Central Asia Metals Regulatory News (CAML)

30 March 2015

CENTRAL ASIA METALS PLC

("CAML" or the "Company" or "Group")

2014 Full Year Results

Central Asia Metals plc (AIM: CAML), a copper producing company, today announces its full year results for the 12 months ended 31 December 2014. The Company proposes a 7.5 pence final* dividend bringing 2014 full year dividend to 12.5 pence (5 pence interim dividend paid in October 2014 and 7.5 pence final* dividend is a 50% increase on this interim dividend).

Financial update:

· The transaction to acquire the sole ownership of Kounrad project completed in May 2014

· Record gross revenue of $76.6 million (increase of 42%, 2013: $54.1 million)

· Group EBITDA of $47.3 million (increase of 46%, 2013: $32.4 million)

· C1 cash costs of $0.71/lb (reduction of 3%, 2013: $0.73/lb)

· The proposed full year dividend represents 28% of attributable revenue for the year

· Group cash balance as at 31 December 2014 of $46.3 million (2013: $44.5 million)

Operational update:

· Kounrad record annual production of 11,136 tonnes of cathode copper (increase of 6%, 2013: 10,509 tonnes)

· Boiler-house capacity increased from 8.4MW to 14MW allowing higher winter treatment rates

· SX-EW plant utilisation increased from 97.0% to 98.7%

· Stage 1 plant expansion to 15,000 tonnes annual capacity commenced in June 2014

2015 Outlook

· Kounrad production target of 13,000 tonnes increasing to 15,000 tonnes in 2016

· Focus on cash costs to remain in lower quartile of industry cost curve

· Stage 1 expansion is under budget and on schedule for completion in Q2

· Continue to appraise business development opportunities to create further shareholder value

Nick Clarke, Chief Executive Officer of CAML, commented:

"2014 was yet another year of CAML meeting its targets as we achieved both record revenues and production. This record performance was accomplished against an increasingly challenging commodity price environment for copper, as our SX-EW plant at Kounrad delivered production in excess of our stated target of 11,000 tonnes. The expansion of the plant is firmly on track and will increase our annual production capacity further to 15,000 tonnes by 2016. A continued focus on cost control by all our employees has allowed us to remain in the lower quartile of the industry's cost curve and we are confident that this position will be maintained as we expand production. Our excellent performance in 2014 is reflected in the final dividend our Board has proposed, and we remain committed to delivering returns to all our shareholders."

 Analyst presentation conference call

There will be an analyst presentation and conference call on 30 March 2015 at 09:30 (BST). The call can be accessed by dialling +44 (0) 203 427 1910 and quoting the confirmation code 5576202. The results presentation slides will be available at http://www.centralasiametals.com/ and a replay facility will be available following the presentation.

For further information contact:

Note to editors:

Central Asia Metals, an AIM-listed UK company based in London, owns 100% of the Kounrad SX-EW copper facility in Kazakhstan. The Company also has a 52% equity interest in Copper Bay Ltd, which is a private company conducting a pre-feasibility study of the Chañaral Bay Copper Project in Chile. At the 2014 UK Stock Market Awards, CAML was named Best Basic Resources Plc. For further information, please visit www.centralasiametals.com.

*subject to capital reduction scheme as summarised in note 20 in the financial information below

CHAIRMAN'S STATEMENT

Having established the Kounrad project as a low cost copper project in Kazakhstan, we now plan to increase production to 15,000 tonnes of copper per annum by 2016. We are also looking at expanding the business where we see an opportunity to create value for our shareholders.

Dear Shareholders,

Key Achievements

It is now over four years since the Company listed on AIM and raised $60 million to implement its business plans. Thanks to the hard work, dedication and skill of our staff we have achieved a lot since that time and managed to deliver on all of our key promises to shareholders.

Since September 2010, we have now produced over 30,000 tonnes of cathode copper at Kounrad at extremely competitive cash costs of production. The CAML Board intend to propose a final dividend for 2014 of 7.5 pence per Ordinary Share subject to shareholder approval and to the proposed capital reduction as summarised in the separate RNS announcement released today. This will take the total dividend for 2014 to 12.5 pence per Ordinary Share. This latest dividend will increase the amount returned to shareholders in dividends and share buy backs since the listing to approximately $53 million.

In addition, the Company has retained sufficient cash resources to fund the $35 million expansion programme at Kounrad. Stage 1 of this expansion programme will increase the SX-EW plant's capacity to 15,000 tonnes per annum at a total capital cost of $15.5 million, inclusive of the boiler house expansion, whilst Stage 2 will commence on receipt of the relevant State approvals to enable the resource from the Western dumps to be leached and processed. The capital cost of the Stage 2 expansion is currently estimated at $19.5 million.

In May 2014, the Company completed the transaction to acquire 100% ownership of the Kounrad project. This was a key milestone for the Company and prompted the commencement of the expansion programme mentioned above. As part of the completion of the transaction, Mr Kenges Rakishev, a Non-Executive Director of the Company, also became a 20% shareholder of the Company. We are pleased to have such an influential Kazakhstan businessman as Kenges as both a Board member and a supportive major shareholder.

In recognition of the Company's achievements since the IPO, the Company was awarded 'Best Basic Resources PLC' in the UK Stock Market Awards in March 2014. The award was judged on the basis of the Company's performance within the mining sector and in comparison to its peer group and other larger mining companies.

Corporate Governance

Dr Michael Price retired from the Board in June 2014, having served as a Director of the Company since 2006. During his time with the Company, Mike served both as a valued independent Non-Executive Director and as the Chairman of the Audit and Remuneration Committees of the Board. In these roles he helped lead the transition of the governance of the Company from the private arena to the public market. The rest of the Board and I wish to record our appreciation to Mike for his independent and insightful input over many years.

Following Mike's departure, the Board has been strengthened by the appointment of David Swan in June 2014 as an independent Non-Executive Director of the Company and Chairman of the Audit Committee. David is a chartered accountant with broad commercial experience across a range of small to large companies. We are delighted to welcome David to the Board and believe he will provide great value to the Group as we continue developing CAML's controls and procedures.

