TIDMCAML
RNS Number : 3138I
Central Asia Metals PLC
01 April 2020
1 April 2020
CENTRAL ASIA METALS PLC
('CAML' or the 'Company')
2019 Full Year Results
Central Asia Metals plc (AIM: CAML) today announces its full
year results for the 12 months ended 31 December 2019.
Update regarding COVID-19 pandemic and outlook for 2020
-- No CAML Group staff or contractors diagnosed with COVID-19
-- Both Sasa and Kounrad remain fully operational, with strong
2020 operational performances to date
-- Despite host government border restrictions for movement of
people, metal sales have to date been unaffected
-- Situation intensifying in both countries with a rising number of COVID-19 cases
-- No 2019 final dividend proposed
o Short-term priority is the welfare of all CAML employees and
contractors
o Prudent to maintain strong cash position
o Decision to be revisited pending greater clarity on the impact
of the pandemic
Strong 2019 financial and operational performance
-- 2019 full year dividend (interim only) of 6.5 pence (2018: 14.5 pence)
o Equates to a c.4.5% yield on the current share price
-- Group gross revenue [1] of $180.8 million (2018: $204.2
million) and Group net revenue of $171.8 million (2018: $194.4
million)
-- Group profit before tax of $67.8 million (2018: $72.7 million)
-- Sasa 2019 C1 zinc equivalent cash cost of $0.47 per pound (2018: $0.46 per pound)
-- Kounrad 2019 C1 cash cost of $0.52 per pound (2018: $0.54 per pound)
-- Group EBITDA1 of $108.6 million (2018: $125.3 million)
-- EBITDA margin1 of 60% (2018: 61%)
-- EPS from continuing operations of 29.36 cents (2018: 31.33 cents)
-- Group free cash flow1 ('FCF') of $69.8 million (2018: $73.8 million, adjusted)
-- Cash in the bank as at 31 December 2019 of $32.6 million [2] (2018: $39.0 million)
-- Group net debt1 as at 31 December 2019 of $80.2 million
(2018: net debt of $110.3 million)
-- 2019 gross debt repayments of $38.4 million (2018: $38.5 million)
-- Zinc in concentrate production of 23,369 tonnes (2018: 22,532 tonnes)
-- Lead in concentrate production of 29,201 tonnes (2018: 29,388 tonnes)
-- Copper production of 13,771 tonnes (2018: 14,049 tonnes)
-- One lost time injury ('LTI') in 2019 (2018: eight LTIs)
Nigel Robinson, Chief Executive Officer, commented:
"Our 2019 financial results demonstrate the fundamental strength
of the CAML business, which has two low cost base metals operations
that are highly profitable and cash generative. We ended the 2019
financial year in a strong position with $32.6 million cash in the
bank and gross debt reduced to $108.8 million, almost half the
level it was only two years ago when we acquired Sasa.
"Despite that, we are conscious that we announce these results
in very uncertain times, when the short-term outlook for our
health, the commodity markets and the global economy is in much
doubt due to the COVID-19 pandemic. Our top priority during these
times is the welfare of our employees and contractors.
"Both Sasa and Kounrad remain fully operational at present and
we have experienced no disruption to either the production or sales
of our metal products. However, both North Macedonia and Kazakhstan
have now closed their borders to neighbouring countries for the
movement of people, although not trade, due to the escalating
number of cases. Schools have been closed in North Macedonia and
overnight curfews imposed, whilst in Kazakhstan, the cities of
Nur-Sultan and Almaty are in lockdown.
"As you would expect, we have implemented respective government
guidance plus additional stringent procedures to protect the
welfare of our staff at both operations, plus our London-based
headquarters, where our CAML Group team now works remotely. While
both North Macedonia and Kazakhstan currently have relatively few
cases of COVID-19, the numbers are rising daily, and we are seeing
the subsequent escalation of government measures therefore cannot
rule out the potential for increased restrictions as seen
elsewhere.
"Given the current period of uncertainty, we have made the very
difficult decision not to recommend a 2019 final dividend. We are
also reviewing our 2020 capital expenditure budgets with the aim of
identifying near-term savings. Despite the underlying strength of
our business with a strong balance sheet and lowest quartile
industry costs, we feel these measures are necessary to conserve
cash given the unpredictable nature of the current situation, the
potential impact on our operations and the volatility of the
underlying commodity prices to which we are exposed. We remain
confident for the medium and long-term future of our business and
intend to review this tough decision as the year progresses and as
we gain more clarity on the COVID-19 situation and its impact on
our operations and metal prices.
"We fully realise that we have built our business on returns to
shareholders and appreciate that this has been a significant factor
in the loyal investor support that we have enjoyed for many years.
We fully intend to continue that approach in the future and trust
that you will understand the rationale whilst we establish the
impact of the pandemic and support our decision."
Analyst conference call
There will be an analyst conference call on Wednesday 1 April
2020 at 09:30 (BST). The call can be accessed by dialling +44 (0)
20 3003 2666 and quoting the confirmation code 'CAML Full Year
Results'. Additionally, the presentation can be viewed via a live
webcast using the following link
https://webcasting.brrmedia.co.uk/broadcast/5e78b4d9599e401fc24fff1f
. The webcast and the Company's corporate presentation will be
available on the CAML website at www.centralasiametals.com.
For further information contact:
Central Asia Metals Tel: +44 (0) 20 7898 9001
Nigel Robinson, CEO
Gavin Ferrar, CFO
Louise Wrathall, Director of Corporate louise.wrathall@centralasiametals.com
Relations
Peel Hunt (Nominated Advisor and Tel: +44 (0) 20 7418 8900
Joint Broker)
Ross Allister
David McKeown
BMO Capital Markets (Joint Broker) Tel: +44 (0) 20 7236 1010
Thomas Rider
Neil Elliot
Blytheweigh (PR Advisors) Tel: +44 (0) 20 7138 3204 / +44 (0)
7816 924 626
Tim Blythe
Megan Ray
Rachael Brooks
Note to editors:
Central Asia Metals, an AIM-listed UK company based in London,
owns 100% of the Kounrad SX-EW copper project in central Kazakhstan
and 100% of the Sasa zinc-lead mine in North Macedonia.
For further information, please visit: www.centralasiametals.com
and https://twitter.com/CamlMetals
CHAIRMAN'S STATEMENT
Operational and financial efficiency
As we report our results, we are in the midst of the COVID-19
pandemic. The challenges and outlook for our health, our business
and the global economy are changing daily. Our priority during this
time is the welfare of our employees and contractors.
2019 was another good year for CAML. While commodity markets
were challenging with lower year on year metal prices prevailing,
we have managed to maintain strong financial margins and generate
significant profits and cash flow.
Strong 2019 production from our operations led to CAML EBITDA of
$108.6 million and free cash flow of $69.8 million. This has, in
turn, meant we continued to de-leverage and we ended the year with
gross debt of $108.8 million, some $36.1 million lower than
2018.
We have now been listed on the AIM market of the London Stock
Exchange for almost 10 years and have been producing copper at our
Kounrad facility in Kazakhstan for eight years. In the first half
of 2020 we expect to achieve the significant milestone of 100,000
tonnes of copper production from Kounrad. We are proud that this
copper has been produced from what was waste material, and at costs
that are amongst the lowest in the world.
We grew in 2017 by acquiring the Sasa zinc and lead mine in
North Macedonia and we have successfully integrated this operation
into our business. We have made significant advances since we
bought the mine, having made many incremental improvements in
optimising operations and making the recent decision in principle
to change our mining method for the long term.
Indeed, we have since our listing generated revenue of $831.8
million and EBITDA of $502.3 million, and we have returned to
shareholders in dividends $176.4 million or 97.7 pence per share.
Despite this strong long-term performance, we are currently
recommending no final dividend for 2019. While we have a robust
balance sheet and low cost operations, the situation regarding
COVID-19 and its potential impact on the global economy and our
operations remains uncertain and is rapidly changing, so we believe
that, currently, preserving cash is the most prudent approach.
Recognising all our stakeholders
In addition to our supportive shareholders, we recognise that
there are many other stakeholders in our business such as our
employees, the communities which surround our operations, host
governments and suppliers, to name a few.
We have contributed meaningfully to the economies of the
countries in which we operate, employing over 1,000 people across
Kazakhstan and North Macedonia and providing real financial support
and time to important social development programmes. I was
particularly proud of the financial and practical support that we
provided to the Kind Heart Centre for disabled children in
Balkhash, Kazakhstan, as we purchased and refurbished a day care
building for the charity.
Sustainability
2019 has rightly been a year of increased focus on
sustainability and environmental, social and governance ('ESG')
both in the investment community as a whole and in particular in
the extractives' industries. While we have had a site-based
Sustainability Director since 2013, during the year we have
revisited our approaches and policies to keep abreast of current
developments.
In 2019, I took part in an ESG investor roadshow, where we
approached some of our major shareholders to ask what they expect
to see from us in terms of governance and sustainability, and their
important feedback has informed some of the paths that we have
taken.
We will soon be publishing our first standalone Sustainability
Report, which is to cover the activities of 2019 and our general
approach and strategy with regard to sustainability, as we
recognise the growing interest in us providing increased
granularity and numerical metrics in this regard.
Sustainability is a wide ranging and crucial topic and we
believe that this forthcoming report will provide our investors and
other stakeholders with a greater understanding of our efforts and
achievements in this important aspect of our business. We hope that
it will be seen as a big and positive step in our sustainability
journey and no doubt there will be areas for continued improvement
going forwards.
Board changes
I was delighted to announce the appointment of Dr Gillian
Davidson to the CAML Board in November 2019. She is an experienced
company director, whose sustainability knowledge has already been
invaluable in guiding the Company forwards to continually improve
in this important area.
While I remain Chairman of CAML, my role has now transitioned
from an executive position to becoming Non-Executive Chairman and I
have therefore taken a step back from the day to day running of the
Company. This change is part of a long-term succession plan that
was initially implemented when I moved from CEO to Executive
Chairman four years ago. This enabled Nigel Robinson and Gavin
Ferrar to grow into their current roles as CEO and CFO respectively
and I am confident that they are very capable of managing our
business. My efforts going forward will centre on governance and
succession planning to ensure that we continue to plan for the
long-term sustainable future of CAML.
Acknowledgements
I would like to thank the Board of Directors, our senior
management team and all of our employees for their dedication to
our business during 2019. Your efforts do not go unnoticed and we
very much appreciate your hard work.
Nick Clarke, Non-Executive Chairman
CEO STATEMENT
2019 overview
We have enjoyed a successful year at CAML, having delivered
copper production above guidance at Kounrad and zinc and lead
production on target at Sasa, at costs that remain, on average,
within the lowest industry quartile of the copper cost curve.
Sasa produced 23,369 tonnes of zinc in concentrate and 29,201
tonnes of lead in concentrate at a C1 zinc equivalent cash cost of
production of $0.47 per pound, which is comparable to prior
years.
Our Kounrad operations continued to perform well, delivering
copper cathode output of 13,771 tonnes, which exceeded production
guidance. Kounrad's 2019 C1 copper cash cost of production was
$0.52 per pound, demonstrating once again that the operation is one
of the lowest cost in the world.
Despite challenging 2019 commodity markets, due to continuing
trade wars between the USA and China and an increase in zinc and
lead mine supply, our robust operational performance resulted in
gross revenue of $180.8 million and EBITDA of $108.6 million, and
we maintained our strong margin of 60%.
We have continued to deleverage during 2019, having repaid a
further $38.4 million of our debt, plus the remainder of the $12.0
million deferred consideration that was owed to the Sasa vendors.
We ended 2019 in a net debt position of $80.2 million, with cash in
the bank of $32.6 million (including restricted cash). We view this
as a positive development given that CAML had debt of almost $200
million on acquiring Sasa in November 2017. The Group generated
2019 free cash flow of $69.8 million.
Our decision not to recommend a final 2019 dividend was a
difficult one, but we firmly believe that preservation of cash is
key, given the current uncertainty and as yet unquantifiable impact
of the COVID-19 pandemic. We intend to revisit this decision during
2020 as and when there is increased clarity on the impact of the
virus. We have over 1,000 employees and are determined to look
after their welfare as best as we can in the current
environment.
Sustainability
This strong economic and financial performance underpins our
business and we place significant emphasis on ensuring that we are
sustainable for all stakeholders. To demonstrate our credentials in
this area, we will soon be publishing our first sustainability
report, which will provide quantitative data to support material
sustainability topic areas for us and other stakeholders.
We remain focused on safety and are pleased to report a
significant improvement in performance in 2019, with a lost time
injury frequency rate ('LTIFR') of 0.42, which represents a
decrease of 86% from 2018 and compares well with wider industry
standards. Whilst the number of lost time injuries ('LTI') reduced
from eight in 2018 to only one in 2019, we are committed to
achieving a zero-harm workplace.
During 2019, we spent $0.6 million at Sasa and Kounrad
supporting the local communities. This is a vital aspect of what we
do in the areas close to the operations and, as a result, we enjoy
good relations with our neighbours, and we believe we have brought
some real positive change. We established the Kounrad Foundation
for charitable donations in 2018 and, during 2019, we committed to
establishing a similar Sasa foundation to formalise charitable
donations that should be operational during 2020.
We have completed construction of our new tailings storage
facility 4 ('TSF4') in North Macedonia, which is of downstream
construction and has been fully lined in accordance with industry
best practice. Our facilities have been reviewed by external expert
consultants and we have complied fully with all disclosure
requirements in the 2019 Investor Mining & Tailings Safety
Initiative, which is governed through a steering committee chaired
by the Church of England Pensions Board.
Sasa
At Sasa, we have during the year identified many opportunities
for incremental improvement, such as using 3D technology as a basis
for our mining, geological and ventilation work. We are in the
process of installing underground internet to enable better
analysis of availability and utilisation of equipment, plus
improved communications and health and safety. At surface, we have
installed two new crushers during the year, which should allow us
to comfortably increase production to a run rate of approximately
850,000 tonnes per annum.
In 2019, our Life of Mine study primarily focussed on whether
Sasa's mining method should be changed from the current sub-level
caving operation to a more selective cut and fill stoping, and the
Board has made the decision in principle to make this transition.
This should optimise our production while allowing the storage of
potentially over 40% of our tailings underground. Detailed
technical study work will continue throughout 2020.
Kounrad
During the year at Kounrad, leaching operations performed well,
as did the solvent extraction electrowinning ('SX-EW') processing
facilities which achieved availability of over 96%. We continued to
transition the leaching operations from the Eastern Dumps to the
Western Dumps and during 2019, 68% of the copper produced came from
the west. This trend is expected to continue over the next three
years by which time all production will come from the Western
Dumps.
Capital expenditure remained very low at $1.6 million,
comprising some replacement anodes and cathodes, plus increasing
our footprint of leaching infrastructure and collector trenches
around the Western Dumps.
Market performance
At the end of 2019, the CAML share price closed up 1.4% at
GBP2.20 and the FTSE AIM All Share/Basic Resources Index performed
in a similar manner, gaining 1.8% during the year. The average
prices received for the commodities that CAML produces were lower
than those received in 2018. The CAML share price performance was
also affected by investor concerns regarding the liquidity of small
cap stocks in general and the economic uncertainty caused by
protracted Brexit negotiations and the associated volatile exchange
rates for Sterling. In December 2019, both the economy and the CAML
share price responded favourably to the UK General Election
result.
Outlook
The outlook for 2020 is uncertain given the severity of the
COVID-19 pandemic and our immediate priority is the welfare of our
employees and contractors.
Currently, we reiterate our previously announced production
guidance for Sasa, which has increased year-on-year to between
23,000 and 25,000 tonnes of zinc and between 30,000 and 32,000
tonnes of lead, generated from higher throughput levels of between
825,000 tonnes and 850,000 tonnes. Likewise, we maintain our
Kounrad copper production guidance of 12,500 to 13,500 tonnes. We
are facing some headwinds due to the current weak commodity prices
exacerbated by COVID-19, coupled with increased 2020 global zinc
and lead treatment charges.
We have to date encountered no disruption to either the
production or sale of our copper or our zinc and lead concentrates,
but we are very conscious that the situation could change swiftly
in the coming weeks and months. We will continue to monitor the
COVID-19 position daily in both countries of operation and respond
to the threats accordingly to protect both our employees and our
business interests.
Throughout this uncertainty, we will continue to maintain strong
health and safety and environmental standards at both of our
operations and we will strengthen our relationships with the local
communities by also working closely with them on overcoming the
difficulties posed by the COVID-19 pandemic.
Nigel Robinson, Chief Executive Officer
FINANCIAL REVIEW
OVERVIEW
CAML has reported another strong set of financial results, which
demonstrate consistent operational performance and effective cost
control. The Group generated an EBITDA margin of 60%, which is
broadly consistent with the prior year notwithstanding a period of
weak commodity prices. The Company has continued to deleverage,
having repaid debt of $38.4 million during the year.
The Group generated 2019 EBITDA of $108.6 million (2018: $125.3
million), representing a decrease of 13% from the prior year due to
the decline in commodity prices. The EBITDA margin however remained
broadly stable at 60% (2018: 61%), which reflects the Group's
ability to maintain low costs across the operations as well as a
reduction in corporate administrative expenses.
EPS from continuing operations was 29.36 cents (2018: 31.33
cents), only 6% lower than the previous year, reflecting well
controlled operational and corporate costs.
The Company generated $69.8 million (2018 adjusted: $73.8
million) of free cash flow. During 2019, debt repayments were $38.4
million (2018: $38.5 million), ending the year with net debt of
$80.2 million (2018: $110.3 million).
Sasa's 2019 EBITDA was $59.6 million (2018: $71.2 million), with
a margin of 60% (2018: 64%). Zinc and lead prices declined during
2019, although continued cost control has ensured that this mine
continues to operate at approximately the 25(th) percentile of
global producers on a C1 zinc equivalent cash cost basis.
