Central Asia Metals plc (CAML) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Central Asia Metals PLC Interim Results investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review your questions [indiscernible] will publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand over to CEO, Nigel Robinson, good afternoon.

Good afternoon, and many thanks for joining us for our H1 2023 results which we announced this morning. I'll just go over the highlights, then I'll hand over to Gavin for more detail on the financials and then later on to Louise Wrathall here on my left to go through some of the stuff on our business development activities. Strong performance in the first half of this year, I think. Again, it's fairly challenging economic headwinds with reduced metal prices, ongoing inflationary cost pressures across both of our operations. And also for the first time in a decade, we've seen some tax increases in Kazakhstan that have come through to impact on some of our numbers. But as I say, overall, a strong performance, and we're in good shape despite those headwinds. Starting with production, first of all, we'll talk about it more later, but we are on track for hitting our full year guidance on both copper, zinc, and lead, and we've done it in a very safe manner. So we have, as you can see at the bottom of the slide there, what's known as an LTIFR for the first half of this year of 0.8. Our target was 1.3, and we've only had 1 LTI recorded in the first half of this year, which is a good performance. One too many, but it's still a good performance overall for the group. The financial numbers, we generated in the first half of the year just south of $100 million of revenue, generating an EBITDA, that's earnings before interest, tax and depreciation and amortization of just out of $49 million, resulting in a 49% EBITDA margin. So a strong EBITDA margin. The cash flow on the back of those EBITDAs was $24.1 million adjusted for a number of issues that affected us in the first half of the year, and Gavin will touch more on that in a minute. And that resulted in us announcing a dividend this morning of 9p for the first half of the year. Our balance sheet remains strong with $50.6 million of cash in the bank, and we have no debt having paid down last August. All the debt from the acquisition of Sasa back in November 2017. So those are just a few of the highlights. And on that point, I'll hand over to Gavin now to take you through more of the financial details of the results.