The Company is committed to improving corporate governance wherever it can and the Board is well aware of the importance of maintaining strong controls and procedures across the Group's operations.

Strategy and Growth

Kazakhstan

The Company has an established presence in Kazakhstan and since the commencement of operations at Kounrad, has paid almost $50 million in various taxes to the Kazakhstan authorities, contributed close to $690,000 towards the local community and currently employs approximately 330 staff on site, the majority of whom have been recruited locally.

The Company is keen to grow its business and reputation in Kazakhstan and the expansion of operations at Kounrad is testament to this goal. As a responsible operator, we place the highest priority on our obligations to protect the environment in the area of our copper recovery operations and to comply with the applicable health and safety regulations of Kazakhstan.

Alongside the main copper production facilities at Kounrad, the Group has established a business development focus within Kazakhstan which is tasked with seeking out additional opportunities.

Outside of Kazakhstan

Elsewhere, based on our strong financial position and technical experience, the Company is keen to consider other business opportunities. Such opportunities will only be actively pursued by management so long as they can be suitably incorporated into CAML and would add significant shareholder value.

In determining this, the management team will consider a number of factors from the strategic fit within the Group's operations to the funding requirements and overall impact on Group profitability. To support our business development activities we were delighted to appoint Gavin Ferrar as our Business Development Director in June 2014. Gavin brings with him a wealth of commercial experience in the natural resources sector and will be a valuable member of the CAML team.

Outlook

During 2014, the copper price came under pressure due to increasing supply and continued concerns over the outlook for the growth of the Chinese economy. These price pressures became particularly acute in January 2015 when the copper price fell to a five and a half year low.

Whilst the current commodity price environment provides a challenge to all copper producers, from which CAML is not immune, our low operating cash costs of production at Kounrad places us in an enviable position compared to our peers.

Nigel Hurst-Brown

Chairman

CHIEF EXECUTIVE OFFICER'S STATEMENT

Since the start of the project we have exceeded annual production targets and our cash costs of production have remained in the lowest quartile on the industry cost curve.

Kounrad Operations - Record Production in 2014

During 2014, the Company's production at the Kounrad project continued to be a success. We produced 11,136 tonnes of copper cathode and surpassed our production target of 11,000 tonnes whilst maintaining a low cash cost base. During 2014, our C1 cash cost of production was $0.71/lb (2013: $0.73/lb) and fully absorbed costs within Kazakhstan were $1.30/lb (2013: $1.13/lb). The increase in fully absorbed costs is due to increased depreciation and amortisation charges as a result of the accounting treatment of the acquisition of the additional 40% share in the Kounrad project in 2014.

A total of 11,163 tonnes of copper (2013: 10,689) were sold at an average copper price of $6,794 per tonne (2013: $7,114) resulting in annual 2014 gross revenue for CAML of $76.6 million (2013: $54.1 million) and $161.4 million cumulative gross revenues to 31 December 2014 since operations commenced. This revenue stream combined with the low costs of production helped to generate a Kounrad project EBITDA for the year ended 31 December 2014 of $56.0 million.

During 2014, the utilisation rate of the plant was 98.7%. The performance and efficiency of the SX-EW plant continued to meet our expectations and is further evidence of the reliability of the plant design, equipment selection and construction methods employed from the outset.

Similarly, the quality of the copper cathodes produced continued to be of a high standard and met all contractual conditions and London Metal Exchange (LME) specifications.

Our commitments to the local community and environment continued to be a key focus during the year. Significant efforts have been made to ensure that we comply with all the local environmental and health and safety legislation.

Our Corporate Social Responsibility (CSR) Director, Nick Shirley, is based on site in Kazakhstan to lead these activities and is tasked with raising environmental and health and safety standards to ensure they meet industry best practice.

Whilst health and safety is key to the welfare of our employees, the Group did record its first lost time injury (LTI) since the commencement of construction four years ago. The injury to the employee was relatively minor and he made a quick and full recovery and has since returned to duties.

Finally, Kounrad is a valuable contributor to the Kazakhstan economy and specifically in the local area. We currently employ approximately 330 staff on site and paid $24.8 million in taxation to the Republic of Kazakhstan during 2014 whilst contributing $280,000 to local causes through our voluntary and regulated subsoil use contract (SUC) social contributions.

Kounrad Ownership and Expansion

During the year, and as part of the process of purchasing the remaining 40% ownership of the Kounrad project, the Group received all the necessary approvals from the State for the transfer of ownership. On completion of the transaction in May 2014, Mr Kenges Rakishev, a Non-Executive Director of the Company became a 20% shareholder of the Company.

Following the completion of the transaction, the expansion plans for the project commenced in May 2014. The Company plans to invest $35 million into the project in two specific stages. Stage 1 is to increase copper production at the SX-EW plant to 15,000 tonnes per annum by 2016. The estimated cost for this stage is $15.5 million inclusive of the capital costs for constructing the boiler house extension. Stage 2, at an additional estimated capital cost of $19.5 million, will extend the life of mine to enable the resource from the Western dumps to be leached and processed. The programme of works for Stage 1 will be completed in Q2 2015 using the same CAML construction personnel that worked on the construction of the current SX-EW plant.

Stage 1

An additional 5.6MW of boiler capacity was commissioned on schedule in October 2014 to facilitate increased production throughout the winter months. The total capital cost of building and commissioning the boiler was $1.4 million. In June 2014, the Company commenced the construction programme for the expansion of the existing SX-EW plant. This involves the addition of a new mixer settler unit (SX), a new 5,000 tonne per annum capacity Electro-Winning (EW) facility and an upgrade to the existing electrical sub-station. As at 31 December 2014, work was progressing well and we remain on target for commissioning in Q2 2015.

Stage 2

The Stage 2 expansion will only commence upon receipt of all the necessary approvals and mining permits required from the State to allow leaching operations on the Western dumps. All the required applications have been submitted and we hope to have obtained all approvals by Q2 2015.