Kounrad's 2019 EBITDA was $61.7 million (2018: $66.8 million),
with a margin of 76% (2018: 72%). EBITDA margin increased despite
the decline in copper price, due to effective cost control and a
weakening of the local currency during the year. This enabled the
project to continue producing copper at costs well within the
lowest industry quartile.
GOING CONCERN
The Group meets its day to day working capital requirements
through its profitable and cash generative operations at Kounrad
and Sasa. The Group manages liquidity risk by maintaining adequate
committed borrowing facilities and the Group has substantial cash
balances as at 31 December 2019. The price of copper, zinc and lead
have been impacted in 2020 by concerns over the outbreak of the
COVID-19 pandemic and this will impact on Group revenue for the
year ended 31 December 2020. Whilst there has been little impact of
COVID-19 to the Group's operations at present, owing to the
volatility of the commodity price environment, uncertainty
regarding the future impact on operations and the uncertainty
surrounding implementation of government policies to manage the
outbreak it is difficult to determine and quantify the financial
impact there may be on the business going forward. The CAML Board
has considered and debated a range of substantial possible
scenarios on the Group's operations, financial position and
forecasts covering a period of at least the next 12 months
considering potential impacts associated with a) operational
disruption that may be caused by restrictions applied by
governments, illness amongst the workforce and disruption to supply
chain and offtake arrangements; b) market volatility in respect of
commodity prices; c) availability of existing credit facilities.
Further information on these forecasts is included in note 2.
After review of these 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 consolidated financial statements. However, at the date of
approval of the financial statements, the potential future impact
of COVID-19 indicate the existence of a material uncertainty which
may cast significant doubt about the Group's ability to continue as
a going concern.
INCOME STATEMENT
Profit before tax for the year was $67.8 million (2018: $72.7
million), a decrease of 7%. This was primarily as a result of
decreased revenue due to falling commodity prices as low costs of
production were maintained.
Revenue
The Group generated 2019 gross revenue of $180.8 million (2018:
$204.2 million), which is reported after deduction of treatment
charges but before deductions of off-taker's fees, penalties, assay
adjustments and silver purchases from the silver stream. Net
revenue under IFRS post these deductions was $171.7 million (2018:
$194.4 million).
Sasa
Operationally, Sasa performed strongly with a total of 19,697
tonnes (2018: 18,792 tonnes) of payable zinc in concentrate and
27,875 tonnes (2018: 27,878 tonnes) of payable lead in concentrate
sold during the year.
The zinc price received declined by 11% to an average of $2,497
per tonne (2018: $2,819 per tonne) and, for lead, the price
declined by 8% to an average of $2,001 per tonne (2018: $2,170 per
tonne), leading to a reduction in gross revenue generated from the
mine. Revenue also declined due to higher treatment charges during
the year which increased by $4.1 million to $13.6 million (2018:
$9.5 million), which reflects the change in market conditions for
zinc concentrates in particular. This trend is expected to continue
into 2020 with a further significant increase in treatment charges
expected for zinc and lead. After deduction of treatment charges,
Sasa generated gross revenue of $99.1 million (2018: $111.5
million).
Zinc and lead concentrate sales agreements have been arranged
with Traxys through to 31 December 2022 for 100% of Sasa
production. Sasa has an existing silver streaming agreement with
Osisko Gold Royalties whereby Sasa receives approximately $5 per
ounce from its silver production for the life of the mine.
Kounrad
A total of 13,100 tonnes (2018: 13,695 tonnes) of copper cathode
from Kounrad was sold as part of the Company's off-take
arrangements with Traxys which has been fixed through to October
2022. The commitment is for a minimum of 95% of Kounrad's annual
production. A further 500 tonnes (2018: 386 tonnes) were sold
locally. Total Kounrad copper sales were 13,600 tonnes (2018:
14,081 tonnes).
Kounrad revenue declined due to an 8% decrease in the average
copper price received, which was $6,011 per tonne in 2019 (2018:
$6,518 per tonne), coupled with lower copper production and sales.
This generated gross revenue for Kounrad of $81.7 million (2018:
$92.6 million). During 2019 the off-taker's fee for Kounrad was
$2.4 million (2018: $2.5 million).
COST OF SALES
Group 2019 cost of sales was $73.1 million (2018: $76.4
million), consisting $52.8 million (2018: $53.3 million) of
Sasa-related costs and $20.3 million of Kounrad-related costs
(2018: $23.1 million). This includes depreciation and amortisation
charges during the period of $29.5 million (2018: $33.4 million),
which reduced as a result of certain assets being fully depreciated
at the end of last year.
Sasa
Sasa's cost of sales for the year was lower than the previous
year at $52.8 million (2018: $53.3 million). These costs reflect a
lower depreciation and amortisation charge as explained above of
$25.1 million (2018: $27.7 million), and lower concession fees
amounting to $2.6 million (2018: $2.8 million). This tax is
calculated at the rate of 2% on the value of metal recovered during
the year.
Kounrad
Kounrad cost of sales for the year was $20.3 million (2018:
$23.1 million). The decrease compared with 2018 was partly due to a
reduction in mineral extraction tax paid ('MET'). MET is charged by
the Kazakhstan authorities at the rate of 5.7% (2018: 5.7%) on the
value of metal recovered during the year. MET for the year was $4.7
million (2018: $5.2 million) and a reduction resulted from the
lower average copper price received and reduced copper sales during
the year.
During the year, the Kazakhstan Tenge significantly depreciated
against the US Dollar, which resulted in a benefit for the cost
base. The average exchange rate for the year was 383 KZT/USD (2018:
345 KZT/USD), with the Kazakhstan Tenge being worth on average 10%
less in US Dollar terms in 2019 compared to 2018. Certain
production related costs have risen such as additional costs
incurred for increased reagents such as Escaid, and increased coal
consumption due to a colder than usual Q2 2019. Kounrad also agreed
an average pay rise of 6% for its employees.
Kounrad depreciation and amortisation charges were $4.4 million
(2018: $6.3 million) and reduced primarily due to the Tenge
devaluation.
C1 CASH COST OF PRODUCTION
C1 cash cost of production is a standard metric used in the
mining industry to allow comparison across the sector. In line with
the Wood Mackenzie approach, CAML calculates C1 cash cost by
including all direct costs of production at Sasa and Kounrad
(power, production labour and materials) as well as local
administrative expenses and realisation charges such as freight and
treatment charges. Royalties and depreciation and amortisation
charges are excluded from the C1 cash cost.
C1 cash cost
2019 2018
Sasa zinc equivalent C1 cash cost, $/lb 0.47 0.46
-------- --------
Sasa RoM unit cost, $/t 40.3 38.8
-------- --------
Konrad copper C1 cash cost, $/lb 0.52 0.54
-------- --------
Cu equivalent production, t 31,233 31,459
-------- --------
Cu equivalent C1 costs, $/lb 0.94 0.87
-------- --------
Fully inclusive, $/lb 1.50 1.64
-------- --------
Sasa
Sasa's C1 cash cost of zinc equivalent production for 2019 was
$0.47 per pound (2018: $0.46 per pound) which is at the lower end
of the second quartile of the zinc industry cost curve. This
broadly similar C1 cash cost figure reflects higher treatment
charges during the year compared to 2018 against higher zinc
production compared to 2018. Certain production related costs have
increased compared to 2018, such as an increase in payroll costs
due to an agreed average 5% pay-rise for employees. This is
reflected in on-site costs that amount to $40.3 per tonne of ore
mined (2018: $38.8 per tonne). The 2018 on-site costs have been
updated to include Sasa related costs incurred by other Group
entities.
Kounrad
Kounrad's 2019 C1 cash cost of production remains firmly in the
lowest quartile of the industry cost curve for copper production at
$0.52 per pound (2018: $0.54 per pound). The decrease in C1 cash
cost is largely due to tight cost control and as a result of the
devaluation of the Kazakhstan Tenge. Approximately 70% of the C1
cash cost base in Kazakhstan is denominated in Tenge. The average
C1 cash cost since production commenced in 2012 is $0.55 per
pound.
Group
CAML reports its Group C1 cash cost on a copper equivalent basis
incorporating the production costs at Sasa. The Group's 2019 C1
copper equivalent cash cost was $0.94 per pound (2018: $0.87 per
pound). This number is calculated based on Sasa's annual zinc and
lead production, which equates to 17,462 copper equivalent tonnes
(2018: 17,410 copper equivalent tonnes), based on 2019 average
commodity prices achieved, added to Kounrad's copper production of
13,771 tonnes (2018: 14,049 tonnes).
The Group C1 cash cost on a copper equivalent basis has
increased largely as a result of higher production costs at Sasa,
including treatment charges, and lower copper equivalent production
units as a result of lower copper production.
CAML also reports a fully inclusive cost that includes capital
expenditure, local taxes including MET and concession fees,
interest on loans and corporate overheads associated with the Sasa
and Kounrad projects. The Group's fully inclusive copper equivalent
unit cost for the year was lower than 2018 at $1.50 per pound
(2018: $1.64 per pound). This was primarily due to lower capital
expenditure of $11.0 million (2018: $16.7 million) as a result of
reduced costs on the construction of Sasa's TSF4. The Group also
incurred lower finance costs given the reducing debt balance and
lower share-based payment charges recognised within corporate
overheads.
ADMINISTRATIVE EXPENSES
During the year, administrative expenses were lower at $18.3
million (2018: $24.0 million), largely due to a reduced share-based
payment charge of $1.1 million (2018: $4.9 million). Options
granted in 2019 had a change in the vesting date and vesting
performance conditions compared to previous year grants, plus there
was a one-off issue awarded upon the successful acquisition of
Sasa, which vested on issue amounting to $1.9 million in the
previous year.
FINANCE COSTS
The Group incurred lower finance costs of $11.2 million (2018:
$15.0 million) given the reducing debt balance.
DISCONTINUED OPERATIONS
The Group continues to report the results of the Shuak and
Copper Bay entities within discontinued operations. These assets
were fully written off in prior years. In February 2020, the Group
reduced its effective interest in Ken Shuak LLP from 80% to 10%.
The Group will not be required to contribute towards future costs
of the project.
BALANCE SHEET
During the year, there were additions to property, plant and
equipment of $12.1 million (2018: $15.0 million). The additions
include $1.8 million at Kounrad, primarily sustaining capital
expenditure (2018: $1.4 million), $7.5 million Sasa sustaining
capital expenditure (2018: $6.8 million), and costs associated with
the construction of TSF4 amounting to $1.9 million (2018: $6.6
million). TSF4 was completed during 2019 with a capacity of six to
seven years. Capital expenditure for TSF4 totalled $16.0 million
(pre and post CAML ownership). The costs of TSF4 will be
transferred out of asset under construction during 2020 following
receipt of the final operating permits.
Due to a change in accounting policy following the adoption of
IFRS 16 Leases, a further $0.9 million has been capitalised in
respect of finance leases, which primarily relate to the leasing of
office space in London.
A full audit of Sasa's underground mobile fleet was undertaken
and a decision was made during Q4 2019 to undergo a phased process
of replacing the current underground mobile plant with a new
optimised fleet. The initial component of this replacement process
will include the purchase of six new units in 2020, and three
additional units will also be purchased each year in 2021, 2022 and
2023.
As at 31 December 2019, current trade and other receivables were
$6.3 million (31 December 2018: $10.1 million) and non-current
trade and other receivables were $3.4 million (31 December 2018:
$2.1 million). Current trade and other receivables as at 31
December 2019, include trade receivables from the off-take sales of
$1.5 million (2018: $3.7 million) and $2.2 million in relation to
prepayments (2018: $1.5 million). As at 31 December 2019, a total
of $3.1 million (2018: $2.8 million) of VAT receivable was still
owed to the Group by the Kazakhstan authorities. Recovery is still
expected through the local sales of cathode to offset these
liabilities and a decision has been taken not to write off this
balance.
As at 31 December 2019, current trade and other payables were
$12.3 million (31 December 2018: $20.9 million). The prior year
balance included $6.5 million in relation to deferred consideration
payable for the Sasa acquisition which was settled during 2019. In
April 2019, a settlement agreement with the previous owners of CMK
Resources Limited was finalised in respect of the $5.9 million
withholding tax liability in North Macedonia paid in the prior
year. The liability related to activities of CMK Europe prior to
CAML's ownership. The settlement amounted to $5.5 million and
accordingly, during 2019, CAML paid only the balancing $6.5 million
due in respect of the $12.0 million deferred consideration owed to
the previous owners.
During 2019, instalments of $20.2 million (2018: $25.7 million)
were paid towards the Group's 2019 corporate income tax liability
of which $3.9 million was a non-cash payment offset against VAT
receivable. The Group also received refunds of $1.4 million for
corporate income tax overpaid in the prior year.
As at 31 December 2019, current and non-current borrowings were
$39.3 million and $69.5 million respectively (2018: $38.4 million
and $106.5 million). The reduction of $36.1 million reflects debt
repaid during the year of $38.4 million, drawdowns on overdrafts of
$0.9 million and finance charges of $1.4 million unwinding directly
attributable fees. The debt financing agreement with Traxys Europe
S.A. has a final maturity date of 4 November 2022. The monthly
repayment schedule is $3.2 million and interest is payable at LIBOR
plus 4.75% and reduced to LIBOR plus 4.00% with effect from 27
March 2020 . Security is provided over the shares in CAML
Kazakhstan BV, certain bank accounts and the offtake agreements
between Traxys and each operation. The debt is subject to financial
covenants which include the monitoring of gearing, debt service
ratios, and leverage ratios with which the Company has
complied.
On 31 December 2019, the Group had cash of $32.6 million (31
December 2018: $39.0 million) including restricted cash of $4.0
million (31 December 2018: $4.4 million).
CASH FLOWS
The strong operational performance of Sasa and Kounrad and the
associated low costs of production resulted in robust cash flows
for the Group during the year, with cash generated from operations
of $105.1 million (2018: $130.1 million).
Taking into account capital expenditure, CAML's free cash flow
for 2019 was $69.8 million. (2018 adjusted: $73.8 million). During
the year, $32.2 million (2018: $39.6 million) was returned to
shareholders as the final 2018 dividend and 2019 interim
dividend.
During the year, Group debt of $38.4 million was repaid (2018:
$38.5 million) plus interest paid totalling $9.4 million (2018:
$14.5 million).
$3.0 million of North Macedonia corporate income tax was paid
during the year (2018: $11.1 million) in addition to a $3.9 million
non-cash payment offset against VAT receivable. Payments made
during 2019 included $2.2 million towards the 2019 corporate income
tax liability and $0.8 million of 2018 corporate income tax paid in
April 2019. The Group also received refunds of $1.4 million for
North Macedonia corporate income tax overpaid in the prior
year.
$13.3 million of Kazakhstan corporate income tax was paid during
2019 (2018: $14.7 million). Payments made during 2019 included
$12.5 million towards the 2019 corporate income tax liability and
the final $0.8 million of 2018 corporate income tax paid in April
2019.
DIVID
The final dividend for the year ended 31 December 2018 of 8.0
pence per Ordinary Share was paid to shareholders on 20 May 2019
amounting to $18.2 million. On 17 September 2019, the Company
announced an interim dividend for the year ended 31 December 2019
of 6.5 pence per Ordinary Share and this was paid to shareholders
on 25 October 2019 amounting to $14.0 million.
In light of COVID-19, the CAML Board has taken the decision not
to recommend a 2019 final dividend. This is due to the currently
unquantifiable impact of the pandemic, and the Board's current
priority is to preserve the Company's cash balances. Total
dividends for the year therefore relate solely to the interim
dividend and amount to 6.5 pence. The total amount returned to
shareholders in dividends and share buy-backs since the 2010 IPO
listing remains unchanged since the H1 2019 results at $176.4
million.
Gavin Ferrar, Chief Financial Officer
Non-IFRS financial measures
The following non-IFRS alternative performance financial
measures are used in this report:
EBITDA
EBITDA is a valuable indicator of the Group's ability to
generate liquidity and is frequently used by investors and analysts
for valuation purposes. It is also a non-IFRS financial measure
which is reconciled as follows:
2019 2018
$'000 $'000
--------------------------------------------- --------- ---------
Profit for the year 51,937 46,585
Plus/(less):
Income tax expense 15,911 18,822
Depreciation and amortisation 30,080 33,342
Foreign exchange (gain)/loss (377) 3,879
Other income (212) (359)
Other expenses 481 1,030
Finance income (336) (264)
Finance costs 11,153 14,999
(Profit)/loss from discontinued operations (53) 7,274
--------------------------------------------- --------- ---------
EBITDA 108,584 125,308
--------------------------------------------- --------- ---------
Gross revenue
Gross revenue is presented as the total revenue received from
sales of all commodities after deducting the directly attributable
treatment charges associated with the sale of zinc, lead and
silver. This figure is presented as it reflects the total revenue
received from the smelters in respect of the zinc and lead
concentrate.
Net debt
Net debt is calculated as the total of the borrowings held with
Traxys Europe S.A. and bank overdrafts less the cash and cash
equivalents held at the end of the year. This balance does not
include the restricted cash balance of $4.0 million.
