Central Asia Metals Regulatory News (CAML)

29 March 2023

CENTRAL ASIA METALS PLC

('CAML' or the 'Company')

2022 Full Year Results

Central Asia Metals plc (AIM: CAML) today announces its full year results for the 12 months ended 31 December 2022.

Financial highlights

2022 final dividend of 10 pence per share

· 2022 full year dividend of 20 pence per share (2021: 20 pence)

· Represents 47% of 2022 free cash flow1 ('FCF'), (2021: 45%) in line with stated dividend policy

· Final dividend payable on 23 May 2023 to shareholders registered on 28 April 2023

Financial results

· Group gross revenue[1] of $232.2 million (2021: $235.2 million)

o  Group net revenue of $220.9 million (2021: $223.4 million)

· Group EBITDA1 of $131.6 million (2021: $141.5 million)

· EBITDA margin1 of 57% (2021: 60%)

· Group FCF1 of $89.7 million (2021: $103.8 million)

· Adjusted EPS (excluding a non-cash impairment) of 48.15 cents, reported EPS of 19.10 cents (2021: 47.69 cents)

Strong balance sheet

· Cash in the bank as at 31 December 2022 of $60.6 million2 (2021: $59.2million)

· Fully repaid $187.0 million corporate debt facility

· Non-cash impairment charge for Sasa of $55.1 million

[1] See Financial Review section for definition of non-IFRS alternative performance measures

2 The cash balance figure disclosed includes restricted cash balance

Sustainability and operational overview

· Zero lost time injuries ('LTIs') at Kounrad during 2022 (2021: zero)

· Two LTIs at Sasa during 2022 (2021: four)

· Reduction in GHG emissions of 40% against 2020 base line

· Climate change scenario analysis undertaken in 2022

· Record copper production of 14,254 tonnes (2021: 14,041 tonnes)

· Zinc in concentrate production of 21,473 tonnes (2021: 22,167 tonnes)

· Lead in concentrate production of 27,354 tonnes (2021: 27,202 tonnes)

2023 outlook

Guidance of:

· Copper, 13,000 to 14,000 tonnes

· Zinc in concentrate, 19,000 to 21,000 tonnes

· Lead in concentrate, 27,000 to 29,000 tonnes

Completion of:

· Paste Backfill and Dry Stack Tailings Plants at Sasa

· Initial phase of Central Decline at Sasa

· Kounrad Solar Power Plant

Nigel Robinson, Chief Executive Officer, commented:

"I am pleased to report a good set of financial results for 2022, and a year of solid performance for CAML. We ended 2022 with a strong balance sheet, having made the final payment on our corporate debt facility in August, with cash in the bank of $60.6 million.

"Following this strong performance, we propose a 10 pence per share final dividend, resulting in a full year dividend of 20 pence per share, comparable with 2021. The full year dividend represents 47% of our 2022 FCF and is in line with our stated policy of 30% to 50% of FCF.

"We have continued to focus our efforts on the five sustainability pillars, we achieved an improvement in our lost time injury frequency rate ('LTIFR') and a 14% increase in Group health and safety training versus 2021. Our forthcoming 2022 annual, sustainability and climate change reports contain more information on our efforts in this regard, and our reporting in relation to the recommendations of the Taskforce for Climate-Related Financial Disclosures ('TCFD').

"We look forward to another positive year for CAML in 2023 and, in particular, the completion of the Paste Backfill and Dry Stack Tailings plants, and the initial phase of the Central Decline at Sasa. This project will ensure maximum extraction of Sasa's resources, in the safest way, with improved tailings management until at least 2039. The construction of the Solar Power Plant at Kounrad will also be completed this year, and that will contribute to the reduction of our Scope 2 GHG emissions.

"We were active in terms of business development during 2022, having appraised 40 opportunities, signed NDAs for 17 and visited two sites. Our efforts continue into 2023 and, with our strong balance sheet, we are in a good position to grow through acquisition.

"On a final note, we enjoyed celebrating 10 years of copper production at Kounrad, in April, where we have generated cumulative gross revenue of $944.4 million and five years of ownership at Sasa in November and look forward to seeing our operations continue to offer local employment and facilitate socio-economic progress in the surrounding communities."

Analyst conference call and webcast

A live conference call and webcast hosted by Nigel Robinson (Chief Executive Officer), Gavin Ferrar (Chief Financial Officer) and Louise Wrathall (Director of Corporate Development) will take place at 09:30 (BST) today.

The conference call can be accessed by dialling +44 (0) 33 0551 0200 and quoting the confirmation code 'Central Asia Metals - Results', and the webcast can be accessed using the link:  https://stream.brrmedia.co.uk/broadcast/63d28f71777efd4a8b5164c1. 

The presentation will be available on the Company's website and there will be a replay of the call available following the presentation at www.centralasiametals.com

Presentation via Investor Meet Company

The Company will also hold a live presentation relating to the 2022 Full Year Results via the Investor Meet Company platform on Wednesday 29 March 2023 at 15:00 (BST). The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard until 09:00 (BST) the day before the meeting or at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet Central Asia Metals Plc via: 

www.investormeetcompany.com/central-asia-metals-plc/register-investor

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 project in central Kazakhstan and 100% of the Sasa zinc-lead mine in North Macedonia.

For further information, please visit www.centralasiametals.com and follow CAML on Twitter at @CamlMetals and on LinkedIn at Central Asia Metals Plc

CHAIRMAN'S STATEMENT Building the Business for the Future I am pleased with our operational and financial performance during 2022, which demonstrated the strength of our business. We also had a positive year in appointing two new Directors to our Board, Dr Mike Armitage and Louise Wrathall, both of whom have already brought their own experiences to our discussions, and in the creation of a new Technical Committee. We have advanced our sustainability efforts on the ground and in terms of reporting, and I was pleased that we commenced construction of our Kounrad Solar Power Plant towards the end of the year.

Fulfilling Our Purpose

Our purpose is to produce base metals, essential for modern living, profitably in a safe and sustainable environment for all our stakeholders and we have fulfilled this purpose during 2022.

Our solid 2022 operational performance generated for CAML EBITDA of $131.6 million and free cash flow of $89.7 million. This has enabled us to continue deleveraging, and in August 2022 we made the final repayment of the debt that we borrowed in order to acquire Sasa in 2017. We were pleased to report adjusted (to exclude a non-cash impairment charge) EPS of 48.15 cents, above the 47.69 cents reported last year.

We celebrated two anniversaries in 2022. In April, we marked 10 years of copper production from Kounrad, during which time we have produced over 130,000 tonnes of cathode, supported a solely Kazakh workforce of 337 employees and 78 contractors, invested capital totalling $81.9 million and generated $944.4 million in gross revenue.

In November, we celebrated five years since we acquired Sasa. Under our ownership, we have maintained a workforce that is 98% Macedonian, generated $525.0 million in gross revenue from zinc and lead sales and paid tax in excess of $71.0 million to the Government of North Macedonia. We have set up charitable foundations in both countries and continue to support the many worthy causes in both jurisdictions, as well as promoting long-term sustainable local development.

Sustainability

We have continued to devote much of our time and energy to advancing our sustainability efforts during 2022. In Q2 2022, we published our third standalone Sustainability Report. This was the Company's second report drafted in accordance with the Global Reporting Initiative ('GRI') Standards 'Core option'. As a result of technical work undertaken during 2021, we were able to set ourselves additional environmental targets on water abstraction and mineral waste to complement the greenhouse gas ('GHG') emission targets that we set ourselves last year. Importantly, we also set ourselves a target to increase our female employees by 25% by the end of 2025.

Given GRI's adjustment to the Universal Standards, we revisited our stakeholder engagement-based materiality assessment with assistance from consultants, Digby Wells, taking into account both societal and economic factors. The results of this survey have informed our updated material topics and we have reported on those in our forthcoming 2022 Sustainability Report.

We also undertook climate change scenario analysis during the year, which has informed our risk management and climate strategy going forwards. In Q4 2022, we commenced construction of our Kounrad solar power plant which is one of our key initiatives that will help us to reduce our Scope 1 and Scope 2 emissions by 50% by 2030 from a 2020 base.

Governance

In January 2022, CAML announced the appointment of Dr Mike Armitage to the Board as an Independent Non-Executive Director. Mike brings a wealth of international technical experience and has already supported management and advised the Board, both in terms of our current operations and with our business development activities. Mike's long career with SRK in particular has seen him review, assist with due diligence and help to develop numerous mineral properties globally.

Robert Cathery retired from the CAML Board at the conclusion of our 2022 Annual General Meeting ('AGM'). I want to express my thanks to Bob for his hard work and dedication to the CAML business. His advice has been invaluable and, in particular in his role as Chair of the Remuneration Committee, he has been responsible for transforming our Long-Term Incentive Plan and incorporating our wider sustainability targets into Executive Director and management remuneration.

Also, at the conclusion of the 2022 AGM, Louise Wrathall, our Director of Corporate Development, joined the CAML Board. Louise has been a key member of the senior management team since she joined CAML in 2015 and further enhances the skills of the Board, emphasising the importance we place on investor relations, business development and environmental, social and governance ('ESG') initiatives.

During 2022, we made changes to our Board Committees as well. We created a new Technical Committee, chaired by Roger Davey and additionally comprising myself, Dr Mike Armitage and Nigel Robinson. During the year, the committee has reviewed the engineering aspects of the Kounrad solar power project and has provided guidance and support to Sasa's Cut and Fill Project team, which included a specific Technical Committee site visit to review work underway.

Mike Prentis agreed to chair our Remuneration Committee and he is now ably supported by Roger Davey and David Swan. The Nomination Committee continues to comprise solely non-executive directors, so now includes Dr Mike Armitage. Another key committee change was to invite Dr Gillian Davidson to join the Audit Committee. Gillian brings experience from other board roles as well as her expertise in sustainability. She is particularly focused on our risk management processes and reporting on non-financial information as well.

Acknowledgements

I would like to thank the Board of Directors, our senior management team and all of our employees for their dedication to our business during 2022. Your efforts do not go unnoticed, and we very much appreciate your hard work. I would like to extend my thanks to our stakeholders for their support.

NICK CLARKE

NON-EXECUTIVE CHAIRMAN 28 March 2023

CHIEF EXECUTIVE OFFICER'S STATEMENTA strong performance in the face of global pressures

2022 has been a year of strong performance for CAML. Global inflationary pressures which were exacerbated by the conflict in Ukraine served to highlight the underlying strength of CAML's business and balance sheet, and we are pleased with our 2022 results and to have made the final repayment in August 2022 of the debt that we borrowed to acquire Sasa in 2017.

2022 Financial overview

Sasa produced 21,473 tonnes of zinc in concentrate and 27,354 tonnes of lead in concentrate at a C1 zinc equivalent cash cost of production of $0.78 per pound, reflecting in particular elevated electricity costs incurred during H2 2022.

Our Kounrad operations continued to perform well, and we increased our copper cathode

production guidance to 13,500 - 14,000 tonnes during H2 2022 and ended the year reporting production in excess of that at 14,254 tonnes. Kounrad's 2022 C1 copper cash cost of production remained very low by global standards at $0.65 per pound, despite inflationary pressures.

Regardless of global challenges, the CAML business performed very well, due to its inherent low-cost base and strong balance sheet. We reported gross revenue of $232.2 million and an EBITDA of $131.6 million at an EBITDA margin of 57% for 2022. We reported adjusted (to exclude a non-cash impairment charge, arising following update to reserves & resources following LOM study as well as inflationary pressures) EPS of 48.15 cents, higher than that reported in 2021.

