Central Asia Metals Regulatory News (CAML)

9 July 2020

CENTRAL ASIA METALS PLC

('CAML' or the 'Company')

H1 2020 Operations Update

Central Asia Metals plc (AIM: CAML) today provides a H1 2020 operations update for the Kounrad dump leach, solvent extraction and electro-winning ('SX-EW') copper recovery plant in Kazakhstan ('Kounrad') and the Sasa zinc-lead mine in North Macedonia ('Sasa').

H1 2020 operational highlights

- No lost time injuries ('LTIs') at either operation

- Production and sales volumes unaffected by COVID-19 pandemic

- Kounrad copper production, 6,607 tonnes

- Sasa zinc in concentrate production, 12,203 tonnes

- Sasa lead in concentrate production, 15,140 tonnes

Group cash and debt position

- Cash in the bank on 30 June 2020, $44.0 million

- Gross debt (inclusive of overdraft) on 30 June 2020, $99.0 million

o H1 2020 Traxys corporate debt facility repayments of $19.2 million

Outlook

- Production currently on track to meet full year 2020 guidance for copper, zinc and lead

o Copper, 12,500 - 13,500 tonnes

o Zinc, 23,000 - 25,000 tonnes

o Lead, 30,000 - 32,000 tonnes

- Post-period end, reduced workforce at Kounrad to further increase social distancing measures with no impact on output levels

CAML production summary

Nigel Robinson, Chief Executive Officer, commented:

"Today's update demonstrates a period of safe production from our two operations during H1 2020, with no lost time injuries. We remain firmly on course to achieve our 2020 production guidance for copper, zinc and lead.

"H1 2020 has brought its challenges, as COVID-19 related concerns and restrictions in Kazakhstan and North Macedonia meant that our site teams have faced and successfully managed many headwinds to maintain our metals production and sales, including making significant changes to our operating practices to ensure the health of all colleagues.

"However, as we enter Q3 2020, COVID-19 cases are rising in the local town close to the Kounrad operation and, despite our stringent on-site actions and health measures, some of our employees have recently been diagnosed with the virus. It is our duty to do our utmost to prevent the spread of this virus on our site and, to that end, we have taken the post-period end decision to temporarily reduce to a minimum the number of employees at Kounrad to further increase social distancing measures. Due to the relatively open nature of the operations, we are confident that such measures will be effective and, with our reduced staffing, we will be able to broadly maintain production for the near term.

"Our top priority is always the welfare of our employees and contractors."

COVID-19 update

During H1 2020, both the Kounrad facility in Kazakhstan and the Sasa mine in North Macedonia continued to operate with no disruptions to production or sales due to COVID-19.

CAML COVID-19 related actions

The Company has put in place many measures during H1 2020 to try to ensure the safety of its employees and contractors on both sites, including:

- Establishing a COVID-19 'Crisis Committee', involving regular calls between CAML Group and operations teams to coordinate responses/actions and share ideas. Business continuity plans were developed and critical inventory levels were reviewed to support production in the event of supply disruptions

- Staff at both operations and in the UK head office instructed to work from home where possible

- A cessation of all but essential international travel

- A cessation of all but necessary visitors to site (subject to authorisation from General Directors)

- Identification and close monitoring of team members most vulnerable to COVID-19 with most now removed from the workplace

- The distribution of COVID-19 related PPE to employees and contractors

- Undertaking a detailed review of all activities at both sites to ensure that social distancing is at the heart of operations during the pandemic

- Changes made to canteen and transport arrangements at both operations to increase social distancing

- Relevant government guidance reinforced, and increased hygiene measures implemented on both sites

- Employees instructed to stay at home if they suffer from any potential COVID-19 symptoms

- Temperature testing on entry to transport buses and at the mine gate

Kazakhstan and North Macedonia update

Along with many other countries, the governments of Kazakhstan and North Macedonia had in May begun to ease lockdown restrictions on the movement of people, business operations and socialising. However, both countries are now experiencing an increasing number of COVID-19 cases. Kazakhstan has recently re-introduced a national lockdown.

Kounrad and Sasa

To date, 27 Kounrad employees have tested positive for COVID-19. Post the period end, the Company has temporarily reduced the total number of employees by 40% in order to further increase social distancing with a view to ensuring the virus does not spread on the Kounrad site. During this period, CAML currently expects to broadly maintain production, safely, albeit with minimal maintenance. The situation will be under constant review and updates provided as and when appropriate.