31 Dec 19 31 Dec 18
$'000 $'000
---------------------------- ----------- -----------
Borrowings 108,768 144,949
Cash and cash equivalents (28,566) (34,649)
---------------------------- ----------- -----------
Net debt 80,202 110,300
---------------------------- ----------- -----------
Free cash flow
Free cash flow is a non-IFRS financial measure of the cash from
operations less the capital expenditure and is presented as
follows:
2019 2018
$'000 $'000
-------------------------------------------------- ---------- ----------
Net cash generated from operations 80,853 83,788
Less: Purchase of property, plant and equipment (11,042) (15,019)
Less: Purchase of intangible assets (21) (907)
-------------------------------------------------- ---------- ----------
Free cash flow 69,790 67,862
-------------------------------------------------- ---------- ----------
Add: Sasa withholding tax paid related to
period prior to ownership 5,900
----------
Free cash flow adjusted 73,762
----------
FINANCIAL INFORMATION
Consolidated Income Statement
for the year ended 31 December
Group
2019 2018
Note $'000 $'000
----------------------------------------------------------- ----- --------- ----------
Continuing operations
Revenue 6 171,748 194,379
----------------------------------------------------------- ----- --------- ----------
Presented as:
Gross revenue 6 180,815 204,152
Less:
Silver stream purchases 6 (5,556) (6,023)
Off-take buyers' fees 6 (3,511) (3,750)
----------------------------------------------------------- ----- --------- ----------
Revenue 171,748 194,379
----------------------------------------------------------- ----- --------- ----------
Cost of sales 7 (73,098) (76,418)
Distribution and selling costs 8 (1,823) (2,045)
----------------------------------------------------------- ----- --------- ----------
Gross profit 96,827 115,916
----------------------------------------------------------- ----- --------- ----------
Administrative expenses 9 (18,323) (23,950)
Other expenses 10 (481) (1,030)
Other income 212 359
Foreign exchange gain/(loss) 377 (3,879)
----------------------------------------------------------- ----- --------- ----------
Operating profit 78,612 87,416
----------------------------------------------------------- ----- --------- ----------
Finance income 14 336 264
Finance costs 15 (11,153) (14,999)
Profit before income tax 67,795 72,681
Income tax 16 (15,911) (18,822)
----------------------------------------------------------- ----- --------- ----------
Profit for the year from continuing operations 51,884 53,859
----------------------------------------------------------- ----- --------- ----------
Discontinued operations
Profit/(loss) for the year from discontinued operations 21 53 (7,274)
----------------------------------------------------------- ----- --------- ----------
Profit for the year 51,937 46,585
----------------------------------------------------------- ----- --------- ----------
Profit attributable to:
* Non-controlling interests 60 (1,439)
* Owners of the parent 51,877 48,024
----------------------------------------------------------- ----- --------- ----------
51,937 46,585
----------------------------------------------------------- ----- --------- ----------
Earnings/(loss) per share from continuing and discontinued
operations attributable to owners of the parent during $ cents $ cents
the year (expressed in cents per share)
----------------------------------------------------------- ----- --------- ----------
Basic earnings/(loss) per share
From continuing operations 17 29.36 31.33
From discontinued operations 0.03 (4.12)
----------------------------------------------------------- ----- --------- ----------
From profit for the year 29.39 27.21
----------------------------------------------------------- ----- --------- ----------
Diluted earnings/(loss) per share
From continuing operations 17 28.54 30.65
From discontinued operations 0.03 (4.12)
----------------------------------------------------------- ----- --------- ----------
From profit for the year 28.57 26.53
----------------------------------------------------------- ----- --------- ----------
Total distribution and selling costs shown above previously
recognised as a deduction from gross revenue have been reclassified
below revenue in the current year with the comparative reclassified
for comparability.
Consolidated Statement of Comprehensive Income
Group
2019 2018
for the year ended 31 December Note $'000 $'000
-------------------------------------------------- ---- --------- ---------
Profit for the year 51,937 46,585
Other comprehensive (expense)/income:
Items that may be subsequently reclassified to
profit or loss:
Currency translation differences 26 (11,019) (10,288)
Foreign exchange on intercompany loan - (13,020)
-------------------------------------------------- ---- --------- ---------
Other comprehensive (expense)/income for the
year, net of tax (11,019) (23,308)
-------------------------------------------------- ---- --------- ---------
Total comprehensive income for the year 40,918 23,277
-------------------------------------------------- ---- --------- ---------
Attributable to:
- Non-controlling interests 60 (1,439)
- Owners of the parent 40,858 24,716
-------------------------------------------------- ---- --------- ---------
Total comprehensive income for the year 40,918 23,277
-------------------------------------------------- ---- --------- ---------
Total comprehensive income/(expense) attributable
to equity shareholders arises from:
- Continuing operations 40,865 30,551
- Discontinued operations 53 (7,274)
-------------------------------------------------- ---- --------- ---------
40,918 23,277
-------------------------------------------------- ---- --------- ---------
Statements of Financial Position Registered no. 5559627
as at 31 December
Group Company
2019 2018 2019 2018
Note $'000 $'000 $'000 $'000
----------------------------------------- ------ ---------- ----------- ------------- --------------
Assets
Non-current assets
Property, plant and equipment 18 406,387 429,601 838 290
Intangible assets 19 58,676 61,311 - 3
Deferred income tax asset 36 266 - - -
Investments 20 - - 5,491 5,491
Other non-current receivables 22 3,389 2,120 - -
----------------------------------------- ------ ---------- ----------- ------------- --------------
468,718 493,032 6,329 5,784
----------------------------------------- ------ ---------- ----------- ------------- --------------
Current assets
Inventories 23 7,283 7,529 - -
Trade and other receivables 22 6,276 10,078 342,083 374,192
Restricted cash 24 4,013 4,376 3,824 4,222
Cash and cash equivalents (excluding
bank overdrafts) 24 28,566 34,649 17,834 15,297
----------------------------------------- ------ ---------- ----------- ------------- --------------
46,138 56,632 363,741 393,711
----------------------------------------- ------ ---------- ----------- ------------- --------------
Assets of disposal group classified
as held for sale 21 219 61 - -
----------------------------------------- ------ ---------- ----------- ------------- --------------
46,357 56,693 363,741 393,711
----------------------------------------- ------ ---------- ----------- ------------- --------------
Total assets 515,075 549,725 370,070 399,495
----------------------------------------- ------ ---------- ----------- ------------- --------------
Equity attributable to owners of
the parent
Ordinary Shares 25 1,765 1,765 1,765 1,765
Share premium 25 191,184 191,184 191,184 191,184
Treasury shares 25 (6,526) (6,526) (6,526) (6,526)
Currency translation reserve 26 (100,473) (89,454) - -
Retained earnings 250,480 230,281 70,086 63,127
336,430 327,250 256,509 249,550
----------------------------------------- ------ ---------- ----------- ------------- --------------
Non-controlling interests (1,324) (1,384) - -
----------------------------------------- ------ ---------- ----------- ------------- --------------
Total equity 335,106 325,866 256,509 249,550
----------------------------------------- ------ ---------- ----------- ------------- --------------
Liabilities
Non-current liabilities
Borrowings 30 69,473 106,549 69,473 106,549
Silver streaming commitment 29 20,755 22,905 - -
Deferred income tax liability 36 26,089 27,670 - -
Lease liability 748 - 723 -
Provisions for other liabilities
and charges 31 9,027 5,069 - -
126,092 162,193 70,196 106,549
----------------------------------------- ------ ---------- ----------- ------------- --------------
Current liabilities
Borrowings 30 39,295 38,400 38,400 38,400
Silver streaming commitment 29 2,140 2,263 - -
Trade and other payables 28 12,305 20,916 4,965 4,996
Provisions for other liabilities
and charges 31 46 47 - -
----------------------------------------- ------ ---------- ----------- ------------- --------------
53,786 61,626 43,365 43,396
----------------------------------------- ------ ---------- ----------- ------------- --------------
Liabilities of disposal group classified
as held for sale 21 91 40 - -
----------------------------------------- ------ ---------- ----------- ------------- --------------
53,877 61,666 43,365 43,396
----------------------------------------- ------ ---------- ----------- ------------- --------------
Total liabilities 179,969 223,859 113,561 149,945
----------------------------------------- ------ ---------- ----------- ------------- --------------
Total equity and liabilities 515,075 549,725 370,070 399,495
----------------------------------------- ------ ---------- ----------- ------------- --------------
Consolidated Statement of Changes in Equity
for the year ended 31 December
Non-controlling
Currency interests
Attributable to Ordinary Share Treasury translation Retained Total $'000 Total
owners Shares premium shares reserve earnings $'000 equity
of the parent Note $'000 $'000 $'000 $'000 $'000 $'000
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Balance as at 1
January
2018 1,765 191,184 (7,780) (79,166) 231,241 337,244 55 337,299
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Profit/(loss) for
the year - - - - 48,024 48,024 (1,439) 46,585
Other
comprehensive
expense -
currency
translation
differences 26 - - - (10,288) - (10,288) - (10,288)
Foreign exchange
on
intercompany loan - - - - (13,020) (13,020) - (13,020)
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Total
comprehensive
income/(expense) - - - (10,288) 35,004 24,716 (1,439) 23,277
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Transactions with
owners
Share based
payments 9 - - - 4,904 4,904 - 4,904
Disposal of Zuunmod
UUL LLC - - - - (66) (66) - (66)
Sales of EBT shares - - 55 - - 55 - 55
Exercise of options 27 - - 1,199 - (1,199) - - -
Dividends 34 - - - - (39,603) (39,603) - (39,603)
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Total
transactions
with owners,
recognised
directly in
equity - - 1,254 - (35,964) (34,710) - (34,710)
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Balance as at 31
December 2018 1,765 191,184 (6,526) (89,454) 230,281 327,250 (1,384) 325,866
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Profit/(loss) for
the year - - - - 51,877 51,877 60 51,937
Other
comprehensive
expense -
currency
translation
differences 26 - - - (11,019) - (11,019) - (11,019)
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Total
comprehensive
income/(expense) - - - (11,019) 51,877 40,858 60 40,918
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Transactions with
owners
Share based
payments 9 - - - - 1,085 1,085 - 1,085
Exercise of options 27 - - - - (599) (599) - (599)
Dividends 34 - - - - (32,164) (32,164) - (32,164)
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Total
transactions
with owners,
recognised
directly in
equity - - - - (31,678) (31,678) - (31,678)
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Balance as at 31
December 2019 1,765 191,184 (6,526) (100,473) 250,480 336,430 (1,324) 335,106
------------------- -------- ----------- --------- --------- ------------ ------------ ------------ ---------------- ------------
Company Statement of Changes in Equity
for the year ended 31 December
Ordinary Share Treasury Retained Total
Shares premium shares earnings equity
Company Note $'000 $'000 $'000 $'000 $'000
---------------------------------- ------- -------- -------- -------- --------- -----------
Balance as at 1 January 2018 1,765 191,184 (7,780) 56,195 241,364
---------------------------------- ------- -------- -------- -------- --------- -----------
Profit for the year - - - 42,830 42,830
---------------------------------- ------- -------- -------- -------- --------- -----------
Total comprehensive income - - - 42,830 42,830
---------------------------------- ------- -------- -------- -------- --------- -----------
Transactions with owners
Share based payments 9 - - - 4,904 4,904
Sale of EBT shares - - 55 - 55
Exercise of options 27 - - 1,199 (1,199) -
Dividends 34 - - - (39,603) (39,603)
---------------------------------- ------- -------- -------- -------- --------- -----------
Total transactions with owners,
recognised directly in equity - - 1,254 (35,898) (34,644)
---------------------------------- ------- -------- -------- -------- --------- -----------
Balance as at 31 December 2018 1,765 191,184 (6,526) 63,127 249,550
---------------------------------- ------- -------- -------- -------- --------- -----------
Profit for the year - - - 38,637 38,637
---------------------------------- ------- -------- -------- -------- --------- -----------
Total comprehensive income - - - 38,637 38,637
---------------------------------- ------- -------- -------- -------- --------- -----------
Transactions with owners
Share based payments 9 - - - 1,085 1,085
Exercise of options 27 - - - (599) (599)
Dividends 34 - - - (32,164) (32,164)
---------------------------------- ------- -------- -------- -------- --------- -----------
Total transactions with owners,
recognised directly in equity - - - (31,678) (31,678)
---------------------------------- ------- -------- -------- -------- --------- -----------
Balance as at 31 December 2019 1,765 191,184 (6,526) 70,086 256,509
---------------------------------- ----------------- -------- -------- --------- -----------
Consolidated Statement of Cash Flows
for the year ended 31 December
2019 2018
Note $'000 $'000
---------------------------------------------- ----- ----- -------- --------- ----------
Cash flows from operating activities
Cash generated from operations 32 105,143 130,131
Interest paid (9,445) (14,510)
Corporate income tax paid (net of refunds) (14,845) (31,833)
Cash flow generated from operating activities 80,853 83,788
------------------------------------------------------------ -------- --------- ----------
Cash flows from investing activities
Balancing receipt from CMK Group acquisition - 3,300
Purchase of property, plant and equipment 18 (11,042) (15,019)
Proceeds from sale of property, plant
and equipment 18 233 -
Deferred consideration paid (6,500) -
Purchase of intangible assets 19 (21) (907)
Interest received 14 336 264
Decrease/(increase) in restricted cash 24 363 (1,564)
Net cash used in investing activities (16,631) (13,926)
------------------------------------------------------------ -------- --------- ----------
Cash flows from financing activities
Proceeds from borrowings 30 - 60,809
Repayment of borrowings 30 (38,400) (99,265)
Dividends paid to owners of the parent 34 (32,164) (39,603)
Settlement on exercise of share options 27 (589) (21)
Net cash used in financing activities (71,153) (78,080)
------------------------------------------------------------ -------- --------- ----------
Effect of foreign exchange gain/(loss)
on cash and cash equivalents 1 (248)
Net decrease in cash and cash equivalents (6,930) (8,466)
Cash and cash equivalents at the beginning
of the year 24 34,707 43,173
------------------------------------------------------------ -------- --------- ----------
Cash and cash equivalents at the end
of the year 24 27,777 34,707
------------------------------------------------------------ -------- --------- ----------
Cash and cash equivalents at 31 December 2019 includes cash at
bank and on hand included in assets held for sale of $106,000 (31
December 2018: $58,000) (note 21) and bank overdrafts of $895,000
(2018: nil) (note 30). The Consolidated Statement of Cash Flows
does not include the restricted cash balance of $4,013,000 (2018:
$4,376,000) (note 24).
The notes below are an integral part of the consolidated
financial information.
Notes to the Financial Information
for the year ended 31 December 2019
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 North
Macedonia and a parent holding company based in the United Kingdom
('UK').
The Group's principal business activities are the production of
copper cathode at its Kounrad operations in Kazakhstan and the
production of lead, zinc and silver at its Sasa operations in North
Macedonia. CAML owns 100% of the Kounrad SX-EW copper project in
Kazakhstan and 100% of the Sasa zinc-lead mine in North Macedonia.
The Company also owns two further operations which are currently
held for sale and this includes 80% of the Shuak copper exploration
property in northern Kazakhstan and a 75% equity interest in Copper
Bay Limited. See note 21 for details.
CAML is a public limited company, which is listed on the AIM
market of the London Stock Exchange and incorporated and domiciled
in England, UK. The address of its registered office is Masters
House, 107 Hammersmith Road, London, W14 0QH. The Company's
registered number is 5559627.
2. Summary of significant accounting policies
Basis of preparation of the Financial Information
The financial information set out herein does not constitute the
Group's statutory financial statements for the year ended 31
December 2019, but is derived from the Group's audited financial
statements. The auditors have reported on the 2019 financial
statements and their reports were unqualified and did not contain
statements under s498(2) or (3) Companies Act 2006 but did contain
a material uncertainty in relation to COVID-19. The 2019 Annual
Report was approved by the Board of Directors on 31 March 2020, and
will be mailed to shareholders in April 2020. The financial
information in this statement is audited but does not have the
status of statutory accounts within the meaning of Section 434 of
the Companies Act 2006.
The Group's consolidated financial statements, which form part
of the 2019 Annual Report, have 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
statements have been prepared under the historical cost convention
with the exception of assets held for sale which have been held at
fair value. The Group financial information is presented in US
Dollars ($) and rounded to the nearest thousand.
The parent company meets the definition of a qualifying entity
under FRS 100 (Financial Reporting Standard 100) issued by the
Financial Reporting Council. The parent company financial
statements have therefore been prepared in accordance with FRS 101
(Financial Reporting Standard 101) 'Reduced Disclosure Framework'
as issued by the Financial Reporting Council. As permitted by FRS
101, the Company has taken advantage of the disclosure exemptions
available under that standard in relation to share-based payments,
financial instruments, fair value measurements, capital management,
presentation of a cash flow statement, new standards not yet
effective, impairment of assets and related party transactions.
Where relevant, equivalent disclosures have been given in the Group
financial statements of Central Asia Metals plc.
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 financial
information are explained in note 4.
Going concern
The Group sells and distributes its copper cathode product
primarily through an off-take arrangement with Traxys Europe S.A.
with a minimum of 95% of the SX-EW plant's forecasted output
committed as sales for the period up until October 2022. The Group
sells Sasa's zinc and lead concentrate product through an off-take
arrangement with Traxys which has been fixed through to 31 December
2022. The commitment is for 100% of the Sasa concentrate
production.
The Group meets its day to day working capital requirements
through its profitable and cash generative operations at Kounrad
and Sasa. The Group manages liquidity risk by maintaining adequate
committed borrowing facilities and the Group has substantial cash
balances as at 31 December 2019.
The price of copper, zinc and lead have been impacted in 2020 by
concerns over the outbreak of the COVID-19 pandemic and this will
impact on Group revenue for the year ended 31 December 2020. Whilst
there has been little impact of COVID-19 to the Group's operations
at present, owing to the volatility of the commodity price
environment, uncertainty regarding the future impact on operations
and the uncertainty surrounding implementation of government
policies to manage the outbreak it is difficult to determine and
quantify the financial impact there may be on the business going
forward.
The CAML Board has considered and debated a range of substantial
possible scenarios on the Group's operations, financial position
and forecasts covering a period of at least the next 12 months
considering potential impacts associated with:
a) Operational disruption that may be caused by restrictions
applied by governments, illness amongst our workforce and
disruption to supply chain and offtake arrangements;
b) Market volatility in respect of commodity prices;
c) Availability of existing credit facilities.
