Berenberg dowgrades Central Asia Metals to 'hold'

Central Asia Metals said copper volumes from its Kounrad mine in Kazakhstan came in at 3,600 tonnes, just short of its 3,700-tonne estimate, while at the Sasa mine in North Macedonia, ore mined of 196,000 tonnes came in lighter than estimates for a 201,000-tonne print.

Zinc volumes of 4,800 tonnes were "a bit light" versus estimates of 5,200 tonnes and grades were 2.92% versus Berenberg's 3.05% estimate, meaning that the miss was a mixture of throughput and grades. Lead volumes of 6,900 tonnes were broadly in line with estimates of 7,000 tonnes.

The German bank pointed out that the company's guidance has been reiterated, with Sasa at the low end, highlighting that there had been no change since its previous guidance.

Berenberg also said growth projects at Sasa appeared to be on track, with the backfill plant operating consistently, and dry commissioning of the dry stack tailings plant now operating well, with the initial placement of the filter cake expected in Q424.

"We continue to think that Central Asia Metals is an excellent business, with strong FCF generation and an attractive (circa 8-9%) dividend yield. However, there is some risk to its 2024 guidance, and given the higher operational risk profile as the company adjusts its mining method at Sasa, we think that the market would prefer it to deliver on its guidance rather than give management the benefit of the doubt. Further, a M&A overhang remains a headwind for the market, with a deal still needed to diversify and grow the business," said Berenberg.