Central Asia Metals Share Discussion Threads

[bubblingup] 15/1/2019 09:45

CARS - quite like the sound of that!

[the deacon] 15/1/2019 07:11

Moving to joint broker. Could mean another acquisition coming, since they're dropping Shuak

[mount teide] 14/1/2019 08:48

Zinc outlook 2019: Looking to price drivers - Investing News

Zinc prices have stayed down through the second half of 2018, failing to recover from the shock of the trade war. However, stockpiles are still being drawn down as a supply shortfall hits inventories. As of mid-December, LME zinc stockpiles stood at 122,000 tonnes — down from 250,000 tonnes in late July.

CRU expects a short-term recovery of the zinc price into early 2019 “as refined metal stocks will remain at critical levels until increased mine output starts to feed through to an increase in smelter output.”

“We believe that the metal supply crunch is coming to an end and that the refined market will return to balance in 2019,” she added.

Brian Leni of Junior Stock Review said that while the trade war has depressed prices, “it isn’t the whole story. When any commodity is hitting new five-year highs, new or hidden supply caches begin to feed the market.”

He added, “however, LME zinc inventories remain very low and, in my opinion, still give upside potential to the zinc price. While I do believe there is potential for a nice spike in the price, especially upon news of a resolution in the US and China trade war, I don’t think it will be sustainable over the long term.”

Leni said that today’s lower zinc price is “a good gauge for the long term, with the proviso that there is certainly room for a nice spike due to the very low visible LME inventories.”

As mentioned, Thomas said the big story for zinc was smelter activity in China, which is now giving way to mine supply.

“The underperformance of Chinese smelters has depleted Chinese stocks of refined metal, which are close to record lows and supported the recovery in the zinc price from less than $2,300 in September to current levels,” he said.

“With mine supply now starting to come onstream, the supply crunch now revolves around smelter production — historically the shortfall in rest-of-world smelter capacity has been more than compensated for by new smelter capacity in China. However, the pace of capacity expansion has slowed. As a consequence there is a risk of a structural smelter bottleneck developing in zinc.”

Meanwhile, Ioannou said that troubled zinc smelter Nyrstar’s woes in 2018 are a sign of the very dry supply line for the metal.

“[Nyrstar has] always been a successful smelting business, and a few years back they decided to make the move to become a fully integrated mine-through-smelting company. And I think they discovered fairly quickly that the mining game is a lot tighter and a lot less forgiving than the smelting business.”


Zinc outlook 2019: CEOs’ thoughts on the market

Besides analysts, INN also asked CEOs operating in the zinc space how they felt about 2018 now it is behind them, and what they think 2019 will hold.

Steve Williams, CEO of Pasinex Resources (CSE:PSE), said that prices remaining so low is “odd” as there are only eight or nine days of zinc held in visible stockpiles.

“We’re still very low on stock, yet the zinc price has come down. I think part of that is that the market is anticipating more production coming on. There’s a mine reopened in Australia, and I think the market’s already sort of anticipated that a bit into the price. But normally you would think that the zinc price should be a bit higher. It’s sort of an unusual position right at the moment,” he said.

Among other CEOs, investor sentiment was the main challenge seen for the base metal in 2018.

CEO of Group Eleven Resources (TSXV:ZNG) Bart Jaworski said that he expected a “more bullish tone in the zinc market in 2019 given hiccups in new production and growing optimism on zinc demand used in fertilizers and batteries.”

He also expected trade war rhetoric to subside — a sentiment shared by Brandon Macdonald of Fireweed Zinc (TSXV:FWZ), who expected a rebound back up to 2018 prices in a “double peak.”

Macdonald said he based this sentiment on continued tightness in the market, while Dr. Mark Cruise, CEO of Trevali Mining (TSX:TV), said that his optimism for zinc is based on continued drawdowns of global refined zinc inventories.

“We are starting to approach inventory levels last seen in the 2006/2008 window when the zinc price propelled to over US$2 per pound [US$4,409 per tonne].”


Zinc outlook 2019: Price predictions

Ioannou said that at Cormark, a price prediction of US$1.35 a pound (US$2,976.2 a tonne) is the average for the next year going forward, a price he said is “somewhat conservative.”

“We’re down into sort of a 120,000-tonne range on the LME right now. And quickly approaching 100,000 tonnes, and when you add up the visible supply that’s out there right now, we’re down to half a week of global consumption, which I think for argument’s sake is pretty critical already.”

“[The] last time we saw zinc inventories on the LME below 100,000 tonnes, the zinc price spiked to US$2 a pound [US$4,409.24 a tonne] … I think just based on that supply concern, I think if we see any waning in the Trump trade war narrative and people start to take a closer look at what the visible inventories are telling them … we could see prices spike significantly” he said.

Given her feelings on the supply crunch coming to an end, CRU’s O’Cleary was understandably more conservative, pegging the zinc price for 2019 at US$2,450, “with an uptick in 2019 Q1 giving way to falling prices for the rest of the year as the refined market returns to balance.”

Wood Mackenzie’s Thomas was closer to Ioannou’s sentiments. “We forecast double-digit growth in Chinese smelter production in 2019,” he said.