These scenarios include the potential for significant downside
to commodity prices and production levels at Sasa and Kounrad which
may include periods with minimal or no revenue. Under these
scenarios possible mitigations within the Group's control or which
can reasonably be achieved have been considered by the Board to
maintain liquidity and service debt and in light of COVID-19. As a
result of the current market uncertainty the CAML Board has taken
the decision not to recommend a 2019 final dividend. Under the
forecast scenarios the Group is able to maintain liquidity and
service debt assuming minimal or no revenue for a period of
approximately 3 -4 months, reflecting its current cash resources.
However, certain of the scenarios considered indicate a breach to
the one of the Group's short-term loan covenants. However,
management have engaged in continued dialogue with the lender and,
whilst there can be no guarantee, anticipate that existing
facilities would remain available where there is a covenant breach.
Should there be a period without production or sales in excess of
the above scenarios the Group would require additional funding in
the form of debt or equity the availability of which cannot be
guaranteed.
After review of these 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 consolidated financial statements. However, at the date of
approval of the financial statements, the potential future impact
of COVID-19 and the resulting forecast breach of covenants should
such adverse scenarios materialise indicate the existence of a
material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern and therefore it may
be unable to realise its assets and discharge its liabilities in
the normal course of business. The financial statements do not
include the adjustments that would result if the Group was unable
to continue as a going concern.
Please refer to notes 6, 24 and 28 for information on the
Group's revenues, cash balances and trade and other payables.
New and amended standards and interpretations adopted by the
Group
The Group has adopted the following standards and amendments for
the first time for their annual reporting period commencing 1
January 2019:
IFRS 16 Leases has been applied from 1 January 2019. IFRS 16
requires a lessee to recognise assets and liabilities for all
leases with a term of more than 12 months, unless the underlying
asset is of low value. A lessee is required to recognise a
right-of-use asset representing its right to use the underlying
leased asset and a lease liability representing its obligation to
make lease payments.
The Group has reviewed all leasing arrangements and contracts in
light of the new standard to determine whether the arrangements
fall under the definition of a lease per IFRS 16. The Group has
applied the simplified transition approach from 1 January 2019 and
therefore does not require to restate the comparatives for the 2018
reporting period, as permitted under the specific transition
provisions in the standard. The reclassifications and the
adjustments arising from the new leasing rules are therefore
recognised in the opening balance sheet on 1 January 2019 amounting
to $853,000. On adoption of IFRS 16, the Group recognised lease
liabilities in relation to leases which had previously been
classified as 'operating leases' under the principles of IAS 17
Leases. These liabilities were measured at the present value of the
remaining lease payments, discounted using the incremental
borrowing rate as of 1 January 2019. All other right-of-use assets
will continue to be measured at the amount of the lease liability
on adoption.
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
- applying a single discount rate to a portfolio of leases with
reasonably similar characteristics
- accounting for operating leases with a remaining lease term of
less than 12 months as at 1 January 2019 as short-term leases
- using hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
IFRIC 23 Uncertainty over Income Tax Treatments was introduced
from 1 January 2019 and clarifies the accounting for uncertainties
in income taxes which is to be applied to determination of taxable
profit and uncertainty over income tax treatments under IAS 12. The
Group will assess its judgements and estimates if facts and
circumstances change. The Group operates in jurisdictions which
necessarily require judgment to be applied when assessing the
applicable tax treatment for transactions and the Group obtains
professional advice where appropriate to ensure compliance with
applicable legislation.
The following amendments did not have any impact on the amounts
recognised in prior years or the current year and on foreseeable
future transactions:
-- Annual Improvements to IFRS Standards 2015-2017 Cycle
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 December 2019 reporting
periods and have not been early adopted by the Group. These
standards are not expected to have a material impact on the entity
in the current or future reporting periods and on foreseeable
future transactions.
There are no other standards that are not yet effective that
would be expected to have a material impact on the Group.
Basis of consolidation
The Group financial statements consolidate the financial
statements of CAML and the entities it controls drawn up to 31
December 2019.
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised losses/gains
on transactions between Group companies are eliminated. Unrealised
losses/gains are also eliminated but considered an impairment
indicator of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Business combinations
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of the acquiree's identifiable net
assets. Acquisition-related costs are expensed as incurred and
reported within other expenses.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquired entity, and
acquisition-date fair value of any previous equity interest in the
acquired entity over the fair value of the net identifiable assets
acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the business
acquired, the difference is recognised directly in profit or loss
as a bargain purchase.
After initial recognition, goodwill is stated at cost less any
accumulated impairment losses, with the carrying value being
reviewed for impairment, at least annually and whenever events or
changes in circumstances indicate that the carrying value may be
impaired.
For the purpose of impairment testing, goodwill is allocated to
the cash-generating unit expected to benefit from the business
combination in which the goodwill arose. Where the recoverable
amount is less than the carrying amount, including goodwill, an
impairment loss is recognised in the Income Statement. The carrying
amount of goodwill allocated to an entity is taken into account
when determining the gain or loss on disposal of the unit.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity's incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent financier
under comparable terms and conditions.
Non-controlling interests
Non-controlling interests represent the portion of profit or
loss and net assets in subsidiaries that are not held by the Group
and are presented separately within equity in the Consolidated
Statement of Financial Position distinct from parent shareholder's
equity.
Where losses are incurred by a partially owned subsidiary, they
are consolidated such that the non-controlling interests' share in
the losses is apportioned in the same way as profits.
Where profits are then made in future periods, such profits are
then allocated to the parent company until all unrecognised losses
attributable to the non-controlling interests but absorbed by the
parent are recovered at which point, profits are allocated as
normal.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker
which is considered to be the Board.
Foreign currency translation
The functional currency for each entity in the Group is
determined as the currency of the primary economic environment in
which it operates. The consolidated financial statements are
presented in US Dollars, which is the Group's and Company's
presentation currency. The functional currency of the Company is US
Dollars.
Transactions in currencies other than the functional currency
are initially recorded at the rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency rate of
exchange ruling at the reporting date. All differences are taken to
the Income Statement.
The results and financial position of all the Group entities
that have a functional currency different from the US Dollar
presentation currency are translated into the US Dollar
presentation currency as follows:
-- assets and liabilities for each Statement of Financial
Position presented are translated at the closing rate at the
reporting date;
-- income and expenses for each Income Statement are translated at average exchange rates; and
-- all resulting exchange differences are recognised in other comprehensive income.
On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign operation
is recognised in the Income Statement.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. Cost
comprises the aggregate amount paid and the fair value of any other
consideration given to acquire the asset and includes costs
directly attributable to making the asset capable of operating as
intended.
The cost of the item also includes the cost of decommissioning
any buildings or plant and equipment and making good the site,
where a present obligation exists to undertake the restoration
work.
Development costs relating to specific mining properties are
capitalised once management determines a property will be
developed. A development decision is made based upon consideration
of project economics, including future metal prices, reserves and
resources, and estimated operating and capital costs.
Capitalisation of costs incurred and proceeds received during the
development phase ceases when the property is capable of operating
at levels intended by management and is considered commercially
viable. Costs incurred during the production phase to increase
future output by providing access to additional reserves, are
deferred and depreciated on a units-of-production basis over the
component of the reserves to which they relate. Ore reserves may be
declared for an undeveloped mining project before its commercial
viability has been fully determined. Development costs incurred
after the commencement of production are capitalised to the extent
they are expected to give rise to a future economic benefit.
Development costs are not depreciated until such time as the areas
under development enter production.
Depreciation is provided on all property, plant and equipment on
a straight-line basis over its total expected useful life. As at 31
December 2019 the remaining useful lives were as follows:
-- Construction in progress - not depreciated
-- Land - not depreciated
-- Plant and equipment - over 5 to 21 years
-- Mining assets - over 2 to 21 years
-- Motor vehicles - over 2 to 10 years
-- Office equipment - over 2 to 10 years
-- Right of use assets - term of lease agreement
Mineral rights are depreciated on a Unit of Production basis
('UoP'), in proportion to the volume of ore extracted in the year
compared with total proven and probable reserves as well as
measured, indicated and certain inferred resources which are
considered to have a sufficiently high certainty of commercial
extraction at the beginning of the year. Assets within operations
for which production is not expected to fluctuate significantly
from one year to another or which have a physical life shorter than
the related mine are depreciated on a straight-line basis.
Construction in progress is not depreciated until transferred to
other classes of property, plant and equipment.
The carrying values of property, plant and equipment are
reviewed for impairment if events or changes in circumstances
indicate the carrying value may not be recoverable and are written
down immediately to their recoverable amount. Useful lives and
residual values are reviewed annually and where adjustments are
required, these are made prospectively.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
de-recognition of the asset is included in the Income
Statement.
Leases
As per IFRS 16 Leases the Group have applied the simplified
transition approach for recognising liabilities. On adoption of
IFRS 16, the Group recognised lease liabilities in relation to
leases which had previously been classified as 'operating leases'
under the principles of IAS 17 Leases. These liabilities were
measured at the present value of the remaining lease payments,
discounted using the incremental borrowing rate as of 1 January
2019.
Until the 2019 financial year, leases of property, plant and
equipment were classified as either finance leases or operating
leases. From 1 January 2019, leases are recognised as a
right-of-use asset and a corresponding liability at the date at
which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable and variable payments based on
index or rate
-- amounts expected to be payable by the Group under residual value guarantees
-- payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions.
The Group leases offices and equipment. Rental contracts are
typically made for fixed periods of six months to five years and
have extension options.
Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements
do not impose any covenants other than the security interests in
the leased assets that are held by the lessor. Leased assets may
not be used as security for borrowing purposes.
Intangible assets
a) Exploration and evaluation expenditure
Capitalised costs include costs directly related to any Group
exploration and evaluation activities in areas of interest for
which there is a high degree of confidence in the feasibility of
the project. Exploration and evaluation expenditure capitalised
includes acquisition of rights to explore, topographical,
geological, geochemical and geophysical studies, exploration
drilling, trenching, sampling and activities in relation to the
evaluation of the technical feasibility and commercial viability of
extracting a mineral resource.
Exploration and evaluation assets are measured at cost less
provision for impairment, where required.
b) Mining licences, permits and computer software
The historical cost model is applied, with intangible assets
being carried at cost less accumulated amortisation and accumulated
impairment losses. Intangible assets with a finite life have no
residual value and are amortised on a straight-line basis over
their expected useful lives with charges included in either cost of
sales or administrative expenses:
Computer software - over two to five years
Mining licences and permits - over the duration of the legal agreement
The carrying value of intangible assets is reviewed for
impairment whenever events or changes in circumstances indicate the
carrying value may not be recoverable.
Impairment of non-financial assets
The Group carries out impairment testing on all assets when
there exists an indication of an impairment. If any such indication
exists, the Group makes an estimate of the asset's recoverable
amount. An asset's recoverable amount is the higher of an asset's
or cash-generating unit's fair value less costs to sell or its
value in use.
Where the carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. Impairment losses are recognised in the Income
Statement.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and risks specific to the asset.
The best evidence of an asset's fair value is the value obtained
from an active market or binding sale agreement. Where neither
exists, fair value less costs to sell is based on the best
available information to reflect the amount the Group could receive
for the cash-generating unit in an arm's length sale. In some
cases, this is estimated using a discounted cash flow analysis on a
post tax basis.
A previously recognised impairment loss is reversed if the
recoverable amount increases as a result of a reversal of the
conditions that originally resulted in the impairment. This
reversal is recognised in the Income Statement and is limited to
the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised in prior
years.
Goodwill is also reviewed annually, as well as whenever events
or changes in circumstances indicate that the carrying amount may
not be recoverable. Non-financial assets other than goodwill which
have suffered an impairment are reviewed for possible reversal of
the impairment at each reporting date.
Revenue
IFRS 15 establishes a comprehensive framework for determining
whether, how much and when revenue is recognised. These steps are
as follows: identification of the customer contract; identification
of the contract performance obligations; determination of the
contract price; allocation of the contract price to the contract
performance obligations; and revenue recognition as performance
obligations are satisfied.
Under IFRS 15, revenue is recognised when the performance
obligations are satisfied and the customer obtains control of the
goods or services, usually when title has passed to the buyer and
the goods have been delivered in accordance with the contractual
delivery terms.
Revenue is measured at the fair value of consideration received
or receivable from sales of metal to an end user, net of any buyers
discount, treatment charges and value added tax. The Group
recognises revenue when the amount of revenue can be reliably
measured and when it is probable that future economic benefits will
flow to the entity.
The value of consideration is fair value which equates to the
contractually agreed price. The off-take agreements provide for
provisional pricing i.e. the selling price is subject to final
adjustment at the end of the quotation period based on the average
price for the month following delivery to the buyer. Such a
provisional sale contains an embedded derivative which is not
required to be separated from the underlying host contract, being
the sale of the commodity. At each reporting date, if any sales are
provisionally priced, the provisionally priced copper cathode, zinc
and lead sales are marked-to-market using forward prices, with any
significant adjustments (both gains and losses) being recorded in
revenue in the Income Statement and in trade receivables in the
Statement of Financial Position.
The Company may mitigate commodity price risk by fixing the
price in advance for its copper cathode with the off-take partner
and also its zinc and lead sales with the banks where a facility
has been set up and agreed. The price fixing arrangements are
outside the scope of IFRS 9 Financial Instruments: Recognition and
Measurement and do not meet the criteria for hedge accounting.
The Group reports both a gross revenue and revenue line. Gross
revenue is reported after deductions of treatment charges but
before deductions of off-takers fees and silver purchases under the
Silver Stream.
Inventory
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the weighted average method.
The cost of finished goods and work in progress comprises raw
materials, direct labour and all other direct costs associated with
mining the ore and processing it to a saleable product.
Net realisable value is the estimated selling price in the
ordinary course of business, less any further costs expected to be
incurred to completion. Provision is made, if necessary, for
slow-moving, obsolete and defective inventory.
Non-current assets (or disposal groups) held for sale and
discontinued operations
Non-current assets (or disposal groups) are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a
sale is considered highly probable. They are measured at the lower
of their carrying amount and fair value less costs to sell, except
for assets such as deferred tax assets, assets arising from
employee benefits, financial assets and investment property that
are carried at fair value and contractual rights under insurance
contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent
write-down of the asset (or disposal group) to fair value less
costs to sell. A gain is recognised for any subsequent increases in
fair value less costs to sell of an asset (or disposal group), but
not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of
the sale of the non-current asset (or disposal group) is recognised
at the date of derecognition.
Non-current assets (including those that are part of a disposal
group) are not depreciated or amortised while they are classified
as held for sale. Interest and other expenses attributable to the
liabilities of a disposal group classified as held for sale
continue to be recognised.
Non-current assets classified as held for sale and the assets of
a disposal group classified as held for sale are presented
separately from the other assets in the balance sheet. The
liabilities of a disposal group classified as held for sale are
presented separately from other liabilities in the balance
sheet.
A discontinued operation is a component of the entity that has
been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area
of operations, is part of a single co-ordinated plan to dispose of
such a line of business or area of operations, or is a subsidiary
acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the Statement
of Comprehensive Income.
Current and deferred income tax
The current income tax charge is calculated based on the tax
laws enacted or substantively enacted at the reporting date in the
countries where the Group's subsidiaries operate and generate
taxable income.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the
consolidated financial statements. However, the deferred income tax
is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither
accounting nor taxable profit nor loss. Deferred income tax is
determined using tax rates that have been enacted or substantially
enacted by the Statement of Financial Position date and are
expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred tax assets are only recognised when they arise from
timing differences where their recoverability in the short term is
regarded as being probable.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks and other short-term highly liquid investments
with original maturities of three months or less.
Restricted cash
Restricted cash is cash with banks that is not available for
immediate use by the Group. Restricted cash is shown separately
from cash and cash equivalents on the Statement of Financial
Position.
Investments
Investments in subsidiaries are recorded at cost less provision
for impairment.
Share capital
Ordinary Shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Treasury shares
Where any Group company purchases the Company's equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to the Company's equity holders
until the shares are cancelled or reissued. Where such Ordinary
Shares are subsequently reissued, any consideration received, net
of any directly attributable incremental transaction costs and the
related income tax effects, is included in equity attributable to
the Company's equity holders.
Share based compensation
The fair value of the employee services received in exchange for
the grant of the options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value
of the options granted, excluding the impact of any non-market
service and performance vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options
that are expected to vest. The total amount expensed is recognised
over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At each reporting
date, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original
estimates, if any, in the Income Statement, with a corresponding
adjustment to equity.
Trade and other receivables
Trade and other receivables are accounted for under IFRS 9 using
the expected credit loss model and are initially recognised at fair
value and subsequently measured at amortised cost less any
allowance for expected credit losses.
Impairment of financial assets
The Group and the Company has adopted the general expected
credit loss model for financial assets, e.g. trade receivables and
intercompany receivables.
The allowance for expected credit losses for trade receivables
is established by considering on a discounted basis the cash
shortfalls it would incur in various default scenarios for
prescribed future periods and multiplying the shortfalls by the
probability of each scenario occurring. The historical loss rates
are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to
settle the receivables. The allowance is the sum of these
probability weighted outcomes. The allowance and any changes to it
are recognised in the Statement of Comprehensive Income within net
operating expenses. A provision matrix is used to calculate the
allowance for expected credit losses on trade receivables which is
based on historical default rates over the expected life of the
trade receivables and is adjusted for forward looking estimates.
When a trade receivable is uncollectible, it is written off against
the allowance account for trade receivables. Subsequent recoveries
of amounts previously written off are credited against net
operating expenses in the Statement of Comprehensive Income.
The Company assesses on a forward-looking basis the expected
credit losses associated with its intercompany balances carried at
amortised cost and FVOCI. The impairment methodology applied
depends on whether there has been a significant increase in credit
risk.
Trade and other payables
Trade and other payables are not interest bearing and are
initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method.