The Stage 2 expansion programme's focus is on the extraction of copper from the Western dump area. Exploitation of the Western Kounrad resource area will be facilitated by the construction of two 12.6km pipelines from the expanded SX-EW plant in the East to the Western dumps. This will allow for the transportation of pregnant leach solution (PLS) and raffinate solution from the Western leaching areas to the plant for processing. The Stage 2 expansion plans also involve the construction of three additional boilers at the Western leaching area together with solution collection and pumping facilities. The anticipated cost is approximately $19.5 million, phased from late 2015 and completion is planned for 2017.

Growth Opportunities

Copper Bay Project - Chile

During 2014, we progressed the Copper Bay project having acquired a 50% shareholding in November 2013. As at 31 December 2014, significant progress had been made on the in-house developed preliminary feasibility study (PFS) although a number of technical aspects required additional work.

At the time of CAML's investment there was no approved JORC resource despite several previous drilling campaigns and resource calculations prepared by former owners. Consequently, a drilling campaign was planned in consultation with Wardell Armstrong International (WAI) and conducted in August 2014 during which a total of 136 holes were drilled to an average depth of 9.2m. The analysis of the data has enabled WAI to commence preparation of a JORC compliant resource statement.

During much of the year the focus of the PFS work has been on assessing the most efficient means of extracting the copper from the resource. The preferred process route is for the tailings to be reclaimed by dredging from the beach zone, with the reclaimed solids then pumped to the processing plant for copper recovery through an acid leaching process followed by froth flotation. The treated waste tailings from the plant will then be either returned to the beach zone as coarse backfill or sent to a tailings management facility (TMF) as fine tailings.

During this period emphasis was placed on metallurgical testing using the WAI laboratory facilities in Cornwall. The results from the test programme have indicated that a copper recovery in the range of 70% to 73% can be achieved using the process mentioned above. Additional testing performed on a 7 tonne bulk sample taken from the 2014 drilling programme is under consideration as part of the next stage of the project.

These additional aspects of the work remain ongoing, together with the environmental and social studies, and it is anticipated that the PFS will be completed in Q2 2015. A decision whether to then invest a further $3 million to increase CAML's stake to 75%, in line with the Investment and Shareholder's Agreement, will be made shortly thereafter.

Other Opportunities

Elsewhere, we continue to look for additional business opportunities to enhance the value of the CAML portfolio. Whilst the expansion at Kounrad and the 100% ownership of the project will increase the cash generation capabilities of the Company, the CAML Board is keen to further increase returns to shareholders by taking advantage of the Group's balance sheet strength and technical skills.

During the year the Company established a formal business development function in its management structure to establish and execute an accretive growth strategy. Underlying these objectives is to ensure solid shareholder value by targeting only those opportunities that will deliver profitable production and be accretive to our shareholders.

CAML's management has well-established expertise in project delivery, mining and processing operations, which together with the financial strength afforded by strong cash flow and a debt-free balance sheet, will allow the Company to assess a broad range of opportunities.

CAML will assess opportunities in Kazakhstan as well as Europe, Africa and the Americas. Although business development activities are constant, there are currently no transactions in process.

Outlook

During 2014 the copper price fell by 18% and a further reduction in prices was seen in January 2015. Indeed, by the end of January 2015 copper prices had fallen to a five and a half year low of approximately $5,505 per tonne.

Whilst such price reductions are not ideal they are also outside of our control. Consequently, we will focus our efforts on what we can control and strive to maintain our low cash costs of production and meet our production target for 2015 of 13,000 tonnes of copper. Delivery on time and within the capital budget of the expansion programme at Kounrad is a primary objective for the year.

Alongside all of the above operational objectives we will continue to actively pursue additional business opportunities that may arise from the challenging nature of the commodities market as well as making some key decisions on the future of the Copper Bay project in Q2 2015.

Nick Clarke

Chief Executive Officer

FINANCIAL REVIEW

2014 has proved to be another profitable year for CAML in a difficult market. Our continued focus on the low cost of operations at Kounrad and our increased ownership to 100% of the project has further strengthened the balance sheet.

Summary:

· Gross revenue for the year increased by 42% to $76.6 million (2013: $54.1 million)

· Operating profit for the year increased by 34% to $37.5 million (2013: $27.9 million)

· Unit operating costs at Kounrad remain competitive

- C1 cash costs of $1,566 per tonne (2013: $1,600), equates to $0.71/lb (2013: $0.73/lb)

- Fully inclusive cost of $3,642 (2013: $3,147), equates to $1.65/lb (2013: $0. $1.43/lb)

· One-off gain in the period of $33.0 million as a result of the completion of the Kounrad Transaction

· Cash balances as at 31 December 2014 of $46.3 million (2013: $44.5 million)

· Proposed 2014 final dividend of 7.5 pence per share - making 12.5 pence for the full year (2013: 9 pence), a 39% increase.

Overview

During 2014 the Company completed the Kounrad transaction and became the 100% owner of the Kounrad Project. The continued strong operational performance of the project and the associated low costs of production, resulted in strong cash flows for the Group. Cash generated from operations increased to $47 million (2013: $41 million) for the year of which $17.9 million was returned to shareholders as dividend and a further $11 million was invested back into the project.

Acquisition of 100% of the Kounrad Project

As previously mentioned, on 23 May 2014 the Kounrad transaction was completed with Mr Rakishev resulting in the Group owning 100% of the Kounrad project. Accordingly, the Group accounted for the increased ownership of the Kounrad project by de-recognising its previous interests held and recognising the fair value of the assets and liabilities acquired at the time of completion.

This resulted in an uplift to the asset values of $54.0 million and a one-off gain for the year of $33.0 million (2013: $27.8 million). There was an additional depreciation and amortisation charge during 2014 of $6.6 million as a result of the uplift to the asset values (2013: $1.3 million).

Details of the Kounrad Transaction and business combination accounting treatment are contained in note 21 of the financial information.

Income Statement

The Group operating profit for the 12 month period was $37.5 million (2013: $27.9 million) an increase of 34%. As mentioned above, a one off exceptional gain from the completion of the Kounrad Transaction boosted the Group's profit for the year from continuing operations to $59.7 million (2013: $48.6 million).

