Central Asia Metals Regulatory News (CAML)

20 May 2014

CENTRAL ASIA METALS PLC

("CAML" or the "Company")

Completion of the Kounrad Transaction and Expansion Plans

Central Asia Metals plc (AIM: CAML) is pleased to announce the completion of the acquisition of the remaining 40 per cent of the Kounrad copper project in Kazakhstan (the "Kounrad Transaction"), the details of which were initially announced on 27 June 2013. The Company is now the sole owner and operator of the Kounrad project and is today also announcing its expansion plans for the project.

The Company plans to increase copper production at Kounrad from the existing 10,000 tonnes to 15,000 tonnes per annum by 2016 at an estimated cost of US$35 million, phased over the next three years. The programme of works on site will commence immediately, using the same CAML construction personnel as used on the construction of the current SX-EW plant.

All capital expenditure will be financed from current project cash flows and is not anticipated to have any impact upon the CAML Group's dividend policy subject to currently accepted long term copper price estimates being maintained.

Nick Clarke, Chief Executive Officer commented:

"We are delighted to announce the completion of the Kounrad Transaction, which is a key milestone for CAML. Significant efforts have been made in achieving this goal and, on behalf of the Board, I would like to extend our thanks to all the employees who have worked tirelessly throughout this protracted process. We are pleased to have such an influential Kazakhstani businessman as Kenges Rakishev as a board member and a supportive major shareholder, and we look forward to continuing to work with him in the future. CAML can now, as the sole owner and operator of the Kounrad project, announce our expansion plans to increase production on site to 15,000 tonnes per annum by 2016 and provide further value to our shareholders."

Kounrad transaction

CAML has now received all the outstanding Kazakhstan Government waivers for the remaining 40 per cent of the subsoil use contract associated with the Kounrad copper project. The completion of this part of the transaction follows the transfer of the 40 per cent interest in Kounrad Copper Company LLP to CAML which was completed in October 2013.

As previously announced, Kenges Rakishev, a Non-Executive Director of the Company, will now be issued 21,211,751 Ordinary Shares of US$0.01 in CAML ("New Ordinary Shares"). Mr Rakishev's total legal and beneficial interest in the Company post admission of the New Ordinary Shares will be 21,211,751 ordinary shares, representing 20.0 per cent of the issued ordinary share capital. The current number of ordinary shares of US$0.01 ("Ordinary Shares") in issue is 86,165,934, including 1,040,210 held in Treasury by the Company ("Treasury Shares").

Mr Rakishev will also receive a cash consideration of 4 pence per share in lieu of the interim dividend declared by CAML in September 2013. This amounts to a cash payment of £848,470.

Application has been made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. The shares will rank pari passu in all respects with the Company's existing Ordinary Shares. It is expected that the admission will become effective and that trading in the New Ordinary Shares will commence at or around 8.00 am on 23 May 2014.

Following admission of the above New Ordinary Shares, the Company's enlarged issued share capital will comprise of 106,337,475 Ordinary Shares of US$0.01 each with voting rights, excluding the Treasury Shares. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Kounrad expansion plans

The JORC compliant resources at Kounrad are estimated to be in excess of 600,000 tonnes of contained copper, of which 27 per cent are situated in the eastern dump area and the remaining 73 per cent are situated in the western dump area. In total, it is estimated that over 230,000 tonnes of copper is recoverable over the project's life.

CAML plans a phased expansion of annual copper cathode production to 15,000 tonnes over the next three years. Production of 15,000 tonnes is scheduled for 2016 to be drawn from the eastern dump area, followed by copper production from the western dumps starting in mid-2017.

Eastern dumps

The existing 10,000 tonne per annum Kounrad SX-EW plant is situated close to the eastern dumps. As at 30 April 2014, the plant had recovered some 20,000 tonnes of cathode copper from these dumps since the commencement of operations in May 2012. CAML forecasts that it will be able to extract in the region of a further 55,700 tonnes of copper from the eastern dumps.

At current rates of output from the SX-EW plant this equates to a further 5.6 years of operating life in the eastern dump area. In contrast, it is estimated by management that the SX-EW plant has a remaining useful life of at least 15 years.