Thanks, Nigel. We'll start off by just briefly going over some of the market conditions that have affected this financial performance during H1 '23. Now there are really 4 key areas, and Nigel has touched on a couple of them. First, is metal prices. And that table on the bottom left of your screens there will show you the changes in prices received period-on-period. And you can see that copper has gone down 9%, zinc significantly down at 28% and lead not often, it's the outperformer, but at 6% down half the 2 metals -- 3 metals that we produce has actually performed the best. Second have been energy prices, and those as illustrated in the chart on the bottom right of your screens there, where you can see in H1 2022, we had a fixed price contract at $0.10 per kilowatt hour. H2 jumped up to an average of $0.37 a kilowatt hour. And now while electricity prices have eased, we're still paying around 30% higher than we had in the prior period last year. Of course, inflation continues to be a thematic across the world and inflation rates in Kazakhstan and North Macedonia were between sort of 13.5% and 14.6%. So very high inflation environments. And us here in the U.K., we're experiencing the same thing. And then lastly but not least is taxes, and we've seen 2 taxes affecting the income statement for the first time this period, which is withholding tax on the intercompany dividend distributions and also a 50% increase in our royalties that we pay in Kazakhstan, and I'll go into a little more detail on the next slide. When we look at the income statement, still pretty healthy looking margins at 49%. And I think this is -- needs to be borne in mind that this is not a -- it's not a poor set of results by any means, and we're pretty pleased with these results and showing really strong margins and the underlying cash flows of the business remains strong. Revenues are down 17%, and that's purely related to commodity prices. Cost of sales up 10%. That is a function of the electricity price, as I mentioned earlier, those additional royalties and some inflation in there as well. And then that income tax line, if you're looking at the profit being almost half profit before tax, half of what it was in the previous period, you'd expect the income tax to be lower, but we do have a significant amount of holding tax included within that line. We have adjusted it somewhat by about $3.6 million just to smooth the effect of that income tax over the 2 periods that we'll be reporting this year. And -- if we look at this on a segmental basis on the left-hand side, we can see that those margins are underpinned by good operating margins at the asset level. With Kounrad's EBITDA margin at 72% and Sasa's EBITDA margin of 41%. Let's turn over to the next slide, I mean, I'll just sort of walk through that sort of EBITDA development very quickly as well where we've got $74.9 million of EBITDA in H1 2022 dropping to $48.9 million this year, largely driven by those commodity prices. In fact, it's about 80% of the reduction in EBITDA period-on-period as a result of those commodity prices. And then you can see little bit is going across the screen to your right, where we've got the cost of sales going up at those inflationary pressures. We got the royalty split out for you as well. We have paid more in distribution and selling costs as well. That was because the lead concentrate, in particular, were transported further than they have been previously and then G&A costs, again reflecting some of those inflationary pressures as well. Kounrad cash costs. This remains one of the lowest cost producers on the copper curve and I think in the context of that in-country inflation of 14.6%, what we present here with the modest increase in costs of $0.04 per pound is a very good result. Now this includes some payroll cost rises and that is in order to remain competitive and to retain all our staff on sites as well. That's been one of the bigger, bigger increases we've seen there. Some of the reagents that are linked to fuel prices, such as SK and [indiscernible], things we call the organics materials and sulfuric acid have increased as well and some other pay rises going into the G&A line sort of impacting those costs as well. But if we look at the cost development from $0.63 to $0.67 in the bottom right-hand corner, don't forget that at the end of last year, we were up at 65%. So we have seen that inflationary cycle pushing through all the way into this H1. We do believe that things will stabilize now at Kounrad. But as I said earlier, it does remain one of the lowest cost copper producers in the industry. Sasa we've seen similar cost increases. Again, if we compare