Losses from discontinued operations reduced to $0.3 million (2013: $14.1 million) following the full write down of all the Mongolian assets during 2013.

The resulting Group profit for the year was $59.5 million (2013: $34.5 million) which resulted in earnings per share of 56.04 cents (2013: 38.89 cents) or 54.91 cents (2013: 37.36 cents) on a fully diluted basis.

Revenue

10,687 (2013: 10,500) tonnes of copper cathode were sold to Traxys as part of the Company's offtake arrangements at Kounrad and a further 476 (2013: 189) tonnes were sold locally. The Group achieved an average selling price of $6,794 (2013: $7,114) per tonne and this generated reported gross revenues for the Group of $76.6 million (2013: $54.1 million).

The offtake arrangement with Traxys is to sell a minimum of 90% of its product through to 31 December 2015. As part of this arrangement, Traxys takes the goods at the SX-EW plant at Kounrad and is then responsible for transporting the goods to the end customer.

The costs of marketing, distribution and selling associated with this arrangement are borne by the Group at an agreed fixed fee. During the start of 2014 the fixed fee was renegotiated with Traxys from $350 to $320 per tonne of copper shipped.

The Group reports both a gross revenue and net revenue line which reflects the offset of the fixed fee from the price of the copper achieved.

Costs of Production

The Group commenced production of copper cathodes in April 2012. The cathodes are produced by the SX-EW plant at Kounrad which is owned and operated by Kounrad Copper Company LLP. Given the changes in the business over the past two years as a result of the Kounrad Transaction, comparisons between the 2013 and 2014 reported statutory numbers can be difficult to interpret. A more meaningful analysis of the reported revenues and costs can be obtained in the table above.

The reported cost of sales for the year were $25.1 million (2013: $13.8 million). This amount consists of the costs associated with the production of copper cathodes, the associated mineral extraction tax levied by the government and the depreciation and amortisation charges.

The costs related to the physical production of copper cathodes are the production labour, reagents and electricity, plus any other SX-EW site related cost. These costs amounted to $9.4 million (2013: $6.1 million). On a project basis, the equivalent comparable cost in 2013 was $8.5 million which indicates an 11% increase. This increase was primarily due to increased production and higher power and production payroll costs at Kounrad.

Mineral Extraction Tax is charged by the Kazakhstan authorities at the rate of 5.7% on the value of the metal recovered and during the year this amounted to a further cost of $4.4 million (2013: $3.1 million). On a project basis, the equivalent comparable cost in 2013 was also $4.4 million.

During the year depreciation and amortisation charges amounted to $11.4 million (2013: $4.6 million). This includes depreciation and amortisation charges of $6.6 million (2013: $1.3 million) as a result of the fair value accounting for the acquisition of the additional 40% share in the Kounrad project. Again on a project basis, the equivalent comparable charge in 2013 was $5.7 million indicating an increase year on year of $5.7 million or 100%.

The ongoing annual depreciation and amortisation charges are expected to remain at approximately the same level in future years but are always subject to future periodic reviews of the Group's depreciation policy.

Distribution and Selling Costs

The major portion of the sales and distribution costs consist of the buyers fees paid to Traxys as part of the offtake agreements as noted above. During 2014, the Company incurred costs of $3.7 million (2013: $3.0 million) and at project level the equivalent comparable 2013 costs were $4.2 million. The 12% reduction in the year at project level is primarily due to lower negotiated fees with Traxys for the delivery of copper.

Administrative Expenses

During 2014, the Group employed an average of 46 staff (2013: 40) at Kounrad to oversee the technical and commercial management of the operations in Kazakhstan together with a small office headquarters in London of 8 staff including the Directors (2013: 7). Group administrative expenses for the year are $11.8 million (2013: $9.6 million) reflecting the growth of the Group during the period.

Unit Costs

The Group's C1 cash costs of production remains in the lowest quartile on the industry cost curve at $1,566 per tonne throughout the year (2013: $1,600) or $0.71/lb (2013: $0.73/lb). This represents a 3% decrease year on year due a combination of strong management controls and the devaluation of the local Kazakhstan currency by 20% in February 2014. Given that the Group currently only has one significant project, it seems reasonable to also report the Group's unit cost base on a fully inclusive basis. The Group's fully inclusive unit costs are $3,642 per tonne (2013: $3,152) or $1.65/lb (2013: $1.43/lb). The main increase at the fully inclusive level comes from increased depreciation and amortisation charges in 2014 as a result of the fair value accounting for the acquisition of the additional 40% share in the Kounrad project.

Balance Sheet

As a result of the completion of the Kounrad Transaction there has been a significant uplift to the Group's asset base during 2014 to $216.3 million (2013: $161.5 million).

Following the acquisition of the remaining 40% in the subsoil user licence, intangibles assets increased to $81.6 million (2013: $16.7 million) including a fair value uplift of $54.0 million and additional goodwill arising on the transaction of $11.0 million (2013: $9.3 million).

During 2014, there were additions to property, plant and equipment of $11.3 million (2013: $1.9 million). The majority of this spend was incurred on construction work at Kounrad for the SX-EW plant expansion.

At 31 December 2014, non-current trade and other receivables were $6.4 million (31 December 2013: $17.1 million). The large reduction is a consequence of the change from joint operation accounting to 100% consolidation of the Kounrad entities which resulted in the removal of the amounts recoverable from related parties (31 December 2013: $11.7 million).

The outstanding balance of $6.4 million (2013: $5.4 million) represents the amount owed to the Group by the Kazakhstan authorities for recoverable VAT. The amount has been audited by the tax authorities on a number of occasions. The conclusion from the authority's audit work was that the VAT amount claimed has been determined correctly and was supported by the required documentary evidence. Despite this, the amount remained unpaid as at 31 December 2014.

The Group is working closely with its advisors and local partners to recover the outstanding VAT. The planned means of recovery will be through a combination of the local sales of cathode copper to effectively offset VAT liabilities and by a successful appeal to the authorities. Following an unsuccessful appeal in 2014, a further appeal was lodged in January 2015 by the local tax advisors and the final outcome may not be known for a further 12 months. During 2014, 476 tonnes of copper were sold locally (2013: 189 tonnes).