Western dumps

The western dumps have an estimated total recoverable copper resource of 157,000 tonnes and CAML will shortly submit the detailed technical application for a mining permit to the relevant State authorities to enable the Company to exploit these resources. The Company anticipates the relevant State approval to be granted in the first half of 2015.

Increased copper production to 15,000 tonnes per annum

CAML has considered a number of factors regarding the physical location of the resource at Kounrad and the estimated remaining lives of both the SX-EW plant and the resource in the eastern area of the site, and concluded that the following plan is the most cost effective approach to expansion to 15,000 tonne per annum.

Stage 1

The existing SX-EW plant will now be expanded to facilitate an annual output of 15,000 tonnes of copper.

Work on site has already begun towards installing two new coal fired boiler units that will increase capacity in the winter solution heating system from 8.4MW to 14MW and progress and costs are very much on schedule. This will allow a higher volume of solution to be processed during the winter months between December and March, increasing copper production by up to 600 tonnes per annum. The boiler units will be commissioned in October 2014 at an estimated cost of US$2.1 million.

The Company will now commence the construction programme for an additional mixer settler unit (SX), a new 5,000 tonne per annum capacity Electro-Winning (EW) facility and an upgrade to the existing electrical sub-station. The additional mixer settler unit will facilitate the processing of higher volumes of solution through the SX-EW plant and will enable up to 1,400 tonnes of solution to be processed per hour as opposed to the current capacity of 950 tonnes per hour.

It is anticipated that the building structures will be erected and clad by November 2014 in order that the installation of the SX-EW equipment can be undertaken without interruption during the winter months. Commissioning of the expanded plant will then take place during Q2 2015 with the plant targeted to be fully operational by Q3 2015. The capital cost of the Stage 1 expansion is estimated at US$13.4 million and will be incurred over the next 12 months.

Stage 2

The Stage 2 expansion will only commence on receipt of the State approval to exploit the copper resource from the western dumps. Extraction of copper from the western dump area will be facilitated by the installation of two 12km pipelines to allow for the pregnant leach solution (PLS) and raffinate solution flows to be cross transferred to the expanded SX-EW plant. Receipt of the State mining permit will allow procurement of materials and equipment to commence in Q3 2015 at the same time as the final detailed engineering studies are completed.

In addition, the exploitation of the western dumps will require the construction of a three unit coal fired boiler house for solution heating, a pond collection system and approximately 3km of collector trenches.

The capital cost of the Stage 2 expansion is currently estimated at US$19.5 million and will be largely committed during 2016. It is anticipated that the pipeline will be commissioned during Q2 2017.

Summary

The total capital cost for the Kounrad expansion is estimated at US$35 million phased over the next three years. The expansion will facilitate an increased copper production from the existing 10,000 tonnes to 15,000 tonnes per annum by 2016. This expenditure is in addition to the estimated US$6.5 million that will be spent on sustaining capital expenditure for the plant and Kounrad site during the three year period. The Stage 1 SX-EW expansion programme of works on site will commence immediately, using the same CAML construction personnel as used on the construction of the current plant from 2010 through to 2012.

All capital expenditure will be financed from current project cash flows and is not anticipated to have any impact upon the CAML Group's dividend policy subject to currently accepted long term copper price estimates being maintained. The production objectives for 2014 remain focussed on an increased output target of 11,000 tonnes of copper cathode and to maintain tight control on costs.

Analyst conference call

There will be an analyst conference call to discuss the expansion at Kounrad at 10:30 am (BST) on Tuesday 20 May 2014. The call can be accessed using the following dial-in number, +44 (0)20 8515 2334, and quoting 'Update on Kounrad'.

For further information contact:

Notes to Editors:

Central Asia Metals is an AIM-listed UK company based in London. Its countries of operation are Kazakhstan and Mongolia. CAML is a copper producing company focussed on base metals. It also has a 50% equity interest in Copper Bay Ltd, who is developing the Chañaral Bay Copper Project in Chile. For further information please visit: www.centralasiametals.com