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CAML drops final dividend to protect cash

Payout shelved so company can survive one or both of its mines closing
April 2, 2020

Central Asia Metals' (CAML) shareholders have again reacted badly to the company playing with its dividend, this time cutting the final payout entirely in the face of possible mine closures. Its shares were down 16 per cent after this measure to save cash was announced, as they were last year when the payout was reduced.

IC TIP: Buy at 132p

The company itself is looking at operations staying open as a good outcome here. Chief executive Nigel Robinson told us the dividend cut and reduction in spending this year is designed to give CAML a cash buffer in case North Macedonia or Kazakhstan orders a shutdown.

He said the Sasa zinc and lead underground mine in North Macedonia, which provided around half of CAML’s revenue last year, was at a greater risk of closure because of its proximity to towns and the country’s position in Europe. Mr Robinson said the $3.2m (£2.6m) in monthly debt repayments would be the “last thing to go” while the company remained in production. Net debt (excluding lease liabilities) dropped 27 per cent last year. 

CAML itself is in a good position to weather a storm, with its overall cash cost across its two operations at 94¢ (76p) per pound (lb) of copper equivalent. This is an 8 per cent increase on 2018, but still leaves headroom at current prices, with copper at $2.18/lb. BMO forecasts an average copper price for 2020 of $2.33/lb. 

Peel Hunt forecasts a fall of almost 50 per cent in CAML’s adjusted EPS this year to 15.8p.

CENTRAL ASIA METALS (CAML)  
ORD PRICE:132pMARKET VALUE:£233m
TOUCH:132-133p12-MONTH HIGH:274pLOW: 100p
DIVIDEND YIELD:4%PE RATIO:6
NET ASSET VALUE:191¢NET DEBT:24%*
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (p)
201567.332.720.212.5
201666.733.624.315.5
201710249.829.116.5
201819272.731.314.5
201917267.829.46.5**
% change-11-7-6-55
Ex-div:na   
Payment:na   
£1=$1.23 *Includes lease liabilities of $748,000 **No final dividend