At 31 December 2014, current trade and other payables were $4.3 million (31 December 2013: $11.9 million). The large decrease is a consequence of $8.1 million of 2013 corporate income tax paid in April 2014. During 2014, instalment payments of $8.5 million were paid towards the 2014 corporate income tax liability and at 31 December 2014 approximately $0.8 million remained outstanding. The deferred tax liability has increased to $20.6 million (31 December 2013: $9.7 million) and this relates primarily to the completion of the Kounrad transaction during 2014.

Significant changes to equity occurred during the period as a direct consequence of the completion of the Kounrad transaction and the subsequent issue of 21,211,751 Ordinary Shares to Mr Kenges Rakishev on 23 May 2014 as consideration for the transaction. On 23 July 2014 the Company allotted and issued 3,500,000 Ordinary Shares to the trustee of the Central Asia Metals Limited Share Trust (the Employee Benefit Trust). These Ordinary Shares were issued to satisfy current awards granted under the Company's Employee Share Plans together with any future awards that may be granted by the Company.

Cash Flows

During the year the Group generated $47.2 million (2013: $41.1 million) from operations which resulted in the Group's cash balances increasing to $46.3 million (2013: $44.5 million) as at 31 December 2014.

The return of $17.9 million of funds (2013: $19.7 million) to shareholders through dividends was the main outflow of cash during the year within the Group.

As mentioned previously, $16.6 million of corporate income tax was paid during 2014. This included $8.1 million of 2013 corporate income tax paid in April 2014 and payments of $8.5 million towards the 2014 corporate income tax liability.

The Group purchased property, plant and equipment of $11.0 million (2013: $2.5 million) of which $1.4 million (2013: nil) was in relation to the commissioning of the boiler at Kounrad and $8.0 million (2013: nil) in relation to the Stage 1 SX-EW expansion programme. The remaining balance of $1.6 million (2013: $2.5 million) was in relation to sustaining capex at Kounrad.

Foreign Exchange

The Group operates overseas and is exposed to foreign currency movements. During 2014, the Kazakhstan Tenge devalued by almost 20%. Given that the Group's operations in Kazakhstan generate their income in US dollars through the export of copper, the immediate impact of the devaluation in 2014 and of any future devaluation should be positive in relation to the Group's cost base in Kazakhstan. It is estimated that approximately 60% of the cost base in Kazakhstan is denominated in Kazakhstan Tenge.

The Board will continue to monitor the situation and respond accordingly should a further devaluation occur. During 2014, the Board's response was to increase salaries for staff in the country by 10%.

The Group does not keep large amounts of cash in Kazakhstan Tenge and as at 31 December 2014 held the US dollar equivalent of $0.4 million (2013: $0.6 million). During 2014, the Group reported a $1.9 million foreign exchange gain (2013: $0.2 million), relating to the transactional gains of foreign currency assets and liabilities at the reporting date.

Copper Price

During 2014, the copper price came under pressure and fell by 18% over the course of the year. Indeed, this reduction in copper prices was exacerbated in early January 2015 by a further reduction in copper prices. Despite these reductions, the Group remains profitable due to the low costs of production at Kounrad.

The Group policy has always been to sell the cooper at 'spot' prices in line with the contractual conditions associated with the offtake arrangements. A review of this policy during the year by the Board concluded that, whilst such an approach is still felt to be appropriate for the Group due to the lack of any debt financing and the low costs of production, the ability of the management team to respond to movements in the copper price was considered appropriate.

Consequently, the Board has approved a minor change to the Group's Treasury policy that allows limited hedging up to a maximum of 30% of the Group's rolling 12-month production. It is felt that this policy would allow management to combine the benefits of an exposure to the copper price for its shareholders whilst also facilitating the ability for management to put in place limited hedging to cover the cost base.

As at the time of writing this report no hedges were in place.

Dividend

As part of these annual results, the Board has the intention to propose a 7.5 pence per Ordinary Share final dividend for 2014, making a total dividend for the year of 12.5 pence (2013: 9 pence). Having raised $60 million at IPO in September 2010, this latest dividend will increase the amount returned to shareholders in dividends and share buy backs since the listing to approximately $53 million.

The Company's dividend policy is that it will return a minimum of 20% of the attributable revenues generated from the Kounrad project to shareholders. During 2014, inclusive of the proposed 2014 final dividend, the Company returned 28% of attributable revenues to shareholders (2013: 29%).

The Directors recognise that there are currently insufficient reserves available in the Company for distribution and are proposing to rectify this by completing a court approved capital reduction scheme by cancelling the Company's share premium account and transferring such reserves to retained earnings. This process is expected to become effective on or around 13 May 2015. The Company undertook a previous capital reduction scheme in 2013.

On completion of the capital reduction scheme it is expected that the 2014 final dividend will then be paid in June 2015.

Financing Growth

The total capital cost for the Kounrad expansion is estimated at $35 million phased over the next three years, including approximately $9.4 million already spent up to 31 December 2014. This expenditure is in addition to the estimated $6.5 million that will be spent on sustaining capital expenditure for the plant and Kounrad site during the three-year period.

As at 31 December 2014, the Group had $46.3 million of cash in the bank of which $33.6 million was held in London and $12.7 million in Kazakhstan to cover the expansion costs and working capital requirements in country and instalment payments of Corporate Income Tax.

The Group has no debts outstanding as at 31 December 2014 and with the cash reserves at its disposal is confident that it has sufficient funds available to finance the dividend policy in the coming years, complete the capital expansion plans at Kounrad and provide the Company with the financial flexibility to support the growth of the business.

Nigel Robinson

Chief Financial Officer

CONDENSED FINANCIAL INFORMATION

Consolidated Income Statement

for the year ended 31 December

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent Company Income Statement or Statement of Comprehensive Income. The loss for the parent Company for the year was $9,703,595 (2013: $21,086,497).

During 2014 the Group had no balances attributable to non-controlling interests (2013: nil). Items in the statement above are disclosed net of tax.

