Central Asia Metals Share Discussion Threads

[morph7] 18/4/2018 18:19

I bought back in last week for decent amounts.I can't believe I rode CAML from £1 to just over £2 just a few years ago. The story never changed but nevertheless I thought I found something (another company) that made it worthwhile to invest elsewhere. The company in question worked out great but here is the funny thing: if I had held onto CALM in the first place my SIPP would be approximately 20% more healthly than what it is now.Food for thought. When you find something you love. Why look elsewhere?GL all holders, and a big thank you to all the very astute posters we have on this board.Morph7

[podgyted] 18/4/2018 16:55

? People awaiting broker notes/revised forecasts following results. I haven't seen any.

PT

[handykart] 18/4/2018 16:24

Strange share price action today. Copper, zinc and Kaz flying.Caml down at the moment.

[mount teide] 18/4/2018 13:18

Copper inventories since July 2016 have shown all the hallmarks of having been routinely gamed for self serving purposes by China and the big trading houses, in order to influence pricing.

As mentioned in a previous post, Copper inventories since the market bottomed in H1/2016 have shown large and regular 'spikes' to drive up volatility in pricing. On a very short term basis it has been successful, so they continue to do it.

The real question is; Where is the Copper hidden before it is dumped into the LME warehouses?

Since Copper is treated as a 'financial' metal by China, the World's largest consumer, much of it is held in shadow 'inventories', where it is routinely used as 'collateral' to access loan finance.

As the massive inventory scandal at Qingdao Port, China in 2014 revealed, it would not be surprising if a material quantity of the shadow Chinese inventory simply is not there - as a number of US Investment banks like Citi found to their horror in 2014 - as a result of corrupt warehouse operators and traders working together to drive the short term copper price down by stealing some of the shadow inventory and collectively dumping it into LMW warehouses in tandem after going heavily short copper.

AIMHO/DYOR

[edjge2] 17/4/2018 09:08

Thanks Mount T looks good considering and divi to be welcomed Jun 2018.

[mount teide] 14/4/2018 11:17

Results Conference Call is now up on the website for any that may have missed it.



A few snippets:

Confirmation that Kounrad has a 15+ year mine life and SASA 20+ years

Kounrad 2018/Q1 Production was slightly lower than expected due to a period of exceptionally low temperatures (close to -40c) affecting the performance of the heap leech process - management confident this small production shortfall will be made up during the remainder of the year. SASA 2018/Q1 Production was in line with expectation and likewise on schedule to meet year end targets.

A metallurgical mining engineer has been appointed to help maximise metal recovery at SASA. Additionally, a review of the entire SASA mining operation is being undertaken to improve operational performance and raise productivity - mine performance will benefit from the introduction of more sophisticated technology and modern operating processes and systems, since the current operating arrangements have largely been unchanged for decades.

[bogdan branislov] 13/4/2018 20:40

All, thanks for the feedback, CAML looks good to me. Rich, guilty, I will read your post. Whilst Ithaca was a multi bagger for me, I exited a year or so before the final phase prior to the sector crash with an c40% loss and then re-entered once Petrofac became adamant about the completion schedule close to the bottom in price terms. So I regard myself as fortunate. The problem was that long term holders who sat through the crash came out at break even at best or perhaps a very small gain. To allow Delek to walk in like that just on the eve of first oil was grossly unfair to the long term holders who had sat tight through it all, probably cost me another £100k in gains as well. So whilst Ithaca was my most profitable holding to date, I doubt I would buy into that kind of scenario again, I am looking for similar upside with far less speculative risk, CAML for instance. Bogdan

[rich73] 13/4/2018 18:25

bogdan branislov,

Out of interest are you the same "Eastern" European from another board who had a strong interest in IAE?

Much of the return from that disappointing final Dalek chess move made it here. If you are the above person I posted some recent news on bounty hunters IAE board on this site.

Rich

[gary1966] 13/4/2018 17:05

isaallowance, Many thanks for that, very happy to hear. Progressive dividend policy and debt free in three years, subject to commodity prices behaving themselves. 😀👍

[bluerunner] 13/4/2018 17:01

I read somewhere that the average EV requires around 50kg of copper.

[mount teide] 13/4/2018 16:57

The rise of electric vehicles will boost metals "across the board" - City AM



'The chairman of base metals miner Central Asia Metals is bullish on copper, saying the upswing in electric vehicles (EVs) will boost demand for the metal while supply pressures will help prices continue to rise over the next 12 months.

"The rise of the EV market is going to be good for the metals market across the board, particularly copper," said Nick Clarke, chairman of the Kazakhstan and Macedonia-focused firm, which is listed on London's Alternative Investment Market (Aim).