In August, we made our final repayment of the $187 million debt which we secured to acquire Sasa less than five years before. CAML ended 2022 with cash in the bank of $60.6 million.

The Group generated 2022 free cash flow of $89.7 million, enabling us to recommend a 10

pence per share final dividend. This equates to a full-year dividend of 20 pence per share, which represents 47% of 2022 free cash flow.

Market performance

During 2022, the CAML share price traded within a range of £2.01 to £2.84, ending the year at £2.48, which represents a 4.2% decrease on the 31 December 2021 price of £2.59. CAML outperformed the FTSE AIM All Share/Basic Resources Index, which lost approximately 31.5% during 2022. The share price was supported by solid base metal prices and by its low cost base. Since the Company's IPO in September 2010, CAML's share price has significantly outperformed the FTSE AIM All Share/Basic Resources Index, primarily due to CAML's strong operational performance, low production costs and consistent dividend payments.

Sustainability

We remain focused on safety and, while we were disappointed to report two LTIs at Sasa during the year, this was an improvement on the four we recorded during 2021. We recorded zero LTIs at Kounrad though, and therefore our 2022 total as a Group was two, with a LTIFR of 0.83, an improvement on our performance in 2021. As ever, effective safety training and supervision for our employees is a priority and is crucial to achieving an improving safety record.

The strong financial performance we have reported underpins our business and we place significant emphasis on ensuring that we are sustainable for all stakeholders. To demonstrate our efforts and achievements, in this area, we will soon be publishing our fourth Sustainability Report, our third to GRI standards and our first to the new GRI 'Universal Standards'. These standards are based on the concept of 'double materiality', looking at both the impact of the Company on society and the environment, as well as the impact of the material topics on the value of a company. Therefore, our updated materiality assessment considers both materiality aspects and has informed reporting for the Company's 2022 Sustainability Report.

In 2021, we began moving towards TCFD reporting. We shared our climate strategy and our medium- and long-term goals that were the result of much internal work undertaken and, in our 2021 annual and sustainability reporting, we felt able to commit to a 50% reduction in our Kounrad and Sasa Scope 1 and Scope 2 emissions by 2030 from a 2020 base, and to being net zero by 2050.

To understand our strategic resilience in terms of our climate risks and opportunities, we undertook scenario analysis work during 2022. This analysis has broadly validated our climate strategy and has helped us to identify our risks and opportunities as well as key workstreams for us to focus on going forwards. In 2023, we plan to collect data to enable us to report our Scope 3 emissions estimates in 2024 for the 2023 operating year.

Our sustainability strategy and practices continue to develop and, having reviewed our material topics in 2022, we have also taken the opportunity to consider and advance our approach to the UN sustainable development goals ('SDGs'). Following the review process, which involved mapping the underlying targets to our activities and considering their alignment to our overall strategy and approach, we have defined a two-tiered approach. We have identified a total of eight SDGs (five primary and three supporting) which are reflected in CAML's material topics.

WSP Golder delivered an Asset Retirement Obligation ('ARO') and site closure plan report for Kounrad in 2022, which covers the responsible closure of the leaching operations in the longer term.

At Sasa, consultants PrimePoint were appointed to further develop the Local Environmental Action Plan ('LEAP') and Local Economic Development Plan ('LEDP') in conjunction with the local Municipality. During the year, several workshops were organised between PrimePoint, the Municipality and the Sasa Foundation to better assess the needs of the community and to identify sustainable development opportunities for Makedonska Kamenica and adjacent communities.

We have committed to reporting to the Global Industry Standard for Tailings Management ('GISTM') for all tailings storage facilities ('TSFs') by the end of H1 2024. A working group has been formed, comprising members of the production, tailings, sustainability, and communications teams, overseen by the Group Sustainability Director, to ensure all workstreams are effectively covered.

To support employees during the current global inflationary environment, all staff at both sites were given pay rises of at least 15% in local currencies.

During 2022, we spent a total of $0.3 million at Sasa and Kounrad supporting the local

communities. This is a vital aspect of what we do in the areas close to our operations and, as a result, we enjoy good relations with our neighbours, and we believe we have brought some real, positive change. This year at Sasa funds were allocated for the renovation of the local medical centre. At Kounrad, we have financially supported a children's rehabilitation centre and provided tuition fees for medical students from Balkhash.

Sasa

During H1 2022, significant permitting work was undertaken in preparation for the construction phase of the Cut and Fill Project. The Environmental and Social Impact Assessment ('ESIA') Study was completed and submitted to the authorities. After the submission, a Public Hearing was held with representatives from the Ministry of Environment and Physical Planning ('MoEPP'), the local municipality, including the Mayor of Makedonska Kamenica and representatives from the local community. Feedback from the public hearing was positive and Sasa achieved approval of the ESIA in August 2022.

In H2 2022, construction of the Paste Backfill Plant began, this is now well underway and on track for completion in H1 2023. The Dry Stack Tailings part of the project is scheduled for construction during H2 2023, and key long-lead time item orders have been placed. We have made solid progress with over 1,000 metres of the Central Decline developed from both surface and underground during the year.

Kounrad

During the year at Kounrad, leaching operations performed well, as did the SXEW processing facilities which achieved availability of over 99%. We continued to develop more of the Western Dumps for future leaching operations, while focusing on maximising copper extraction in the Eastern Dumps.

Capital expenditure remained low at $2.5 million and included $0.1 million on the commencement of construction activities related to the solar power plant in Q4 2022. The 4.77MW unit will be constructed by Kounrad's engineering team and is expected to provide between 16-18% of the site's electrical power requirements.

Outlook

While we continue to foresee global challenges, we expect CAML to continue to perform very well relatively.

Our production guidance for Sasa is 790,000 to 810,000 tonnes of ore, which should lead to between 19,000 and 21,000 tonnes of zinc in concentrate and between 27,000 and 29,000 tonnes of lead in concentrate. Our focus at Sasa during 2023 will be finalising the Cut and Fill Project, which will see us extract the maximum resources in a safer, more sustainable and efficient manner. From a permitting perspective, the Paste Backfill and Dry Stack Tailings aspects of the Cut and Fill Project are effectively viewed in North Macedonia as an overarching yet much improved tailings storage solution for the long term.

At Kounrad, we expect to produce between 13,000 and 14,000 tonnes of copper. We also look forward to starting to generate our own renewable power once we have completed construction of the solar power plant this year.

We expect 2023 Group capital expenditure of between $28 million and $30 million, of

which between $11 million and $13 million is expected to be committed to sustaining capex. Total expected 2023 capex also includes approximately $5 million related to the Kounrad solar power plant. CAML expects Cut and Fill Project capital expenditure in the order of $12 million in 2023.

Sasa has already generated EBITDA of $301.5 million during the last five years under our ownership and we look forward to a long mine life continuing to generate significant value from this asset until at least 2039.

We were active throughout 2022 in terms of business development, having reviewed 40 opportunities, signed NDAs for 17 of them and conducted two site visits.

This momentum has continued into 2023 and we remain in a very strong position from

which to grow through acquisition, building the business for the future and producing the base metals essential for modern living.

NIGEL ROBINSON

CHIEF EXECUTIVE OFFICER

28 March 2023

SUSTAINABILITY SUMMARY

Overview

Producing base metals, which are essential for modern living, profitably in a safe and sustainable environment drives CAML's strategy and business model. In turn, our sustainability strategy is built upon the five pillars shown on page 27. This means protecting the longevity of our operations and working towards an enduring net positive outcome after the end of asset life by upholding strong ethical practices throughout the Company and our supply chain, prioritising the safety, health and development of our people, conducting business in an environmentally responsible manner and positively contributing to our communities and

countries of operation.

CAML's Board has accountability for risk management, including those relating to the Company's impacts on the economy, environment and people. Our Sustainability Committee has overall responsibility for overseeing these impacts and its report can be found on page 79.

In our third year of reporting in line with Global Reporting Initiative ('GRI') standards, we have worked to further improve and develop disclosure. We have continued to engage with stakeholders in 2022 and conducted a comprehensive materiality process.

CAML's sustainability strategy and practices continue to develop, and we have advanced our approach to contributing to the Sustainable Development Goals ('SDGs') in 2022. We recognise that all 17 SDGs are important and that many of them are interconnected, however for the purposes of our sustainability activities, we believe that it is helpful to prioritise and have therefore identified these primary and supporting SDGs.

Delivering value through stewardship

At CAML, we set high standards that are crucial for the effective running of our operations and the long-term sustainability of our business. With a robust framework to promote ethical behaviour and strong corporate governance, we believe we can contribute to a responsible and stable value chain and business environment.

Leading from the top, the Board is responsible for setting the appropriate culture to drive good governance and ethical behaviour throughout the Company. We believe that a robust approach to human rights is vital to fulfilling our corporate responsibilities, not only in respect of our employees but for the workers along our supply chains and within the communities in which we operate.

Maintaining health and safety

Safety has been identified both by the Company and our stakeholders as one of our key material issues and is at the heart of everything we do. Our goal of achieving zero harm in the workplace for all employees, contractors and visitors, is laid out in the Company's Sustainability Policy and we have a clear safety improvement target for the Group.

With fully integrated and robust health and safety management systems at both sites, we aim to ensure the wellbeing of all personnel. We strive to implement world-class health and safety practices across our operations. It is important that both management and personnel are aware of their responsibilities and accountability, and that they feel empowered to prioritise health and safety in the workplace.

Wherever possible, we look to eliminate occupational health risks and believe that a strong workforce, supported by the appropriate programmes to monitor and promote health, is paramount in achieving high levels of productivity.

Focusing on our people

We recognise core labour and human rights principles and acknowledge workers' freedom of association and the right for our employees to bargain collectively within prescribed laws, communicating issues to management through designated employee representatives.

We believe that by encouraging employee development, we can also foster satisfaction and fulfilment amongst our employees. This involves a targeted approach to training facilitated by comprehensive needs analysis. Succession planning is a key focus for the Group in order to develop our leaders of tomorrow.

CAML attaches importance on diversity, specifically when considering the breadth of thought, approach and opinion that can be fostered by a diverse group. By embracing diversity and fostering inclusion, we believe we can unlock the power of all talent and work collaboratively and effectively. Site-level diversity focus groups have been put in place to identify areas for improvement and we have implemented long-term targets to improve levels of gender diversity in the Group. We do not tolerate discrimination in any form and have mechanisms in place to raise any issues.

Caring for the environment

CAML has robust and comprehensive environmental management systems which aim to substantially reduce (if not avoid) the risk of any potential negative environmental impacts from our operations.

We are mindful of our duty to manage and minimise waste responsibly and are firmly committed to environmental and socially responsible tailings and dump leach management, with safety at the centre of our approach.

We employ water management strategies and aim to minimise freshwater or makeup usage wherever possible. Biodiversity, rehabilitation and closure programmes are in place across our assets to avoid or mitigate any adverse effects of our operations.

Tackling climate change is one of the most important challenges of our time and we believe that every government, community, company and individual has a vital role to play in reducing carbon emissions and safeguarding the future of the planet. We recognise the growing importance of understanding and addressing the impact of climate change on the environment and its potential impact on the business. As such, we have adopted the Taskforce on Climate- Related Financial Disclosures ('TCFD') framework.

