Well, good morning, everybody, and welcome to Central Asia Metals 2023 Full-Year Results Presentation. Just scrolling down through the slides, standard disclaimer, people like to take a look at that. And just looking into now the company overview. So if we move to slide four, please. I think most people know where we operate, but just to reiterate the fact, we have two solid operations. In Kounrad, we operate the in-situ dump leach and SX-EW processing facility, which has now been in production for almost 12 years and has a life of mine out to 2034. And in North Macedonia, we own the underground zinc and lead mine, just in the northeast of Macedonia there. Production commenced way back in the 1960s. We acquired it in late 2017, and that now has a life of mine out to 2039.
Both operations are 100% owned by CAML. Next slide, please. Now to the core of this presentation this morning. 2023 was a challenging year with depressed metal prices for us and also remaining inflation in the marketplace, but we put in a solid financial performance, and you can see some of the highlights there. Generating revenue of $207.4 million, with an EBITDA of $96.5 million, which is an EBITDA margin of 47%. In turn, that generated free cash flow for the business of $57.5 million, and we also invested quite heavily into our business, both at Sasa and in Kounrad, developing the projects for the future, at a total investment there of $27.8 million. We remain debt-free, having paid the debt off in August 2022 of the Sasa acquisition.
We have cash in the bank, $57.2 million, and I'm delighted this morning to announce a full-year dividend of GBP 0.18. That's a final of GBP 0.09 to add on to the GBP 0.09 interim dividend we paid last October. That is a total in the year. Sorry, for 2023, of $40 million and above policy dividend. You can see the table there of the strong returns to shareholders over the years, now having paid back $339 million to shareholders and GBP 1.70 since we started paying dividends back in 2012. A solid financial performance. Turning to slide number six.
We've also had a busy year on site at both operations, not only on production, achieving our guidance production to the upper end in Kounrad, 13,816 tons of copper, and in the middle of the fairway in 2023 for zinc and lead, 20,338 tons of zinc and 27,794 tons of lead production. So delivering that production alongside of some heavy capital investment as we made significant strides towards completing our transition to cut-and-fill mining at the Sasa operation, and also invested and completed our solar power project at Kounrad. You can see the details there, and we'll talk more about those later. Just on to slide number seven, sorry. And just to reiterate, and I probably already have done, our investment case here.
I think five key things to point out here in investing in CAML. One is very dependable and profitable operations. Even in difficult markets, our business model of a low-cost operation meant that we could return very strong, profitable margins and a 47% EBITDA margin, as I've already mentioned. Also, reliable and solid dividends and return and management of our capital allocation, both investing in the projects, as well as a strong dividend policy and return to shareholders in line with our policy there of 30%-50%, but above policy for this particular year. And then also, we've got a record of delivery, good track record of producing the metals that we, we produce across the patch and meeting our guidance, annually.
And the last, but by no means least, our ESG credentials, both in terms of a strong governance business, strong health and safety. We had a very good year last year. We just did LTIFR, that's Lost Time Injury Frequency Rate, of 0.4, beating our target for the year, but also the advances we've made in our sustainability reporting and our greenhouse gas emissions reduction. So a strong business case to invest in CAML. And then if we turn to the last slide before I hand over to Gavin for more details on the finances, all I really want to point out on this particular slide is what our objectives are.
In the short term, to focus on those operations, maintain them as low cost and high margin, ensure that the money we generate from those operations is prudently allocated, both back into the business, as well as providing good returns for our shareholders, focusing on sustainability angle of the business, and we've got those five pillars we talk about. And last, but by no means least, a long-term strategic objective to deliver growth to the shareholders, both through early-stage exploration, of which Louise will talk about more later in the presentation, but also looking for a transformational acquisition to actually grow the business, which we are still actively looking for. And on that note, I'll hand over now to Gavin to talk more about the finances in details.
Thank you. We kick off looking at just the commodity markets and the other, macroeconomic conditions that affected our business. Don't dwell on the slide for too long, but, really, in the terms of the commodity markets, it's the zinc price that affected these results. You can see the zinc price change over the year, of 24% down, which is a, had a big impact on us. Otherwise, the other commodity prices remained relatively stable. The other thing in the zinc markets that did affect us as a result of the energy crisis that we saw earlier in the year, was that, European smelting capacity reduced, and that increased, treatment charges that come off the revenue line as well.
Look at the right-hand side of the slide, while inflation is trending downwards, we did feel the impact of inflation in both of our operating jurisdictions, 9.8% in Kazakhstan and 9.4% in North Macedonia. That led us to giving our staff competitive pay raises in response to the increased cost of living in both of those jurisdictions. That is offset slightly by a fall in the electricity prices. We did see a 40% decrease from the price that we achieved last year, down to $0.11 a kWh, which is still slightly above what we've achieved historically, but trending in the right direction.
