Central Asia Metals maintains interim dividend amid weak commodity market

Central Asia Metals declared an interim dividend of 6.5 pence per share in its interim results on Tuesday, in line with its half-year distribution in 2018, even as gross group revenue slipped to $89.9m (£72.52m) from $102.4m year-on-year.

The AIM-traded firm said the equivalent cash cost of Sasa C1 zinc was 47 US cents per pound for the six months ended 30 June, rising from 44 cents per pound year-on-year, while the cash cost of Kounrad C1 copper fell to 51 cents per pound from 53 cents per pound.

Group EBITDA was down to $56.7m from $64.6m, which represented a margin of 63% - the same as that reported a year prior.

Profit before tax slipped to $35.5m from $38.4m, with earnings per share from continuing operations totalling 15.42 cents, compared to 16.37 cents 12 months earlier.

Central Asia Metals said the group’s cash balance as at 30 June was $30.2m, compared to $39.0m at the end of 2018.

The company said it made first half debt repayments of $19.2m, with group net debt as at period end being $100.4m, narrowing from $110.3m at the end of the 2018 year.

Free cash flow stood at $35.5m for the period, rising from $32.4m at the same time last year.

On the operational front, Central Asia Metals recorded one lost time injury at Sasa, down from four in the first half of 2018, making for a lost time injury frequency rate of 0.89, compared to 3.78 year-on-year.

Sasa zinc-in-concentrate production totalled 11,517 tonnes for the period, rising marginally from 11,020 tonnes, while payable zinc sales were recorded at 9,708 tonnes, improving from 9,256 tonnes.

Sasa lead-in-concentrate production was 14,357 tonnes, broadly in line with the 14,386 tonnes reported a year earlier, while payable lead sales were 13,731 tonnes, compared to 13,701 tonnes year-on-year.

Kounrad copper production fell slightly to 6,594 tonnes from 6,747 tonnes, with copper sales rising to 6,461 tonnes from 6,044 tonnes.

Looking ahead, Central Asia Metals said it was on course to achieve its 2019 base metal production guidance of between 12,500 and 13,500 tonnes of copper, 22,000 to 24,000 tonnes of zinc, and between 28,000 and 30,000 tonnes of lead.

“We have today released a strong set of financial results, reflecting our reliable metal output and demonstrating that we have maintained our low costs of production,” said chief executive officer Nigel Robinson.

“We were pleased to have sustained the EBITDA margin of 63% and to have generated an increased free cash flow of 10% period on period.

“Despite a period of weak commodity prices leading to a 12% reduction in revenue when compared to the first half of 2018, we have delivered earnings per share of 15.42 cents, only 6% lower than the previous corresponding period.”

Robinson noted the company’s announcement of a 6.5 pence interim dividend, which he said represented 40% of the firm’s first half free cash flow.

“During the first half of 2019, we have also added value for shareholders in repaying over $19m of our borrowings, ending the period with net debt of $100.4m.

“While our business development activities have continued during the first half, we aim to strike the right balance for our shareholders in terms of capital allocation.

“Therefore, deleveraging and continuing to pay the sector leading dividends, for which we have become known, is a priority.”