Central Asia Metals plc ($CAML)

Good morning, ladies and gentlemen. Welcome to the Central Asia Metals plc Annual General Meeting and Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question submitted today. However, all questions will be reviewed as many topics as possible will be covered in the time available. I'd now like to hand over to the Chairman of Central Asia Metals, Mr. Nick Clarke.

Thank you. Good morning. My name is Nick Clarke, and I would like to welcome you to this Annual General Meeting of Central Asia Metals plc, our 16th AGM since our listing on AIM in 2010. I would also like to welcome those watching online via the Investor Meet Company platform. With us today are my colleagues on the Board, Gavin Ferrar, Chief Executive; Louise Wrathall, our CFO; Mike Armitage, my extreme left; Alison Baker; Roger Davey; Gillian Davidson; Mike Prentis; and Nigel Robinson, are all our non-executive directors are here with me. Before we proceed, I would like to set out the running order for today's proceedings in line with the notice of meeting sent to shareholders in April. First will be the Annual General Meeting at which we will handle the formalities required in connection with this, including answering any questions relating to the AGM. Due to the legal requirements of an AGM, only those here at the meeting will be able to participate in this. Those online can, of course, observe the proceedings as they take place. Voting, which will be by a poll to ensure all votes lodged in advance, are taken into account and the results of the AGM will be announced to the market later today. Once the formal AGM has concluded, we will then move on to the presentation from management, after which there will be an opportunity to ask questions in connection with the business. Now turning to the formal business of the AGM, and necessary quorum being present, I now declare the AGM open. The business of the meeting is set out in the notice of meeting contained in the circular to shareholders dated 15th of April 2026 and distributed with the annual report and accounts. With your approval, I would like to take the notice of meeting as read. Is that agreed? Thank you. The notice is taken as read. I should now be happy to answer any questions in connection with the business of the Annual General Meeting. As I intend to call a poll on all resolutions, I should be grateful if all questions in connection with the business of the Annual General Meeting be asked at this stage. There will be an opportunity to ask general questions following the presentation after the formal meeting is concluded. Are there any questions in connection with the business of the Annual General Meeting? As there are no questions in connection with the business of the AGM, I shall now turn to the formal business of the AGM being the resolutions set out in the Notice of Meeting. In accordance with the company's Articles of Association and to enable all proxies lodged in advance to be taken into account, I now demand a poll be taken on all of the resolutions set out in the Notice of Meeting. There are 18 resolutions. Resolutions 1 to 15 are being taken as ordinary resolutions, which require a simple majority of the votes cast to be passed. And resolutions 16 to 18 are being taken as special resolutions, which require approval of at least 75% of the votes cast to be passed. Now moving on to voting. I declare the poll open. Will those shareholders, proxy holders and corporate representatives wishing to vote, please complete a poll card now and pass these to Company Secretary. If any shareholder or proxy holder or corporate representative wishes to vote or does not already have a poll card to do so, please raise your hand and the Company Secretary will pass you a poll card for completion. I plan to close the poll shortly. If there are any other poll cards to be submitted, please pass those to the Company Secretary now. [Voting]

Thank you. There being no further poll cards to be submitted, the poll is now closed. Our Company Secretary and registrars will be counting votes cast at this meeting. The results of the poll will be available later today and will be announced to the London Stock Exchange as soon as practical. That concludes the business of the AGM. I now declare the Annual General Meeting closed. I will now hand over to Gavin Ferrar, our CEO, to give a presentation on the business. Thank you.