Silver stream commitment
The silver stream arrangement has been accounted for as a
commitment as the Group has obligations to deliver silver to a
third party at a price below market value. On acquisition,
following completion of the business combination, the silver stream
commitment was identified as an unfavourable contract and recorded
at fair value. Payments received under the arrangement prior to the
acquisition by the Group were not considered to be a transaction
with a customer. Management has determined that the agreement is
not a derivative as it will be satisfied through the delivery of
non-financial items (i.e. silver commodity from the Company's
production), rather than cash or financial assets. Subsequent to
initial recognition the silver stream commitment is not revalued
and is amortised on a units of production basis to cost of
sales.
The fair value of consideration received for delivered silver
under the agreement is recorded as revenue. In addition, silver
produced in conjunction with the Group's lead and zinc production
and sold under the off-take agreement is recorded in gross revenue
with a corresponding deduction for silver purchased to deliver
under the silver stream recorded in arriving at net revenue.
Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
An amendment in a loan facility gives rise to a modification
gain or loss to reflect the amended terms under the new facility.
In 2018, the Group consolidated and restructured its borrowings
into one corporate debt package. The total available amount under
the facility was increased by $60,000,000. The refinancing resulted
in the recognition of a modification gain of $836,000 which was
recognised in the Income Statement during 2018.
Borrowings are removed from the balance sheet when the
obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another
party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss
as other income or finance costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
Provisions
a) Asset retirement obligation
Provisions for environmental restoration of mining operations
are recognised when the Group has a present legal or constructive
obligation as a result of past events; it is probable that an
outflow of resources will be required to settle the obligation; and
the amount can be reliably estimated. Provisions are not recognised
for future operating losses.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the cash flows incorporate assessments of risk. The
increase in the provision due to passage of time is recognised as
interest expense.
b) Employee benefits - pension
The Group, in the normal course of business, makes payments on
behalf of its employees for pensions, health-care, employment and
personnel tax, which are calculated based on gross salaries and
wages according to legislation. The cost of these payments is
charged to the Consolidated Statement of Comprehensive Income in
the same period as the related salary cost.
c) Employee benefits - retirement benefits and jubilee awards
Pursuant to the labour law prevailing in the North Macedonian
subsidiaries, the Group is obliged to pay retirement benefits for
an amount equal to two average monthly salaries, at their
retirement date. According to the collective labour agreement, the
Group is also obliged to pay jubilee anniversary awards for each 10
years of continuous service of the employee. Due to the long-term
nature of these plans, such estimates are subject to significant
uncertainty. In addition, the Group is not obligated to provide
further benefits to current and former employees.
Retirement benefit obligations arising on severance pay are
stated at the present value of expected future cash payments
towards the qualifying employees. These benefits have been
calculated by an independent actuary in accordance with the
prevailing rules of actuarial mathematics. Actuarial gains and
losses arising from experience adjustments and changes in actuarial
assumptions are charged or credited to profit and loss over the
employees' expected average remaining working lives.
3. Financial risk management
The Group's activities expose it to a variety of financial
risks; market risk (including foreign currency exchange risk,
commodity price risk and interest rate risk), liquidity risk,
capital risk and credit risk. These risks are mitigated wherever
possible by the Group's financial management policies and practices
described below. The Group's risk management is carried out by a
central treasury department (Group treasury) under policies
approved by the Board. Group treasury identifies, evaluates and
hedges financial risks in close co-operation with the Group's
operating units.
Foreign currency exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures. The primary
Group currency requirements are US Dollar, British Pound,
Kazakhstan Tenge, Euro and North Macedonian Denar.
The following table highlights the major currencies the Group
operates in and the movements against the US Dollar during the
course of the year:
Average rate Reporting date
spot rate
2019 2018 Movement 2019 2018 Movement
Kazakhstan Tenge 382.75 344.71 38.04 381.18 384.20 (3.02)
Macedonian Denar 54.96 52.12 2.84 54.95 53.69 1.26
Euro 1.12 1.15 (0.03) 1.12 1.18 (0.06)
British Pound 0.79 0.75 0.04 0.76 0.79 0.03
----------------- --------- --------- --------- -------- -------- --------
Foreign exchange risk does not arise from financial instruments
that are non-monetary items or financial instruments denominated in
the functional currency. Kazakhstan Tenge and North Macedonian
Denar denominated monetary items are therefore not reported in the
tables below, as the functional currency of the Group's
Kazakhstan-based and North Macedonian-based subsidiaries is the
Tenge and Denar respectively.
The Group's exposure to foreign currency risk based on US Dollar
equivalent carrying amounts at the reported date:
Group
---------------------------- -------------------------------------------------------------------------------------------------------- --------------------
2019
-------------------------------------------------------------------------------------------------------- --------------------
In $'000 equivalent USD EUR GBP
---------------------------- -------------------------------------------------------------------------------------------------------- --------- ---------
Cash and cash equivalents 2,419 94 2,220
Trade and other receivables 1 - -
Trade and other payables - (609) (429)
---------------------------- -------------------------------------------------------------------------------------------------------- --------- ---------
Net exposure 2,420 (515) 1,791
---------------------------- -------------------------------------------------------------------------------------------------------- --------- ---------
Group
-------------------------- -------------------------------------------------------------------------------------------------------- ----------------------
2018
-------------------------------------------------------------------------------------------------------- ----------------------
In $'000 equivalent USD EUR GBP
-------------------------- -------------------------------------------------------------------------------------------------------- --------- -----------
Cash and cash equivalents 12,792 6 774
Trade and other payables - (452) (2,522)
-------------------------- -------------------------------------------------------------------------------------------------------- --------- -----------
Net exposure 12,792 (446) (1,748)
-------------------------- -------------------------------------------------------------------------------------------------------- --------- -----------
Trade and other receivables excludes prepayments and VAT
receivable and trade and other payables excludes corporation tax,
social security and other taxes as they are not considered
financial instruments.
At 31 December 2019, if the foreign currencies had
weakened/strengthened by 10% against the US Dollar, post-tax Group
profit for the year would have been $194,000 lower/higher (2018:
$231,000 lower/higher).
Commodity price risk
The Group has a hedging policy in place to allow us to manage
commodity price risk however the Directors elected not to hedge
during 2019.
The following table details the Group's sensitivity to a 10%
increase and decrease in the copper, zinc and lead price against
the invoiced price. 10% is the sensitivity used when reporting
commodity price internally to management and represents
management's assessment of the possible change in price. A positive
number below indicates an increase in profit for the year and other
equity where the price increases.
Estimated effect on earnings and equity
2019 2018
$'000 $'000
-------------------------------------------- -------- --------
10% increase in copper, zinc and lead price 18,853 20,526
-------------------------------------------- -------- --------
10% decrease in copper, zinc and lead price (18,853) (20,526)
-------------------------------------------- -------- --------
Liquidity risk
Liquidity risk relates to the ability of the Group to meet
future obligations and financial liabilities as and when they fall
due. The Group currently has sufficient cash resources to
facilitate the debt and a material income stream from the Kounrad
and Sasa projects. The Group has no undrawn borrowings as at 31
December 2019 (2018: nil).
Future expected payments: Group
31 Dec 31 Dec
19 $'000 18 $'000
-------------------------------------------- --------- ---------
Trade and other payables within one year 8,981 17,637
Borrowings payable within one year (note
30) 44,684 47,868
Borrowings payable later than one year but
not later than five years (note 30) 76,304 122,323
Lease liability payable later than one year
but not later than five years 748 -
130,717 187,828
-------------------------------------------- --------- ---------
Capital risk
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal structure to reduce the
cost of capital.
The Group manages its capital in order to provide sufficient
funds for the Group's activities. Future capital requirements are
regularly assessed and Board decisions taken as to the most
appropriate source for obtaining the required funds, be it through
internal revenue streams, external fund raising, issuing new shares
or selling assets. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or
sell assets to reduce debt.
The debt is subject to financial covenants which include the
monitoring of gearing and leverage ratios and these are all
currently complied with.
Consistent with others in the industry, the Group monitors
capital on the basis of the following gearing ratio:
Net debt
2019 2018
Note $'000 $'000
------------------------------------ --- --- ----- ---------- ----------
Cash and cash equivalents 24 28,566 34,649
Bank overdraft 30 (895) -
Borrowings, variable interest rates
- repayable within one year 30 (38,400) (38,400)
Borrowings, variable interest rates
- repayable after one year 30 (69,473) (106,549)
Net debt (80,202) (110,300)
---------------------------------------------- ----- ---------- ----------
Total equity 335,106 325,866
---------------------------------------------- ----- ---------- ----------
Net debt to equity ratio 24% 34%
---------------------------------------------- ----- ---------- ----------
Changes in liabilities arising from financing activities
The total borrowings as at 1 January 2019 were $144,949,000 (1
January 2018: $181,914,000). During the year, total repayments were
$38,400,000 (2018: $99,265,000) with nil (2018: $60,809,000)
drawdowns during the year. There was a drawdown of an unsecured
overdraft of $895,000 (2018: nil). Other changes amounted to
$1,324,000 (1 January 2018: $1,491,000) leading to a closing debt
balance of $108,768,000 (2018: $144,949,000). See note 30 for more
details.
The cash and cash equivalents including cash at bank and on hand
in assets held for sale brought forward were $34,707,000 (2018:
$43,173,000) with a $6,930,000 outflow (2018: $8,466,000 outflow)
during the year and therefore a closing balance of $27,777,000
(2018: $34,707,000).
Credit risk
Credit risk refers to the risk that the Group's financial assets
will be impaired by the default of a third party. The Group is
exposed to credit risk primarily on its cash and cash equivalents
as set out in note 24 and on its trade and other receivables as set
out in note 22. The Group sells a minimum of 95% of Kounrad's
copper cathode production to a credit-worthy off-taker and during
the year 100% of Sasa's zinc and lead concentrate was sold to
credit-worthy customers. The Group sells Sasa's zinc and lead
concentrate product through an off-take arrangement with Traxys
which has been fixed through to 31 December 2022. The commitment is
for 100% of the Sasa concentrate production.
For banks and financial institutions, only parties with a
minimum rating of BBB- are accepted. 24% of the Group's cash and
cash equivalents including restricted cash at the year-end were
held by an A+ rated bank (2018: 15% by an A+ bank). The rest of the
Group's cash was held with a mix of institutions with credit
ratings between A to BB (2018: A to BBB-).
The Directors have considered the credit exposures and do not
consider that they pose a material risk at the present time. The
credit risk for cash and cash equivalents is managed by ensuring
that all surplus funds are deposited only with financial
institutions with high quality credit ratings.
The expected credit loss for intercompany loans receivable are
considered immaterial (note 22).
Interest rate risk
The Group's main interest rate risk arises from long-term
borrowings with variable rates, which expose the Group to cash flow
interest rate risk. During 2019, the Group's borrowings at variable
rates were denominated in US Dollars. The Group's borrowings are
carried at amortised cost. The Group has borrowings at variable
interest rates and a 1% point rise in market interest rate would
have caused the interest paid to increase by $1,343,000 (2018:
$1,666,000) while a similar decrease would have caused the same
decrease in interest paid. The Group does not hedge its exposure to
interest rate risk.
The Group had $14,494,000 of cash balances on short-term deposit
as at 31 December 2019 (2018: $13,044,000). The average fixed
interest rate on short-term deposits during the year was 0.6%
(2018: 1.2%).
Categories of financial instruments
Financial assets
Group
----------------------------------------------- --------------------
31 Dec 31 Dec
Cash and receivables: 19 $'000 18 $'000
----------------------------------------------- --------- ---------
Cash and cash equivalents including restricted
cash (note 24) 32,579 39,025
Trade and other receivables 2,980 6,609
------------------------------------------------- --------- ---------
35,559 45,634
----------------------------------------------- --------- ---------
Trade and other receivables excludes prepayments and VAT
receivable as they are not considered financial instruments. All
trade and other receivables are receivable within one year for both
reporting years.
Financial liabilities
Group
------------------------------------------- --------------------
31 Dec 31 Dec
Measured at amortised cost: 19 $'000 18 $'000
------------------------------------------- --------- ---------
Trade and other payables within one year 8,981 17,637
Borrowings payable within one year (note
30) 39,295 38,400
Borrowings payable later than one year but
not later than five years (note 30) 69,473 106,549
Lease liability later than one year but
not later than five years 748 -
118,497 162,586
------------------------------------------- --------- ---------
Trade and other payables excludes the silver streaming
commitment, corporation tax, social security and other taxes as
they are not considered financial instruments.
4. Critical accounting estimates and judgements
The Group has the following key areas where critical accounting
estimates and judgements are required that could have a material
impact on the financial statements:
Impairment of non-current assets
Significant accounting judgements
The carrying value of the goodwill generated by accounting for
the business combination of the Group acquiring an additional 40%
in the Kounrad project in May 2014 (the "Kounrad Transaction") and
the CMK Resources Limited acquisition in November 2017 requires an
annual impairment review. This review determines 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. The key assumptions used in the Group's impairment
assessments are disclosed in note 19.
Key sources of estimation uncertainty
Estimates are required periodically to assess assets for
impairment. The critical accounting estimates are future commodity
prices, treatment charges, future ore production, discount rates
and projected future costs of development and production. Ore
reserves and resources included in the forecasts include certain
resources considered to be sufficiently certain and economically
viable. The Group's resources statements include additional
resources which are not included in the life of mine plan or
impairment test.
Decommissioning and site rehabilitation estimates
Significant accounting judgements
Provision is made for the costs of decommissioning and site
rehabilitation costs when the related environmental disturbance
takes place. Judgement and experience is used in determining the
expected timing, closure and decommissioning methods, which can
vary in response to changes in the relevant legal requirements or
decommissioning technologies.
Key sources of estimation uncertainty
The discounted provision recognised represents management's best
estimate of the costs that will be incurred, and many of these
costs will not crystallise until the end of the life of the mine.
Estimates are reviewed annually and are based on current
contractual and regulatory requirements and the estimated useful
life of mines. Engineering and feasibility studies are undertaken
periodically and in the interim management make assessments for
appropriate changes based on the environmental management strategy;
however significant changes in the estimates of contamination,
restoration standards, timing of expenditure and techniques will
result in changes to provisions from period to period.
A 1% change in the discount rate on the Group's rehabilitation
estimates would result in an impact of $781,000 (2018: $473,000) on
the provision for environmental rehabilitation, and an impact of
$781,000 (2018: $473,000) on the statement of comprehensive income.
A 5% change in cost on the Group's rehabilitation estimates would
result in an impact of $420,000 (2018: $208,000) on the provision
for environmental rehabilitation, and an impact of $48,000 (2018:
$21,000) on the statement of comprehensive income.
Mineral reserves and resources
Key sources of estimation uncertainty
The major value associated with the Group is the value of its
mineral reserves and resources. The value of the reserves and
resources have an impact on the Group's accounting estimates in
relation to depreciation and amortisation, impairment of assets and
the assessment of going concern. These resources are the Group's
best estimate of product that can be economically and legally
extracted from the relevant mining property. The Group's estimates
are supported by geological studies and drilling samples to
determine the quantity and grade of each deposit.
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 statements.
The Kounrad resources were classified as JORC Compliant in 2013
and mineral resources were estimated in June 2017 and the Sasa JORC
ore reserves and mineral resources were estimated in December
2019.
Tax
Significant accounting judgements
Management make judgements in relation to the recognition of
various taxes payable by the Group and VAT recoverability for which
the recoverability and timing of recovery is assessed. The Group
operates in jurisdictions which necessarily require judgment to be
applied when assessing the applicable tax treatment for
transactions and the Group obtains professional advice where
appropriate to ensure compliance with applicable legislation.
5. Segmental information
The segmental results for the year ended 31 December 2019 are as
follows:
Kounrad Sasa Unallocated Total
$'000 $'000 $'000 $'000
---------------------------------------------- ----------- ---------- --------------- -----------
Gross revenue 81,708 99,107 - 180,815
Silver stream purchases - (5,556) - (5,556)
Off-take buyers' fees (2,424) (1,087) - (3,511)
---------------------------------------------- ----------- ---------- --------------- -----------
Revenue 79,284 92,464 - 171,748
---------------------------------------------- ----------- ---------- --------------- -----------
EBITDA 61,720 59,564 (12,700) 108,584
Depreciation and amortisation (4,533) (25,308) (239) (30,080)
Foreign exchange (loss)/gain (169) 698 (152) 377
Other income 182 30 - 212
Other expenses (note 10) (40) (441) - (481)
Finance income (note 14) 9 1 326 336
Finance costs (note 15) (106) (263) (10,784) (11,153)
---------------------------------------------- ----------- ---------- --------------- -----------
Profit/(loss) before income tax 57,063 34,281 (23,549) 67,795
---------------------------------------------- ----------- ---------- --------------- -----------
Income tax (15,911)
---------------------------------------------- ----------- ---------- --------------- -----------
Profit for the year after tax from continuing
operations 51,884
---------------------------------------------- ----------- ---------- --------------- -----------
Profit from discontinued operations 53
---------------------------------------------- ----------- ---------- --------------- -----------
Profit for the year 51,937
---------------------------------------------- ----------- ---------- --------------- -----------
*Depreciation and amortisation includes amortisation on the fair
value uplift on acquisition of Sasa and Kounrad of $19.4m.