EVs use significantly more copper than cars with internal combustion engines. The International Copper Association has said a single electric car can have up to six kilometres of copper wiring, and Nigel Robinson, the newly appointed chief executive of Caml, added that the infrastructure needed to enable the use of EVs will also require a hefty investment of copper.........

.........Despite their bullish outlooks on the price of copper, zinc and lead, the executives at Caml, which floated on Aim in 2010, are confident they can make money even when commodity prices are low.

"We operate at lowest point of cash cost curve," Clarke said. "Whatever happens to commodity prices going forward, we will always be making money."

"With this latest dividend, funds returned to shareholders would total around $129m in six years of operations, versus the $60m raised at IPO in September 2010," said Yuen Low, an analyst at Shore Capital.'

[isaallowance] 13/4/2018 16:32

Gary, Page 8 of the 2017 results presentation shows projected debt payments + accelerated payments totalling nearly $50m per annum reducing debt and interest cost to near zero by 2021. I really like this - I like to own companies that only take on debt for a purpose and then pay it off asap. Cheers - Dave

[mount teide] 13/4/2018 14:22

Nick Clarke is very conservative - as evidenced by CAML having already paid back to shareholders considerably more than the funds it raised at IPO in 2010. Until a further suitably priced major acquisition is found - which is likely to be easier said than done going by the time it took to identify and acquire SASA - its probably very safe to assume that, dividend growth and accelerated debt repayment will be the primary focus for management.



BB - 'underpinned by Kounrad, an aggressive debt repayment schedule, and a trailing C1 cash cost of 76¢ per pound of copper equivalent.' IC

While these are all highly significant factors which strongly support the investment case, i believe IC are perhaps failing to fully appreciate the progress made at SASA in 2017 - where the EBITDA margin increased from 38% to over 60%, largely as a result of average Zinc and lead pricing outperforming copper pricing - and what the average pricing since for all three metals suggests for CAML, when in receipt of a full year contribution from SASA.

Zinc
Averaged $0.95/lb in 2016
Averaged $1.32/lb in 2017 (39% above 2016 average)
Averaging $1.54/lb in 2018 (16.7% above 2017 average)

Lead
Averaged $0.85/lb in 2016
Averaged $1.05/lb in 2017 (23.5% above 2016 average)
Averaging $1.13 in 2018 (7.6% above 2017 average)

Copper
Averaged $2.20/lb in 2016
Averaged $2.81/lb in 2017 (27.7% above 2016 average)
Averaging $3.14/lb in 2018 (11.7% above 2017 average)


In a highly detailed revenue and earnings analysis for 2018, Quoted Data forecast 2018 EBITDA increasing by 94.3% to $138m(EBITDA margin of 66%) as the full year impact of the SASA mine production kicks in.

QD's 2018 earnings forecast of 51.8c(37p) currently gives a forward PER of 8.9, which drops to 7.5 should the average 2018 metal pricing to date continue throughout 2018.

While IC sees CAML as a relatively low risk income play, the company is quietly positioning itself for its next stage of development in a highly cyclical sector still in the early stage of recovery following a recession that decimated company valuations and investment returns for nearly a decade - perhaps best highlighted by the following table:

Total Shareholder Returns - CAGR since 2010 CAML IPO - a period during which Copper, Zinc and Lead pricing dropped by 56%, 68% and 60% respectively to decade lows in 2016.

+24.9% - CAML

-0.9% - Antofagasta
-1.1% - Oz Minerals
-1.4% - FTSE 350 Mining
-4.6% - Atalaya
-7.0% - Kaz Minerals
-13.7% - Capstone
-21.0% - Weatherly

[gary1966] 13/4/2018 14:09

Yes net debt position makes sense Bogdan but there is something about actually paying the debt off that the market always seems to like.

[bogdan branislov] 13/4/2018 13:50

The cash generation after the dividend will be far higher than the payment schedule stated. The generation of cash will reduce down the net debt position rapidly even if the actual debt is paid down more slowly if that make sense. Bogdan

[shanklin] 13/4/2018 13:47

I have not run the numbers but surely the stated dividend policy,planned capital expenditure and predicted profitability give one a pretty definitive number as to the cash being generated... ...and the place where most of this cash could be most usefully applied is in paying down the debt.

[gary1966] 13/4/2018 13:20

Have they said they are paying debt down aggressively as all I saw in the results was reference to the $120m 5 year loan that they were paying back at $2mpm. Aggressive to me would be paying it back in a much shorter time frame but I can’t see any indication of this. Could someone point me in the right direction as I will be pleased if this is the intention.

