CAML defers dividend after tailings leak

The company has also put off declaring an interim dividend because of the failure, which it said saw waste from the mine flow into a river and lake for 90 minutes on Monday morning. No one was hurt in the spill. Management had been planning to announce an interim payout to make up for not handing shareholders a final 2019 dividend in April due to Covid-19 uncertainty. 

Production at Sasa remains suspended while an investigation takes place. CAML chief executive Nigel Robinson said the company was looking at “the ramifications of what’s happened and what we need to do to clean up the mess”. Initial estimates are that 3,000 cubic metres, or 3m litres, of waste from the mine leaked from the dam. Mr Robinson said CAML was working with the tailings facility’s designers and government officials to work out what went wrong. 

Even if production is quickly restarted, the leak will likely have an impact on 2020 earnings through clean-up costs and the expense of shutting down and turning back on the processing plant. The previous full-year zinc and lead production guidance of 23,000-25,000 tonnes (t) and 30,000-32,0000t respectively is under review. 

In the first half, the company saw earnings fall on lower metals prices. Production at the Kounrad copper operation in Kazakhstan and Sasa were up year-on-year and costs were down, but zinc prices falling over a quarter on the first half of 2019 and copper dropping around 10 per cent hit sales.

Since the end of the first half, copper has recovered to well over $6,700 (£5,173) per tonne (t) and zinc has also improved. Free cash flow was down 41 per cent on last year to $21m because of the price falls.

CAML maintained its $19m debt repayment - the same as the first half of last year - bringing net debt down to $59m from $80m at the end of 2019. This year CAML also committed to a new development plan at Sasa, which will see a change in its mining and waste strategy. The cut and fill stoping method will be in place from 2022. 

Consensus forecasts place 2020 earnings per share at 21¢ - down 28 per cent from 2019 – rising to 26¢ in 2021.