The segmental results for the year ended 31 December 2018 are as
follows:
Kounrad Sasa Unallocated Total
$'000 $'000 $'000 $'000
---------------------------------------------- ----------- ---------- --------------- ------------
Gross revenue 92,644 111,508 - 204,152
Silver stream purchases - (6,023) - (6,023)
Off-take buyers' fees (2,535) (1,215) - (3,750)
---------------------------------------------- ----------- ---------- --------------- ------------
Revenue 90,109 104,270 - 194,379
---------------------------------------------- ----------- ---------- --------------- ------------
EBITDA 66,833 71,221 (12,746) 125,308
Depreciation and amortisation (6,335) (26,951) (56) (33,342)
Foreign exchange (loss)/gain 276 (4,165) 10 (3,879)
Other income 359 - - 359
Other expenses (note 10) - (561) (469) (1,030)
Finance income (note 14) 10 3 251 264
Finance costs (note 15) (140) (8,555) (6,304) (14,999)
---------------------------------------------- ----------- ---------- --------------- ------------
Profit/(loss) before income tax 61,003 30,992 (19,314) 72,681
---------------------------------------------- ----------- ---------- --------------- ------------
Income tax (18,822)
---------------------------------------------- ----------- ---------- --------------- ------------
Profit for the year after tax from continuing
operations 53,859
---------------------------------------------- ----------- ---------- --------------- ------------
Loss from discontinued operations (7,274)
---------------------------------------------- ----------- ---------- --------------- ------------
Profit for the year 46,585
---------------------------------------------- ----------- ---------- --------------- ------------
*Depreciation and amortisation includes amortisation on the fair
value uplift on acquisition of Sasa and Kounrad of $20.2m.
A reconciliation between profit for the year and EBITDA is
presented in the Financial Review section.
Group segmental assets and liabilities for the year ended 31
December 2019 are as follows:
Segmental assets Additions to non-current Segmental liabilities
assets
---------------------- -------------------- -------------------------- --------------------------
31 Dec 19 31 Dec 18 31 Dec 19 31 Dec 18 31 Dec 19 31 Dec 18
$'000 $'000 $'000 $'000 $'000 $'000
---------------------- --------- --------- ------------ ------------ ------------ ------------
Kounrad 76,118 80,384 1,850 1,395 (11,017) (11,666)
Sasa 411,899 450,495 9,432 13,352 (55,269) (78,720)
Assets held for
sale (note 21) 219 61 - 907 (91) (40)
Unallocated including
corporate 26,839 18,785 870 298 (113,592) (133,433)
---------------------- --------- --------- ------------ ------------ ------------ ------------
515,075 549,725 12,152 15,952 (179,969) (223,859)
---------------------- --------- --------- ------------ ------------ ------------ ------------
The assets and liabilities of the Copper Bay and Shuak entities
were classified as assets held for sale during the comparative year
ended 31 December 2018 (note 21).
6. Revenue
2019 2018
Group $'000 $'000
International customers (Europe) - copper
cathode 78,848 90,376
International customers (Europe) - zinc
and lead concentrate 97,199 109,451
Domestic customers (Kazakhstan) - copper
cathode 2,860 2,269
International customers (Europe) - silver 1,908 2,056
---------------------------------------------------- ---------- ----------
Total gross revenue 180,815 204,152
---------------------------------------------------- ---------- ----------
Less:
Silver purchases from silver stream (5,556) (6,023)
Off-take buyers' fees (3,511) (3,750)
Revenue 171,748 194,379
---------------------------------------------------- ---------- ----------
Kounrad
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 September 2022.
The off-take arrangements are for a minimum of 95% of the SX-EW
plant's output. Revenue is recognised at the Kounrad mine gate when
the goods have been delivered in accordance with the contractual
delivery terms.
The off-take agreement provides for the option of provisional
pricing i.e. the selling price is subject to final adjustment at
the end of the quotation period based on the average price for the
month following delivery to the buyer, however during 2019 all
sales prices were calculated at the LME price on the date of
dispatch. The Company may mitigate commodity price risk by fixing
the price in advance for its copper cathode sales with the off-take
partner (see note 3).
The costs of delivery to the end customers have been effectively
borne by the Group through means of an annually agreed buyer's fee
which is deducted from the selling price.
During 2019, the Group sold 13,100 tonnes (2018: 13,696 tonnes)
of copper through the off-take arrangements. Some of the copper
cathodes are also sold locally and during 2019, 500 tonnes (2018:
386 tonnes) were sold to local customers.
Sasa
The Group sells Sasa's zinc and lead concentrate product to two
European smelters through an off-take arrangement with Traxys which
has been fixed through to 31 December 2022. For one of the
smelters, revenue is recognised at the Sasa mine gate when the
goods have been delivered in accordance with the contractual
delivery terms and for the other smelter revenue is recognised on
delivery to the smelter in accordance with the contractual delivery
terms. The commitment is for 100% of the Sasa concentrate
production. The agreements with the smelters provides for
provisional pricing i.e. the selling price is subject to final
adjustment at the end of the quotation period based on the average
price for the month following delivery to the buyer and subject to
final adjustment for assaying results. The impact of mark-to-market
adjustments for forward prices on provisional sales was not
significant in the current or prior year.
The Group sold 19,697 tonnes (2018: 18,792 tonnes) of zinc in
concentrate and 27,875 tonnes (2018: 27,878 tonnes) of lead in
concentrate.
The revenue arising from silver relates to a contract with
Osisko Gold Royalties where the Group has agreed to sell all of its
silver at a fixed price of $5.58/oz, significantly below market
value and arising from the silver stream commitment inherited on
acquisition (note 29).
7. Cost of sales
2019 2018
Group $'000 $'000
------------------------------------ -------- ---------
Reagents, electricity and materials 19,931 19,676
Depreciation and amortisation 29,499 33,407
Silver stream commitment (note 29) (2,285) (2,627)
Royalties 7,271 7,995
Employee benefit expense 12,862 12,053
Consulting and other services 5,398 5,412
Taxes and duties 422 502
73,098 76,418
------------------------------------ -------- ---------
8. Distribution and selling costs
2019 2018
Group $'000 $'000
------------------------------ --------- ---------
Freight costs 1,550 1,670
Transportation costs 108 184
Employee benefit expense 61 76
Depreciation and amortisation 20 15
Materials and other expenses 84 100
------------------------------ --------- ---------
1,823 2,045
------------------------------ --------- ---------
The above distribution and selling costs are those incurred at
Kounrad and Sasa in addition to the costs associated with the
off-take arrangements.
9. Administrative expenses
2019 2018
Group $'000 $'000
--------------------------------------------- ------- --------
Employee benefit expense 8,867 9,709
Share based payments 1,085 4,904
Consulting and other services 6,084 6,345
Auditors remuneration (note 11) 378 409
Office-related costs 1,271 1,783
Taxes and duties 77 45
Depreciation and amortisation 561 755
--------------------------------------------- ------- --------
Total from continuing operations 18,323 23,950
--------------------------------------------- ------- --------
Total from discontinued operations (note 21) 170 153
--------------------------------------------- ------- --------
18,493 24,103
--------------------------------------------- ------- --------
10. Other expenses
2019 2018
Group $'000 $'000
-------------------------------------------------- ------- --------
Loss on disposal of property, plant and equipment 481 561
Impairment of receivable from Orion - 469
-------------------------------------------------- ------- --------
481 1,030
-------------------------------------------------- ------- --------
The impairment of receivable from Orion in the prior year
relates to $5,969,000 of withholding tax payable relating to income
from payments in 2016 and 2017. This tax relates to a period pre
the Group's ownership and so due to the tax indemnity in place on
acquisition was considered fully recoverable as per the acquisition
accounting. A settlement was reached in March 2019 where Orion
would pay $5,500,000 of the withholding tax payable and therefore
the Group recognised a $469,000 write off in 2018.
11. Auditors' remuneration
During the year, the Group obtained the following services from
the Company's auditors and its associates:
2019 2018
$'000 $'000
--------------------------------------------------------- -------- ---------
Fees payable to BDO LLP the Company's auditors for the 160 -
audit of the parent company and consolidated financial
statements
Fees payable to PWC LLP the previous Company's auditors
for the audit of the parent company and consolidated
financial statements 36 146
Fees payable to BDO LLP the Company's auditors and its
associates for other services:
- The audit of Company's subsidiaries 144 -
- Tax compliance services - -
- Other assurance services - -
--------------------------------------------------------- -------- ---------
Fees payable to PWC LLP the previous Company's auditors
and its associates for other services:
- The audit of Company's subsidiaries - 179
--------------------------------------------------------- -------- ---------
- Tax compliance services 26
--------------------------------------------------------- -------- ---------
- Other assurance services 38 58
--------------------------------------------------------- -------- ---------
378 409
--------------------------------------------------------- -------- ---------
12. Employee benefit expense
The aggregate remuneration of staff, including Directors, was as
follows:
Group 2019 2018
$'000 $'000
--------------------------------------------- --------- ---------
Wages and salaries 16,294 14,856
Social security costs 3,823 4,484
Staff healthcare and other benefits 2,424 2,266
Other pension costs 564 497
Share based payments (note 27) 1,085 4,904
--------------------------------------------- --------- ---------
Total for continuing operations 24,191 27,008
--------------------------------------------- --------- ---------
Total for discontinuing operations (note 21) 75 75
--------------------------------------------- --------- ---------
24,266 27,083
--------------------------------------------- --------- ---------
The total employee benefit expense includes an amount of
$1,316,000 (2018: $1,137,000) which has been capitalised within
property, plant and equipment. The 2018 comparative has been
reclassified due to the reallocation of costs to ensure consistent
presentation of employee benefit expense.
Company 2019 2018
$'000 $'000
Wages and salaries 5,391 4,778
Social security costs 934 1,325
Staff healthcare and other benefits 533 479
Other pension costs 165 146
Share based payments (note 27) 1,085 4,904
------------------------------------ --------- ---------
8,108 11,632
------------------------------------ --------- ---------
Key management remuneration is disclosed in the Remuneration
Committee report.
13. Monthly average number of people employed
Group 2019 2018
Number Number
Operational 901 906
Construction 8 8
Management and administrative 130 125
------------------------------ --------- ----------
1,039 1,039
------------------------------ --------- ----------
The monthly average number of staff employed by the Company
during the year was 15 (2018: 14).
14. Finance income
Group 2019 2018
$'000 $'000
------------------------------------------------- ------------ ---------
Foreign exchange gain on intercompany borrowings - 3
Bank interest received 336 261
------------------------------------------------- ------------ ---------
336 264
------------------------------------------------- ------------ ---------
15. Finance costs
Group 2019 2018
$'000 $'000
Provisions: unwinding of discount (note 31) 329 489
Interest on borrowings (note 30) 10,779 15,225
Bank charges 45 117
Gain on modification of the debt facility - (832)
Total for continuing operations 11,153 14,999
Total for discontinuing operations (note 21) 57 -
11,210 14,999
16. Income tax
2019 2018
Group $'000 $'000
Current tax on profits for the year 17,234 20,391
Deferred tax credit (note 36) (1,323) (1,569)
Income tax expense 15,911 18,822
Taxation for each jurisdiction 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:
2019 2018
Group $'000 $'000
Profit before taxation including loss from discontinued
operations 67,794 65,407
Tax calculated at domestic tax rates applicable to
profits in the respective countries 23,287 27,410
Tax effects of:
Expenses not deductible for tax purposes 19,854 2,982
Non-taxable income (27,194) (15,827)
Movement on unrecognised deferred tax - tax losses 1,287 5,826
Movement on recognised deferred tax (note 36) (1,323) (1,569)
Income tax expense 15,911 18,822
Corporate income tax is calculated at 19% (2018: 19%) of the
assessable profit for the year for the UK parent company, 20% for
the operating subsidiaries in Kazakhstan (2018: 20%) and 10% (2018:
10%) for the operating subsidiaries in North Macedonia.
Expenses not deductible for tax purposes includes share-based
payment charges, transfer pricing adjustments in accordance with
local tax legislation and depreciation and amortisation charges.
Non-taxable income includes intercompany dividend income. The 2018
comparative has been reclassified to ensure consistent presentation
with the current year.
Deferred tax assets have not been recognised on tax losses
primarily at the parent company as it remains uncertain whether
this entity will have sufficient taxable profits in the future to
utilise these losses.
17. Earnings/(loss) per share
(a) Basic
Basic earnings/(loss) per share is calculated by dividing the
profit/(loss) attributable to owners of the Company by the weighted
average number of Ordinary Shares in issue during the year
excluding Ordinary Shares purchased by the Company and held as
treasury shares (note 25).
2019 2018
$'000 $'000
Profit from continuing operations attributable to owners
of the parent 51,824 55,298
Profit/(loss) from discontinued operations attributable
to owners of the parent 53 (7,274)
Profitable attributable to owners of the parent 51,877 48,024
2019 2018
No. No.
Weighted average number of Ordinary Shares in issue 176,498,266 176,498,266
2019 2018
$ cents $ cents
Earnings/(loss) per share from continuing and discontinued
operations attributable to owners of the parent during
the year (expressed in $ cents per share)
From continuing operations 29.36 31.33
From discontinued operations 0.03 (4.12)
From profit for the year 29.39 27.21
(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.
2019 2018
$'000 $'000
Profit from continuing operations attributable to owners
of the parent 51,824 55,298
Profit/(loss) from discontinued operations attributable
to owners of the parent 53 (7,274)
Profitable attributable to owners of the parent 51,877 48,024
2019 2018
No. No.
Weighted average number of Ordinary Shares in issue 176,498,266 176,498,266
Adjusted for:
* Share options 5,076,397 3,937,283
Weighted average number of Ordinary Shares for diluted
earnings per share 181,574,663 180,435,549
2019 2018
Diluted earnings/(loss) per share $ cents $ cents
From continuing operations 28.54 30.65
From discontinued operations 0.03 (4.12)
From profit for the year 28.57 26.53
18. Property, plant and equipment
Motor
Construction Plant Mining vehicles Mineral
in and assets and ROU Land rights
progress equipment $'000 assets $'000 $'000 Total
Group $'000 $'000 $'000 $'000
Cost
At 1 January 2018 11,038 115,183 1,636 1,703 664 365,010 495,234
Additions 14,398 108 - 513 - - 15,019
Disposals (24) (596) - (60) - - (680)
Change in estimate - asset
retirement obligation
(note 31) - (159) - - - - (159)
Transfers (7,439) 7,432 - 7 - - -
Transfer from stock 35 116 - - - - 151
Exchange differences (691) (8,809) (221) (216) (30) (14,677) (24,644)
Impairment - (43) - - - - (43)
At 31 December 2018 17,317 113,232 1,415 1,947 634 350,333 484,878
Additions 10,566 481 - 1,084 - - 12,131
Disposals (214) (732) - (32) - - (978)
Change in estimate - asset
retirement obligation
(note 31) - 3,664 - - - - 3,664
Transfers (12,951) 12,951 - - - - -
Exchange differences (345) (941) 11 (14) (15) (8,532) (9,836)
At 31 December 2019 14,373 128,655 1,426 2,985 619 341,801 489,859
Accumulated depreciation
At 1 January 2018 - 22,211 168 789 - 2,805 25,973
Provided during the year - 13,086 89 201 - 18,399 31,775
Disposals - (66) - (30) - - (96)
Impairment - (6) - - - - (6)
Exchange differences - (2,229) (32) (108) - - (2,369)
At 31 December 2018 - 32,996 225 852 - 21,204 55,277
Provided during the year - 9,964 89 471 - 17,801 28,325
Disposals - (237) - (27) - - (264)
Exchange differences - 127 2 5 - - 134
At 31 December 2019 - 42,850 316 1,301 - 39,005 83,472
Net book value at 31
December
2018 17,317 80,236 1,190 1,095 634 329,129 429,601
Net book value at 31
December
2019 14,373 85,805 1,110 1,684 619 302,796 406,387
The Company had $838,000 of office equipment at net book value
as at 31 December 2018 (2018: $290 ,000 ).
The increase in estimate in relation to the Kounrad asset
retirement obligation of $783,000 (2018: reduction of $159,000) is
due to a combination of adjusting the provision recognised at the
net present value of future expected costs using latest assumptions
on inflation rates and discount rates as well as updating the
provision for management's best estimate of the costs that will be
incurred based on current contractual and regulatory requirements
and the estimated useful life of mine (note 31).
The increase in estimate in relation to the Sasa asset
retirement obligation of $2,881,000 (2018: reduction of $10,000) is
due a review of the provision for management's best estimate of the
costs that will be incurred based on current contractual and
regulatory requirements and the estimated useful life of mine (note
31).
The Group has reviewed all the leasing arrangements and
contracts in light of adopting IFRS 16 Leases and has capitalised
$853,000 as right-of-use assets ('ROU') during the year and is
included within additions. All right-of-use assets will continue to
be measured at the amount of the lease liability on adoption.
During the year there were total disposals of plant, property
and equipment at cost of $978,000 with accumulated depreciation of
$264,000. The Group received $233,000 consideration for these
assets and therefore a loss of $481,000 was recognised in other
expenses (note 10).
Amounts recognised in the income statement
The income statement shows the following amounts relating to
leases:
2019 2018
$'000 $'000
Depreciation charge of right-of-use assets
Office 323 -
Other 19 -
342 -
Interest expense included in finance 54 -
costs
As at 31 December 2019 there are no indications of impairment
with the fair value of the assets exceeding the net book value.
19. Intangible assets
Mining Computer
licences software
Goodwill and permits and website Total
Group $'000 $'000 $'000 $'000
Cost
At 1 January 2018 33,464 41,730 514 75,708
Additions - - 28 28
Disposals - - (6) (6)
Exchange differences (2,285) (4,096) (17) (6,398)
At 31 December 2018 31,179 37,634 519 69,332
Additions - - 21 21
Disposals - - (12) (12)
Exchange differences (507) (140) 1 (646)
At 31 December 2019 30,672 37,494 529 68,695
Accumulated amortisation
At 1 January 2018 - 5,728 65 5,793
Provided during the year - 2,134 433 2,567
Disposals - - (6) (6)
Exchange differences - (325) (8) (333)
At 31 December 2018 - 7,537 484 8,021
Provided during the year - 1,940 55 1,995
Disposals - - (12) (12)
Exchange differences - 15 - 15
At 31 December 2019 - 9,492 527 10,019
Net book value at 31 December 2018 31,179 30,097 35 61,311
Net book value at 31 December 2019 30,672 28,002 2 58,676
The Company had nil of computer software and website costs at
net book value as at 31 December 2019 (2018: $3,000).
