No final dividend for Central Asia Metals shareholders

Central Asia Metals reported group gross revenue of $180.8m in its full-year results on Wednesday, down from $204.2m year-on-year, with group net revenue sliding to $171.8m from $194.4m.

The AIM-traded firm said its full-year dividend, consisting of the interim distribution only, was 6.5p, down from 14.5p.

That equated to a 4.5% yield on the current share price.

Group profit before tax stood at $67.8m for the year ended 31 December, down from $72.7m.

It reported a Sasa 2019 C1 zinc equivalent cash cost of 47 cents per pound, up from 46 cents in 2018, while the Kounrad 2019 C1 cash cost was 52 cents per pound, down from 54 cents.

Group EBITDA slipped to $108.6m from $125.3m, with the company reporting an EBITDA margin of 60%, down from 61%.

Earnings per share from continuing operations totalled 29.36 cents, compared to 31.33 cents in the prior year, while group free cash flow for the year was $69.8m, down from an adjusted $73.8m in the prior year.

Cash in the bank as at 31 December was $32.6m, compared to $39m at the start of the year, while group net debt narrowed to $80.2m, from $110.3m.

Gross debt repayments for 2019 totalled $38.4m, broadly in line with the $38.5m it repaid in 2018.

Zinc in concentrate production was 23,369 tonnes for the year, up from 22,532 tonnes, while lead in concentrate production came in at 29,201 tonnes, down slightly from 29,388 tonnes.

Copper production was 13,771 tonnes, falling from 14,049 tonnes, and the firm reported one lost time injury in 2019, down from eight a year earlier.

Looking at its operations, particularly in light of the Covid-19 coronavirus pandemic, Central Asia Metals said no group staff or contractors had been diagnosed with the virus.

It confirmed that both Sasa and Kounrad remained fully operational, with “strong” 2020 operational performances to date, and added that despite host government border restrictions for the movement of people, metal sales had thus far been unaffected.

It did note, however, that the situation was “intensifying” in both North Macedonia and Kazakhstan, with a rising number of cases.

No final dividend was being proposed for 2019 as a result of the pandemic, with the board saying its short-term priority was the welfare of all its employees and contractors.

It said the decision was “prudent” to maintain its strong cash position, and said the decision would be revisited pending greater clarity on the impact of Covid-19.

“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,” said chief executive officer Nigel Robinson.

“We ended the 2019 financial year in a strong position with $32.6m cash in the bank and gross debt reduced to $108.8m, 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.”

Robinson reiterated that the firm’s top priority was the welfare of its employees and contractors.

He said both Sasa and Kounrad remained fully operational at present, adding that the company had experienced “no disruption” to either the production or sales of its 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 had relatively few cases of Covid-19, the numbers were rising daily, with Robinson saying they were seeing the subsequent escalation of government measures and so could not 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.”

Nigel Robinson said the company remained confident for the medium and long-term future of the business, and intended to review the dividend decision as the year progressed and as the board gained more clarity on the Covid-19 situation and its impact on its 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.”

At 1411 BST, shares in Central Asia Metals were down 19.08% at 126.4p.