In line with TCFD recommendations, we conducted a scenario planning exercise in 2022 to increase our understanding of transition risks that may affect our operations as well as extending our physical risk analysis to our supply chain. In 2023 we will implement key recommended actions and will begin to estimate our Scope 3 emissions in advance of reporting them in 2024.

Unlocking value for our communities

CAML aims to provide demonstrable benefits to stakeholders in our local communities and host countries. By contributing to the economic security of local workers, the provision of employment opportunities is one of the primary ways the Company can provide a positive impact and CAML therefore prioritises local hiring.

The Company is committed to providing philanthropic support, fostering sustainable development, facilitating socioeconomic progress (specifically in the field of community training and education) and helping the youth and most vulnerable members of the community in line with our human rights commitments.

Our economically robust business that underpins our ability to generate profits and dividends for our shareholders also ensures that our successes are shared with other important stakeholders. This aligns with international priorities such as the UN SDGs, in particular SDG 8 Decent Work and Economic Growth. We strongly believe that by creating shared value we are ensuring the long term sustainability of our operations and acting as a good corporate citizen. CAML is proud of the value that it brings to its host countries, with taxes of $293.6 million paid to the Governments of North Macedonia and Kazakhstan during our ownership.

SASA

North Macedonia

In 2022, Sasa mined 806,069 tonnes of ore and processed 806,653 tonnes of ore. The average head grades for the year were 3.15% zinc and 3.63% lead and the average 2022 metallurgical recoveries were 84.6% for zinc and 93.4% for lead.

Sasa produces a zinc concentrate and a separate lead concentrate. Total production for 2022 was 42,824 tonnes of zinc concentrate at an average grade of 50.1% and 38,439 tonnes of lead concentrate at an average grade of 71.2%.

Sasa typically receives from smelters approximately 84% of the value of its zinc in concentrate and approximately 95% of the value of its lead in concentrate. Accordingly, total 2022 payable sales were 17,862 tonnes of zinc in concentrate and 25,689 tonnes of lead in concentrate.

During 2022, Sasa sold 316,757 ounces of payable silver to Osisko Gold Royalties in accordance with its streaming agreement.

Sasa Production Statistics

Health and Safety

At Sasa, there were two LTIs, two medical treatment injuries ('MTIs') and one restricted

work case ('RWC') during the year.

Mining

A total of 806,069 tonnes of ore were mined using the sub-level caving method during the year from the 990 metre and 910 metre working areas. The ore from the underground operations is hoisted via the Golema Reka shaft to surface (c.73%) and the remainder is trucked to surface via the existing XIVb decline using a fleet of 20 tonne Epiroc trucks.

The average combined grade of the ore mined was 6.78% zinc and lead, approximately 2% higher than 2021.

Ore development in the two working areas totalled 3,114 metres, which was approximately 14% more than last year and involved accessing additional sub-levels below the 910 metre level during H2 2022. Waste development for the year totalled 2,378 metres, approximately 9% above last year for approximately 92,000 tonnes of waste, generated from internal ramp access and crosscuts to the ore body, raise development and the development of the Central Decline. The mine produced a total of 898,069 tonnes of ore and waste during the year, approximately 1% more than last year.

Maintenance

A computerised maintenance management system for surface and underground equipment is in the process of being commissioned. Underground communications were improved with the introduction of underground Wifi, which will be completed by

the end of H1 2023.

During the year, certain equipment was purchased to increase efficiency:

· An Epiroc Bolting Drill Rig Boltec S for the safe and efficient installation of roof bolts.

· Two Paus utility units fitted with interchangeable platforms and hydraulic hammers for rock scaling.

· A Putzmeister SPM 4210 wet shotcrete unit and mixer to enable in-cycle support, replacing the handheld shotcrete units previously used underground.

· A Manitou MHT-X790 Mining for installation of underground reticulation system.

· A Paus Bus (Minca).

· A CAT rock crusher.

Processing

Sasa processed 806,653 tonnes of ore during the year, a fall of approximately 3% versus

2021, and the plant had an overall availability of 95% - an improvement of 2% on 2021.

In addition to the planned maintenance works completed during the year, automated oil lubrication systems and flow meters were installed and commissioned on all of the mills. In November 2022, the reconfiguration of the tertiary crusher and feed arrangements were completed and commissioned. The tailings storage facility systems at Sasa ran to a high standard and without incident during the year, managed by a designated tailings management team. Knight Piésold audited the TSFs in H2 2022 and CAML appointed an experienced Independent Technical Reviewer, who also reviewed the management of Sasa's TSFs. Sasa is currently actioning the recommendations from both reports and working to conformance with GISTM in H1 2024.

During the year, construction of the TSF4 waste rock toe continued with the placement of 37,000 m3 of waste rock from the Sasa underground mine. A new bridge transporting tailings to TSF4 from the processing plant was constructed over the Soborski Dol River. A seismic monitoring system and piezometer sensors were installed as part of an overall drive to automate TSF monitoring systems and commissioning is underway.

The rehabilitation of the TSF3.2 facility continued throughout the year with the placement of waste rock from the Sasa underground mine.

Drilling

A total of 6,670 metres of exploitation drilling was completed during the year on the two working areas, the 910 metre and 990 metre levels, to provide additional information on the

grade and thickness of the three orebodies on the sub-levels.

A total of 5,760 metres of exploration drilling was completed below the 830+14 metre level to improve the geological understanding of the mineralisation at depth.

A total of 2,950 metres of exploration drilling in three holes was completed from surface to test the geology at depth below the 700 metre level. One hole intersected three zones of mineralisation down to at least the 580 metre level proving the extension of the mineralisation at depth to the south-west and adding to the Inferred Mineral Resources. The second and third hole proved the limits of the north-western extents of the mineralisation.

There was no exploration drilling completed at Kozja Reka or Golema Reka during the year.

A comprehensive dewatering programme was also completed during the year with over 250 metres of drainage holes drilled.

2023 Production Guidance

At Sasa, 2023 will be a year of transition from the current sub-level caving mining method to a paste fill mining approach. Therefore, CAML maintains its ore mined guidance year on year of 790,000 to 810,000 tonnes. The Company expects some adjustment in the split of its metal products this year, and therefore provides production guidance of 19,000 to 21,000 tonnes of zinc in concentrate and 27,000 to 29,000 tonnes of lead in concentrate.

CUT AND FILL PROJECT

The transition to using paste fill at Sasa will create a safer and sustainable underground mining operation for the long term. The Cut and Fill Project comprises the construction of a Paste Backfill Plant and associated reticulation, development of a new Central Decline and the Dry Stack Tailings Plant and associated landform.

Paste Backfill Plant

Following the ESIA approval for the Paste Backfill Plant in Q3 2022, a contract was signed with local construction company, Activa, and excavation and civil works began shortly after. The construction of the steel structure began during Q4 2022 with 95% of the structural elements now complete.

Also, during Q4 2022, internal works started with the installation of the continuous mixer. All equipment for the Paste Backfill Plant has been ordered and any outstanding items are due for delivery in H1 2023, and the overall project remains on track.

The underground reticulation required to transport the paste backfill material to the voids underground consists of two phases and connects the surface Paste Backfill Plant with the working areas on 910 and 990 metre levels, via the XIVb and the Central Decline accesses.

In Q3 2022, a designated and trained team commenced the underground installation of 2,109 metres of pipes and associated infrastructure (including 457 metres in the Central Decline). This project was completed during Q4 2022.

The construction of the services culvert from the processing plant to the Paste Backfill Plant

started during Q3 2022. Concrete and steel works have been completed, including the bridge over the Kozja Reka River, all necessary equipment, pipes and valves were delivered to site in Q4 2022 for this aspect of the project, and the installation of the pipes and electrical cable are on track to be completed during H1 2023.

Central Decline

The development of the Central Decline continues to progress well, with 1,051 metres developed during 2022, and 1,554 metres in total, and is on schedule to complete phase 1 to connect surface with the 910 metre production level by the end of H1 2023.

The Central Decline is fully serviced with power, stage pumping and cuddies mined at c. 200 metre intervals. In Q4 2022, a surface 75kW fan was installed and commissioned, producing up to 24m3 per second for ventilation.

Dry Stack Tailings Plant

Following an ongoing review of the dry stack tailings plant and landform conducted by Knight Piésold, as well as local experts, Geing and Atrium and local academic Professors, a number of enhancements have been included in the Dry Stack Tailings project. The review will be completed in H1 2023, and construction is scheduled to start in H2 2023 and be completed during that period. Orders for longlead items such as the Metso-Outotec filter press have been placed.

Tailings Management

A key benefit to the Cut and Fill Project is the improved storage of tailings. Currently, all tailings generated from Sasa's processing plant are stored in TSF4. During the life of the mine, tailings will be stored in the following three locations:

· Backfill: 34% of the flotation tailings will be used to produce paste backfill

· Dry Stack Tailings: Sasa aims to introduce dry stack storage technology for 35% of the flotation tailings

· TSF4: Approximately 31% of tailings will be stored in the existing storage facility using the existing methodology.

· Investigation is underway to identify additional voids to store tailings as paste backfill underground to allow for any extensions to Sasa's life of mine.

SASA MINERAL RESOURCES, ORE RESERVES AND LIFE OF MINE ('LOM')

During Q4 2021, CAML bolstered its technical team, in particular with the recruitment of a

new Group Geologist and Group Technical Services Director. During 2022, the technical services team revisited Sasa's Mineral Resource Estimate ('MRE') for its Svinja Reka deposit, as well as its Ore Reserves.

The updated work took into account recent additional drilling at depth and was completed using new modelling software as well as incorporating the net smelter return ('NSR') cut-off method for polymetallic orebodies instead of the cut-off grade method previously applied. Sasa's MRE and Ore Reserves are shown in the following tables.

Total Svinja Reka Mineral Resources have decreased to 12.3Mt at 4.2% Pb and 2.9% Zn compared to 13.5Mt at 4.6% Pb and 3.0% Zn reported as of 31 December 2021. This is due to 2022 mining depletion and an adjustment of approximately 0.5Mt due to geological reinterpretation based on the results of the recent exploration drilling.

The Svinja Reka Ore Reserve has decreased to 8.8Mt at 3.9% Pb and 2.6% Zn from 9.5Mt at 4.1% Pb and 2.8% Zn reported as of 31 December 2021. The most material factors in this adjustment are related to 2022 mining depletion, resource model changes, the inclusion of some deeper Indicated Resources not previously included and mine design changes, including the use of Long Hole Stoping with paste fill as an additional mining method. The introduction of Long Hole Stoping will support a reduced minimum mining width and reduced dilution as well as enable an increased sub-level height, reducing development requirements and improving overall mine productivities.

Following review of the Mineral Resources and Ore Reserves, detailed mine planning work was undertaken and CAML now plans for a maximum production from Svinja Reka of 830,000 tonnes per year, reduced from the 900,000 tonnes per year previously anticipated for the longer term. As a result, Sasa's expected LoM has increased to 2039 from 2037.

Approximately 10,600 metres of exploration drilling is planned at Sasa for 2023, which will focus on underground drilling of the Kozja Reka deposit from the Central Decline to explore for down dip extensions of the previously mined mineralisation. In addition, surface drilling into the Golema Reka deposit is planned, as well as down dip exploration and infill drilling at Svinja Reka.