Impairment assessment
Kounrad project
The Kounrad project located in Kazakhstan has an associated
goodwill balance of $8,999,000 (2018: $8,928,000). In accordance
with IAS 36 "Impairment of assets" and IAS 38 "Intangible Assets" ,
a review for impairment of goodwill is undertaken annually or at
any time an indicator of impairment is considered to exist and in
accordance with IAS 16 "Property, plant and equipment", a review
for impairment of long-lived assets is undertaken at any time an
indicator of impairment is considered to exist. The discount rate
applied to calculate the present value is based upon the nominal
weighted average cost of capital applicable to the 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 recoverable
amount of the CGU is assessed by reference to the higher of value
in use ('VIU'), being the net present value ('NPV') of future cash
flows expected to be generated by the asset, and fair value less
costs to dispose ('FVLCD'). The FVLCD is considered to be higher
than VIU and has been derived using discounted cash flow techniques
(NPV of expected future cash flows of a CGU), which incorporate
market participant assumptions.
The discount rate reflects equity risk premiums over the
risk-free rate, the impact of the remaining economic life of the
CGU and the risks associated with the relevant cash flows based on
the country in which the CGU is located. These risk adjustments are
based on observed equity risk premiums, historical country risk
premiums and average credit default swap spreads for the
period.
The key economic assumptions used in the review were a five-year
forecast average nominal copper price of $6,372 per tonne (2018:
$6,985) and a long-term price of $6,595 per tonne (2018: $7,472)
and a discount rate of 8% (2018: 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.
Management concluded and the net present value of the asset is
significantly in excess of the net book value of assets, and
therefore no impairment has been identified.
Sasa project
The SASA project located in North Macedonia has an associated
goodwill balance of $21,673,000 (2018: $22,251,000). The business
combination in 2017 was accounted for at fair value under IFRS 3
and therefore recoverable value is sensitive to changes in
commodity prices, operational performance, treatment charges,
future cash costs of production and capital expenditures. In
accordance with IAS 36 'Impairment of assets' and IAS 38
'Intangible Assets', a review for impairment of goodwill is
undertaken annually or at any time an indicator of impairment is
considered to exist and in accordance with IAS 16 'Property, plant
and equipment', a review for impairment of long-lived assets is
undertaken at any time an indicator of impairment is considered to
exist.
The assessment compared the recoverable amount of the SASA Cash
CGU with its carrying value for the year ended 31 December 2019.
The recoverable amount of the CGU is assessed by reference to the
higher of VIU, being the NPV of future cash flows expected to be
generated by the asset, and FVLCD. The FVLCD is considered to be
higher than VIU and has been derived using discounted cash flow
techniques (NPV of expected future cash flows of a CGU), which
incorporate market participant assumptions. Cost to dispose is
based on management's best estimates of future selling costs at the
time of calculating FVLCD. Costs attributable to the disposal of
the CGU are not considered significant. The methodology used for
the fair value is a level 3 valuation.
The expected future cash flows utilised in the FVLCD model are
derived from estimates of projected future revenues based on broker
consensus commodity prices, treatment charges, future cash costs of
production and capital expenditures contained in the life of mine
('LOM') plan, and as a result FVLCD is considered to be higher than
VIU. The Group's discounted cash flow analysis reflects probable
reserves as well as indicated resources and certain inferred
resources which are considered sufficiently certain and
economically viable, and is based on detailed research, analysis
and modelling. The forecast operational and capital expenditure
reflects the transition of mining method from sub-level caving to
cut and fill stoping, which is expected to lead to improved reserve
grades for both zinc and lead and increased metal production over
the life of mine.
At 31 December 2019, the Group has reviewed the indicators for
impairment, including forecasted commodity prices, treatment
charges, discount rates, operating and capital expenditure, and the
mineral reserves and resources' estimates and an impairment is not
necessary. For the purposes of the impairment review a discount
rate of 8.07% (2018: 12%) was applied to calculate the present
value of the CGU. The reduction in the discount rate from the prior
year was supported by a detailed WACC calculation and due to the
reduced country risk profile and asset specific risk factors
through operational improvements, environmental and social plans
having owned and operated the asset for over two years. The key
economic assumptions used in the review were a five-year forecast
average nominal zinc and lead price of $2,220 (2018: $2,441) and
$1,986 (2018: $2,200) per tonne respectively and a long-term price
of $2,358 (2018: $2,604) and $1,900 (2018: $2,264) per tonne
respectively. Zinc and lead treatment charges are forecast to rise
significantly in 2020 with a significant reduction from these
returning to historic averages by 2022.
Management then performed sensitivity analyses whereby certain
parameters were flexed downwards by reasonable amounts for the CGU
to assess whether the recoverable value for the CGU would result in
an impairment charge. The following sensitivities were applied:
Long-term zinc price reduced by 5%
Long-term lead price reduced by 5%
Discount rate increased to 9%
Production decreased by 2.5%
Treatment charges increased by 20%
Operational expenditure increased by 7%
Capital expenditure increased by 20%
In isolation, none of the changes set out above would result in
an impairment. This sensitivity analysis also does not take into
account any of management's mitigation factors should these changes
occur or the planned production optimisation in future years. The
Board considers the base case forecasts to be appropriate and
balanced best estimates.
20. Investments
Shares in Group undertakings:
Company
31 Dec 31 Dec
19 $'000 18 $'000
At 1 January 5,491 11,821
Investment in Shuak BV 2,800 35
Impairment of investment in Shuak BV (2,800) (143)
Impairment of investment in Copper Bay - (6,222)
At 31 December 5,491 5,491
Investments in Group undertakings are recorded at cost which is
the fair value of the consideration paid, less impairment.
Details of the Company holdings are included in the table
below:
Date
Registered office CAML % CAML of incorporation
Subsidiary address Activity 2019 % 2018
Herikerbergweg
CAML Kazakhstan 238, 1101 CM Amsterdam, 23 Jun
BV The Netherlands Holding Company 100 100 08
Herikerbergweg
238, 1101 CM Amsterdam, 20 Sep
Shuak BV The Netherlands Holding Company 80 80 16
Business Centre
No. 2, 4 Mira Street, Kounrad project 6 Feb
Sary Kazna LLP Balkhash, Kazakhstan (SUC operations) 100 100 06
Business Centre
Kounrad Copper No. 2, 4 Mira Street, Kounrad project 29 Apr
Company LLP Balkhash, Kazakhstan (SX-EW plant) 100 100 08
Business Centre
No. 2, 4 Mira Street, Shuak project 5 Oct
Ken Shuak LLP Balkhash, Kazakhstan (exploration) 80 80 16
Masters House,
107 Hammersmith
Road, London, W14 29 Oct
Copper Bay Limited 0QH, United Kingdom Holding Company 75* 75* 10
Masters House,
107 Hammersmith
Copper Bay (UK) Road, London, W14 9 Nov
Ltd 0QH, United Kingdom Holding Company 75* 75* 11
Ebro 2740, Oficina
Copper Bay Chile 603, Las Condes, 12 Oct
Limitada Santiago, Chile Holding Company 75* 75* 11
Ebro 2740, Oficina
Minera Playa Verde 603, Las Condes, Exploration - 20 Oct
Limitada Santiago, Chile Copper 75* 75* 11
Masters House,
107 Hammersmith
Road, London, W14 Seller of zinc 5 Sep
CAML MK Limited 0QH, United Kingdom and lead concentrate 100 100 17
Cannon's Court,
22 Victoria St,
CMK Resources Hamilton HM12, 19 June
Limited Bermuda Holding Company 100 100 2015
Prins Bernhardplein
200
1097 JB Amsterham, 30 June
CMK Mining B.V. The Netherlands Holding Company 100 100 2015
Ivo Lola Ribar
CMK Europe SPLLC no. 57-1/6, 1000 10 July
Skopje Skopje, North Macedonia Holding Company 100 100 2015
28 Rudarska Str,
Rudnik SASA DOOEL Makedonska Kamenica, 22 June
Makedonska Kamenica 2304, North Macedonia Sasa project 100 100 2005
*Fully diluted basis
CAML MK
For the period ended 31 December 2019, CAML MK Limited
(registered number: 10946728) has opted to take advantage of a
statutory exemption from audit under section 479A of the Companies
Act 2006 relating to subsidiary companies. The members of CAML MK
Limited have not required it to obtain an audit of their financial
statements for the period ended 31 December 2019. In order to
facilitate the adoption of this exemption, Central Asia Metals plc,
the parent company of the subsidiaries concerned, undertakes to
provide a guarantee under Section 479C of the Companies Act 2006 in
respect of CAML MK Limited.
Shuak
In February 2020, the Group reduced its effective interest in
Ken Shuak LLP from 80% to 10%. The Group will not be required to
contribute towards future costs of the project. The asset has been
fully impaired.
CMK Resources Limited
During 2019, CMK Mining B.V. (formally CMK Mining Limited
(Bermuda) was reincorporated from Bermuda into the Netherlands.
Prior to this reincorporation, CMK Resources Limited transferred
its shareholding in CMK Mining B.V. to CAML MK Limited . CMK
Resources Limited was liquidated in February 2020, see note 37.
21. Assets held for sale
The assets and liabilities of the Shuak entities continue to be
presented as held for sale in the Statement of Financial Position.
During the prior year, the exploration assets and property, plant
and equipment held in Shuak were impaired in full. In February
2020, the Group reduced its effective interest in the Shuak project
from 80% to 10%. The Group will not be required to contribute
towards future costs of the project.
The assets and liabilities of the Copper Bay entities continue
to be presented as held for sale in the Statement of Financial
Position following the decision of the CAML Board to sell the
project in August 2017 and the Company progresses it's sale
process. The results of the Copper Bay entities for the year ended
31 December 2019 and the comparative year ended 31 December 2018
are shown within discontinued operations in the Consolidated Income
Statement. During the prior year, the exploration assets and
property, plant and equipment held in Copper Bay were impaired in
full as although the Group is confident of making a sale in the
near future, it is not clear of the cash generative abilities of
these assets.
Assets of disposal group classified as held for sale: 31 Dec 31 Dec
19 $'000 18 $'000
Cash and cash equivalents 106 58
Trade and other receivables 113 3
219 61
Liabilities of disposal group classified 31 Dec 31 Dec
as held for sale: 19 $'000 18 $'000
Trade and other payables 73 40
Provisions 18 -
91 40
During the year the following have been recognised in
discontinued operations:
2019 2018
Profit/(loss) from discontinued operations: $'000 $'000
General and administrative expenses (170) (153)
Foreign exchange gain/(loss) 280 (927)
Finance costs (57) -
Impairment of exploration and evaluation
assets - (6,194)
Loss from discontinued operations 53 (7,274)
2019 2018
Cash flows of disposal group classified
as held for sale: $'000 $'000
Operating cash flows 48 (93)
Total cash flows 48 (93)
22. Trade and other receivables
Group Company
--------------------
31 Dec 31 Dec 31 Dec 31 Dec
Current receivables 19 $'000 18 $'000 19 $'000 18 $'000
--------- ---------
Receivable from subsidiary - - 381 215
Loans due from subsidiaries - - 341,005 373,182
Trade receivables 1,493 3,746 - -
Prepayments 2,195 1,463 387 395
VAT receivable 1,101 2,006 90 189
Other receivables 1,487 2,863 220 211
6,276 10,078 342,083 374,192
Non-current receivables
Prepayments 441 71 - -
VAT receivable 2,948 2,049 - -
3,389 2,120 - -
The carrying value of all the above receivables is a reasonable
approximation of fair value. There are no amounts past due at the
end of the reporting period that have not been impaired apart from
the VAT receivable balance as explained below. Trade and other
receivables and loans due from subsidiaries are accounted for under
IFRS 9 using the expected credit loss model and are initially
recognised at fair value and subsequently measured at amortised
cost less any allowance for expected credit losses.
There are two loans due from subsidiaries. One loan is owed by
CAML MK Limited, a directly owned subsidiary for $301,179,000
(2018: $315,116,000), accrues interest at a rate of 5% per annum
and is repayable on demand. There is another loan which is owed by
CMK Mining B.V, a subsidiary, for $39,826,000 (2018: $58,067,000)
which accrues interest at a rate of 4.75% per annum and is
repayable on demand. These loans have been assessed for expected
credit loss under IFRS 9, however as the Group's strategies are
aligned there is no realistic expectation that repayment would be
demanded. The expected future cash flows arising from the asset
exceed the intercompany loan values under various scenarios
considered so it is believed these loans can be repaid and the
expected credit loss is immaterial.
As at 31 December 2019, the total Group VAT receivable was
$4,049,000 (2018: $4,055,000) which includes an amount of
$3,086,000 (2018: $2,813,000) of VAT owed to the Group by the
Kazakhstan authorities. In 2019, the Kazakhstan authorities
refunded $403,000 and a further $125,306 was received in March 2020
and this has been classified as current trade and other receivables
as at 31 December 2019. The Group is working closely with its
advisers to recover the remaining portion. The planned means of
recovery will be through a combination of the local sales of
cathode copper to offset VAT liabilities and by a continued
dialogue with the authorities.
23. Inventories
31 Dec 31 Dec
19 18
Group $'000 $'000
Raw materials 6,431 6,901
Finished goods 852 628
7,283 7,529
The Group did not have any slow-moving, obsolete or defective
inventory as at 31 December 2019 and therefore there were no
write-offs to the Income Statement during the year (2018: nil). The
total inventory recognised through the Income Statement was
$4,955,000 (2018: $4,668,000).
24. Cash and cash equivalents and restricted cash
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
19 18 19 18
$'000 $'000 $'000 $'000
Cash at bank and on hand 14,072 21,605 3,340 2,253
Short-term deposits 14,494 13,044 14,494 13,044
Cash and cash equivalents 28,566 34,649 17,834 15,297
Restricted cash 4,013 4,376 3,824 4,222
Total cash and cash equivalent including
restricted cash 32,579 39,025 21,658 19,519
The restricted cash amount of $4,013,000 (2018: $4,376,000) is
held at bank to cover debt service compliance and Kounrad SUC
licence requirements. Short-term deposits are held at call with
banks.
The Group holds an overdraft facility in Sasa and these amounts
are disclosed in note 30 Borrowings.
Reconciliation to cash flow statements
The above figures reconcile to the amount of cash shown in the
statement of cash flows at the end of the financial year as
follows:
Group
---
31 Dec 31 Dec
19 $'000 18 $'000
Cash and cash equivalents as above (excluding
restricted cash) 28,566 34,649
Bank overdrafts (note 30) (895) -
Cash at bank and on hand in assets held
for sale (note 21) 106 58
Balance per statement of cash flows 27,777 34,707
25. Share capital and premium
Ordinary Share Treasury
Number of Shares premium shares
shares $'000 $'000 $'000
At 1 January 2018 176,498,266 1,765 191,184 (7,780)
Treasury shares - - - 1,254
At 31 December 2018 176,498,266 1,765 191,184 (6,526)
Treasury shares - - - -
At 31 December 2019 176,498,266 1,765 191,184 (6,526)
The par value of Ordinary Shares is $0.01 per share and all
shares are fully paid.
26. Currency translation reserve
Currency translation differences arose primarily on the
translation on consolidation of the Group's Kazakhstan-based and
North Macedonian-based subsidiaries whose functional currency is
the Tenge and North Macedonian Denar respectively. In addition,
currency translation differences arose on the goodwill and fair
value uplift adjustments to the carrying amounts of assets and
liabilities arising on the Kounrad Transaction and CMK Resources
acquisition which are denominated in Tenge and Denar respectively.
During 2019, a non-cash currency translation loss of $11,019,000
(2018: $10,288,000) was recognised within equity.
27. Share based payments
The Company provides rewards to staff in addition to their
salaries and annual discretionary bonuses, through the granting of
share options in the Company. The Company effectively has two such
option schemes in place, the Old Scheme and the New Scheme.
Old Scheme
The first share option plan was introduced by the Company in
February 2008 and initially had an exercise price of $6.42. On the
recommendation of the Remuneration Committee, the exercise price
for the participants was reduced to $0.68 in February 2010 to
reflect the changed economic circumstances of the Company and
maintain some form of incentive for staff. Only those staff still
employed by the Group at this time benefited from this decision and
those participants who had left the Group maintained an exercise
price of $6.42 on their options. The vesting of share options in
the plan is purely conditional upon time served by the participant
and as at 31 December 2019, all options have fully vested.
New Scheme
The Company introduced the second share option plan in October
2011. This scheme has an exercise price of effectively nil for the
participants. The share options granted during 2012 until 2018
under this scheme were based on the achievement by the Group and
the participant of the performance targets as determined by the
CAML Remuneration Committee that are required to be met in year one
and then options could be exercised one third annually from the end
of year one. Options granted during 2012 to 2018 had straight
forward conditions attached and were valued using a Black-Scholes
model.
Share options granted in 2019 vest after three years depending
on achievement of the Group of performance target relating to the
level of absolute total shareholder return compound annual growth
rate of the value of the Company's shares over the performance
period of three financial years ending 31 December 2021. The fair
value at grant date is independently determined using a Monte Carlo
simulation model that takes into account the exercise price, the
term of the option, the impact of dilution (where material), the
share price at grant date and expected price volatility of the
underlying share, the expected dividend yield, the risk-free
interest rate for the term of the option, and the correlations and
volatilities of the share price.
The assessed fair value at grant date of options granted during
the year ended 31 December 2019 was $1,450,000 in total with an
amount of $362,000 expensed for the year ended 31 December 2019. An
additional dividend related share option charge of $723,000 (2018:
$699,000) was also recognised. The number of shares covered by such
awards is increased by up to the value of dividends declared as if
these were reinvested in Company shares at the dates of payment.
The outstanding share options included in the calculation of
diluted earnings/(loss) per share (note 17) includes these
additional awards but they are excluded from the disclosures in
this note. In total, an amount of $1,085,000 (2018: $4,904,000) has
been credited to retained earnings and expensed within employee
benefits expense from continuing operations for the grant of stock
options for the year ended 31 December 2019.