Statements of Financial Position

at 31 December

During 2014 the Group had no balances attributable to non-controlling interests (2013: nil). Items in the statement above are disclosed net of tax.

Consolidated statement of changes in equity 

for the year ended 31 December

* The Group and Company made a reserve transfer during 2014 to include the share option reserve as part of retained earnings as permitted by IFRS.

During 2014 the Group had no balances attributable to non-controlling interests (2013: nil).

Company Statement of Changes in Equity

for the year ended 31 December

* The Group and Company made a reserve transfer during 2014 to include the share option reserve as part of retained earnings as permitted by IFRS.

Statements of Cash Flows 

for the year ended 31 December

The notes below are an integral part of this consolidated financial information.

Notes to the Condensed Financial Information for the year ended 31 December 2014

Central Asia Metals plc (CAML or the Company) and its subsidiaries (the Group) are a mining and exploration organisation with operations primarily in Kazakhstan and a parent holding company based in the United Kingdom.

The Group's principal business activity is the production of copper cathode at its Kounrad operations in Kazakhstan. The Group also owns various exploration projects in Mongolia which are held for sale and has an investment in a copper tailings project in Chile.

CAML is a public limited company, which is listed on AIM and incorporated and domiciled in the UK. The address of its registered office is Masters House, 107 Hammersmith Road, London, W14 0QH. The Company's registered number is 5559627.

The principal accounting policies applied in the preparation of this consolidated financial information are set out in the 2014 Annual Report. These policies have been consistently applied to all the years presented, unless otherwise stated.

The financial information set out above does not constitute the Group's statutory financial statements for the year ended 31 December 2014, but is derived from the Group's audited full financial statements. The auditors have reported on the 2014 financial statements and their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act 2006. The 2014 Annual Report was approved by the Board of Directors on 27 March 2015, and will be mailed to shareholders in April 2015. The financial information in this statement is audited but does not have the status of statutory accounts within the meaning of Section 434 of the Companies Act 2006.

The Group's consolidated financial information has been prepared in accordance with International Financial Reporting standards (IFRS) and IFRS Interpretations Committee (IFRSIC) interpretations as adopted by the European Union, and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial information has been prepared under the historical cost convention with the exception of assets held for sale which have been held at fair value. The accounting policies which follow set out those policies which apply in preparing the financial information for the year ended 31 December 2014. The Group's financial information is presented in US dollars ($) and rounded to the nearest thousand.

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial information are explained in note 3.

The Group commenced production of copper cathodes on 30 April 2012. The cathodes are produced by the SX-EW plant at Kounrad which is owned and operated by Kounrad Copper Company LLP (KCC). On 21 October 2013, the ownership of KCC increased from 60% to 100% following the acquisition of 40% of KCC. Consequently, the comparative results for the year ended 31 December 2013 comprise only 60% of the revenues and costs associated with the Kounrad project for the first nine months of the year but 100% for the final three months of the year. In contrast, the results for the year ended 31 December 2014 account for 100% of the revenue and costs associated with the Kounrad project throughout the year.

The impact of the above event makes annual comparisons difficult from the annually reported numbers in several of the notes to this financial information. A more meaningful analysis of the reported revenues and costs can be obtained from the Financial Review section.

The Group meets its day-to-day working capital requirements though its profitable operations at Kounrad. The Group has substantial cash balances as at 31 December 2014 and on the date of issue of this financial information. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the forseeable future.

The Group sells and distributes its copper cathode product primarily through an offtake arrangement with 90% of the SX-EW plant's output committed as sales for the period up until 31 December 2015.

The Group therefore continues to adopt the going concern basis in preparing its consolidated financial information. Please refer to notes 5, 14 and 17 for information on the Group's revenues, cash balances and trade and other payables.

The Kounrad project ownership changes have taken a significant amount of time to complete. Throughout the periods of joint ownership and under the terms of the Joint Operating Agreement (JOA), both of the parties had an equal vote on all significant operational, financial and planning matters. Consequently, it was concluded that Joint Control existed over the Kounrad project and so, whilst the various transactions have been negotiated and submitted for government approval, the Kounrad project has been accounted for in the following manner;

1. The subsoil user licence operations (SUC) under Sary Kazna LLP (SK) are classified as a jointly controlled asset. The assets, liabilities, income and expenditure have been proportionately consolidated on a 60:40 basis.

2. All of the operations conducted under Kounrad Copper Company LLP (KCC) have also been proportionately consolidated on a 60:40 basis as it has been a jointly owned legal entity.

The Kounrad transaction resulted in CAML obtaining control over the Kounrad project in two transactions:

1. The first transaction (KCC) was effected in October 2013 by CAML's wholly owned subsidiary, CAML Kazakhstan BV (CAML BV), acquiring the remaining 40% share capital of KCC.

2. The second and final part of the transaction (SUC) was effected in May 2014 by CAML's wholly owned subsidiary SK acquiring the remaining 40% economic interest in the SUC.

Following the completion of the Kounrad Transaction on 23 May 2014, the Group now owns 100% of the Kounrad project and during the year ended 31 December 2014 has accounted for 100% of the income and expenditure together with 100% of the assets and liabilities of the legal entities associated with the Kounrad project.

The completion of both transactions, being the acquisition of the remaining 40% of KCC and the SUC, resulted in a change in control of the Kounrad project from joint control to control by CAML. As such an IFRS 3 Business Combination was deemed to have taken place upon completion.

Details of the accounting treatment for the business combination are contained in note 21.

The Group has five key areas where critical accounting estimates and judgements are required that could have a material impact on this financial information:

As mentioned above estimates are required periodically to assess assets for impairment. These estimates will incorporate the expected future commodity prices, estimates of the ore reserves and projected future costs of development and production. This includes an assessment of the carrying values of assets held for sale.

The carrying value of the goodwill generated by accounting for the business combination of the Group acquiring an additional 40% in the Kounrad project requires an annual impairment review. This review will determine whether the value of the goodwill can be justified by reference to the carrying value of the business assets and the future discounted cash flows of the business.

