Shares in copper and zinc miner Central Asia Metals (CAML:AIM) gained around 1.6% to 154p despite the company putting on hold a decision over its interim dividend after a problem at one of its mines.
It comes after Central Asia Metals reported on Monday that there was a short-term leakage of waste material from its Sasa TSF4 storage facility into the local river, though it added the leakage was stopped soon after and nobody was harmed.
Production at its Sasa zinc mine has been temporarily stopped as a result of the issue.
DIVIDEND DECISION ON HOLD
The miner had been expected to reinstate its dividend in today’s half-year results, but has now deferred a decision while it looks for greater clarity on the time and cost of sorting out the leakage problem, with an investigation underway to ascertain the volume of leaked material as well as the root cause.
Speaking to Shares, Central Asia Metals’ chief financial officer Gavin Ferrar said the incident will not involve ‘a long-term shutdown’ of the processing plant at Sasa, with the initial working assumption – while subject to change – that this is a ‘one month problem’. He added that the repair team at the site is confident it can get the facility back into shape in around 1-2 weeks.
The leakage also means Central Asia Metals won’t be able to make deliveries to its customers while production has stopped.
Regarding the company’s offtake agreements Ferrar said, ‘We did inform our offtakers. Fortunately these are all long-standing relationships, and all they’ve asked is to be kept updated on when we can resume production and deliveries again.’
While on the rise today, Central Asia Metals’ shares are still down over 10% this week following the announcement of the tailings leakage.
Central Asia Metals kept its annual copper production guidance intact at 12,500-13,500 tonnes, but with processing facilities at its Sasa mine not currently operational while the TSF4 leakage investigation is underway, the company has put its zinc and lead production guidance under review.
The incident masked what was otherwise a fairly resilient performance amid the coronavirus pandemic, with its half-year results to 30 June in-line with expectations.
Revenue for the first half came in at $70.8 million, compared to $85.6 million in the first half of 2019, due to weaker commodity prices, though the miner said prices have recovered strongly in the second half of the year so far.
Consequently profits were down on the same period last year, with pre-tax profit falling to $24.3 million compared to $35.5 million in the first half of 2019.
Though the company’s cash position grew, with cash in the bank as at 30 June of $44 million compared to $32.6 million at 31 December 2019, mainly as a result of big drops in investing and net financing outflows, which were much steeper than the fall in operating cash generation.
The miner also managed to keep a lid on costs, with its zinc equivalent cash cost reduced to $0.43 per pound compared to $0.47 per pound in the first half of 2019, and copper cash cost reduced to $0.48 per pound from $0.51 per pound in the same period a year ago.