Good morning, everybody. I hope you can see the presentation on screen and behind me. I'll just give you a brief overview of our business. For those of you are pretty familiar with it by now, we have 2 operations, one called Kounrad operation, which produces copper cathode in Kazakhstan; and we have the Sasa lead and zinc mine in North Macedonia, which is producing lead and zinc. Kounrad has been in operation since 2012, and Sasa is an operation that we acquired in 2017. In addition to this, we have exploration ventures in Kazakhstan through 2 holding companies there, looking for high-grade base metals in outstanding and prospective regions there. And we also have a minority position in a privately held U.K. company called Aberdeen Minerals that is exploring for base metals mineralization up in Scotland. A quick overview of our business from 2025 shows that we have a strong production profile. We produced a little over 13,300 tonnes of copper from Kounrad in Kazakhstan, 17,880 tonnes of zinc and 25,150 tonnes of lead from the Sasa mine in North Macedonia, all done in a safe manner, where we had one lost time injury with a lost time injury frequency rate lower than it was the previous year. And our target is to keep that rate moving downwards. So it's a real focus for us on the health and safety side. This production led to good financial results, which we published in March this year, a little shy of $230 million of revenue, $102 million of EBITDA translating into a 44% EBITDA margin. And importantly, we generated $56 million of free cash flow. That free cash flow is important because that's the money we used to pay our dividend and the dividend that's been approved today, it's a total of 12p for 2025, which is at the upper end of our dividend policy range that I'll talk about later. Just setting out an investment case for Central Asia Metals. This is a strong cash-generative business with a disciplined focus on growth. We generate a lot of free cash flow. Our free cash flow yield is around 15%, which is really high. We have a strong track record of shareholder returns. In fact, we've returned USD 420 million to our shareholders by way of dividends and buybacks versus $214 million that we've raised in equity, only twice from the market, once on IPO and once when we acquired Sasa. We're committed to value-accretive growth. We have a clear ambition to build a pipeline of projects either through exploration, but also through acquisition, and I'll talk about that in a minute. We've got a great team, both sitting around me here today, plus also at our operations and in our office in London that support the strategy. And we have a robust financial position. We have a balance sheet that's free of debt and has $80 million in cash on it. But importantly, we're also strategically positioned in critical metals. We're in the right metals. Copper, we call it here the metal of electrification. This is essential for transmitting electricity and generating electrical power all over the world. Zinc is very useful in industrial production, plus also makes steel last a lot longer and is a reliable energy storage metal as well. So we're in the right metals, and we call them base metals essential for modern living. As I said, we've created a lot of value for our shareholders here. Our total shareholder return since IPO has been 274%, which is a stunning result for a small mining company. And this is because of our disciplined approach to capital allocation. Like I said before, we have this dividend policy of 30% to 50% of free cash flow, and that provides us the flexibility to continue with capital returns to shareholders whilst financing our internal growth, internal investment plus also our growth ambitions. Turning to our operations. As I said, Kounrad is a leaching facility. We are leaching copper from old dumps by irrigating them with the solution. We extract the copper from those dumps and plate them into copper cathode. This copper cathode is a salable material that is 99.99% pure and goes straight to the market. The image on the top right of the screen gives a view -- a satellite view of the operation. That open pit in the top center, just for scale, is about 2 kilometers north and south -- north to south. And the area of the dumps, which are labeled with the little numbers is equivalent to around 1,500 football pitches. So it's a huge undertaking that we have here. Our guidance for 2026 is to produce 12,000 to 13,000 tonnes of copper, and quarter 1 has seen us on track to achieve that guidance. Since we started producing, we produced over 180,000 tonnes of that LME grade copper, as you can see in the bottom right-hand picture there. You can see a couple of more photographs of our site on this slide here. That's the production facility on the top right with the copper coming out of the EW cells on the bottom right there. I'll draw your attention to the chart in the middle, what that is showing is that our actual recovery of copper has actually exceeded our initial expectations. So we do expect the -- as is normal with these dump leach facilities, we expect the output to gradually decline over time, and that's reflected in that guidance I spoke about earlier, but our focus remains on extracting as much of this copper and maximizing the efficiencies that we can in terms of extracting copper from these dumps. Our cash costs are some of the lowest in the industry. We're currently producing copper at a cost of $0.82 a pound. Mining industry is terrible. We always quote our cost in pounds, and we sell our metal in tonnes. The current copper price is $6.12 a pound, and that's driving that extraordinary EBITDA margin that we achieved at 75%. Moving on to Sasa. This is a much more traditional mine. It's mining lead zinc from underground operations, crushing, milling, grinding, moving things around and ultimately selling a concentrate into smelters that are located primarily in Europe. There's a photograph of one of our new facilities that we've constructed. This is what we call paste backfill facility. We've just completed a bunch of capital programs at Sasa, building 2 new plants plus a big tailings handling facility including and also a decline into the bottom of the mine. That effectively sets Sasa up for the rest of its life. What I'll draw your attention to on this slide is the tonnages that we have achieved in 2025 versus 2024. As we ramp up from that transitional phase and moving upwards, we're aiming at a little more tonnage this year. So we were able to guide back to where we were in 2024, 18,000 to 20,000 tonnes of zinc expected; in 2026, 26,000 to 28,000 tonnes of lead in the same period. We weren't without our problems at Sasa last year, and we've done a full review of the business, starting from underground in the resource and reserve calculations all the way through every aspect of our business. And the focus this year is to drive all of those initiatives through the business and ultimately see the results coming through on the bottom line. This includes mine planning, processing technologies, productivity, staffing levels and importantly, cost control as well. So a lot of that's going on. And we've also focused on in that top right-hand photograph, depositing our tailings, which is the waste we produce at Sasa in a much more environmentally fashion. This is what we call the dry stack land form. Around 40% of our tailings every year goes on to that land form. The other 40% goes underground, with only 20% going into what should be our last remaining surface tailings facility. See the costs at Sasa, while we don't get the spectacular margins that we achieve at Kounrad, it's certainly a solid little performer with $0.80 a pound zinc costs there versus the current price of just shy of $1.60 a pound of zinc as well. So as I said earlier, with all those implementation of those initiatives that we've got going at Sasa, we expect that this operation to start performing a little bit better through 2026. Getting to our capital allocation and outlook. As I said earlier, we're looking to drive some value to the shareholders via exploration and acquisition. That means we've got to build our portfolio to replace what we're depleting at Kounrad and Sasa. We're doing that through an agile and exciting exploration program in Kazakhstan, where we've got a really excellent team of geologists working hard there. They're properly incentivized. They own 20% of the CAML X business. And we're targeting high-grade metal prospects there. And this year, very exciting. We're drilling -- these prospects. We've got around [ 5,500 ] now, and I'm really looking forward to seeing those results as all my colleagues on the Board here. We're also -- when I say agile, we go through -- we've got the luxury of the cash flow behind us, so we don't have to hang on to these things and flog dead horses. So we do drop licenses that aren't looking good. We already identified 4 additional licenses that we look to add to our portfolio this year. Plus importantly, we've signed a term sheet for an option agreement in a very exciting part of Kazakhstan and look to start exploring that in the near future. I won't go through that column on the right-hand side of the screen in great detail. But what I will say is to populate the area between the early-stage exploration and the production. We are looking for growth assets. We're looking to grow by buying a development asset. That will allow us to generate value for our shareholders by conducting studies, conducting more drilling and applying all of the engineering and operational knowledge that CAML has built up over the years into bringing a new asset to the market that will start replacing the production at Sasa and Kounrad. Lastly, and in conclusion, we have a great little business, great platform for growth. We've got a flexible balance sheet with a lot of cash on it, $80 million at the end of the year, plus we're generating good free cash in this commodity market as well. We're looking to produce 12,000 to 13,000 tonnes of copper in 2026; 18,000 to 20,000 tonnes of zinc; and 26,000 to 28,000 tonnes of lead. And this year is key for us in terms of improving the productivity at Sasa, maintaining focus and efficiencies and costs at Kounrad. And we're looking to identify and structure a material transaction to populate that area between the exploration and the production, as I said. And all the time, we're going to be retaining disciplined capital allocation and making sure that our shareholders benefit from all of it. Good work that my team does every day. Thank you very much.