In terms of taxes, we announced, I think, at the interims, in September, that a 10% withholding tax had been introduced on intercompany dividends from Kazakhstan, and that's had a $7 million impact on us. MET rates, which is the royalty that we pay to the government, increased by 50% to 8.55%. And you can see around a $3 million impact on that front. And then there's an accounting standard that was introduced and acted retrospectively to the beginning of 2022. This is non-cash, but it does add another $1 million to our income tax line, and I'll go through that in a minute.
Foreign exchange, while the movements were fairly modest, at 3% and 2%, the U.S. dollar against our operating currencies, they did go in the wrong direction for us, and we'll talk about the impact on our income statement on the next slide, please, Emma. As Nigel said, this income statement reflects a really good overall performance given the macro environment, with that 47% EBITDA margin. If we just step through the highlights, on the right-hand side of the table, on the right-hand side, we can see the gross revenue, period-on-period is down 11%. That's a function of metal prices, primarily that zinc price coming off 24%. We've seen the increase in treatment charges.
That's about $1.5 million increase, off, off of that revenue line. That's where those are embedded. And then we've seen volumes down slightly, particularly at, at Kounrad, year- on- year, around 438 tonnes of copper less produced there. If we turn to our cost of sales now, if we recall those, inflation rates that I mentioned earlier, approaching 10%, a 6% cost increase overall, doesn't seem too bad. And when you dig into that even deeper, that MET that I mentioned earlier, that, that royalty to the government of $3 million, that's in that line as well.
But we have seen proper cost inflation coming through on payroll, which I mentioned earlier, plus also reagents, spare parts, and there's a small foreign exchange element embedded in cost of sales as well, of $2 million. Next line, the foreign exchange loss. This is non-cash. It looks like a huge swing of $10.2 million, but just to reiterate, it's non-cash, and that relates to the currency translation in relation to those currency movements I mentioned earlier on our intercompany loans, which are booked in U.S. dollars, where we see them here, but at local level, they're booked in tenge and in Macedonian denars. Admin expenses, now, those include a few exciting things, actually.
We've got, while they do look like they've gone up, those are business development costs, and Louise will talk about those in more detail later. They include our contributions to the foundations. There's the foundations at Kounrad and at Sasa, where we're contributing 0.5% of our revenue. Also, cost of establishing another exploration play in Kazakhstan. And then we've also seen some payroll coming through there, not only at group level, but also adding senior technical staff to run the projects, which Nigel will walk you through in a minute as well. Finance costs, again, these are primarily non-cash. These are the amortization of what we call our asset retirement obligations go through there, so $1.7 million of that finance cost is related to that.
The rest are related to leases around offices and other bits of kit. Finance income, with interest rates where they are, we have benefited slightly from that, with $1.9 million of interest received. And in the taxation line, as I said earlier, $7.7 million additional withholding tax in that line, plus also for non-cash IFRS adjustment of $1 million related to the new standard. That all comes down to profit after tax of $37.4 million and EBITDA of $96.5 million. And that EPS line, you know, again, includes a couple of those non-cash items there. So, you know, in reality, we probably performed a little bit better than what the accountants will have us believe here.
Let's move on to the next slide. This is to break down the EBITDA year-over-year. I think I've been through all of these in huge detail, so just to point out the impact of the commodity prices on the left-hand side, particularly that zinc price. Then, you know, treatment charges, as I said earlier, up $1.5 million. Royalties, up again. The contributions to foundation, $600 thousand, and then those business development costs of $1.2 million, all contributing to that EBITDA from $131.6 million in the previous period to $96.5 million. But the biggest impact, obviously, is commodity prices. Moving on to each of the assets. Kounrad's revenue performance was pretty good.
If you remember, the copper price was fairly stable through the year, just that sort of slight reduction in volumes. What we have seen on the cost base is that payroll increase coming through that I mentioned earlier, that is around $1 million. Higher reagent costs. We've seen things like acid prices and Escaid prices, which are two of our key ingredients, go up by 30%+ each, partly in response to sort of global economic pressures. Escaid is an oil-based product. Sulfuric acid, you know, that's gone up, but our supply is absolutely robust. We purchase everything internally in Kazakhstan there, so that's all under control. And we've also had a $0.03 impact on that, just through that lower production that we've seen as well.
