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Central Asia Metals beats FY'19 copper production guidance

Base metals producer Central Asia Metals PLC exceeded its full-year copper production guidance for 2019 even as fourth-quarter output came in 6.7% lower than in the same period of 2018, the company said Jan. 9.

Production of 3,138 tonnes in the final quarter from the company's flagship Kounrad Dump site in eastern Kazakhstan brought full-year copper output to 13,771 tonnes, ahead of guidance of 12,500 to 13,500 tonnes.

Kazakhstan's harsh winter conditions typically limit the volume of copper-bearing solution, leached from material mined from a nearby open pit between 1936 and 2005, that the operation can process in the fourth and first quarters of the year, when temperatures in the Central Asian republic fall well below zero.

Central Asia Metals is transitioning from processing the site's eastern waste dumps to its western dumps, which came from deeper in the ore body; heap leaching this takes longer due to the different mineralogy of the waste.

Fourth-quarter copper sales came in at 3,525 tonnes, while total sales for 2019 amounted to 13,600 tonnes.

At the company's Sasa lead-zinc mine in North Macedonia, zinc-in-concentrate output dwindled 1.8% year over year to 5,666 tonnes in the quarter, with full-year output up 3.7% at 23,369 tonnes, toward the upper end of guidance.

The fall in zinc output was due to slightly lower plant feed, head grade and recoveries from the underground mine in the northeast of the Balkan state, investor relations spokesperson Louise Wrathall told S&P Global Market Intelligence.

Lead-in-concentrate production from Sasa was up 1.1% at 7,483 tonnes for the fourth quarter, bringing full-year output to 29,201 tonnes, a slight decrease from 29,388 tonnes in 2018.

The company maintained 2020 production guidance for copper at between 12,500 and 13,500 tonnes, of which about 75% is expected to be leached from Kounrad's western dumps, versus 68% in 2019.

In North Macedonia, the company expects to produce between 23,000 and 24,000 tonnes of zinc in concentrate during 2020 and between 30,000 and 32,000 tonnes of lead in concentrate.

Central Asia Metals plans to begin replacing Sasa's aging underground mobile fleet in 2020 after an audit indicated declining cost efficiency. The company has also decided, in principle, to transition to more selective cut-and-fill mining from the sublevel caving method now in use at the project's Svinja Reka deposit. Detailed engineering studies are planned for the second half of 2020 as well as an update of the deposit's mineral resource estimate and ore reserve.

Cut-and-fill mining typically has a higher operational expenditure cost per tonne mined than sublevel caving, but this could be offset by higher head grades, ore recovery and reduced capital expenditure on tailings storage in the future, according to Mirabaud Research analysis.

The company expects capex to be between US$12 million and US$14 million in 2020, compared to guidance of US$10 million to US$12 million in 2019. At the end of 2019, it had US$32.4 million in cash while gross debt stood at US$108.8 million, having fallen by US$36.1 million over the year.

Nick Clarke assumed the role of nonexecutive chairman as of Jan. 1. He was executive chairman.

Shares closed up 3.5% at 224.50 pence apiece in London on Jan. 9.