period-on-period. A lot of it's down to electricity cost, that is about $600,000 of additional costs in the labor costs of $1.1 million, translating to a $4 per tonne Run-of-mine cost increase. Reagents and grinding consumables, we do consume things like copper and steel. We know the prices and those things have gone up as well. And then external services is probably a positive really where we've actually increased the amount of exploration drilling that we've done on site to better understand the ore body, improve geological confidence and search for extensions to the ore body as well. Coming through into that ROM cost of $56.2 per tonne, which is up from $45.5 a ton period on period. Again, just to contextualize that into the -- what we reported at the end of the year, $55.6 a tonne at year-end. So we haven't actually increased enormously from that point onwards. We have included the cents per pound calculations for you in the bottom right hand corner, so you can look at this asset in light of other zinc assets across the industry. The increase there is only $0.01, and that's really because the proportion of zinc revenue has actually dropped relative to lead, and therefore, the by product mix has changed. So whilst that looks steady, the -- what is a more useful number for you guys is the millions of dollars spent and the RoM costs that we've seen there. We do also see a positive impact of the realization costs. Those are the treatment charges that we paid to smelters to convert the concentrate into metals, and we have seen a $300,000 improvement there for us period-on-period. Balance sheet remains strong. No debt, as Nigel mentioned, we do carry 2 working capital items on there, which would have otherwise improved the cash flow situation. $4 million of trade receivables where we've had sales that the receipts have only been received post period end. And because of payments on account, of taxes, particularly in Kazakhstan with the high copper prices last year, we are -- we have overpaid around $5.2 million of corporation tax on that front. Otherwise, balance sheet is well poised to finance any sort of future growth aspirations we may have. Capital expenditure for the year, we've elected to report this as cash CapEx, not to -- so it's not confused with any sort of capitalized items and expense items on the balance sheet. So this is actual cash out the door for us. You can see that sustaining CapEx of $4.2 million, Sasa, including some underground development, flotation adn new plants and Kounrad and some pipes and some bits and bobs there coming through, but all on track. We always guide between $8 million to $10 million per year of sustaining CapEx over both operations. And -- sorry, that's the size of maybe 1 to 2 at Kounrad. As you can see we're well on track to be within sort of the usual CapEx size in there. Development projects, those Nigel will give you a lot more detail on in a minute. But we have spent some money at Sasa in terms of 2 new plants, which is a paste backfill plant in the dry stack tailings plant plus a new access into the mine, which we're calling the central decline and also a solar project at Kounrad. Again, all on track, all on budget, more or less, and we retained the guidance of $28 million to $30 million of cash CapEx for 2023. Last but not least, cash flows. So we can see we started the period with $60.6 million in the bank. Generated good cash from operations of $42.7 million. Dividends paid to shareholders, $21.7 million. That was the 10p final dividend that we announced with the financial results in March. And then income tax paid $18.5 million. That's a lot of cash out the door for income tax, and that includes $7 million of Kazakh withholding tax. And last but not least that CapEx, I spoke out there. So the table on the right will sort of inform you how we're adjusting that set cash flow because we think there's a couple of items that are new to us, and we thought we'd sort of highlight those for you. First is interest received. Previously, we haven't received very much on our cash balances at all. We're happy to report that we're now receiving around $1 million of interest just for that first half. And then the adjustment for the withholding tax rather than run the entire $7 million through the cash flows in order to sort of report the adjusted free cash flow, we effectively adjusted it for what we've paid this year and what we expect to pay in the second half. So that $3.2 million adjustment comes back into the adjusted free cash flow number to result in the $24.1 million reported adjusted free cash flow. So on that note, I will hand back to Nigel to go through the operation.