Mineral resource estimate for Svinja Reka and Golema Reka

Sasa's technical services team has updated the Mineral Resource Estimate ('MRE') for the Svinja Reka deposit as of 31 December 2022. The Golema Reka MRE was updated on 1 January 2020.

Notes

· Mineral Resources have an effective date of 31 December 2022.

· The Competent Person for the declaration of Mineral Resources is Graham Greenway, BSc.Honours (Geology), PGeo. Graham Greenway, CAML's Group Geologist, is a Practising Registrant of the Professional Geoscientists of Ontario and has over 34 years' experience in the exploration, definition and mining of precious and base metal Mineral Resources, and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration, and to the type of activity which he is undertaking to qualify as a 'Competent Person' as defined by JORC and as required by the June 2009 Edition of the AIM Note for Mining and Oil & Gas Companies. He has reviewed, and consents to, the inclusion in the Annual Report of the matters based on their information in the form and context in which it appears and confirms that this information is accurate and not false or misleading.

· Mineral Resources are reported inclusive of Ore Reserves.

· The Svinja Reka Mineral Resource is reported based on a NSR cut-off of $46/t for Sub-Level Caving and $53/t for Cut and Fill and Long Hole Stoping and are based on metal price assumptions of $2,755/t for zinc, $2,290/t for lead and $22/oz for silver.

· The Golem Reka Mineral Resource is reported above a cut-off grade of 2% combined lead and zinc.

· Mineral Resources are reported as undiluted. No mining recovery has been applied in the Statement.

· Tonnages are reported in metric units, grades in percent (%) or grams per tonne (g/t), and the contained metal in metric units or ounces. Tonnages, grades, and contained metal totals are rounded appropriately.

· Rounding may result in apparent summation differences between tonnes, grade and contained metal content.

Svinja Reka Ore Reserve Statement

The following Ore Reserve Statement has been prepared by Sasa's technical services team based on a Life of Mine ('LoM') plan that includes a transition from the Sub-Level Caving mining method to Cut and Fill as well as Long Hole Stoping with paste backfill. The Ore Reserve Statement considers the updated Indicated Resources constrained within a practical and economic mine design only. NSR cut-off values and design modifying factors for each mining method were applied as follows:

· Sub-Level Caving,

o  NSR Cut-Off Value = $46/t

o  Planned Dilution 25%

o  Mining Recovery 85%

· Cut and Fill

o  NSR Cut-Off Value = $53/t

o  Planned Dilution 5%

o  Mining Recovery 98%

· Long Hole Stoping

o  NSR Cut-Off Value = $53/t

o  Planned Dilution 17.4%

o  Mining Recovery 90%

· Ore Development

o  NSR Cut-Off Value = $37/t

o  Planned Dilution 5%

o  Mining Recovery 98%

Notes

· Ore Reserves have an effective date of 31 December 2022.

· The Competent Person who has reviewed the Ore Reserves is Scott Yelland, C. Eng, FIMMM, MSc, who is a full-time employee and Chief Operating Officer of CAML. He is a mining engineer with over 38 years' experience in the mining and metals industry, including operational experience in underground zinc and lead mines, and as such qualifies as a Competent Person as defined in the JORC Code (2012).

· The Ore Reserve is reported using a NSR cut-off of $46/t for Sub-Level Caving, $53/t for Cut and Fill and Long Hole Stoping and $37/t for Ore Development drives that are required to establish stope access and are based on metal price assumptions of $2,395/t for zinc, $1,992/t for lead and $19.3/oz for silver.

· Rounding may result in apparent summation differences between tonnes, grade and contained metal content.

· The Mineral Resources and Ore Reserves are reported in accordance with the guidelines of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the 'JORC Code').

KOUNRAD

Kazakhstan

The Kounrad team was proud to exceed its production target during 2022. Most importantly, this copper was produced safely and, to 31 December 2022, there have been 1,689 days since the last LTI at Kounrad.

2022 Cathode Production

The SX-EW plant produced a record 14,254 tonnes of copper cathode during 2022, a slight increase from the previous year of 14,041 tonnes. The total Kounrad copper production since operations commenced in April 2012 is now 138,395 tonnes, equating to 55% of the forecast life of operation extractable tonnage. During 2022, copper was leached from the Eastern and Western Dumps, with both areas performing well.

Health and Safety

There were no LTIs, RWCs or MTIs at Kounrad during 2022. There have now been 1,689 days since the last LTI at Kounrad.

Leaching Operations

Both the Eastern and Western Dumps were simultaneously leached during 2022, with the production split being 18% and 82% respectively.

In the Eastern Dumps, the team focused on irrigating previously leached blocks in order to maximise the recovery of copper from the resource. This technique was implemented on various blocks that had been allowed to rest for periods of, in some cases, almost two years. During this rest period, bacterial and chemical activity continued to degrade and solubilise copper mineralisation, especially the more leach resistant species such as chalcopyrite. In addition, with the purchase of a new bulldozer, the summer period was spent pushing and levelling side walls along Dump 7. This new area of exposed material will be leached during 2023. Adopting these approaches resulted in the typical pregnant leach solution ('PLS') grade pick-up averaging about 0.7 grammes per litre ('gpl'), similar to that achieved in 2021. This was somewhat better than anticipated due to leaching the fresher, side slope material and resulted in extracted copper of around 2,625 tonnes from this area.

This takes the total quantity of copper recovered from the Eastern Dumps, since operations commenced, to over 82,000 tonnes, slightly higher than the quantity forecast at the time of the CAML Initial Public Offering ('IPO') in 2010. Typically, the daily average area under irrigation at the Eastern Dumps during the year was 18.5 hectares, noting that winter leaching is restricted to an area of around 12 hectares.

The project to relocate approximately 180,000 cubic metres of material, containing approximately 2,000 tonnes of copper close to the Kazakhmys railway line, was completed by the end of April 2022 using a local contractor. A cut-back leaving a 30-metre distance to the railway line from the dump toe has now been completed, through which a lined trench extension of 876 metres has been installed. This newly exposed area of fresh, previously unleached material is scheduled for irrigation during 2023, although depending upon overall outputs this might be deferred until 2024.

The continued successful and economic generation of copper from the Eastern Dumps is anticipated to continue into 2025.

Kounrad Copper Production

At the Western Dumps, the focus of irrigation remained on parts of Dumps 16, 21, 22 and 1A, from which 11,629 tonnes of copper were recovered, contributing approximately 82% of the total Kounrad copper production. The average daily area under irrigation on the Western Dumps increased to 38.2 hectares (37.5 hectares in 2021) of both new and previously leached material. The volume of raffinate pumped around the site averaged 1,228 cubic metres per hour ('m3/hr'). As in previous summer periods, a proportion of the off-flow solutions from the Eastern Dumps were recycled across to the Western Dumps with the aim of maintaining broadly stable PLS grades to the solvent extraction ('SX') plant.

The second phase of the Intermediate Leaching System ('ILS') was completed in mid-July and at the beginning of August was commissioned and put into test operation. All aspects of the engineering design parameters were validated, and the test was operated with a flow rate of 340m3/hr for six weeks until mid-September, when it was stopped to commence winter leaching switch-over preparations. Whilst the test run was quite short indications of additional pick-up from leaching old blocks appeared positive, with a typical gain of around 0.7 grams per litre ('gpl') achieved during this trial period. However, the very positive leaching performance of the dumps, which continues to generate the required copper transfer to the SX-EW facility, confirms that the ILS circuit will probably not be required as an integral component of the circuit until 2025 or so. During the intervening period we are undertaking additional column tests, replicating the ILS system, in order to better advance our understanding of optimum parameters for when it is utilised more permanently. The first such samples have been collected, prepared, and loaded to columns with testing scheduled to start in January 2023.

Application rates of solution to the dumps were maintained at a level of 2.32 litres per square metre per hour ('l/m2/hr') throughout the year, slightly higher than in 2021.

During the course of the year, 820 metres of the extended interceptor trench around Dump 21 were lined with HDPE and are ready for operations in 2023. Additionally, the extension of the trench encircling Dump 16 by 890 metres, between blocks 22 and 32 was fully excavated but the HDPE lining will only be installed as leaching of the relevant side blocks commences.

Our two dozers continued with their work of significant levelling and shaping earthworks, primarily on the Western Dumps. At the Eastern Dumps, dozer work was relatively limited to the preparation of unleached side slope and road access areas.

The new winter measurement and control systems, which were designed and prepared in late 2021, operated extremely well during the winter period through to March 2022. They allowed excellent control of dripper end temperatures and resulted in an optimised consumption of coal by the three Western Dump area boilers, with a saving of around c.15% compared to the previous winter.

SX-EW Plant

The SX-EW plant continued to operate efficiently during 2022 and the overall operational availability throughout the year was 99.3%. This was 0.1% below that of 2021, primarily due to a planned increase in maintenance schedules to reflect the needs of the process equipment which has been in almost permanent operation for 10 years.

With the average Western Dumps copper grade of around 0.1% and largely fully leached Eastern Dump materials, the average PLS grade for the year was 2.25gpl, approximately 0.1gpl lower than in 2021. Solution flow rates through the SX averaged 1,018m3/hr, with summer rates averaging approximately 1,150m3/hr. During the year, each of the four extract settler units were taken off-line to facilitate inspection and any necessary repairs and, after 10 years of operation, their condition was found to be excellent.

At the start of Q2 2022, 960 anodes were renewed in the EW2 building, these being the first replacements in that plating unit for seven years. As a consequence, both EW sections are fitted with excellent quality anodes and no replacement orders are expected to be made until around 2024. In respect of cathodes a local factory has been identified that can refurbish them, without the requirement to send them to either Chile or Germany. This has obvious cost benefits in terms of shipment and other savings, and of course means that turnaround of the plates is faster and therefore more flexible.

During the year, increased focus on reagent consumptions and controls, particularly imported organic reagents, was made by the operations team with success. Additionally, due to supply chain disruptions, it was decided to increase on-site storage of the Escaid reagent and, by December, an additional two tanks with storage capacity of 180m3 were installed and filled.

The focus for the operations team has been on continued safe, efficient plant operations and the tight control of all operating costs. The management changes introduced in Q3 2021 are now fully embedded and working extremely well under the guidance and control of the site based Technical Director.

Copper Sales

Throughout the year, the quality of CAML's copper cathode product has once again been maintained at high levels both chemically and visually and there have been no negative quality claims. Regular in-house and independent metallurgical analyses have consistently reported 2022 copper purity of around 99.998%. The Company continues to sell the majority of copper production through its off take arrangements with Traxys.

2022 Production Guidance

The 2023 guidance for Kounrad's copper cathode production is between 13,000 and 14,000 tonnes.

Solar Power Project

Following detailed engineering works by TGS, a Kazakh engineering firm specialising in renewable energy installations, the CAML Board approved the construction of a 4.77MW solar panel facility in 2022.

The facility has an estimated capital cost of up to $5 million and is forecast to generate approximately 9.2 million kWh per year or around 16 to 18% of annual power consumption. This is expected to reduce Kounrad's Scope 1 and 2 GHG emissions by c.10% versus 2020.

Upon receipt of all necessary regulatory approvals, the levelling earthworks on the 10-hectare site were undertaken during Q4 2022 and were fully completed by year end. Additionally, by late December the orders were placed for the two long-lead components of the project, which are 8,850 solar panels and 24 DC-AC inverters.