The major value associated with the Group is the value of its mineral resources. The value of the resources have an impact on the Group's accounting judgements in relation to depreciation and amortisation, impairment of assets and the assessment of going concern. These resources are the Group's best estimate of product that can be economically and legally extracted from the relevant mining property. The Group's estimates are supported by geological studies and drilling samples to determine the quantity and grade of each deposit.

Significant judgement is required to generate an estimate based on the geological data available. Ore resource estimates may vary from period to period. This judgement has a significant impact on impairment consideration and the period over which capitalised assets are depreciated within this financial information.

The resources have been independently verified by Wardell Armstrong International and were classified as JORC Compliant in 2013.

Provision is made for the costs of decommissioning and site rehabilitation costs when the related environmental disturbance takes place. Provisions are recognised at the net present value of future expected costs using a discount rate of 8.65% (2013: 6.40%) representing the risk free rate (pre-tax) for Kazakhstan.

The provision recognised represents management's best estimate of the costs that will be incurred, but significant judgement is required as many of these costs will not crystallise until the end of the life of the mine. Estimates are reviewed annually and are based on current contractual and regulatory requirements and the estimated useful life of mines. Engineering and feasibility studies are undertaken periodically; however significant changes in the estimates of contamination, restoration standards and techniques will result in changes to provisions from period to period.

The Kounrad Transaction resulted in the Group acquiring the 40% of the joint venture project at Kounrad that it did not previously own. The assessment of the fair value uplift of the underlying assets acquired and the treatment of the two legal entities involved in the project required a high degree of judgement.

The assessment of the overall project as a business combination for both legal entities, Kounrad Copper Company LLP and Sary Kazna LLP, and the impact on that judgement caused by the different stages of completion required a careful review of the overall transaction as opposed to the specific nature of the assets being acquired.

The fair value uplift of the assets acquired as a result of that judgement and the resulting accounting treatment have resulted in a significant change to both the income statement and the statement of financial position of the business. The details are explained in note 21.

The Group's main receivable is the VAT incurred on purchases within Kazakhstan as explained in note 13. As at 31 December 2014 a total of $6,392,885 (2013: $5,436,475) of VAT receivable was still owed to the Group by the Kazakhstan authorities. The Group still remains confident about its prospects to recover this outstanding debt and is working closely with its advisers and local partners to achieve this.

The planned means of recovery will be through a combination of the local sales of cathode copper to effectively offset VAT liabilities and by a successful appeal to the authorities. Following an unsuccessful appeal in 2014, a further appeal was lodged in January 2015 by the local tax advisers and the final outcome may not be known for a further 12 months. As a result of the above and the uncertainty regarding timing, the Group has classified the VAT receivable as non-current.

The Board is the Group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance. The Board considers the business from a geographic prospective.

As at 31 December 2014, the Group only had one operating and reporting segment consisting of an SX-EW copper plant at Kounrad in Kazakhstan. The head office in London, where the Group operations are controlled, and Copper Bay project (Chile), being an exploration asset in its early stages, do not represent separate operating and reporting segments.

Previously reported segments within the Group, namely all the Mongolian operations, are classified as held for sale as at 31 December 2014. In June 2014, Bayanresources LLC, a Mongolian incorporated company owned 70% by the Group was sold for nil consideration.

The Board assesses the performance of the Kounrad project based on a number of key operational and financial measures which relate to copper production output, revenues from the sales of copper and the overall costs of producing the copper. All capital related expenditure at the project is also closely monitored and controlled.

The segmental results for the year ended 31 December 2014 are as follows:

The total production at Kounrad for 2014 was 11,136 tonnes (2013: 10,509 tonnes) whilst the total quantity of copper sold was slightly higher at 11,163 tonnes (2013: 10,689 tonnes). The average price achieved from the sale of copper was $6,794 per tonne (2013: $7,114 per tonne).

EBITDA is a non-IFRS financial measure. CAML calculates EBITDA as profit or loss for the year excluding the following items:

· Income tax expense;

· Finance income and expense;

· Depreciation and amortisation; and

· Discontinued operations; and Gain on re-measuring to fair value and other income or expenses.

EBITDA is intended to provide additional information to investors and analysts. It does not have any standardised meaning prescribed by IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. EBITDA excludes the impact of cash costs of financing activities and taxes, and the effects of changes in operating working capital balances, and therefore is not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate EBITDA differently.

A reconciliation between net profit for the year and EBITDA is presented below:

Group segmental assets and liabilities for the year ended 31 December 2014 are as follows:

The Group sells and distributes its copper cathode product primarily through an offtake arrangement with Traxys. The offtake arrangements are for a minimum of 90% of the SX-EW plant's output for the period up until 31 December 2015. The copper cathodes are delivered from the Kounrad site by rail under an FCA (Incoterms 2010) contractual basis and delivered to the end customers in Turkey. As part of the offtake arrangements, the Group sells the copper cathodes at a price linked to the London Metal Exchange (LME) copper price based on an agreed quotational period.

The costs of delivery to the end customers have been effectively borne by the Group through means of an annually agreed buyer's fee which is offset from the selling price (note 7).

During 2014 the Group sold 10,687 tonnes (2013: 10,500 tonnes) of copper through the offtake arrangements. Some of the copper cathodes are also sold locally and during 2014 a total of 476 tonnes (2013: 189 tonnes) were sold to local customers.

The above distribution and selling costs are those incurred at the Kounrad site in addition to the costs associated with the offtake arrangements. Note 5 refers to the costs associated with the offtake arrangements with Traxys.

UK corporate income tax is calculated at 21.5% (2013: 23.25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

From 1 April 2014, the main UK Corporation tax rate reduced from 23% to 21%. Further reductions in the main tax rate to 20% from 1 April 2015 have been announced.

The rate reductions were substantively enacted on 3 July 2013 and have been reflected in the calculation of deferred tax at the statement of financial position date.

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to owners of the Company by the weighted average number of Ordinary Shares in issue during the year excluding Ordinary Shares purchased by the Company and held as treasury shares (note 15).

