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October 15, 2013
Central Asia Metals Pays Another US$5.4 Million Out To Shareholders, As Production Continues On Track In Kazakhstan
By Alastair Ford
Another day, another strong quarter from Central Asia Metals, the company that has made a spectacular success of extracting copper from old dumps in Kazakhstan.
Copper production at Kounrad
Copper production at Kounrad
It may not be a romantic business model, but the market is nonetheless enamoured, as a quick look at the company’s share price graph shows.
Central Asia’s shares have risen by more than 50 per cent since this time last year, from 98p to the current 151p.
Not a bad effort, given that the wider mining markets crumbled over the same period and share prices went through the floor.
So how has Central Asia done it?
The answer comes in two parts, both given equal weight by the company’s punchy chief executive Nick Clarke.
The first is that there’s a strong operating business on the ground. The Kounrad project is well-financed, was well thought out, and was built by people who’ve had experience operating on the ground in Kazakhstan before.
The second is that Central Asia is not shy, and has never been shy in rewarding shareholders for their faith in backing the company.
“We raised US$60 million at IPO”, says Nick. “Already US$21.6 million has been returned to shareholders in the shape of dividends and buybacks. That represents 36 per cent of the money we raised at IPO.”
Given that fund managers across the world have been screaming at mining companies to provide decent yields from decent operations, Central Asia’s track record of fitting the bill from a standing start has stood it in good stead.
The latest dividend, announced in the most recent results, for the six months to June 2013, came in at 4p, putting the company on a prospective yield of around five per cent. Given that Central Asia’s shares are also well up on their 96p listing price, it’s hardly surprising that investors have been buying in.
“But it isn’t just about the figures”, says Nick. “We’re only able to return the money to shareholders because we’ve got a good strong operating business in Kazakhstan. The plant has a 10,000 tonne nameplate capacity and in the first half of the year we produced just under 5,000 tonnes of copper. We’re well on track to complete 10,000 tonnes, especially since in each of August and September we produced just over 1,100 tonnes of copper.”
Because it’s produced from dumps, costs are pretty low too. “Cash costs are in the lowest quartile”, says Nick simple. It all adds up to a pretty secure financial position. The company is debt free, and had net cash of US$26.5 million at the end of June, but by the end of September that had risen to US$43 million, albeit that US$5.4 million is earmarked as dividend payments.
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