The project will be undertaken by our inhouse engineering and procurement teams, supported by TGS especially during the commissioning phase. Provided there are no issues with supply chain delivery, the forecast completion and commissioning date is scheduled for H2 2023.

FINANCIAL REVIEW

Strong Balance Sheet

CAML reports a 2022 Group EBITDA of $131.6 million. This result was achieved despite global inflationary pressures resulting in some cost increases which were mitigated by weaker operating currencies. CAML has now completely repaid the $187.0 million debt which was secured to acquire Sasa. These repayments have been made while we remained consistently among the sector leading dividend payers, delivered value for all our stakeholders, and invested in our operations.

2022 MARKET OVERVIEW

Kazakhstan

According to the National Bank of Kazakhstan, where CAML produces its copper, Kazakhstan's 2022 GDP expanded by 3.2%, and official inflation was 20.3%.

Copper

During 2022 copper prices have been hit by two significant macro headwinds: China's Zero Covid policy and the US's monetary policy tightening. While China's Zero Covid policy has resulted in a marked slowdown in domestic economic growth and weaker end-user consumption in China, the normalisation of the US monetary policy tightening has led to a firmer dollar, tighter financial conditions and weaker economic growth globally, which has also undermined copper consumption and prices. Copper prices rebounded in December 2022 as a result of China's reopening plans, weakening dollar and low visible copper inventories.

During the year the increase in demand of 3.0% has slightly lagged behind the increase in supply of refined copper production of 3.5%. The International Copper Study Group ('ICSG') indicated a 2022 global refined copper deficit of 376,000 tonnes.

North Macedonia

According to the National Bank of North Macedonia, North Macedonia's 2022 GDP is expected to have expanded by 2.1%, with inflation of 14.2%.

Zinc

The zinc price in 2022 remained robust but volatile, averaging $3,486 per tonne. The factors affecting the zinc (and lead) markets and balances were largely macroeconomic. The rise in energy costs due to the conflict in Ukraine interrupted trade patterns and hit the energy-intensive metal refining industry in Europe. The proportion of energy costs in smelting is estimated to have risen from 55% pre-pandemic to 72% in 2022, hence smelters' closure.

In 2022 zinc mine production remained similar to 2021 at approximately 13 million tonnes, but zinc smelting saw a 4% drop. This is equivalent to 500,000 tonnes of metal and approximately c.50% of the drop was at European smelters. The zinc concentrate market moved from a deficit in the first half with a tight spot market, to becoming relatively weak in Q4 2022 as concentrate supply exceeded demand.

The 2022 Benchmark treatment charges ('TCs') increased from $159 to $230 per dry metric tonne ('dmt'), while spot concentrate TCs reached $260-300/dmt by year end.

Zinc demand, in contrast, flattened during the first half 2022 and further weakened in the second half. The main reasons were China (representing c.50% of global zinc demand) maintaining its Zero Covid policy until late in the year and fears of a recession in Europe, the region most affected by the conflict in Ukraine. Smelter cutbacks meant that global metal inventories fell, particularly on the LME. Metal premiums charged by smelters reached historical highs in Q4 2022, which enabled some smelter capacity to reopen, but not enough to dampen the strong metal price.

The global refined zinc market recorded a further sizable monthly deficit in December 2022, bringing the overall deficit last year to 306,100 tonnes, according to initial estimates from the International Lead & Zinc Study Group (ILZSG), broadly aligned with the 291,000-tonne deficit implied by our supply-demand model.

Lead

The global refined lead market recorded a further modest monthly deficit totaling 6,100 tonnes in December, according to initial estimates from the International Lead & Zinc Study Group (ILZSG). Global lead production was less affected by energy price rises and demand continued to grow (+1.3% vs 2021). The overall lead market is driven by the availability of scrap, which comprises c.65% of the global market. This continued to be tight. Lead mine production in 2022 fell by c.2.3% which helped to keep the concentrate market tight throughout the year, in spite of the fact that one large European smelter remained closed (Stolberg). At the end of 2022 the market was becoming stronger again as spot TCs fell.

Performance Overview

Group profit before tax from continuing operations decreased by 50% to $54.6 million (2021: $109.3 million). This result reflects a noncash impairment charge of $55.1 million related to the Sasa operation as explained below. There was a foreign exchange gain of $6.8 million (2021: $1.2 million) and reduced finance costs of $2.1 million (2021: $3.9 million) due to the repayment of the corporate debt during the year. Recent global inflation has adversely affected several key costs such as electricity and salaries which have increased the Group cost base.

CAML's 2022 gross revenue was $232.2 million (2021: $235.2 million). In H1 2022, record interim financial results were reported, aided by the strength in the metal prices and strong markets. During H2 2022, market conditions worsened as metal prices generally fell and inflation affected operations, not least the electricity prices in North Macedonia.

The Group generated 2022 EBITDA of $131.6 million (2021: $141.5 million), and an EBITDA margin of 57% (2021: 60%) which, despite the global inflationary pressures, reflects the Group's ability to maintain relatively low costs across the operations.

Adjusted earnings per share ('EPS') from continuing operations was higher than the previous year at 48.15 cents (2021: 47.69 cents). EPS from continuing operations, including the impairment charge, was 19.10 cents (2021: 47.69 cents). See note 18 to the financial statements for more information.

CAML generated free cash flow of $89.7 million (2021: $103.8 million), allowing the Board to propose a final 10 pence dividend within policy. The Group fully repaid the corporate debt during the year. As at 31 December 2022, drawn overdraft facilities totalled $1.4 million (2021: $9.6 million) resulting in net cash of $58.9 million (2021: $22.7 million).

Sasa's 2022 EBITDA was $56.4 million (2021: $57.5 million), with a margin of 52% (2021: 56%). The average zinc price received increased by 11% and the average lead price received decreased by 4% compared to the prior year. Treatment charges reduced from April 2022 onwards. Sasa faced some cost increases due to inflationary pressures including an increase in electricity costs. The impact of cost increases has been reduced by a favourable movement in the North Macedonian Denar exchange rate to the US Dollar.

Kounrad's 2022 EBITDA was $94.9 million (2021: $106.0 million), with a margin of 77% (2021: 80%). Kounrad's gross revenue decreased due to the average copper price received decreasing by 8%. Kounrad's EBITDA reflects an increase in costs due to employee pay rises. The impact of cost increases has been somewhat mitigated by a favourable movement in the Kazakhstan Tenge exchange rate to the US Dollar.

INCOME STATEMENT

Revenue

CAML generated 2022 gross revenue of $232.2 million (2021: $235.2 million), which is reported after deduction of treatment charges, but before deductions including offtake buyers' fees and silver purchases for the Sasa silver stream. Net revenue after these deductions was $220.9 million (2021: $223.4 million).

Sasa

Overall, Sasa generated 2022 gross revenue of $108.5 million (2021: $103.1 million). A total of 17,862 tonnes (2021: 18,586 tonnes) of payable zinc in concentrate and 26,320 tonnes (2021: 25,245 tonnes) of payable lead in concentrate were sold during 2022. The payable lead in concentrate sales is 631 tonnes higher than that disclosed in the Operational Review as the final lead concentrate shipment of the prior year was delayed until January 2022 and, under the Free on Board ('FOB') terms, this revenue was recognised in the 2022 financial year.

The zinc price received increased by 11% to an average of $3,358 per tonne (2021: $3,036 per tonne) and, for lead, the price decreased by 4% to an average of $2,113 per tonne (2021: $2,209 per tonne), leading to an overall increase in gross revenue generated from the mine.

Treatment charges during the year reduced to $16.2 million (2021: $18.8 million) due to improved negotiated terms for both zinc and lead. Lead treatment charges are expected to decrease in 2023 whilst zinc treatment charges are expected to increase as a result of the higher availability of zinc concentrate.

During 2022, the offtake buyers' fee for Sasa was $1.2 million (2021: $1.2 million). Zinc and lead concentrate sales agreements have been extended with Traxys on a one year rolling basis for 100% of Sasa production. Sasa has an existing silver streaming agreement with Osisko Gold Royalties whereby Sasa receives approximately $6 per ounce for its silver production for the life of the mine.

Kounrad

A total of 14,192 tonnes (2021: 13,983 tonnes) of copper cathode from Kounrad were sold as part of the Company's offtake arrangement with Traxys. The offtake arrangement with Traxys has been extended from 1 January 2023 on a one-year rolling basis. The commitment is for a minimum of 95% of Kounrad's annual production. A further 150 tonnes (2021: 68 tonnes) were sold locally. Total Kounrad copper sales were 14,342 tonnes (2021: 14,051 tonnes).

Gross revenue decreased due to the copper price received decreasing by 8% to an average of $8,625 per tonne (2021: $9,384 per tonne). This generated gross revenue for Kounrad of $123.7 million (2021: $132.0 million). During 2022, the offtaker's fee for Kounrad increased to $3.1 million (2021: $2.6 million) due to higher transportation costs as a result of the conflict in Ukraine.

Cost of sales

The Group cost of sales for the year was $87.3 million (2021: $80.5 million). This includes

depreciation and amortisation charges of $26.7 million (2021: $28.9 million). Global macro-economic conditions led to an increase in key production cost components such as electricity and salaries. The impact of these cost increases has been somewhat mitigated by favourable foreign exchange movements during the year. The Company continues to focus on factors such as disciplined capital investments, working capital initiatives and other cost control measures.

Sasa

Sasa's cost of sales for the year was 10% higher than the previous year at $60.8 million (2021: $55.4 million). During the year, Sasa faced some cost increases due to inflationary pressures including an increase in electricity costs of $5.5 million, as spot energy prices increased throughout 2022 during which time Sasa had a largely fixed price contract that expired in June. The impact of these overall cost increases was mitigated by a weakening in the North Macedonian Denar. The Denar, which is pegged to the Euro, weakened by 12% to an average of 58.36 against the US Dollar versus a 2021 average of 52.06.

2022 depreciation decreased by $2.0 million versus 2021, due primarily to the weakening of the local currency.

2022 royalties were $2.9 million (2021: $2.8 million). This tax is calculated at the rate of 2% (2021: 2%) on the value of metal recovered during the year.

Kounrad

Kounrad's 2022 cost of sales was $26.5 million (2021: $25.1 million).

There was an increase of $1.7 million due to employee pay rises during the year. There was a $0.2 million decrease in reagent costs due to temporary increased consumption in the prior year which occurred due to a metallurgical adjustment arising from solely leaching the Western Dumps during the prior winter period. The depreciation and amortisation charges during the year reduced to $3.7 million (2021: $3.9 million).

Mineral Extraction Tax ('MET') is a royalty charged by the Kazakhstan authorities at the rate of 5.7% (2021: 5.7%) on the value of metal recovered during the year. MET for the year was $7.2 million (2021: $7.3 million). From 1 January 2023, the MET rate increased to 8.55%.

The impact of the above cost increases was mitigated by a 8% weakening in the Kazakhstan Tenge. The Tenge weakened to an average of 460 against the US Dollar versus a 2021 average of 426.

C1 cash cost of production

C1 cash cost of production is a standard metric used in the mining industry to allow comparison across the sector. In line with the industry standard, CAML calculates C1 cash cost by including all direct costs of production at Kounrad and Sasa (reagents, power, production labour and materials, as well as realisation charges such as freight and treatment charges), in addition to local administrative expenses. Royalties, depreciation, and amortisation charges are excluded from C1 cash cost.