Thank you very much, Gavin. So as you can see, a strong financial performance, though in the first half of this year. Just to remind people on the call what we do and where we do it, we have 2 operations, one in Kazakhstan, which is in situ and SX-EW and that stands for Solvent Extraction Electrowinning processing facility. That's around the central part of Kazakhstan. It's been in production now for 11.5 years, and it has a life of mine out to 2034. The Sasa mine is very different in many ways. An underground zinc and lead mine in the north -- eastern part of North Macedonia. Production has been going there since 1960s, but we've owned it since late November 2017. And the Life of Mine that we have out at Sasa is to 2039 on reserves and resources that we reported at the full year results last year. Switch to the next slide, please, Emma. And in terms of production, I mentioned before that we're on track for the full year guidance that we've given. The actual production for the first half of this year Copper was 6,716 tonnes. Zinc was 9,764 tonnes and lead was 13,734 tonnes. So as you can see, all 3 of those metals are on track for that guidance on the right-hand side of that slide. And you can see a pretty consistent performance over the past 6 or 7 years, both at Kounrad and at Sasa. On the next slide, what we're trying to show here is both at Kounrad and then further on at Sasa, where we're investing money to improve aspects of the business in Kazakhstan and Sasa. In Kounrad, we spent over $80 million over the past 10, 11 years, investing in that project. So it's very minimal CapEx that we need to invest on an ongoing basis, and we quote a figure of around about $2 million per annum. But we did take the decision for improving our greenhouse gas emissions and our CO2 footprint about a year or so ago to actually construct a solar farm on site. That's well advanced. It's fairly small by international standards. It's 4.77 megawatt output. All the equipment is now on site, we're probably around about 50% or 60% of our way through the work, and it will be on track and is on track to be completed in the second half of this year for commissioning and then coming on stream, which provide around about 18% of Kounrad's electrical power needs and reduce our Kazakhstan Scope 1 and 2 emissions by about 10% against the 2020 base. Capital cost of this investment is below $5 million. Over to Sasa, on the next slide, we've got for a while now about our transition to paste fill mining. The investments that we're making there to take the mine to the next level from what we thought was an improvement on sublevel cave mining when we purchased the mine back in 2017, that was subsequent to a long review to make sure that we can extend the life as long as possible. And the infrastructure required though that we're investing in consists of 3 aspects, really, a pace backfill plant, a central decline and also a dry stack tailings plant as well. On the pace backfill plant, we're well advanced on that and the construction of it is really materially complete now. The commissioning started in May and June on dry commissioning, then we advanced onto what we call wet commissioning, which starts with just water and then goes on to thickened tailings, which we put through the system in late August. We're now going through that commissioning phase with the thickened tails and we'll then be introducing cement into the system from around about October time, different recipes of cement. And we expect to complete the commissioning aspects of this plant in the second half of this year. The reticulation pipe work, and that's basically the pipe work that takes the pace to the underground voyage that we create from the mining. We've now put in place about 4.5 kilometers of that piping to pump the pace to the underground voids, as I mentioned. We have identified additional voids to store pace because clearly, the benefits of doing this is you're storing your waste in the future underground as opposed to putting it onto our wet tailings facility that we have that we call TSF 4. And the first pace is expected to be placed operational underground in the second half of this year. So well advanced on that aspect of the projects. In terms of the mining associated with the paste fill back plants, we're quite -- we're well advanced on that. The 800 level and we are ready almost to take the pace with development -- waste development, so should I say, haven't been done and the ore development, which will start in a few weeks' time. Central decline. We hold through, I don't know, it's a technical term or whatever, but basically from drilling started at the surface and also started underground at the 910 level. And in May, those 2 declines met and we hold through to actually enjoying the surface to the 910 level. We've now done around about 2.2 kilometers. That's a far bigger tunnel than we've got in the rest of the mine, which will improve the ventilation and access ultimately into the mine and the lower levels. And the tunnels, as I say, connected in Q2 2023. It's now operational and the haulage of ore up and down that particular [D] plant has already started. Last, but by no means least, on the projects at Sasa and the dry stack tailings elements. We have started the earthworks that's commenced. The building will commence in a few weeks' time. and the automation and electrical pack and the work that's required for that, we're going through finalization of negotiating contracts for that, and that will be delivered on to site later this year and into Q1 next year. With the intention of commissioning the dry stack tailings plant and the associated land form for putting the drive stack tails on to in the first half of next year. So that's the investment and the progress on the project at site, just a wee bit on the sustainability aspect of the business. Overall, at group level, during the past 6 months, we put a lot of efforts, as many of you know, into our sustainability initiatives. We did publish our fourth sustainability report in April of this year. We also published our second climate change report. We became an official TCFD supporter. In terms of what they're trying to achieve in terms of financial disclosures on how we are -- what we're doing [with] as a company for climate change. Last but by no means least, we submitted our first disclosures to the carbon disclosure program as well. I think that was in July of this year. So moving ahead on the reporting front, and then on the left-hand side of the slide, what you can see is our 5 pillars and specific targets that we set ourselves to actually deliver upon. So we have 5 pillars. And just to remind people what those 5 sustainability pillars are: delivering value through stewardship, so that's the governance of the business, maintaining health and safety. I've already mentioned, we had a good -- we have a good track record, and we had a good period in the first 6 months of this year with only one LTI. Focusing on our people and developing those people, caring for the environment and finally, unlocking value for our communities and investing into the local communities. I won't talk about each of the targets, but you can see -- we've set ourselves some pretty challenging goals there, and we are rewarded as a management team on delivering on those goals for the business. Next slide, please. At each of the site, we also set ourselves goals and these are just a list of some of the things we've done at site. The top triangles show you cumulatively how we've progressed and how we've met targets effectively at each of the sites. So at Kounrad, for example, we have 100% of the staff are locally employed. We don't have any expats whatsoever on site. We've paid nearly $250 million in tax to the national government in Kazakhstan's whilst we've been operating the project and the number of staff we employ is 337 in the area. I've already mentioned the solar power plant that we're investing in the local area. The local employment that we've got, we've actually had no LTIs at Kounrad since May 2018. That's over 5 years since the last lost time incidents at the operation, which is something we're particularly proud of. For both Sasa and Kounrad, what we did this year at the beginning of the year was increase the amount of money we put into local community at investments from 0.25% of our revenue to 0.5% of the revenue. Just switch to the next slide, please, Emma. And line-wise, at Sasa, a few statistics there, not quite 100% local employment at Sasa. We do have some what we call expat staff on board as we transition to pace fill mining with particular expertise in paste fill or dry stack tailings, but the intention would certainly be that we move towards 100% employment in the future. Taxation locally in the country, we paid $78.5 million to the national government, and we also contributed $2 million to the local community through our investments into helping them on various projects, et cetera. And on that note, I'll hand over to Louise to talk a bit about our business development activities.