We're still one of the lowest cost copper pure copper producers in the world, with that EBITDA margin of $0.71, so still a really good performance by Kounrad. Moving on to Sasa. Run-of-mine costs, we sort of, rather than confuse things with all of the translations from zinc to lead and vice versa, we're just gonna present our run-of-mine costs here. We can see that they have gone up slightly year-on-year. Now, $3 a ton of that increase includes the payroll cost. Again, same thing in Macedonia, where we've seen some inflation coming through there, plus some additional headcount as we construct these two capital projects, or sorry, the capital projects, but there's some three elements to it really, so.
And then we're upgrading our whole maintenance to improve fleet performance, so on and so forth. So that, that's translated into $1.3 per ton increase. And drilling and training, clearly, training is gonna be key with the implementation of the capital projects, so we are investing in that. But the benefit of those lower electricity prices of around $4.5 per ton that we're seeing there as well. And realization costs, that includes those treatment charges, but we also had to transport our concentrate a little further afield than we had in the previous year, particularly the lead concentrates, and that's added around $700,000 to those costs, and that translates into that realization cost down at the bottom. Second last line of your slide there.
So still a healthy margin, at just under 40% at Sasa, 39% for a lead zinc mine, given where the zinc prices were, through the year, we think is a really good result. Talking a little bit more about that investment in the business, CapEx for 2023 was $27.8 million, which is just about within guidance. I think we guided $28 million-$30 million for the year. And that includes sort of four key items, really. It's sustaining CapEx at each of the assets, two of those items. Underground development at Sasa, flotation equipment that we've upgraded, and in underground mining equipment, we've had some fleet replacement there, totaling around $8.7 million.
Kounrad sustaining CapEx, you know, is irrigation and dripper pipes, some down payments on anodes and a few other costs. Still within that $1.2 million that we generally guide at Kounrad. And in the power project, we've spent $3 million this year on to complete that power project, which has been a fantastic result for us. It's already sort of paying us off with you know, producing some electricity for the plant, even through the winter, and it will reduce our greenhouse gas emissions by around 10%. And last but not least, transition to the paste fill mining. These are paste backfill plant and including underground reticulation. That's come in at $3.3 million for the year.
Central decline, which is a new access into the mine, which we sort of made operational in May 2023, $2.8 million. And the dry stack tailings plant, which is currently under construction, we spent $7.5 million last year on that, and we're currently guiding $22 million-$24 million for next year's, for this year's CapEx, so. Balance sheet, look, it's a really strong balance sheet. We're really fortunate here, being a cash position of $56.8 million on that balance sheet. That restricted cash really relates to some rehabilitation requirements in Kazakhstan. The only big movements you'll see on that balance sheet are additions to PPE. That is related to those capital projects that we mentioned earlier, the solar farm, plus the transition projects.
And then, also, you will see in other assets, there's a few interesting items in there. We overpaid income tax by $6.8 million through the year, so that's in that line item there. There's some trade in other receivables, and our stock levels are up at $14 million. So, that's sort of work in progress, plus also a little bit of stock carried over at Kounrad and Sasa. And then also some prepayments on the equipment for the transition projects of $2.3 million. So, overall, excellent-looking balance sheet. We're very happy with that at the moment. And then moving on to my last slide, which is the cash flow. You can see cash generated from operations, $93.9 million.
The investments to our shareholders, really, in terms of those dividends at $41.5 million, and CapEx at $27.8 million. We are seeing taxes a little bit higher, and I've talked through all of those, which leads us to that, $57.2 million in cash at the end of December 2023. Free cash flow number, $57.5 million. For those of you who don't recall, we calculate that taking our net cash from operations, which this year was $66.4 million. We deduct any additions to PPE, which came in at $10.7 million. We received some interest of $1.9 million. There's a couple of intangible assets that we've invested in as well, particularly the exploration in Kazakhstan. That results in $57.5 million of free cash flow generation for the year. On that note, I'll hand back to Nigel to talk through operations.
Thanks very much, Gavin. So just a little bit more detail on the operations, how they performed. If we look at slide 19, this is our standard aerial photograph of the Kounrad mine. Not a lot really to add. I think most people have seen this several times, see the eastern dumps and the western dumps there. We are primarily leaching on the western dumps now as we transition, and have been since 2017, transitioning over to those western dumps. We estimate close to 100,000 tons recoverable copper still remains in the dumps. Next slide, please, Emma. Just a few statistics. We probably touched on these, so I won't bore the audience any more with them. As I say, we're operating in the western dumps primarily, but still leaching the eastern dumps. And we are having more success than the planned 42%-51% as we go back to some of the areas on the eastern dumps and level some of the slopes and actually acquire some more copper from them. Small amounts, but all marginal improvements at very low cost.