The diluted earnings/(loss) per share is calculated by adjusting the weighted average number of Ordinary Shares outstanding after assuming the conversion of all outstanding granted share options and exercise of outstanding security warrants.

1. On completion of the KCC Transaction on 21 October 2013, the Group derecognised its previously held 60% interest and recognised its 100% interest in property, plant and equipment together with the fair value uplift associated with the transaction of $46,392,000. On completion of the whole Kounrad Transaction on 23 May 2014, the Group updated the purchase price allocation and as a result the fair value uplift increased by $1,049,798 as explained in note 21.

2. On completion of the SUC Transaction on 23 May 2014, the Group derecognised its previously held 60% interest and recognised its 100% interest at cost. There was no fair value uplift to property, plant and equipment associated with the SUC transaction.

3. There was an additional depreciation charge during 2014 of $5,345,806 (2013: $1,335,856) as a result of the fair value uplift in property, plant and equipment.

The Company had $158,916 of office equipment at net book value as at 31 December 2014 (2013: $198,119).

1. On completion of the SUC Transaction on 23 May 2014, the Group derecognised its previously held 60% interest and recognised its 100% interest at cost together with the fair value uplift associated with the transaction of $54,015,555.

2. There was an additional amortisation charge during the year of $1,209,344 as a result of the fair value uplift in intangible assets.

As a result of the Kounrad Transaction, the Group has recognised goodwill of $20,291,000.

The Company had no intangible assets as at 31 December 2014 (2013: nil).

The Group currently only has one business segment, namely the Kounrad project located in Kazakhstan which has an associated goodwill balance.

In accordance with IAS 36 'Impairment of assets' and IAS 38 'Intangible Assets', a review for impairment of goodwill is undertaken annually or at any time an indicator of impairment is considered to exist and in accordance with IAS 16 'Property, plant and equipment', a review for impairment of long-lived assets is undertaken at any time an indicator of impairment is considered to exist.The discount rate applied to calculate the present value is based upon the real weighted average cost of capital applicable to the Cash Generating Unit (CGU). The discount rate reflects equity risk premiums over the risk-free rate, the impact of the remaining economic life of the CGU and the risks associated with the relevant cash flows based on the country in which the CGU is located. These risk adjustments are based on observed equity risk premiums, historical country risk premiums and average credit default swap spreads for the period.

The value in use (VIU) of a CGU is generally lower than its fair value less costs of disposal (FVLCD), due primarily to the fact that the optimisation of the mine plans has been taken into account when determining its FVLCD. Consequently, the recoverable amount of a CGU for impairment testing purposes is determined based on its FVLCD.The key economic assumptions used in the review were:- copper price $6,614 per tonne- discount rate 8%The carrying value of the net assets is not currently sensitive to any reasonable changes in key assumptions.

The carrying value of all the above receivables is a reasonable approximation of fair value. There are no amounts past due at the end of the reporting period that have not been impaired.

The Group amount receivable from related parties in 2013 had arisen as a consequence of the joint venture accounting treatment required at the Kounrad project and was reduced to nil during 2014 on completion of the transaction to acquire 100% of the project (note 21).

The Group's non-current receivable is the VAT incurred on purchases within Kazakhstan. As at 31 December 2014 a total of $6,392,885 (2013: $5,436,475) of VAT receivable was still owed to the Group by the Kazakhstan authorities. The Group still remains confident about its prospects to recover this outstanding debt and is working closely with its advisers and local partners to achieve this. The planned means of recovery will be through a combination of the local sales of cathode copper to effectively offset VAT liabilities and by a successful appeal to the authorities. Following an unsuccessful appeal in 2014, a further appeal was lodged in January 2015 by the local tax advisers and the final outcome may not be known for a further 12 months. As a result of the above and the uncertainty regarding timing, the Group has classified the VAT receivable as non-current.

Management's policy is to assess all trade and other receivables for recoverability on a regular basis. A provision is made where doubt exists and amounts are fully written off when information comes to light that the amounts due will not be recovered.

The Group did not have any slow moving, obsolete or defective inventory as at 31 December 2014 (2013: nil).

$1,649,000 of money in the restricted account was released upon the completion and payment of the final consideration of the Kounrad transaction. The remaining amount of $148,072 is held to cover SUC legislation requirements (2013: $85,324).

An amount of nil (2013: $10.0 million) was held in a short term deposit account as at 31 December 2014.

73% of the Group's cash and cash equivalents including restricted cash at the year end were held by an AA- rated bank (2013: 68.7% by an AA- bank). The rest of Group's cash was held within mix of institutions with credit rating between B to B- (2013: B to B1).

The par value of Ordinary Shares is $0.01 per share (2013: $0.01) and all shares are fully paid.

On 23 May 2014, on the completion of the Kounrad transaction, a total of 21,211,751 Ordinary Shares were issued to Kenges Rakishev (note 33). The shares were allocated in two tranches with one tranche of 15,336,096 Ordinary Shares at a share price of $2.57 each for the transfer of the 40% share capital of Kounrad Copper Company LLP to CAML Kazakhstan BV. The remaining 5,875,655 Ordinary Shares were issued at a share price of $2.87 each for the transfer of the 40% economic interest in the subsoil use contract to Sary Kazna LLP.

On 23 July 2014 the Company allotted and issued 3,500,000 Ordinary Shares to the trustee of the Central Asia Metals Limited Share Trust (the Employee Benefit Trust). These Ordinary Shares were issued to satisfy current awards granted under the Company's Employee Share Plans together with any future awards that may be granted by the Company.

Upon the successful completion of the Initial Public Offering (IPO) on 30 September 2010, Mirabaud Securities (MS) were granted 1,192,053 warrants. These warrants had an exercise price of 96 pence and on 30 June 2014, MS exercised a total of 260,000 for which the Company received £249,600. MS exercised their remaining 932,053 warrants on 31 July 2014 for which the Company received £894,771.

The $10,291,000 currency translation reserve movement (2013: $722,000) is primarily as a result of the 18.7% devaluation of the Kazakhstan Tenge from 31 December 2013 to 31 December 2014.