The model inputs for options granted during the year ended 31
December 2019 included:
Vesting period: 3 years
Vested options are exercisable for a period of 7 years after
vesting
Exercise price: $0.01
Grant date: 30 May 2019
Expiry date: 29 May 2029
Share price at grant date: $2.71
Expected price volatility of the Company's shares: 15%
Risk-free interest rate: 1.84%
As at 31 December 2019, nil (2018: 16,000) Old Scheme options
and 4,182,729 (2018: 3,295,600) New Scheme options (including those
issued to Nurlan Zhakupov) were outstanding. Share options are
granted to Directors and selected employees. The exercise price of
the granted options is presented in the table below for every
grant. The Company has the option but not the legal or constructive
obligation to repurchase or settle the options in cash.
Movements in the number of share options outstanding and their
related weighted average price are as following:
2019 2018
Average Average
exercise exercise
price price
in $ per in $ per
share Options share Options
option (number) option (number)
At 1 January 0.01 3,311,600 0.39 2,772,260
Granted 0.01 1,124,877 0.01 1,067,414
Exercised 0.08 (156,627) 0.01 (364,074)
Expired - - 6.42 (164,000)
Non-vesting 0.01 (97,121) - -
At 31 December 0.01 4,182,729 0.01 3,311,600
Non-vesting shares relates to options granted for which the
performance targets were not met. Out of the outstanding options
of
4,182,729 (2018: 3,311,600), 2,149,192 options (2018: 1,505,830)
were exercisable as at 31 December 2019 excluding the value of
additional share options for dividends declared on those
outstanding. The related weighted average share price at the time
of exercise was $2.73 (2018: $3.71) per share.
Share options exercised by the Directors during the year are
disclosed in the Remuneration Committee Report.
Share options outstanding at the end of the year have the
following expiry date and exercise prices:
Option
Expiry exercise 2019 2018
Grant - vest date price $ Share options
of option (number)
Old Scheme:
21 Feb
21 Feb 10 20 0.68 - 16,000
New Scheme:
8 May 12 7 May 22 0.01 100,000 100,000
23 Jul
24 Jul 13 23 0.01 60,155 60,155
3 Jun 14 2 Jun 24 0.01 196,355 196,355
8 Oct 14 7 Oct 24 0.01 214,354 214,354
21 Apr
22 Apr 15 25 0.01 358,948 358,948
18 Apr
18 Apr 16 26 0.01 533,157 621,790
21 Apr
21 Apr 17 27 0.01 642,376 676,583
2 May 18 2 May 28 0.01 952,507 1,067,415
30 May 19 2 May 29 0.01 1,124,877 -
4,182,729 3,311,600
Employee Benefit Trust
The Company set up an Employee Benefit Trust ('EBT') during 2009
as a means of incentivising certain Directors and senior management
of CAML prior to the Initial Public Offering ('IPO'). All of the
shares awarded as part of the EBT scheme vested on the successful
completion of the IPO on 30 September 2010.
2,534,688 Ordinary Shares were initially issued as part of the
arrangements in December 2009 followed by a further issue of
853,258 in September 2010. The shares were issued at the exercise
price of $0.68, which was the best estimate of the Company's
valuation at the time. Details of the awards to Directors of the
Company are contained in the Remuneration Committee Report.
28. Trade and other payables
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
19 18 $'000 19 $'000 18 $'000
$'000
Trade and other payables including accruals 8,981 11,137 4,760 4,805
Deferred consideration - 6,500 - -
Corporation tax, social security and
other taxes 3,324 3,279 205 191
12,305 20,916 4,965 4,996
The carrying value of all the above payables is equivalent to
fair value.
In April 2019, an agreement with the previous owners of CMK
Resources Limited for receipt of $5,500,000 was finalised relating
to the $5,900,000 withholding tax liability in North Macedonia that
relates to the activities of CMK Europe prior to CAML ownership.
During the year, the Group has paid the remaining $6,500,000 of
deferred consideration.
The Group made a provision for the 2019 Kazakhstan corporate
income tax liability of $424,000 (2018: $773,000) having paid an
amount of $13,284,000 in advance during the year (2018:
$13,588,000). $841,000 was also paid during the year in relation to
2018 corporate income tax (2018: $1,259,000 in relation to
2017).
The Group made a provision for the 2019 North Macedonian
corporate income tax liability of $nil (2018: $1,293,000) having
paid an amount of $6,211,000 in advance during the year which
exceeded the final liability (2018: $8,191,000). $792,000 was also
paid during the year in relation to 2018 corporate income tax
(2018: $2,840,000 in relation to 2017).
All Group and Company trade and other payables are payable
within less than one year for both reporting periods.
29. Silver streaming commitment
The carrying amounts of the silver streaming commitment for
silver delivery are as follows:
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
19 $'000 18 $'000 19 $'000 18
$'000
Current 2,140 2,263 - -
Non-current 20,755 22,905 - -
22,895 25,168 - -
On 1 September 2016, the CMK Group entered into a Silver
Purchase Agreement. The Group acquired this agreement as part of
the acquisition of the CMK Group and inherited a silver streaming
commitment related to the production of silver during the life of
the mine. The reduction in the silver streaming commitment is
recognised in the Income Statement within cost of sales as the
silver is delivered based on the units of production.
30. Borrowings
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
19 18 $'000 19 18
$'000 $'000 $'000
Secured: Non-current
Bank loans 69,473 106,549 69,473 106,549
Secured: Current
Bank loans 38,400 38,400 38,400 38,400
Unsecured: Current
Bank overdraft 895 - - -
Total Current 39,295 38,400 38,400 38,400
Total borrowings 108,768 144,949 107,873 144,949
The carrying value of loans approximates fair value:
Carrying amount Fair value
31 Dec 31 Dec 31 Dec 31 Dec
19 $'000 18 $'000 19 $'000 18 $'000
Traxys 107,873 144,949 107,873 144,949
Bank overdraft 895 - 895 -
108,768 144,949 108,768 144,949
The movement on borrowings can be summarised as follows:
Group Company
31 Dec 31 Dec 31 Dec 31 Dec
19 18 $'000 19 18
$'000 $'000 $'000
Balance at 1 January 144,949 181,914 144,949 113,711
Drawdown of borrowings - 60,809 - 60,000
Repayment of borrowings (38,400) (99,265) (38,400) (28,744)
Finance charge interest 9,455 12,065 9,455 7,142
Finance charge unwinding of directly
attributable fees 1,324 2,323 1,324 814
Interest paid (9,455) (12,065) (9,455) (7,142)
Gain on modification of the debt facility - (832) - (832)
Overdraft drawdown 895 - - -
Balance at 31 December 108,768 144,949 107,873 144,949
During the year, $38,400,000 (2018: $38,500,000) of the
principal amount of Group debt was repaid as well as a further
$9,455,000 (2018: $12,065,000) interest. As at 31 December 2019,
non-current and current borrowings were $69,473,000 and $38,400,000
respectively (2018: $106,549,000 and $38,400,000 respectively).
The Group holds one corporate debt package with Traxys Europe
S.A. repayable on 4 November 2022. Interest is payable at LIBOR
plus 4.75% and reduced to LIBOR plus 4.00% with effect from 27
March 2020. Security is provided over the shares in CAML Kazakhstan
BV, certain bank accounts and the Kounrad off-take agreement as
well as over the Sasa off-take agreement.
The debt is subject to financial covenants which include the
monitoring of gearing and leverage ratios and these are all
currently complied with.
In August 2019, an overdraft facility was agreed with
Komercijalna Banka AD Skopje with a fixed interest rate of 3.80%
denominated in Macedonian Denar. The overdraft was utilised for the
first time in December 2019.
As at 31 December 2019, the Group measured the fair value using
techniques for which all inputs which have a significant effect on
the recorded fair value are observable, either directly or
indirectly (Level 2).
The different levels have been defined as follows:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
31. Provisions for other liabilities and charges
Group
Asset Employee Other
retirement retirement employee
obligation benefits benefits Legal claims Total
$'000 $'000 $'000 $'000 $'000
At 1 January 2018 4,576 180 154 455 5,365
Change in estimate (159) 55 21 - (83)
Settlements of provision - (31) (3) (108) (142)
Unwinding of discount (note
15) 489 - - - 489
Exchange rate difference (478) (8) (7) (20) (513)
At 31 December 2018 4,428 196 165 327 5,116
Change in estimate 3,664 39 36 - 3,739
Settlements of provision - (32) (11) (30) (73)
Unwinding of discount (note
15) 329 - - - 329
Exchange rate difference (23) (4) (4) (7) (38)
At 31 December 2019 8,398 199 186 290 9,073
Non-current 8,398 171 168 290 9,027
Current - 28 18 - 46
At 31 December 2019 8,398 199 186 290 9,073
a) Asset retirement obligation
The Group provides for the asset retirement obligation
associated with the mining activities at Kounrad, estimated
internally to be required in 2034. The provision is recognised at
the net present value of future expected costs using a discount
rate of 8.07% (2018: 8.07%). The increase in estimate in relation
to the asset retirement obligation of $750,000 (2018: reduction of
$159,000) is due to a combination of adjusting the provision
recognised at the net present value of future expected costs using
an inflation rate of 4.13% (2018: 5.59%) as well as updating the
provision for management's best estimate of the costs that will be
incurred based on current contractual and regulatory requirements
and the estimated useful life of mine to 2034.
Under current legislation entities operating mining and related
activities in North Macedonia are required to take remedial action
for the land where such activities have occurred based on a plan
approved by the Ministry of the Environment as well as in
accordance with international best practices. In 2017, the Group
engaged an independent expert to conduct an independent assessment
on the environment of the mining activities of the Group and to
prepare an assessment of the restoration and the relevant costs
connected with the mine, and the mining properties and in 2019, the
Group engaged the University of Shtip to assess future costs in
relation to TSF3.2 and TSF4. The final asset retirement obligation
used these external assessment as well as the Group's own internal
calculations to estimate the future potential obligations. The
expected current cash flows were projected over the useful life of
the mining sites and discounted to 2019 terms using a discount rate
of 7.25% (2018: 7.87%). The cost of the related assets are
depreciated over the useful life of the assets and are included in
property, plant and equipment. The increase in estimate in relation
to the asset retirement obligation of $2,914,000 (2018: reduction
of $10,000) is from updating the provision for management's best
estimate of the costs that will be incurred based on current
contractual and regulatory requirements and the estimated useful
life of mine to 2038.
b) Employee retirement benefit
All employers in North Macedonia are obliged to pay employees
minimum severance pay on retirement equal to two months of the
average monthly salary applicable in the country at the time of
retirement. The retirement benefit obligation is stated at the
present value of expected future payments to employees with respect
to employment retirement pay. The present value of expected future
payments to employees is determined by an independent authorised
actuary in accordance with the prevailing rules of actuarial
mathematics.
c) Other employee benefit
The Group is also obliged to pay jubilee anniversary awards in
North Macedonia for each ten years of continuous service of the
employee. Provisions for termination and retirement obligations are
recognised in accordance with actuary calculations. Basic 2019
actuary assumptions are used as follows:
Discount rate: 3.0%
Expected rate of salary increase: 2.2%
d) Legal claims
The Group is party to certain legal claims and the recognised
provision reflects management's best estimate of the most likely
outcome.
32. Cash generated from operations
(Group) 2019 2018
Note $'000 $'000
Profit before income tax including discontinued
operations 67,847 65,406
Adjustments for:
Depreciation and amortisation 30,080 33,342
Silver stream commitment (2,285) (1,599)
Loss on disposal of property, plant and
equipment 10 481 561
Foreign exchange gain/(loss) (375) 3,879
Share based payments 27 1,085 4,904
Finance income 14 (336) (264)
Finance costs 15 11,153 14,999
Other expenses 10 - 576
Impairment of held for sale assets 21 - 6,194
Changes in working capital:
Inventories 23 246 (683)
Trade and other receivables 22 (1,740) (386)
Trade and other payables 28 (940) 3,550
Provisions for other liabilities and charges 31 (73) (348)
Cash generated from operations 105,143 130,131
Non-cash investing activities
In April 2019, a settlement agreement with the previous owners
of CMK Resources Limited was finalised in respect of the $5,900,000
withholding tax liability in North Macedonia paid in the prior
year. The liability related to activities of CMK Europe prior to
CAML's ownership. The settlement amounted to $5,500,000 and
accordingly, during 2019, CAML agreed to pay only the balancing
$6,500,000 due in respect of the $12,000,000 deferred consideration
owed to the previous owners.
33. Commitments
Significant expenditure contracted for at the end of the
reporting period but not recognised as liabilities is as
follows:
Group 31 Dec 31 Dec
19 $'000 18 $'000
Property, plant and equipment 851 475
Other 340 570
1,191 1,045
34. Dividend per share
In line with the Company dividend policy, the Company paid
$32,164,000 in 2019 (2018: $39,603,000) which consisted of a 2019
interim dividend of 6.5 pence per share and a final dividend for
2018 of 8.0 pence per share (2018: interim dividend of 6.5 pence
per share and a final dividend for 2017 of 10.0 pence per
share).
35. Related party transactions
Key management remuneration
Key management remuneration comprises the Directors'
remuneration, including Non-Executive Directors, disclosed in the
Remuneration Committee Report.
Non-Executive Directors
During the year, the Group paid consultancy fees of nil (2018:
$13,261) to Nurlan Zhakupov, a Non-Executive Director of the
Company, under a consultancy agreement in terms of which Mr
Zhakupov provides services over and above his normal duties.
The Kounrad foundation, a vehicle through which Kounrad donates
to the community, was advanced $195,000 (2018: $226,000). This is a
related party by virtue of common Directors.
36. Deferred income tax asset and liability
Group
The movements in the Group's deferred tax assets and liabilities
are as follows:
Currency (Debit)/credit
translation to income
At 1 differences statement At 31 December
January $'000
2019 $'000 2019 $'000
$'000
Other timing differences (77) - (113) (190)
Deferred tax liability on fair value adjustment
on Kounrad Transaction (6,681) (51) 304 (6,428)
Deferred tax liability on fair value adjustment
on CMK acquisition (20,912) 575 1,132 (19,205)
Deferred tax liability, net (27,670) 524 1,323 (25,823)
Reflected in the statement of financial 31 Dec 31 Dec
position as: 19 18
$'000 $'000
Deferred tax asset 266 -
Deferred tax liability (26,089) (27,670)
A taxable temporary difference arose as a result of the Kounrad
Transaction and CMK Resources Limited acquisition, where the
carrying amount of the assets acquired were increased to fair value
at the date of acquisition but the tax base remained at cost. The
deferred tax liability arising from these taxable temporary
differences has been reduced by $1,436,000 during the year (2018:
$1,535,000) to reflect the tax consequences of depreciating and
amortising the recognised fair values of the assets during the
year.
Currency (Debit)/credit
At 1 translation to income At 31 December
January differences statement 2018 $'000
2018 $'000 $'000
$'000
Other timing differences (121) 10 34 (77)
Deferred tax liability on fair value
adjustment on Kounrad Transaction (8,103) 1,056 366 (6,681)
Deferred tax liability on fair value
adjustment on CMK acquisition (22,972) 891 1,169 (20,912)
Deferred tax liability, net (31,196) 1,957 1,569 (27,670)
At 31 At 31
December December
2019 2018
$'000 $'000
Deferred tax liability due within
12 months (1,345) (1,017)
Deferred tax liability due after
12 months (24,744) (26,653)
Deferred tax liability, net (26,089) (27,670)
All deferred tax assets are due after 12 months.
Where the realisation of deferred tax assets is dependent on
future profits, the Group recognises losses carried forward and
other deferred tax assets only to the extent that the realisation
of the related tax benefit through future taxable profits is
probable.
The Group did not recognise other potential deferred tax assets
arising from losses of $7,417,000 (2018: $8,465,000) as there is
insufficient evidence of future taxable profits within the entities
concerned. Unrecognised losses can be carried forward
indefinitely.
At 31 December 2019, the Group had other deferred tax assets of
$2,810,000 (2018: $2,085,000) in respect of share-based payments
and other temporary differences which had not been recognised
because of insufficient evidence of future taxable profits within
the entities concerned.
There are no significant unrecognised temporary differences
associated with undistributed profits of subsidiaries at 31
December 2019 and 2018, respectively.
Company
At 31 December 2019 and 2018 respectively, the Company had no
recognised deferred tax assets or liabilities.
At 31 December 2019, the Company had not recognised potential
deferred tax assets arising from losses of $7,417,000 (2018:
$8,465,000) as there is insufficient evidence of future taxable
profits. The losses can be carried forward indefinitely.
At 31 December 2019, the Company had other deferred tax assets
of $2,810,000 (2018: $2,085,000) in respect of share-based payments
and other temporary differences which had not been recognised
because of insufficient evidence of future taxable profits.
37. Events after the reporting period
On 6 February 2020, the Group reduced its effective interest in
Ken Shuak LLP from 80% to 10%. The Group will not be required to
contribute towards future costs of the project.
On 7 February 2020, the Group liquidated CMK Resources Limited,
a wholly owned subsidiary.
The price of copper, zinc and lead have been impacted in 2020 by
concerns over the outbreak of the COVID-19 pandemic and this will
impact on Group revenue for the year ended 31 December 2020 and may
impact future asset values should they remain depressed. The CAML
Board has considered and debated a substantial range of possible
scenarios of the Group's operations, financial position and
forecasts covering a period of at least the next 12 months from the
date of this report and these are discussed in note 2. Whilst there
has been little impact of COVID-19 to our operations at present,
restrictions on the movement of goods, people and services could
impact the Group's operations and management.
[1] See Financial Review section for definition of non-IFRS
alternative performance measures
[2] The cash balance figure disclosed includes restricted cash
balance
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UAOBRRSUOOAR
(END) Dow Jones Newswires
April 01, 2020 02:00 ET (06:00 GMT)
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