“It’s important to understand that even if this is achieved, the metal market is still forecast to experience further declines in stocks and remain in deficit. As a consequence the price is projected to revisit, and potentially exceed, the highs seen in February [2018].”

As mentioned, Junior Stock Review’s Leni believes a spike in price is on the cards due to low inventories — though that could be soured by any resolution to the trade war.

Leni said the big story for 2018, and going into 2019, is zinc-air batteries, which he said he increasingly heard and read about this year.

“Unlike the narrative-heavy vanadium redox battery storylines, zinc-air batteries are legit, and I believe could be an emerging major demand source for zinc in the future.”

[mfhmfh] 10/1/2019 23:03

One of IC's tips of the week

[lauders] 09/1/2019 11:09

Back to the level I bought them at last year. Had one dividend so far so now in profit again. A long way to go on the hold front so expect many more years of dividends and a climb back to those 309 and 325 targets plus some I hope! Seems another aqcuisition may be in sight per:

The Company is currently further reviewing two potential base metals opportunities.

Could be something else than an acquisition I suppose?

[mfhmfh] 09/1/2019 10:08

Peel Hunt today reiterates buy rating and has a 325p target price.

[mfhmfh] 09/1/2019 10:03

VSA Capital today reiterates buy rating and 309p target price.

[mount teide] 09/1/2019 09:45

Another rock solid production performance from a management that has delivered every year since coming to AIM in 2010.

The drilling results at SASA were very impressive and are likely to lead to a highly material volume of the inferred resources at both deposit areas getting converted into the indicated category.

Interesting to note that a further acquisition is in the latter stages of evaluation/negotiation (not altogether surprising as current base metal and asset pricing, warehouse stock levels and the forecast growth in demand make a compelling investment case for such a move if another highly accretive deal has been identified).

[catsick] 09/1/2019 09:44

Running the slide rule over lots of projects, they know what they are doing and now the refinancing is done they can line up the next transaction to roll up into a bigger group with more scale ...

[king suarez] 09/1/2019 09:37

Nice update - some promising exploration results for Sasa.

Any thoughts on why forward production guidance for copper in 2019 is reduced down from 2018 (14k tonnes v 12.5k to 13.5k tonnes)?

[mfhmfh] 09/1/2019 09:24

broken the 3 month resistance - hopefully the share price can stay at this level/higher until the close

[bushranger] 09/1/2019 08:25

A well run company that you can have confidence in and be sure that any desicions their board makes will benift the company and shareholders. Metal prices are weak but they will strenghten and CAMLs share price will also rise. A cash generator with great dividend and no prblems with any money parked here disappering overnight in a sudden drop of share price

[tightfist] 09/1/2019 08:12

Series of gently higher Lows over the last six weeks looks good too

[the deacon] 09/1/2019 08:05

Shame metals prices are weak. Undoubtedly well positioned though

[cthompso] 09/1/2019 08:03

CAML look to be on track and meeting their operational goals. Any fireworks are yet to come.A solid business throwing off plenty of cash will do me just fine.

[shortarm] 09/1/2019 08:01

Or not so good....?

[waterloo01] 09/1/2019 07:54

Good, bad or indifferent?

[andyj] 08/1/2019 23:46

Back at the top of the 3 month trading range. Hopefully it will break upwards with a resolution in the trade talks.

[morph7] 07/1/2019 19:32

Nice bowl forming on the 1 and 3 year charts.

[3noddy] 05/1/2019 07:49

Central Asia Metals (CAML LN) has announced that it has refinanced and consolidated its corporate debt as of December 2018. The Sasa mine had gross debt of US$67m at the time of the acquisition by CAML in November 2017. As part of the acquisition financing CAML raised US$120m in debt from its offtake partner, Traxys. In order to simplify the outstanding corporate debt CAML has increased the size of the Traxys facility by US$60m to US$151m and repaid the outstanding Sasa debt plus accrued interest.

The Traxys facility carries 4.75% interest plus 1-month US Libor and is to be repaid monthly on a straight-line basis within four years without the previous requirement for cash sweeps. Our current estimates based on prior guidance assume that gross debt would be repaid by the end of 2021 and we forecast year end 2018 gross debt of around US$132m. Given the removal of the cash sweep constraint this likely gives CAML more flexibility over repayments and use of cash which may prompt a less aggressive deleveraging programme particularly since our current forecasts suggest net debt to EBITDA of 0.8x at year end 2018.

The shares have traded within a narrow range over the past three months despite commodity price volatility, however, given the strong free cash flow outlook which is highlighted by the ability to rapidly deleverage whilst continuing to pay a robust dividend the shares remain attractive, in our view. At the current price we anticipate a dividend yield of around 7% in 2018.

We reiterate our Buy recommendation and target price of 309p.

www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/30437/vsa-capital-market-movers---central-asia-metals-30437.html

[mysteronz] 04/1/2019 19:43

Thanks carcosa, why on earth was that not mentioned in the RNS.

Missed a good opportunity there to sell the virtues of the debt deal