Sasa

Sasa's on-site operating costs increased by 24% to $44.8 million (2021: $36.1 million). The on-site unit cost increased by 26% to $55.6 per tonne (2021: $44.1 per tonne) due to the higher costs explained above and a 2% reduction in tonnes of ore mined in 2022 versus 2021.

Sasa's total C1 cash cost base, including realisation costs, increased to $64.3 million (2021: $58.2 million), and Sasa's C1 zinc equivalent cash cost of production increased to $0.78 per pound (2021: $0.63 per pound). The $0.15 per pound increase in the C1 calculation was primarily due to the decreased production volumes of zinc and higher electricity costs.

Kounrad

Kounrad's 2022 C1 cash cost of copper production was $0.65 per pound (2021: $0.57 per pound) which remains amongst the lowest in the copper industry. The increase in C1 cash cost versus 2021 is due primarily to higher costs resulting from employee pay increases and higher transportation costs.

Group

CAML reports its Group C1 cash cost on a copper equivalent basis incorporating the production costs at Sasa and by also converting lead and zinc production into copper equivalent tonnes. The Group's 2022 C1 copper equivalent cash cost was $1.39 per pound (2021: $1.32 per pound). This number is calculated based on Sasa's 2022 zinc and lead payable production, which equated to 13,402 copper equivalent tonnes (2021: 11,959 copper equivalent tonnes) added to Kounrad's 2022 copper production of 14,254 tonnes (2021: 14,041 tonnes). The C1 cash cost increase on a copper equivalent basis is due to the higher C1 cost base at both Sasa and Kounrad.

CAML also reports a fully inclusive cost that includes sustaining capital expenditure, local taxes including MET and concession fees, interest on loans and corporate overheads associated with the Kounrad and Sasa projects as well as the C1 cost component. The Group's fully inclusive copper equivalent unit cost for the year was $1.92 per pound (2021: $1.89 per pound). The increase is a result of the higher C1 cost components at Sasa and Kounrad somewhat offset by a reduction in interest on loans.

Impairment of non-current assets

At 31 December 2022, the Group recognised an impairment charge of $55.1 million related to the Sasa operation due to the following factors:

· Completion of the life of mine study at the year end and therefore amending the financial model inputs for updated reserves, resources and expected 830,000 tonne long-term plant throughput capacity per annum (reduced from 900,000 tonnes). The Resource and Reserves are both reported using Net Smelter Return cut-off values and the Resources have decreased due to management's assessment of those which are economically viable and capable of future extraction.

· An increase in the discount rate used to calculate the net present value of future cash flows to 12.52% (2021: 10.21%) due to external economic conditions.

· Cost increases for energy and wages to reflect near-term inflationary pressures.

· The key economic assumptions used in the review were a five-year forecast average nominal zinc and lead price of $2,760 and $2,081 per tonne respectively and a real long-term price of $2,467 and $1,874 per tonne respectively with an inflationary factor applied.

Administrative expenses

During the year, administrative expenses increased to $27.1 million (2021: $22.1 million), largely due to an increased non-cash share-based payment charge of $4.5 million (2021: $2.4 million). This increase was due to options exercised at a share price more than the fair value of the options at the date of grant, arising from the Company electing to settle in cash, as well as recognising a full year's charge in relation to the 2021 mid-year share option grants.

There was also an increase in employee-related costs due to staff pay increases and new hires as well as an increase in business travel costs.

Other losses

During the prior year, the Group entered into commodity price hedge contracts resulting in $6.7 million of realised losses on financial derivatives. These financial instruments expired at the end of 2021 and the Group has not put in place any further hedge contracts.

Foreign exchange gain

The Group incurred a foreign exchange gain of $6.8 million (2021: $1.2 million) resulting from the retranslation of USD denominated monetary assets held by foreign subsidiaries with a local functional currency. The gain was significant due to the weakening of the Kazakhstan Tenge and North Macedonian Denar as mentioned above.

Finance costs

The Group incurred lower finance costs of $2.1 million (2021: $3.9 million) resulting from the scheduled debt repayments during the year.

Taxation

2022 Group corporate income tax decreased to $20.6 million (2021: $25.1 million) as a result of lower profits at Kounrad taxed at a corporate income tax rate of 20% and at Sasa taxed at a corporate income tax rate of 10%. The decrease also resulted from a reduction in the deferred tax liability due to the Sasa impairment charge.

Discontinued operations

The Group continues to report the results of the Copper Bay entities within discontinued operations. These assets were fully written off in prior years.

BALANCE SHEET

Capital expenditure

During the year, there were additions to property, plant, and equipment of $17.4 million (2021: $14.8 million). The additions were a combination of $2.5 million (2021: $2.7 million) Kounrad sustaining capital expenditure, $7.7 million (2021: $6.2 million) Sasa sustaining capital expenditure and $7.2 million (2021: $5.9 million) in relation to the Sasa Cut and Fill Project.

Sasa sustaining capital expenditure includes capitalised mine development of $2.5 million, $1.4 million on flotation equipment and $1.7 million on underground fleet. Kounrad's sustaining capital expenditure includes $0.5 million on new anodes, $0.6 million on dripper pipes and $0.1 million on the solar power plant.

Cut and Fill Project

The Group continues to invest significantly at Sasa with the implementation of the Cut and Fill Project, comprising the construction of a Paste Backfill Plant and associated underground reticulation infrastructure, a Dry Stack Tailings Plant and associated landform and the development of the new Central Decline.

During 2022, capital expenditure on the Cut and Fill Project totalled $11.9 million of which $7.2 million has been capitalised and $4.7 million prepaid. This includes $2.6 million of Central Decline costs and $5.6 million on the Paste Backfill Plant. There was a further $1.6 million spent on underground reticulation and $1.8 million spent on the Dry Stack Tailings Plant and associated landform.

CAML expects 2023 capital expenditure of between $28.0 million and $30.0 million, of which between $11.0 million and $13.0 million is expected to be committed to sustaining capex. Total expected 2023 capex also includes approximately $5.0 million related to the Kounrad solar power plant. CAML expects Cut and Fill Project capital expenditure in the order of $12.0 million in 2023. This will be largely related to construction of the dry stack tailings landform as well as capitalised decline development.

Working capital

As at 31 December 2022, current trade and other receivables were $8.7 million (31 December 2021: $6.2 million), which includes trade receivables from the offtake sales of $2.4 million (31 December 2021: $1.2 million) and $3.0 million in relation to prepayments and accrued income (31 December 2021: $2.5 million).

Non-current trade and other receivables were $11.5 million (31 December 2021: $7.3 million). As at 31 December 2022, a total of $3.4 million (31 December 2021: $3.3 million) of VAT receivable was owed to the Group by the Kazakhstan authorities. Recovery is still expected through a continued dialogue with the authorities for cash recovery and further offsets.

As at 31 December 2022, current trade and other payables were $16.6 million (31 December 2021: $16.1 million).

Asset retirement obligation

During the year, an updated Kounrad conceptual closure plan was prepared by independent

external consultants WSP Golders. The report reassessed the estimated closure costs at the end of the life of the operation including rehabilitation, remediation, decommissioning and demolition. The Group asset retirement obligation provision has been increased by $1.2 million to account for additional estimated costs in aggregate across Kounrad and Sasa and using latest assumptions on discount and inflation rates.

Cash and borrowings

As at 31 December 2022, the Group had cash in the bank of $60.6 million (31 December 2021: $59.2 million) and current borrowings of $1.4 million (31 December 2021: $33.0 million). Current borrowings comprise $1.4 million of North Macedonian overdraft facilities. The corporate debt facility with Traxys was repaid in full in August 2022.

The reduction in current borrowings of $31.6 million reflects corporate debt repaid during the year of $23.8 million, repayments of overdrafts of $7.5 million, a foreign exchange impact of $0.6 million as well as an effective interest rate amount of $0.4 million relating to unwinding directly attributable fees.

Allotment and issue of shares

In September 2022, the Company issued and allotted 5,600,000 Ordinary Shares of $0.01 each (the 'New Ordinary Shares') to the trustee of the Central Asia Metals employee benefit trust. These New Ordinary Shares were issued for the purposes of satisfying current awards granted under the Company's Employee Share Plans together with any future awards that may be granted by the Company. Under the Trust deed the trustee must waive dividends and refrain from voting unless the Board directs otherwise. The New Ordinary Shares rank pari passu with the existing issued Ordinary Shares of the Company.

CASH FLOWS

Net cash flow generated from operations was $99.8 million (2021: $112.6 million).

During the year, corporate debt repayments of $23.8 million were made in relation to the Traxys loan (2021: $48.4 million) and a further $7.5 million of overdraft was repaid (2021: net drawdown $0.6 million). In addition, interest of $0.6 million was paid (2021: $2.4 million).

In 2022, corporate income tax payments to governments totalled $22.2 million (2021: $21.6 million). This included $1.7 million (2021: $0.5 million) of North Macedonia corporate income tax paid in cash in addition to a $4.5 million (2021: $3.5 million) non-cash payment offset against VAT and corporate income receivable. $20.5 million (2021: $21.1 million) of Kazakhstan corporate income tax was paid during the year.

Considering sustaining capital expenditure, excluding project capex, CAML's free cash flow for 2022 was $89.7 million (2021: $103.8 million).

DIVIDEND

The Company's dividend policy is to return to shareholders a range of between 30% and 50% of free cash flow, defined as net cash generated from operating activities less sustaining capital expenditure. The dividends will only be paid provided there is sufficient cash remaining in the Group to meet any contractual debt repayments and that any banking covenants are not breached.

Total dividends paid to shareholders during the year of $48.2 million comprised the final 2021 dividend of 12 pence per Ordinary Share and the interim 2022 dividend of 10 pence per Ordinary Share.

In conjunction with CAML's 2022 annual results, the Board proposes a final 2022 dividend of 10 pence per Ordinary Share. This brings total dividends (proposed and declared) for the year to 20 pence (2021: 20 pence) which represents 47% of free cash flow. The final dividend is payable on 23 May 2023 to shareholders registered on 28 April 2023. This latest dividend will increase the amount returned to shareholders in dividends since the 2010 IPO listing to $299.0 million.

GOING CONCERN

The Group sells and distributes its copper cathode product primarily through an annual rolling offtake arrangement with Traxys Europe S.A. ('Traxys') with a minimum of 95% of the SX-EW plant's forecasted output committed as sales. The Group sells Sasa's zinc and lead concentrate product through an annual rolling offtake arrangement with Traxys. The

commitment is for 100% of the Sasa concentrate production.

The Group meets its day-to-day working capital requirements through its profitable and cash generative operations at Kounrad and Sasa. The Group manages liquidity risk by maintaining adequate committed borrowing facilities and the Group has substantial cash balances as at 31 December 2022.

The Board has reviewed forecasts for the period to December 2024 to assess the Group's liquidity which demonstrate substantial headroom. The Board has considered additional sensitivity scenarios in terms of the Group's commodity price forecasts, expected production volumes, operating cost profile and capital expenditure. The Board has assessed the key risks which could impact the prospects of the Group over the going concern period including commodity price outlook, cost inflation and supply chain disruption with reverse stress testing of the forecasts in line with best practice. Liquidity headroom was demonstrated in each reasonably possible scenario. Accordingly, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.