Thank you, Gavin. I now invite questions on the business, both from those in the room and those watching online. We have around 10 minutes for this, and I won't be able to repeat all of the questions submitted online, though we'll try to cover each of the topics raised. Can I ask if anyone in the room has a question? Yes.

What is the mineral that's likely to be discovered? Is this copper or...

Yes. So it's an ultramafic deposit. So the target mineralization is copper and nickel...

On the multi-fold, that's Aberdeen [indiscernible] just to diversify away from Central Asia I'm thinking -- are you worried about geopolitical risk in Kazakhstan?

No, no, we're not. In fact, our stated kind of geographical boundaries for our strategy are the European time zone. So Aberdeen obviously fits in well with that plus Kazakhstan. So we're very comfortable in Kazakhstan. We've been operating there a long time and know how to operate and navigate our way through the bureaucracies there, so we don't see any issue there. And the motivation for Aberdeen was more sort of asset quality and the quality of the team that is conducting that exploration.

Thank you. Any more questions from the room? Yes, please.

How the [indiscernible] you have to foresee any impact?

No, fortunately not. Now we do get -- that's a very good question because we do consume sulfuric acid. And obviously, it's been in the headlines that a lot of the sulfuric acid globally comes through that strait. We are very fortunate that there's a smelter only 18 kilometers to the south of our operation that generates sulfuric acid as a byproduct and we purchase our sulfuric acid there. So from that perspective, it hasn't. At Sasa, we have seen a slight increase in diesel costs, but we don't -- that's about 2% of our cost base. So it doesn't affect us too much. And then energy costs, we've actually -- at Sasa again, electricity costs, we've hedged to the end of June. So we've been watching that market very carefully as well because those are the sort of biggest inputs for us that with the prices...

Thank you. Any -- I would now like to address the topics coming up in questions submitted via the online platform.

We've got a few questions. Asking about, is the current market environment creating opportunities...

Sure. Look, I don't think the current end market is generating more opportunities than usual? I don't think so. I think we've got a strategy that revolves mainly around the knowledge that we have of the industry, plus also connections we have. The 9 people sitting up here are all industry veterans who know their way around. We get a lot of opportunities arising through those, through our teams on the ground and also through our relationships with banks and traders. So we do see a decent pipeline of opportunities coming through regardless of the market at the moment. If we're talking about the price of the metals influencing the prices of assets, look, these things do move. But in general, the modeling that we use uses what we call consensus pricing. So that is a price that is put out by several people, consensus of all the analysts forecasting copper prices. We use that price in terms of our determinations, and that's kind of a standard thing. So we don't see huge dislocations in terms of what people are asking versus what the prevailing copper price, for example.

