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Central Asia Metals completes expansion on time and within budget

Published: 07:56 21 May 2015 BST

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The US$13.4mln programme to extend its solvent extraction electro-winning facility will see output jump to 15,000 tonnes of copper a year from over 11,000 tonnes last year.

Kazakhstan-focused Central Asia Metals (LON:CAML) has completed its latest expansion phase on time and within budget.

The US$13.4mln programme to extend its solvent extraction electro-winning facility will see output jump to 15,000 tonnes of copper a year from over 11,000 tonnes last year.

It is on track for output of 13,000 tonnes from the Kounrad copper recovery plant in 2015.

Chief executive Nick Clarke said: "The completion and successful commissioning of the expanded plant at Kounrad is another important milestone achieved by the company in its development of the project. 

“The credit for this noteworthy achievement is principally due to our dedicated team in Kazakhstan whose hard work, diligence and expertise made it possible to accomplish the expansion on time and within budget. 

“The company's main focus is now on implementing the stage-two expansion programme, the approvals process for which is proceeding as scheduled, and on continuing to actively seek growth opportunities in Central Asia and other regions."

The next big investment will be on the western dumps to provide the next 15 years of material. The project is likely to cost US$18-19mln to complete and will go live in 2017.

Central Asia Metals is a rarity in the bombed-out natural resources sector.

It is profitable, debt-free and dividend paying. That the Kazakhstan copper producer achieved this as the price of the metal hit a five-year low is all the more remarkable.

Kounrad, its flagship asset, doesn’t fit the template for a traditional mining operation as its reserves are held in mineralised dumps from an open pit worked from 1936 to 2005.

Over the decades waste dumps of oxides and low-grade sulphides of copper were formed.

Central Asia Metals uses a process called in situ leaching that relies on a 2,300km network of plastic pipes to run weak acid solution through this waste material that picks up copper as it percolates through the piles of waste material.

This solution then emerges into trenches, which lead to collector ponds that feed a solvent extraction electro-winning (SX-EW) plant.

There the copper is extracted using a very simple process that involves running electricity through this mineral-rich liquid mix.

While it sounds a bit of a kerfuffle, this is an incredibly easy, efficient and, crucially, cheap method of producing copper.

The cost before shipping and royalties is less than 40 cents a pound, while the all-in figure is 71 cents. This compares to a current copper spot price of US$2.88 per pound.

These ultra-low overheads explain how CAML was able to post underlying earnings (EBITDA) of US$47.3mln on revenues of US$76.6mln in 2104.

Kounrad is not so much a mine as a cash machine that helped support a dividend of 12.5p a share last year – equating to a yield of 7% at today’s price.

The company has pledged to pay out at least 20% of revenues every year (subject to it maintaining a certain level of cash cover). This policy means investors will benefit directly from any recovery in the rock bottom copper price.


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