OUTLOOK

During the second half of the year commodity prices declined and inflation increased which brought into focus the Company's cost control measures. The full repayment of debt provided additional liquidity which mitigated against any cost increases that were outside of the Company's control, such as electricity prices. However, actions taken by governments to increase gas storage in the latter part of the year as well as a mild winter resulted in easing of energy prices and alleviated cost pressures for the Company. Demand for the metals produced by the Group remains robust and metal stocks are at low levels which should continue to support prices and allow the Company to maximise cash flow and hence value creation.

NON-IFRS FINANCIAL MEASURES

The Group uses alternative performance measures, which are not defined by generally accepted accounting principles ('GAAP') such as IFRS, as additional indicators. These measures are used by management, alongside the comparable GAAP measures, in evaluating the business performance. The measures are not intended as a substitute for GAAP measures and may not be comparable to similarly reported measures by other companies. The following non-IFRS alternative performance financial measures are used in this report:

Earnings before interest, tax, depreciation and amortisation (EBITDA)

EBITDA is a valuable indicator of the Group's ability to generate liquidity and is frequently used by investors and analysts for valuation purposes. It is also a non-IFRS financial measure which is reconciled as follows:

Gross revenue

Gross revenue is presented as the total revenue received from sales of all commodities after

deducting the directly attributable treatment charges associated for the sale of zinc, lead and silver. This figure is presented as it reflects the total revenue received in respect of the zinc and lead concentrate and is used to reflect the movement in commodity prices and treatment charges during the year. The Board considers gross revenue, together with the reconciliation to net IFRS revenue to provide valuable information on the drivers of IFRS revenue.

Net cash

Net cash is a measure used by the Board for the purposes of capital management and is

calculated as the total of the borrowings held plus the cash and cash equivalents held at the

end of the year. This balance does not include the restricted cash balance of $0.3 million (31

December 2021: $3.5 million):

Free cash flow

Free cash flow is a non-IFRS financial measure of the cash from operations less sustaining capital expenditure on property, plant and equipment and intangible assets and is presented as follows:

The purchase of sustaining property, plant and equipment figure above does not include the $7.2 million (2021: $5.9 million) of capitalised expenditure on the Sasa Cut and Fill Projects. These costs are not considered sustaining capital expenditure as they are expansionary development costs required for the transition to the paste fill mining techniques. These exceptional costs are expected to continue until 2024.

Sustainability reporting standards Sustainability is at the core of our business values, and we have reported in accordance with Global Reporting Initiative ('GRI') Standards for the period 1 January 2022 to 31 December 2022.

We have an economically robust business that underpins our ability to generate profits and

dividends for our shareholders and ensures that our successes are also felt by other important stakeholders. We strongly believe that by creating shared value we are ensuring the long-term sustainability of our operations and acting as a good corporate citizen. The table below highlights the economic value that has been distributed amongst CAML stakeholders during 2022.

1 The tax disclosed is the total corporate income tax recognised in the income statement, MET, concession fees and property taxes. The figure excludes the payroll taxes and additional cash payments made on corporate income tax during the year.

On behalf of the Board

GAVIN FERRAR

CHIEF FINANCIAL OFFICER

28 March 2023

Consolidated Income Statement

for the year ended 31 December 2022 

Group

1 Gross revenue is a non-IFRS financial measure which is used by management, alongside the comparable GAAP measures, in evaluating the business performance. The measures are not intended as a substitute for GAAP measures and may not be comparable to similarly reported measures by other companies.

Statements of Financial Position Registered no. 5559627

as at 31 December 2022

Group Company

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 profit for the parent company for the year was $62,066,000 (2021: $13,585,000).

Consolidated Statement of Changes in Equity

for the year ended 31 December 2022

Company Statement of Changes in Equity

for the year ended 31 December 2022

Consolidated Statement of Cash Flows

for the year ended 31 December 2022

Cash and cash equivalents at 31 December 2022 includes cash at bank and on hand included in assets held for sale of $63,000 (31 December 2021: $36,000) (note 22). The consolidated statement of cash flows does not include the restricted cash balance of $264,000 (2021: $3,516,000) (note 25).

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

Notes to the Financial Information

for the year ended 31 December 2022

1. General information

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

The Group's principal business activities are the production of copper cathode at its Kounrad operations in Kazakhstan and the production of lead, zinc and silver at its Sasa operations in North Macedonia. CAML owns 100% of the Kounrad SX-EW copper project in Kazakhstan and 100% of the Sasa zinc-lead mine in North Macedonia. The Company also owns a 76% equity interest in Copper Bay Limited which is currently held for sale. See note 22 for details.

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

2. Summary of significant accounting policies

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

Basis of preparation of the Financial Information

The financial information set out herein does not constitute the Group's statutory financial statements for the year ended 31 December 2022, but is derived from the Group's audited financial statements. The auditors have reported on the 2022 financial statements and their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act 2006, nor did they contain a material uncertainty in relation to going concern. The 2022 Annual Report was approved by the Board of Directors on 28 March 2023, and will be mailed to shareholders in April 2023. 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 statements, which form part of the 2022 Annual Report, have been prepared in accordance with international accounting standards as adopted in the United Kingdom and the Companies Act 2006. The consolidated financial statements have 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 statements for the year ended 31 December 2022. The Group financial information is presented in US Dollars ($) and rounded to the nearest thousand.

The parent company meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council. The parent company financial statements have therefore been prepared in accordance with FRS 101

(Financial Reporting Standard 101) 'Reduced Disclosure Framework' as issued by the Financial Reporting Council. As permitted by

FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to share-based

payments, financial instruments, fair value measurements, capital management, presentation of a cash flow statement, new

standards not yet effective, impairment of assets and related party transactions. Where relevant, equivalent disclosures have been

given in the Group financial statements of Central Asia Metals plc.

The preparation of the Group 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 4.

Going concern

The Group sells and distributes its copper cathode product primarily through an annual rolling offtake arrangement with Traxys Europe S.A. ('Traxys') with a minimum of 95% of the SX-EW plant's forecasted output committed as sales. The Group sells Sasa's zinc and lead concentrate product through an annual rolling offtake arrangement with Traxys. The commitment is for 100% of the Sasa concentrate production.

The Group meets its day to day working capital requirements through its profitable and cash generative operations at Kounrad and

Sasa. The Group manages liquidity risk by maintaining adequate committed borrowing facilities and the Group has substantial cash

balances as at 31 December 2022.

The Board has reviewed forecasts for the period to December 2024 to assess the Group's liquidity which demonstrate substantial headroom. The Board have considered additional sensitivity scenarios in terms of the Group's commodity price forecasts, expected production volumes, operating cost profile and capital expenditure. The Board have assessed the key risks which could impact the prospects of the Group over the going concern period including commodity price outlook, cost inflation and supply chain disruption with reverse stress testing of the forecasts in line with best practice. Liquidity headroom was demonstrated in each reasonably possible scenario. Accordingly, the Directors continue to adopt the going concern basis in preparing the consolidated financial information.

Please refer to notes 6, 25 and 29 for information on the Group's revenues, cash balances and trade and other payables.

New and amended standards and interpretations adopted by the Group

The Group has adopted the following standards and amendments for the first time for the annual reporting period commencing 1 January 2022, however there is no impact on the current reporting period:

IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract amending the standard regarding costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

IAS 16 - Property, Plant and Equipment - Proceeds before Intended Use regarding proceeds from selling items produced while bringing an asset into the location and condition necessary for it to be capable of operating in the manner intended by management.

New standards, interpretations, and amendments not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Group. These standards include:

IAS 1 - Presentation of Financial statements - The classification of liabilities as current or non-current basing the classification on contractual arrangements at the reporting date. These amendments are effective for periods beginning 1 January 2024.

Amendments to IAS 8 - Definition of Accounting Estimates effective 1 January 2023.

Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting policies effective 1 January 2023.

These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Basis of consolidation

The Group financial statements consolidate the financial statements of CAML and the entities it controls drawn up to 31 December 2022.

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Intercompany transactions, balances and unrealised losses/gains on transactions between Group companies are eliminated. Unrealised losses/gains are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Business combinations

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and reported within other expenses.

Goodwill

The excess of the consideration transferred of a business combination, the amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase. Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.

After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill is allocated to the cash-generating unit expected to benefit from the business combination in which the goodwill arose. Where the recoverable amount is less than the carrying amount, including goodwill, an impairment loss is recognised in the income statement. The carrying amount of goodwill allocated to an entity is taken into account when determining the gain or loss on disposal of the unit.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Non-controlling interests

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately within equity in the consolidated statement of financial position distinct from parent shareholder's equity.

Where losses are incurred by a partially owned subsidiary, they are consolidated such that the non-controlling interests' share in the losses is apportioned in the same way as profits.

Where profits are then made in future periods, such profits are then allocated to the parent company until all unrecognised losses attributable to the non-controlling interests but absorbed by the parent are recovered at which point, profits are allocated as normal.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker which is considered to be the Board. The Group's segmental reporting reflects the operational focus of the Group. The Group has been organised into geographical and business units based on its principal business activities of mining production, having two reportable segments as follows:

· Kounrad (production of copper cathode) in Kazakhstan

· Sasa (production of lead, zinc and silver) in North Macedonia

Included within the unallocated segment are corporate costs for Central Asia Metals Plc and other holding companies within the Group which are not separately reported to the Board.

Foreign currency translation

The functional currency for each entity in the Group is determined as the currency of the primary economic environment in which it operates. The consolidated financial statements are presented in US Dollars, which is the Group and Company presentation currency. The functional currency of the Company is US Dollars.

Transactions in currencies other than the currency of the primary economic environment in which they operate are initially recorded at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.

Exchange gains and losses arising on the retranslation of monetary financial assets are treated as a separate component of the change in fair value and recognised in profit or loss. Exchange gains and losses on non-monetary OCI financial assets form part of the overall gain or loss in OCI recognised in respect of that financial instrument.

On consolidation, the results of overseas operations are translated into USD at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rates are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended.

The cost of the item also includes the cost of decommissioning any buildings or plant and equipment and making good the site, where a present obligation exists to undertake the rehabilitation work.

Development costs relating to specific mining properties are capitalised once management determines a property will be developed. A development decision is made based upon consideration of project economics, including future metal prices, reserves and resources, and estimated operating and capital costs. Capitalisation of costs incurred and proceeds received during the development phase ceases when the property is capable of operating at levels intended by management and is considered commercially viable. Costs incurred during the production phase to increase future output by providing access to additional reserves, are deferred and depreciated on a units-of-production basis over the component of the reserves to which they relate. Ore reserves may be declared for an undeveloped mining project before its commercial viability has been fully determined. Development costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to a future economic benefit. Development costs are not depreciated until such time as the areas under development enter production.

Depreciation is provided on all property, plant and equipment on a straight-line basis over its total expected useful life. As at 31 December 2022 the remaining useful lives were as follows:

· Construction in progress - not depreciated

· Land - not depreciated

· Plant and equipment - over 5 to 16 years

· Mining assets - over 2 to 16 years

· Motor vehicles - over 2 to 10 years

· Office equipment - over 2 to 10 years

· Right of use assets - term of lease agreement

Mineral rights are depreciated on a Unit of Production basis ('UoP'), in proportion to the volume of ore mined in the year compared with total proven and probable reserves as well as measured, indicated and certain inferred resources which are considered to have a sufficiently high certainty of commercial extraction at the beginning of the year. Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the related mine are depreciated on a straight-line basis.

Construction in progress is not depreciated until transferred to other classes of property, plant and equipment.

The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable and are written down immediately to their recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required, these are made prospectively.