We've got a couple of questions about the level of executive remuneration both [indiscernible] and really it's about level of executive remuneration as appropriate...

Mike, would you like to address that?

We do spend a lot of time assessing the appropriateness of executive remuneration. We look at benchmark studies in the industry to see comparable, what we think is happening for comparable sized companies. It's quite difficult to find exact comparables, but we look at the broad industry data to assess appropriateness of pay, we spend a lot of time looking at our LTIP and how that should be driven the KPIs underlying that, and we're broadening out that as much as possible to make sure it's fair, challenging. So I believe our pay structure generally is reasonable, in line with market norms. And I haven't heard any suggestions that it isn't.

We got a silly question of Kounrad [indiscernible] opportunity to increase to optimize...

Look, as I said earlier, the asset has actually outperformed our initial expectations. I think we've produced depending on which dump we're talking about between 13% and 16% more copper than we initially expected. And the current forecast for that sort of outperformance to continue. The issue with Kounrad is that you've got a finite resource that's sitting on surface and you can measure it fairly easily. The challenge is getting more is, either as you say, more recovery out of it or more resource into the plant. Now we look at both. We look at various sort of optimizations that we can do with our normal course of business leaching operations, plus also we do, from time to time, test new technologies in terms of leaching copper minerals as well when they come out. In terms of additional material, the plant will have capacity, and we're experts at piping and pumping solutions around. So if opportunities do come up within the region that allows us to exploit that plant capacity, we would do that. And we do have an active business development program in Kazakhstan looking at those sorts of opportunities as well. But so far, we haven't been able to set our foot on any of those, but we're not going to stop looking.

Similar question on dump operations at Kounrad, is there a copper price at which...

That dusting off a bunch of old models, I don't know the answer to that question. But in general, when we do reject those things, the economics is only one part of the analysis. We also do a lot of technical analysis and look at the acid consumption, the recovery rates, those sorts of things. But don't forget that Kounrad is actually a unique asset in many respects that we don't have to rehandle material and put it on a heap pad or crush it or grind it or inject air or bacteria into the system. So we've got all of that at Kounrad. We're very fortunate to have that. So it's very difficult to find an analog to it. But the copper price, of course, would compensate for higher cost operations. But in most cases, when we reject these sorts of things, it's pure technical reasons rather than just economics.

We have a couple of questions on strategy...

There's a lot of questions there. Look, I think the strategy is important clearly, and we discuss that at every Board meeting and make sure that the Board and our execs are aligned on what we're doing strategically and taking into account the sort of views of all of our stakeholders there. And that gets reviewed every 4 months effectively, every 3 to 4 months when we have a Board meeting. So I think we're on the right path in terms of strategy. In terms of any sales of the assets, look, if someone makes an offer for something that is compelling to the Board, we'd be irresponsible not to consider that. And I think in terms of returning capital to shareholders, we've got a good track record of doing that. And I think we've essentially proven to the market that in terms of $420 million we've given back well in excess of what we have raised from market is probably speaks for itself.

All right. [indiscernible].

That's a good question. I suppose the first thing I'd say is that the footprint for a mine -- we're a long way from a mine there anyway. We've got to make a proper economic discovery first, which Aberdeen does and then CAML needs to decide on that basis whether or not it continues to invest. I won't speak for the Aberdeen team there, but the judging by what we've seen and driving our investment is that any mine that would potentially be developed there is going to be an underground mine. The footprint is going to be small. And it's in an area of Scotland that is fairly deprived, it's looking for jobs, and it's not outstanding natural beauty by any means. So we're not going to be encroaching on any natural part and that kind of stuff. So I think from that perspective, it represents a solid investment on our part. And in terms of politics, what I'd say is the cycles around politics is probably much shorter than mine development. So let's see what happens.

The only thing I'd add to that as well is the 2 metals that we would be producing from there should there be a mine are key for environmentally friendly future of the U.K. and the world. We're talking about electric vehicles. We're talking about batteries for nickel. We're talking about electrification in general for copper. So there's a very pro green approach to the need for the metals that we will be looking to generate should we be developing a mine with Aberdeen in Scotland.

We're out of time on questions. But if anyone got any other questions they'd like to ask questions, please feel free their questions please e-mail me...

Thank you, Richard. I think we have now covered the topics raised and thank everyone participating both in person and online. We appreciate your interest in the company.