. The fair value uplift
applied to the assets acquired as part of the SUC transaction has
all been applied to the intangible assets of the SUC under Mining
Licences and Permits resulting in an uplift of $54,016,000.
The Group recognised a gain of $32,409,333 as a result of
measuring at fair value its 60% interest in the SUC held before the
business combination. This gain is included in other income, as a
line item "Gain on re-measuring to fair value the existing
interests on acquisition of control", in the Group's income
statement for the six month period ended 30 June 2014.
Minor amendments to KCC Transaction as reported at 31 December
2013
As at 31 December 2013, the cash consideration had been
apportioned to both the KCC and SUC parts of the Kounrad
Transaction. This assumption was revised following a review of the
detailed legal agreements associated with the transaction.
Consequently, the adjustment and revised allocation of the cash
consideration to the KCC part of the transaction resulted in an
additional gain of $629,798 through the income statement.
As a result the Group reported a total gain through the income
statement, under the line item "Gain on re-measuring to fair value
the existing interests on acquisition of control", for the six
month period ended 30 June 2014 of $33,039,131. This reported gain
is in addition to the $27,835,000 gain reported by the Group in the
12 month period ending 31 December 2013 making a reported total
gain for the completion of the Kounrad Transaction of
$60,874,131.
This minor amendment to the allocation of the cash consideration
also resulted in an additional fair value uplift associated with
the property, plant and equipment of KCC. The fair value uplift
reported as at 31 December 2013 was $46,392,000 giving a total on
completion of $47,441,797.
Provisional Goodwill
The provisional goodwill arising on the completion of the
Kounrad Transaction amounted to $20,291,043 which includes a minor
adjustment of $209,933 resulting from the reallocation of the cash
consideration assigned to
KCC as mentioned above. The goodwill is not deductible for tax purposes.
This is the amount of the deferred tax liability which arises on
the difference between the assigned fair value of the acquired
assets and liabilities and their tax base.
The acquisition costs related to the completion of the
transaction in the six months ended 30 June 2014 are approximately
$105,161. These have been charged to administrative expenses in the
consolidated income statement.
15. Related Party Transactions
During the six month period ending 30 June 2014 the Group had no
transactions with related parties with the exception of the
company's subsidiaries and the Kounrad Transaction described
below.
Kounrad Transaction
Mr Kenges Rakishev (KR) became a major shareholder of CAML on 23
May 2014 following completion of the Kounrad Transaction. He was
appointed to the CAML Board on 9 December 2013 following the
completion of the first part of the transaction. As a consequence,
KR is considered a related party in any future dealings he has with
the Group.
As far as the Group is aware, they do not have any dealings with
companies associated with KR. As part of the obligations on KR for
completing the Kounrad Transaction, he signed a relationship
agreement with CAML setting out the terms of the relationship
between KR and the Group.
As part of KR's business interests he recently completed the
acquisition of a 46.5% interest in BTA Bank JSC along with JSC
Kazkommertsbank. The Group uses the facilities of JSC
Kazkommertsbank within Kazakhstan for its normal day-to-day
banking.
16. Post Balance Sheet Events
On 2 July 2014, the Company announced that the SDB Group LLP, an
entity 100 per cent. owned and controlled by Mr Kenges Rakishev, a
Non-Executive Director of the Company, had entered into a loan
agreement whereby security over 21,211,751 ordinary shares of
US$0.01 each in the capital of the Company (the "Pledged Shares")
held by Mr Kenges Rakishev was granted in favour of JSC
CenterCredit Bank.
There is no change in Mr Rakishev's legal or beneficial
shareholding in the Company and he continues to have an interest
and voting rights in 21,211,751 ordinary shares. The Pledged Shares
will remain subject to the restricted dealing provisions originally
agreed with Mr Kenges Rakishev and CAML as part of the Kounrad
Transaction.
The Company has obtained an undertaking from JSC CenterCredit
Bank that should the security be enforced, the Company will be
granted a priority right to place the shares.
On 23 July 2014 the Company allotted and issued 3,500,000
ordinary shares of US$0.01 each to the trustee of the Central Asia
Metals Limited Share Trust (the "Employee Benefit Trust"). These
ordinary shares are being issued with a view to satisfying current
awards granted under the Company's Employee Share Plans together
with any future awards that may be granted by the Company.
On 31 July 2014 Mirabaud Securities LLP exercised their
remaining 932,053 warrants at an exercise price of 96 pence per
share. The Company received GBP894,771 in cash for the exercise of
the warrants.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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