In its quick take on Central Asia Metals ' (CAML) impressive 2016 results, the company's broker, Peel Hunt, noted that the "10p final dividend will likely take the headlines". Much as we'd like to - from both a journalistic and a shareholder perspective - it is hard to argue with that summation. Given the constraints on capacity at Kounrad, and the likelihood that Central Asia will be making money regardless of the copper price, that dividend - equivalent to 31 per cent of revenues - is the headline and the main story.
Fortunately, generating cash from its main asset is what Central Asia does best. In 2016, the Aim-traded miner set a number of records, including copper production of 14,020 tonnes (up 16 per cent year on year) and C1 cash costs - that is, on-site mining, administration and general expenses - of just 43¢ per pound, against an average realised price of $2.27 (£1.82).
So where does the company go from here? The defined feasibility study for the Copper Bay site in Chile revealed limited potential even at a copper price of $3 a pound, and has essentially been placed on file. A greater source of optimism comes from the Shuak exploration project acquired at the end of the period, although there is limited room to double down on the venture even if copper prices continue their positive momentum.
FinnCap expects adjusted pre-tax profits of $44m and EPS of 31.6¢ in 2017 (up from $32.9m and 23.7¢ in 2016).
CENTRAL ASIA METALS (CAML) | ||||
|---|---|---|---|---|
| ORD PRICE: | 222p | MARKET VALUE: | £248m | |
| TOUCH: | 220-222p | 12-MONTH HIGH: | 263p | LOW: 136p |
| DIVIDEND YIELD: | 7.0% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 109¢* | NET CASH: | $40.3m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 30.7 | 14.8 | 11.0 | 10.7 |
| 2013 | 54.1 | 55.4 | 54.9 | 9.0 |
| 2014 | 76.6 | 70.3 | 56.3 | 12.5 |
| 2015 | 67.3 | 32.7 | 20.2 | 12.5 |
| 2016 | 69.3 | 32.9 | 23.7 | 15.5 |
| % change | +3 | +0.4 | +17 | +24 |
Ex-div:11 May Payment:07 Jun £1=$1.25. *Includes intangible assets of $40.8m, or 37¢ a share. | ||||