Thanks, Nigel. So Nigel and Gavin have talked about how we've invested in our existing business in this presentation. But, we can also give you an update on our business development in terms of the inorganic growth that we're aiming to deliver as well. So we've got a recap here on our business development strategy in terms of tax and opportunities that we're looking for. And really, we're sticking to the same strategic areas that we've previously flagged and focused on. So the commodity exposure, our metal focus is predominantly on base metals, which are essential to modern living. Jurisdiction-wise, we are happy to stick broadly with the European time zone plus Kazakhstan, where we're obviously very comfortable operating in. In terms of the tax of opportunities, we've spent a lot of time in the first half of this year looking at some earlier-stage exploration opportunities and one which has come to fruition in the form of Terra exploration, which I'll touch on again in a second. We're also still looking at the larger transformational acquisitions likely to be in production, and those are likely to enhance scale and liquidity for the business. And we also look for ad hoc overlooked or unlocked opportunities as well. Affordability, we've got a very strong balance sheet. We've got no debt, and we've got strong cash generation from our operations. So that means that we believe that we can borrow significant amounts for the right opportunity. We also have strong shareholder support and good liquidity for future deals as well in terms of our equity. Of course, we always look at accretion and the business development opportunities that we appraise must add value for our shareholders for us to go ahead. And then overlaying all of that, we always look at sustainability aspects. We put a lot of effort into sustainability aspects of our business that Nigel highlighted, and we must make sure that an acquisition wouldn't negatively impact our sustainability credentials for the longer term. On the right-hand side of the slide, we've put a brief summary of the sort of -- sort of statistics, I suppose, of the sorts of things that we've been busying ourselves with in the first half. So we've appraised '22 opportunities which is a similar number to the first half last year. However, what's a little bit different in the first half of this year is that we've undertaken 3 sites visit, and we've spent some money on external consultants for more detailed due diligence on a couple of projects. So I think you can infer in that, that there's a couple of projects that we've looked at in a lot more detail. On this slide, we can talk about our business arrangements with Terra exploration, which is an exciting development for us. I think it's been about 5, 6 years maybe since we've done some exploration in Kazakhstan. And we've entered into an arrangement with a group of very experienced geologist, early-stage explorers with lots of Kazakhstan experience. So the Terra Group has got a very impressive advanced database of opportunities, geology and opportunities within Kazakhstan, and using this database that they've built and historical data that they can get hold of and acquire. We've discussed specific target areas, the types of geology, the types of deposits that we're looking for and Terra is then going and appraising these areas and recommending licenses that we should apply for in conjunction with site visits to go and visit some of these areas. So applications have already been made for some exploration licenses in Kazakhstan, and that's in progress. The budget for this work for this year is around about maybe just under $1 million in order to put this transaction effectively in place. We've formed a new company called CAML Exploration. We formed that in the Astana International Financial Center. That company will be owned 80% by CAML and 20% by Terra and in the fullness of time with meaningful exploration success that would move towards an NSR style royalty arrangement for Terra. So we're excited about the opportunities that may come through this business arrangement, and we're hoping for a full exploration season starting next spring where we should be doing some geophysics -- geochemical type work to explore hopefully some of the licenses, which we'll be able to call our own in the near term. And on this slide, we've just really recapped on how we have developed our own business in the last 13 years since we're listed on the stock market. And I think it's worth highlighting that we've raised equity only twice in the 13 years that we've been listed. Initially, it was $60 million when we first floated at our IPO, and then we raised another $204 million of equity in 2017 to acquire Sasa. So that's total of $264 million that we've taken from our shareholders. But I think the important point here is that including the 9p interim dividend that we've declared today, we will have returned shortly almost $320 million to our shareholders. We have -- from the Kounrad initial investment of 60 million, we've generated EBITDA of 731 million. and from the Sasa equity investment of $204 million. We've repaid the debt that we took out in under 5 years, and we've generated EBITDA from Sasa of $320 million as well. So we firmly believe that we are trusted to find the right opportunity at the right time for us to continue to develop our business for the future. I'll hand over to Nigel to wrap up.