An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset is included in the income statement.

Leases

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

· fixed payments (including in-substance fixed payments), less any lease incentives receivable and variable payments based on index or rate;

· amounts expected to be payable by the Group under residual value guarantees; and

· payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

The Group leases offices and equipment. Rental contracts are typically made for fixed periods of six months to five years and have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

Intangible assets

a) Exploration and evaluation expenditure

Capitalised costs include costs directly related to any Group exploration and evaluation activities in areas of interest for which there is a high degree of confidence in the feasibility of the project. Exploration and evaluation expenditure capitalised includes acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploration drilling, trenching, sampling and activities in relation to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource.

Exploration and evaluation assets are measured at cost less provision for impairment, where required.

b) Mining licences, permits and computer software

The historical cost model is applied, with intangible assets being carried at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with a finite life have no residual value and are amortised on a straight-line basis over their expected useful lives with charges included in either cost of sales or administrative expenses:

Computer software - over 2 to 5 years

Mining licences and permits - over the duration of the legal agreement

The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.

Impairment of non-financial assets

The Group carries out impairment testing on all assets when there exists an indication of an impairment. If any such indication exists, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell or its value in use.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

The best evidence of an asset's fair value is the value obtained from an active market or binding sale agreement. Where neither exists, fair value less costs to sell is based on the best available information to reflect the amount the Group could receive for the cash-generating unit in an arm's length sale. In some cases, this is estimated using a discounted cash flow analysis on a post-tax basis.

A previously recognised impairment loss is reversed if the recoverable amount increases as a result of a reversal of the conditions that originally resulted in the impairment. This reversal is recognised in the income statement and is limited to the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised in prior years.

Goodwill is also reviewed annually, as well as whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non-financial assets other than goodwill which have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

Revenue

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. These steps are as follows: identification of the customer contract; identification of the contract performance obligations; determination of the contract price; allocation of the contract price to the contract performance obligations; and revenue recognition as performance obligations are satisfied.

Under IFRS 15, revenue is recognised when the performance obligations are satisfied and the customer obtains control of the goods or services, usually when title has passed to the buyer and the goods have been delivered in accordance with the contractual delivery terms.

Revenue is measured at the fair value of consideration received or receivable from sales of metal to an end user, net of any buyers' discount, treatment charges and value added tax. The Group recognises revenue when the amount of revenue can be reliably measured and when it is probable that future economic benefits will flow to the entity. 

The value of consideration is fair value which equates to the contractually agreed price. The offtake agreements provide for provisional pricing i.e. the selling price is subject to final adjustment at the end of the quotation period based on the average price for the month following delivery to the buyer. Such a provisional sale contains an embedded derivative which is not required to be separated from the underlying host contract, being the sale of the commodity. At each reporting date, if any sales are provisionally priced, the provisionally priced copper cathode, zinc and lead sales are marked-to-market using forward prices, with any significant adjustments (both gains and losses) being recorded in revenue in the income statement and in trade receivables in the statement of financial position.

The Company may mitigate commodity price risk by fixing the price in advance for its copper cathode with the offtake partner and also its zinc and lead sales with the banks where a facility has been set up and agreed. The price fixing arrangements are outside the scope of IFRS 9 Financial Instruments: Recognition and Measurement and do not meet the criteria for hedge accounting.

The Group reports both a gross revenue and revenue line. Gross revenue is reported after deductions of treatment charges but before deductions of offtaker fees and silver purchases under the Silver Stream (note 6).

Inventory

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method.

The cost of finished goods and work in progress comprises raw materials, direct labour and all other direct costs associated with mining the ore and processing it to a saleable product.

Net realisable value is the estimated selling price in the ordinary course of business, less any further costs expected to be incurred to completion. Provision is made, if necessary, for slow-moving, obsolete and defective inventory.

Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any Initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of comprehensive income.

Current and deferred income tax

The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the reporting date in the countries where the Group's subsidiaries operate and generate taxable income.

Deferred income tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

· The initial recognition of goodwill,

· The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit, and

· Investments in subsidiaries and joint arrangements where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered). When there is uncertainty concerning the Group's filing position regarding the tax bases of assets or liabilities, the taxability of certain transactions or other tax-related assumptions, then the Group:

· Considers whether uncertain tax treatments should be considered separately, or together as a group, based on which approach provides better predictions of the resolution;

· Determines if it is probable that the tax authorities will accept the uncertain tax treatment; and

· If it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty. This measurement is required to be based on the assumption that each of the tax authorities will examine amounts they have a right to examine and have full knowledge of all related information when making those examinations.

Deferred income tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

· The same taxable group company, or

· Different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Restricted cash

Restricted cash is cash with banks that is not available for immediate use by the Group. Restricted cash is shown separately from cash and cash equivalents on the statement of financial position. 

Investments

Investments in subsidiaries are recorded at cost less provision for impairment.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Treasury shares

Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders.

Share based compensation

Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied. An option pricing model is used to measure the fair value of the options. 

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the consolidated statement of comprehensive income over the remaining vesting period. 

Where the Company has no choice but to settle in cash, for example due to the inability to settle in shares, the Company shall recognise an additional expense for the excess value given at the settlement date.

Trade and other receivables

Trade and other receivables are accounted for under IFRS 9 using the expected credit loss model and are initially recognised at fair value and subsequently measured at amortised cost less any allowance for expected credit losses.

Impairment of financial assets

Impairment provisions for current and non-current trade receivables are recognised based on the 'simplified approach' within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in profit or loss. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for receivables from subsidiaries and loans to subsidiaries are recognised based on the 'general approach' within IFRS 9. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset with the assessment also taking into account the ability of the subsidiary to repay the receivable or loan in the event that it was called due. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of the loan whereas twelve month expected credit losses are a portion of lifetime expected credit losses that represent the expected credit losses that result from default events that are possible within twelve months of the reporting date.

From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the consolidated statement of comprehensive income (operating profit).

Trade and other payables

Trade and other payables are not interest bearing and are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

Silver stream commitment

The silver stream arrangement has been accounted for as a commitment as the Group has obligations to deliver silver to a third party at a price below market value. On acquisition, following completion of the business combination, the silver stream commitment was identified as an unfavourable contract and recorded at fair value. Payments received under the arrangement prior to the acquisition by the Group were not considered to be a transaction with a customer. Management has determined that the agreement is not a derivative as it will be satisfied through the delivery of non-financial items (i.e. silver commodity from the Company's production), rather than cash or financial assets. Subsequent to initial recognition the silver stream commitment is not revalued and is amortised on a units of production basis to cost of sales. 

The fair value of consideration received for delivered silver under the agreement is recorded as revenue. In addition, silver produced in conjunction with the Group's lead and zinc production and sold under the offtake agreement is recorded in gross revenue with a corresponding deduction for silver purchased to deliver under the silver stream recorded in arriving at net revenue.

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

Derivative financial instruments

The Group may use commodity price contracts to reduce its exposure to risks from commodity price movements. Derivative financial instruments are primarily used as a means of managing exposure to price in line with the Group risk management strategy. Derivative financial liabilities are initially recognised and measured at fair value on the date a derivative contract is entered into and then subsequently re-measured at fair value by reference to valuation models and the probability of outcome scenarios and categorised as level 2 measurements:

· Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)

· Inputs other than quoted prices within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2)

· Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). For the derivative contracts held the Group are recognising the financial instruments with level 2 data as the valuation is obtained using MTM market data using the forward curve of the commodity prices. However, there is no readily observable market information for these exact derivative instruments. The realised losses gains are recognised in other gains and losses in the income statement.

Provisions

a) Asset retirement obligation

Provisions for environmental restoration of mining operations are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the cash flows incorporate assessments of risk. The increase in the provision due to passage of time is recognised as interest expense.

b) Employee benefits - pension

The Group, in the normal course of business, makes payments on behalf of its employees for pensions, health-care, employment and personnel tax, which are calculated based on gross salaries and wages according to legislation. The cost of these payments is charged to the consolidated statement of comprehensive income in the same period as the related salary cost. 

c) Employee benefits - retirement benefits and jubilee awards

Pursuant to the labour law prevailing in the North Macedonian subsidiaries, the Group is obliged to pay retirement benefits for an amount equal to two average monthly salaries, at their retirement date. According to the collective labour agreement, the Group is also obliged to pay jubilee anniversary awards for each ten years of continuous service of the employee. Due to the long-term nature of these plans, such estimates are subject to uncertainty.

Retirement benefit obligations arising on severance pay are stated at the present value of expected future cash payments towards the qualifying employees. These benefits have been calculated by an independent actuary in accordance with the prevailing rules of actuarial mathematics and recognised as a liability with no pension plan assets (note 32). Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to profit and loss over the employees' expected average remaining working lives.

3. Financial instruments - risk management

The Group's activities expose it to a variety of financial risks; market price risk (including foreign currency exchange risk, commodity price risk and interest rate risk), liquidity risk, capital risk and credit risk. These risks are mitigated wherever possible by the Group's financial management policies and practices described below. The Group's risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group's operating units.

Foreign currency exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. The primary Group currency requirements are US Dollar, British Pound, Kazakhstan Tenge, Euro and North Macedonian Denar. 

The following table highlights the major currencies the Group operates in and the movements against the US Dollar during the course of the year:

Foreign exchange risk does not arise from financial instruments that are non-monetary items or financial instruments denominated in the functional currency. Kazakhstan Tenge and North Macedonian Denar denominated monetary items are therefore not reported in the tables below, as the functional currency of the Group's Kazakhstan-based and North Macedonian-based subsidiaries is the Tenge and Denar respectively. 

The Group's exposure to foreign currency risk based on US Dollar equivalent carrying amounts at the reported date:

Trade and other receivables excludes prepayments and VAT receivable and trade and other payables excludes corporation tax, social security and other taxes as they are not considered financial instruments. 

At 31 December 2022, if the foreign currencies had weakened/strengthened by 10% against the US Dollar, post-tax Group profit for the year would have been $1,804,000 lower/higher (2021: $1,021,000 lower/higher).

Commodity price risk

The Group has a hedging policy in place to manage commodity price risk however the Directors elected not to hedge during 2022.

The offtake agreement at Kounrad and Sasa provides for the option of provisional pricing i.e. the selling price is subject to final adjustment at the end of the quotation period based on the average price for the month following delivery to the buyer. This could result in fluctuations of revenue recognised ultimately. The Company may mitigate commodity price risk by fixing the price in advance for its copper cathode sales with the offtake partner.

The following table details the Group's sensitivity to a 10% increase and decrease in the copper, zinc and lead price against the invoiced price. 10% is the sensitivity used when reporting commodity price internally to management and represents management's assessment of the possible change in price. A positive number below indicates an increase in profit for the year and other equity where the price increases.

Estimated effect on earnings and equity

Liquidity risk

Liquidity risk relates to the ability of the Group to meet future obligations and financial liabilities as and when they fall due. The Group currently has sufficient cash resources and a material income stream from the Kounrad and Sasa projects. 

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities. They agree to those amounts presented in the statement of financial position because the impact of discounting is immaterial.

Capital risk

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal structure to reduce the cost of capital.

The Group manages its capital in order to provide sufficient funds for the Group's activities. Future capital requirements are regularly assessed and Board decisions taken as to the most appropriate source for obtaining the required funds, be it through internal revenue streams, external fund raising, issuing new shares or selling assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the following gearing ratio:

Net cash