[bogdan branislov] 13/4/2018 11:24

The forecasts used by IC seem to be at the bottom end of the scale, I would welcome some views on this. For this reason I am going to post the IC write up and comment. I know that some subscribers get hot under the collar about this, but IC gets plenty of free input from me and other posters and it would be very useful to get feedback on the IC write up from some of the sector specialists on this board:
With last year’s $403m (£283m) acquisition of Lynx Resources, Central Asia Metals (CAML) added zinc and lead to its asset base, debt to its liabilities, and Macedonia to its geographical footprint. The long sought expansion beyond its Kazakh roots was well-supported by the market, and well-timed to a copper price rendered volatile by diverging opinion on the size and timing of a supply deficit.

CAML:LSE
Central Asia Metals PLC

1mth
Today change
0.15% Price (GBP)
328.50
As full-year results show, Kounrad’s unique and highly-profitable features were as reliable as ever, and kept the group’s adjusted cash profit margin at a mighty 62 per cent. And though the timing of the Lynx deal meant just 17 per cent of Sasa’s annual output was attributable to CAML, its operating performance has so far left management “delightedR21;.

At current prices, the 21,585 tonnes of zinc and 29,881 tonnes of lead produced last year would sell for around $140m. That helps to explain consensus forecasts for adjusted pre-tax profits of $118m and EPS of 53¢ in 2018, compared with last year’s estimates of $47m and 25¢.

With these results, chairman Nick Clarke relinquished the ‘executiveR17; prefix to his job title, allowing CFO Nigel Robinson to take the CEO role and the reins of a business which now employs more than 1,000 people in two continents. The board continues to debate the merits of a switch to the main market, though brokers tell Mr Clarke “there are very few fund managers we can’t get to see because we’re Aim listed”.

CENTRAL ASIA METALS (CAML)
ORD PRICE: 325p MARKET VALUE: £ 571m
TOUCH: 324-325p 12-MONTH HIGH: 346p LOW: 203p
DIVIDEND YIELD: 5.1% PE RATIO: 16
NET ASSET VALUE: 192¢ NET DEBT: 41%
Year to 31 Dec Turnover ($m) Pre-tax profit ($m) Earnings per share (¢) Dividend per share (p)
2013 54.1 55.4 54.9 9.0
2014 76.6 70.3 56.3 12.5
2015 67.3 32.7 20.2 12.5
2016 66.7 33.6 24.3 15.5
2017 107 49.7 29.0 16.5
% change +60 +48 +20 +6
Ex-div: 26 Apr
Payment: 25 May
£1=$1.42
IC View
The shares have done well since the Sasa deal, and our fortunately-timed tip (218p, 3 Aug 2017). But we still see virtue in CAML’s income case – underpinned by Kounrad, an aggressive debt repayment schedule, and a trailing C1 cash cost of 76¢ per pound of copper equivalent. Income buy.

Last IC View: Buy, 232p, 26 Sep 2017
I rate CAML as one of the top three holdings listed in the UK, my only 3 holdings in fact - UAI, CAML and MGNS. CAML is far more than an income buy. There are a range of forecasts out there for CAML's forward earnings, the above figures are at the very conservative end of the spectrum, which is typical of CAML, they like to under promise and over deliver, unlike so many other companies. Most estimates put the forward PE well down into single figures, the dividend could be much higher but CAML will rapidly reduce down the debt instead, again typical CAML, there is a lot to like here. The debt reduction will of course rapidly grow the balance sheet equity, the most important growth of all, allowing further expansion going forward.

Doug

Views on this from MT and others would be much appreciated. Bogdan

[podgyted] 13/4/2018 10:42

IC buy @325p update 30 mins ago.

[coxsmn] 12/4/2018 22:06

From Today's Telegraph,""The boss of Central Asia Metals (CAML) has hinted the miner could be on the trail of fresh acquisitions having completed the reverse takeover of a zinc miner in Macedonia.Nick Clarke, executive chairman of the Aim-listed mining company, said he wanted "to build a strong business in the right manner"."We're not going to become deal junkies for the sake of it but if the right opportunities come along, we will take a look them.""

[coxsmn] 12/4/2018 19:22

Strong set of results and a dividend boost. Very happy to be invested here.

[lord gnome] 12/4/2018 16:52

Good to see this finish blue. Looks like we've already said 'goodbye' to the sell-on-results profit takers. Onwards and upwards.

[mount teide] 12/4/2018 15:02

150k and 97.5k at 328.5p mid price.

L2 - only Peel Hunt at 334p left on the offer under 340p

[bluerunner] 12/4/2018 11:46

As expected, IC has issued an update / BUY tip for CAML again based on this morning's results."Group adjusted cash profit margin was still a mighty 62%."

[thevaluehunter] 12/4/2018 11:44

I reckon $150m-$160m ebitda is on the cards this year so the dividend could be pretty decent based on 30-50% of free cashflow.