Okay. Thanks very much, Louise. I suppose in summary, just trying to wrap up the presentation. On the financials, I think you can see that we are in good shape. We've had a strong financial performance in the first half of the year in fairly challenging conditions. We've got a strong balance sheet. And we've also announced a sector-leading dividend of 9p for the first 6 months of this year. So that's all positive. On the production side, we're on track for our guidance this year and we've managed to produce those metals in a very safe manner. The business initiatives for trying to grow the business on business development, we're advancing and also on sustainability initiatives, which we've done very well over the past 2 or 3 years to the size of business, I think we've advanced those and we're pitching that just at the right level. So I think we're in a great shape. And as I look towards the end of this year, we're looking towards finishing off the projects at Sasa and at Kounrad. So the paste fill projects as well as the Kounrad solar farm, and we'll be looking to finish those off as soon as we can in the early part of next year and get into full operational mode with paste fill mining methods at Sasa from next year and looking, as I said before, for other business opportunities. And so on that point, I'll end the presentation. I'll hand over for any Q&A session and any questions that there may be from the floor.

That's great. Thank you. Nigel, Gavin. Thank you very much for updating investors this afternoon. [Operator Instructions] I'd just like to remind you the recording of this presentation on with a copy of the slides and the published Q&A can be accessed via your Investor Meet Company dashboard. You've received a number of questions from investors this afternoon. So thank you to everybody for your engagement. If I may, just hand back to Emma. Emma, if I could ask you please to read out the questions, and then I'll pick up from you at the end.

Thank you very much. Our first question, which I think we will direct at Nigel. What savings do you expect from the completion of the works on the solar plant on a yearly basis? And how much investment went into this?

Okay. Good question. In terms of savings, I don't expect many savings. We primarily invested in the solar farm for green credentials in Kazakhstan to reduce our CO2 footprint and that will be reduced in Kazakhstan by about 10% and at group level by about 6%. The plant itself, we expect to come in under budget. Our budget was set at $5 million. We expect to come in under that. So it's not a major investment. So it's not about savings. When we did the discounting cash flows on the solar farm itself because we enjoy the benefits of very low-cost electricity supply in Kazakhstan. It was more or less breakeven, but we decided it was the right thing to do, to actually enhance our greenhouse -- reduce our greenhouse gas emissions and enhance our green credentials in Kazakhstan as part of our target effectively reducing those greenhouse gas emissions by 50% by 2030 from a 2020 base.

Next question off Gavin. Given your debt free and making money and investor stream, why do you think the share price is undervalued? From a capital allocation perspective, would you consider buying back shares? Or would you focus more on acquisitions?

I think we share your view that we're slightly undervalued at the moment. But there's probably a myriad of reasons for why it is. And I think some of them are speculative and some of them are not. But I think what we can do in terms of capital allocation is we look quite carefully on how we apply that capital in terms of creating value for shareholders. Now, we have, as a Board, considered share buybacks. I think we've decided to park that idea for the time being because we're not sure that we've got the firepower to do both the growth aspect of the business and buy back enough shares to really move the share price. We do also have liquidity concerns being a small company and reducing that liquidity might not be the smartest move in what are quite tricky markets at the moment. And I think in terms of the dividend payouts that people are receiving right now, the eagle eyes amongst you will have noted that the 9p payout is probably slightly outside or actually outside the range that we have in our policy, but we'd rather use that dividend as a mechanism to return capital to shareholders right now, and we don't see any reason to change the policy until we sort of change the real completion of the business by doing a deal. Does that cover?

Yes, that actually. I think you've also always answered the next question, I'm going to read you anyway. You've announced an 9p dividend today of 80% of adjusted free cash flow, 1 above your usual guidance, what can investors take away from this? Given balance sheet strength can shareholders expect even higher returns to come?

Look, I think, as I said earlier, we are outside the policy range. I think this is the second period in a row that we've actually paid outside of that policy range. Now what does that mean? It means that the 3 of us and our board have a lot of confidence in the cash flows of the business and the balance sheet position of the business that allows us to make that sort of capital return to our shareholders. And allied to that, we also have confidence that all of the capital expenditure programs that we've spoken about today are well funded, and we are able to fund those through to completion without any pressure on the balance sheet. So if we don't find an acquisition and we end up with excess cash then we'll clearly revisit some of the things we've spoken about like share buybacks and dividends. But I think for the time being, we'll keep the policy as it is. And if there's excess cash and with nowhere else to deploy that, we may well take a similar view that we've done today and that we did 6 months ago to use that money to return to cash -- to shareholders.

Louise, please, can you explain the process of paste fill mining.

