Central Asia Metals (LSE:CAML) has been a very rewarding trade if you got into the stock at around the 200p level in early March. Shares are now trading at 276p and are slightly off a six month high. The miner is still trading at around 7.2x 12 month forecast PE.
Shares have fallen back slightly recently, we suspect because some traders are keeping their eyes fixed on the 52 week high which was established at just under 300p back in May. But Central Asia Metals remains a very high quality stock. Canny mining investors will be watching to see if they can scoop up more shares if they start to look cheaper.Central Asia Metals is a diversified metals play with operations in Kazakhstan, as well as a zinc concentrate production operation in Macedonia. It recently reported copper production in Kazakhstan was up in Q1 – 3,024 tonnes vs 2,880 tonnes same period last year. Full year production guidance was for between 12,500 and 13,500 tonnes of copper.
Central Asia Metals reported a record year for revenue, profits, free cash flow and returns to shareholders at the end of March. We’re not surprised, and given the very bullish copper forecasts coming out of Goldman Sachs recently, investors in Central Asia Metals could be in for more good news going forward.
We flagged up Central Asia Metals on 9 November as one of our five copper mining stocks to keep an eye on for 2022.
What do the brokers think of Central Asia Metals?
- Berenberg Bank (5 April) – BUY 340p
- RBC Capital Markets (5 April) – SECTOR PERFORM 265p
- Canaccord Genuity (11 January) – BUY 295p
Kounrad: CAM’s jewel in the crown
Central Asia Metals is the sole owner and operator of a solvent extraction-electrowinning copper recovery plant near Balkhash in Kazakhstan. It recovers copper from waste dumps that originated from the Kounrad open pit copper mine, accumulated during mining operations during the Soviet period and subsequent (concluding in 2005).
The processing plant produces copper cathode and the metal is delivered by rail and sea. Its end customers are predominantly situated in Turkey.
Central Asia Metals originally acquired an interest in Kounrad in 2007 as part of a 60/40 joint venture. It completed its acquisition of the remainder of the project in May 2014. Some $60m was raised by the company’s IPO in 2010, which allowed for the construction of the processing plant. Copper production came online in April 2012.
Copper processing from mine tailings
The company has access to a quite considerable supply of tailings, called the Western and Eastern dumps. Both sets up dumps are now being mined. The record for total copper production was reached in 2017, with 14,103 tonnes mined. The company has an overall JORC resource of 600,000 tonnes of contained copper, and around 140,000 tonnes of remaining recoverable copper. It has an indicated resource of over 388,000 tonnes and an inferred resource of 264,000 tonnes approx.
We should also mention that the company has a second site in Macedonia, a zinc-lead mine, again with 100% ownership, which it acquired in 2017. This mine was originally a Yugoslav state mine which closed in 2002 due to a lack of funding. It is now back up and running and produces around 820,000 tonnes of ore every year.