No CAML employees at Sasa have tested positive for COVID-19 and there are no reported cases in the town closest to the mine, Makedonska Kamenica.

Community support

During Q2 2020, CAML has supported both Kazakhstan and North Macedonia in the fight against COVID-19. CAML's Kounrad Foundation charity in Kazakhstan purchased a polymerase chain reaction ('PCR') machine for Balkhash Central Hospital, close to the Group's copper operations, which will be installed during H2 2020. At a cost of approximately $70,000, this machine will enable timely COVID-19 testing for the local population, as recommended by the World Health Organisation ('WHO'). The Kounrad Foundation also purchased an automatic back-up power unit for the hospital to ensure security of supply during crucial medical treatments.

In North Macedonia, the Sasa mine's €126,000 donation included a national contribution to the Ministry of Health, procurement of personal protective equipment for medical staff and key members of the local community, donations of food and hygiene products to the most vulnerable, and additional automatic anaesthesia equipment for a key hospital.

Safety

No LTIs were reported at either Kounrad or Sasa during H1 2020. There has been one medical treatment injury ('MTI') at Sasa during H1 2020 and therefore one Group total recordable injury ('TRI') during H1 2020.

Kounrad

Kounrad Q2 2020 copper production of 3,406 tonnes brings output for the first six months of 2020 to 6,607 tonnes. Total Kounrad copper production since operations commenced in 2012 is now 102,852 tonnes. 

Total copper recovered from the Western Dumps in H1 2020 is 5,017 tonnes, equating to approximately 76% of the amount plated.

Copper sales during H1 2020 were 6,600 tonnes.

Sasa

During H1 2020, orders were placed for six new pieces of Epiroc underground equipment and, during the period, four of the six machines (three loaders and a boomer drill rig) arrived at site. A second boomer and a truck are due to be delivered to Sasa in Q3 2020.

Despite travel restrictions, technical work continues for the Life of Mine study that is appraising the change in mining method from the current sub-level caving method to cut and fill stoping. The study is on schedule to be completed during H2 2020.

Production

In Q2 2020, mined and processed ore were 208,267 tonnes and 209,192 tonnes respectively, bringing the H1 2020 total to 416,055 tonnes of ore mined and 419,856 tonnes of ore processed. The average head grades for the Q2 2020 period were 3.37% zinc and 3.83% lead, and for H1 2020 were on average 3.37% and 3.82% respectively. The average H1 2020 metallurgical recoveries were 86.3% for zinc and 94.3% for lead.

Sasa produces a zinc concentrate and a separate lead concentrate. In Q2 2020, 12,195 tonnes of concentrate containing 49.8% zinc and 10,475 tonnes of concentrate containing 71.9% lead were produced. Total H1 2020 production was 24,510 tonnes of zinc concentrate at an average grade of 49.8% and 21,035 tonnes of lead concentrate at an average grade of 72.0%.

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, Q2 2020 payable production of zinc was 5,100 tonnes and of lead was 7,157 tonnes, bringing total payable production for H1 2020 to 10,242 tonnes of zinc and 14,383 tonnes of lead.

Sales

Payable base metal in concentrate sales from Sasa for the six-month period were 10,273 tonnes of zinc and 14,445 tonnes of lead.

Recent tightness in the regional lead concentrate market resulted in spot contracts being sought elsewhere to diversify CAML's customer base. Two smelters in China were identified and 3,261 dry tonnes of lead concentrate have been shipped to them during H1 2020. Spot contracts are now in place with these customers for approximately 15% of Sasa's 2020 lead product. Through these lead concentrate sales, Sasa is benefitting from reduced treatment charges that have resulted from global COVID-19 related supply disruptions. 

During H1 2020, Sasa sold 176,655 ounces of payable silver to Osisko Gold Royalties, in accordance with its streaming agreement.

Group cash and debt position

During Q2 2020, CAML secured a Macedonian Denar denominated overdraft facility totalling approximately $5.0 million from North Macedonian bank, Ohridska Banka AD Skopje ('Ohridska Banka'). These funds have been drawn by CAML and provide the Group with additional financial flexibility.

As of 30 June 2020, CAML had cash in the bank of $44.0 million and gross debt of $99.0 million. Gross debt comprises $89.0 million in corporate debt through Traxys Europe S.A. and $10.0m of North Macedonian overdraft facilities with Ohridska Banka (interest fixed at 2.5%) and Komercijalna Banka AD Skopje (interest fixed at 3.8%).

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 https://twitter.com/CamlMetals