I king of did. Well, thank you for the question. Yes, it's actually an exciting time for us because as Nigel said we have just started developing the 800-meter level for paste fill mining. So what we've been doing to date at Sasa is a method called sublevel caving, where effectively, you take the ore out and you allow in a controlled manner, the roof to cave after you've removed the ore. What happens then is it's a lot -- it's a very bulk mining method. It's relatively cheap to mine in that manner, but you end up taking a little bit of waste that you didn't want and you end up leaving a little bit of ore that you didn't want to do because it's a bulk mining method. Also, you're leaving voids underground where once you get deeper into the mine, you need to leave pillars in place to make sure that geotechnically, the mine remains strong. So the move to using paste fill mining method, is basically a more selective method, which means that we reduce the amount of waste that we mine, and we make sure that we mine the maximum amount of our ore. We also -- because we're filling these voids with a paste which effectively is made up from our tailings and cement sets like concrete means that we don't have to leave pillars in place. So we can extract the maximum of our resources underground as well. There's 2 slightly different methods we're using. One is going to be called cut and fill and the other is called long hole stoping. But both of those effectively use the paste product to fill these voids. And that's the key part because this also ties into our tailings management process for the long term. We've got a tailings dam that's in operation a wet tailings dam. We're developing the dry stack tailings plant, and we also have this paste. And between those 3 areas to deposit or store our tailings, that means that we shouldn't need to build another tailings facility -- another wet tailings facility in the future. So -- that's the goal to make sure that we store our tailings in these 3 locations. So it's very much related to tailings management. and also will mean that we -- because of the dry stack tailings in particular, dewatering of those tailings, it means that we can reduce the amount of surface water that we abstract as well from the Sasa Rivers.

Nigel, given the good progress in both the cut and fill and solar projects, is CAML moving to a period of reduced expansionary CapEx? If not, what projects come next?

That's a good question. Both the operations, we are moving to that phase. And we've always stated in the past that what we call sustaining capital, which is capital you spend every year on a mine is around about $2 million mark. I think I mentioned it before at Kounrad, because it's fairly straightforward. It's not a traditional mine. It's not a lot of moving parts at Kounrad. So it's 2 million per annum at Kounrad. At Sasa, an underground mine. It's around about the -- I think we've put in about 8 million to 10 million. We're possibly looking at 10 million to 12 million next year as a kind of sustaining capital in terms of replacing the mobile fleet, capital development, improves the flotation plant, things that you expect every year on a mine. Those will continue, but the expansionary capital or the development capital should start easing off quite significantly from what we've had in the past 2 years. We feel certainly at Kounrad, we're fully invested through to 2034. In terms of investments we need to make and it will be about that. And I think it's Sasa also use that kind of method because we've invested for the mines to extend the life out to 2039. So the sustaining capital should sustain Sasa right through to 2039 at that kind of level of ongoing expenditures. So we should see the rest of our cash that we generate, building up in the balance sheet or being used hopefully for business development purposes.

Louise, was Indonesia considered as a jurisdiction CAML would expand into?

Well, it's -- I mean, obviously, Indonesia is a big country in terms of mining. But actually, we've pretty much always see it clear as the Far East in that kind of time zone. And it's for 2 reasons really. Firstly, the time zone does make things very practically difficult to operate when you're based in London. Your management team is in London and you've got operations that far away. Even when we talk to our guys in Kazakhstan, they are 5 hours ahead, we could only really have calls with them first thing in the morning. So there is a practical aspect of operating so far away. But also as it happens, in terms of our experience as a senior management team, none of us really have a huge amount of experience in that part of the world. We've got more experience elsewhere, and that really plays into our jurisdictions that we are focused on now. So Indonesia is probably not one for us, although we do understand there's lots of mineral potential there.

That's great. I think, Emma, that's all the questions from investors. If any further questions do come in, I can make those available to you. Is there anything else at all there, Emma, in that regard?

No.

No, perfect. Thank you very much indeed. And thank you to all for your questions this afternoon. Nigel, I know investor feedback is important to you and to the Board, and I'll shortly redirect those on the call to give you their feedback. I wonder if I may, just before doing so, just ask you for a few closing comments.

Yes, I don't really want to repeat myself on the summary and outlook, as I mentioned before, I think, hopefully, you've heard enough from the 3 of us in terms of the business is in good shape with strong performance. What we're looking to do in the next 6 months, as we reach the year-end are disciplined towards capital allocation and how we're investing the money using shareholders' funds. So hopefully, the listeners on today's call have heard some positive things about the business, and we'll invest in the business. And certainly, please feel free to reach out to us for any questions you may have. Our doors are always open to answer questions to investors and we welcome people investing in what is an exciting time for CAML in the business.

That's great. Nigel, Gavin, Louise, Emma for your time this afternoon. Can I please ask investors not to close this session as we're now automatically redirect you to the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete but I'm sure will be greatly valued by the company. On behalf of the management team of Central Asia Metals plc. I'd like to thank you for attending today's presentation. I wish you all a very good afternoon.

Thank you.

Thank you.