-- ADDS BROKER COMMENT AND UPDATED SHARE PRICE --
The ongoing impact of Central Asia’s (LON:CAML) expansion plans was laid bare when the company released production numbers for the six months to June 2015 which showed an improvement of almost 7% on the corresponding period a year ago.
In the second quarter of 2015 Central Asia’s Kounrad copper project in Kazakhstan produced 3,093 tonnes of cathode copper, bringing total production for the first half up to 5,444 tonnes.
Last year Central Asia completed an expansion of its boiler house capacity, enabling it to treat higher volumes of copper in solution during the winter months in Kazakhstan, which can be particularly severe.
Broker Peel Hunt said: “The boilers that were installed in 2014 have done their job in sustaining higher temperatures and hence flow rates of raffinate back onto the dumps.”
This, it said, has allowed stronger first half production compared with 2014.
It’s not all good news, however.
Following on from the recent news that there had been a fault in the solvent extraction unit at Kounrad, the company has now revised down its overall production target for 2015 from 13,000 tonnes of copper to 12,000 tonnes.
At present, the solvent-extraction electro-winning plant is running at only 45% capacity, and although the relevant new parts have been ordered, the company’s best estimate is that the overall circuit won’t get back to running at design capacity till early September.
In spite of all that, as chief executive Nick Clarke pointed out, Central Asia still looks set this year to beat the 11,136 tonnes of production delivered in 2014.
He also pointed out that the incident was “the first such interruption in the plant’s production.”
Peel Hunt also adds that the figure is only slightly below its current estimate of 12,150 tonnes and said: “given management’s track record since initial commissioning, we are comfortable with our implied small beat.”
And the market, it seems, has already taken that on board.
This is a company that has consistently under-promised and over-delivered. On the day that news of the incident broke the shares managed to gain 2p to 177p, suggesting that at this stage investors are prepared to be pretty forgiving.