You can see, if you look back, all the way back to 2016, we've been hitting around about 13,000-14,000 tons of copper production from this waste ore on a quite a disciplined manner, and we've got a life of mine, as I said before, out to 2034, so another 10 years. Next slide, please, Emma. One of the things, just to emphasize, I think we've, again, already talked about it, but one of the projects that we developed in-house primarily, there's a little bit of external assistance, but we built it in-house with our own staff and sourced the equipment, obviously, is this solar power farm. We completed it on time and below budget. It cost us $3.1 million. We budgeted more than that, so a great testament to the cost discipline of the guys on site. It is operational now. You can see the bar chart on the right-hand side. It's been operating since November, when we officially opened it. And it's gonna potentially reduce our Scope One and Scope Two greenhouse gas emissions in country by around about 10%, and provide around about 16%-18% of the electrical requirements of the plant. Just moving on, please, Emma, into again, another year of a lot of activity at the Sasa zinc and lead mine.
And just to remind the audience what that is, this is in North Macedonia. It's a skarn-hosted deposit in the northeast of North Macedonia. Underground mine, very different to the Kounrad operation, and historically, when we acquired it, it was a sub-level caving operation, and we've taken time out to assess that, understand what's going on further down in the ore body as we go lower with geotechnical stresses, and decided to transition to a combination of cut-and-fill mining and long hole stoping, both of which will use high-density paste fill. And the infrastructure to support that transition will be completed this year, and I'll touch a little bit more on that in a minute. We have reserves and resources and a life of mine out to 2039 at Sasa. Next slide, please, Emma. So just to emphasize, it has been a busy year at Sasa.
Not only did we reach our, or hit our Sasa zinc and lead guidance, and you can see on the table to the right, we produced around about 805,000 tons of ore, which all fed through to the plant, and you can see the zinc metal produced from that at a recovery of around about 85% and 93% for lead, producing 20,000, just in excess of 20,000 tons of zinc and close to 28,000 tons of lead. As I say, it's also, t hat's alongside developing the projects and the infrastructure required to transition to paste fill mining. And just to remind the audience why we actually went down this path, there's probably four key reasons for it, one of which is the maximum extraction of mineral resources. It's, it's a more accurate mining method, and as we go lower down in the ore body, some of the lenses are becoming narrower, and therefore, it'll allow us to minimize the, minimize the dilution and enhance the recovery of metal from the metal that we're actually mining. It has extended the life of the mine out to 2039, the fact that we're able to do this mining methodology.
And also a key requirement early in the, in the decision-making process was the additional tailings storage on, on surface, and thereby minimizing the environmental impact. We will, in future years, be storing our tailings in three ways, one, in the underground voids, also in the dry stack tailings facility, and using a lower level of volume going into the wet dam TSF4, as we call it, which we finished off when we acquired the mine. It will provide a safer operating environment for the employees underground. Just moving to the next three slides, really, just a bit of an update on where we've got to on the three elements of this transition project. Just to remind you, that is the paste backfill plant, dry stack tailings plant, and also the central decline, sorry. On the paste backfill plant, we've now completed the construction. It is fully operational, fully commissioned. The reticulation system, which is the pipework, effectively, to take the paste to the underground mining areas, is more or less complete, about 97% installed for phase I. We have 16 staff to man the plant. They've all been fully recruited internally and they're going through training as we speak.
I think approximately 10 of them are fully trained. The other six will be trained in the next month or so. We're ramping up our operations slowly and introducing cement into the system to a 24-hour-a-day operation. Underground, the paste fill mining, we have crews established, and the training has begun. The cut-and-fill stopes have been mined on the 800 level, and I've already mentioned the reticulation. One area where we've had a slight delay is some of the boreholes for introducing paste into those areas, but we expect to complete that during the course of this year and probably into the first half of this year. So good, good advances on the paste backfill plant. Slightly behind on the dry stack tailings plant, but more or less in line with our plans, and we intend to complete this part of the project this year. Most of the equipment is on site. We've done the earthworks, and we've laid the concrete. Many of the steelworks have been erected for the actual plant, and also the warehouse to store the cake. The separate part of it is the landfill, where you actually place that cake in a very engineered form.
The vegetation has been cleared for that, and we're on track for actually starting cake placement in 2024, and dry commissioning should commence towards the end of H1 2024 for both parts of it, both the plant and also the landfill, as we call it. And last, but certainly by no means least, the central decline. We holed through from the surface to 910 level in May of this year, so that really effectively completed phase I. During the course of the year, we constructed a decline of about 1,056 meters were developed. And the reason for the central decline is it will improve the ventilation, you can see some statistics there, and also it'll improve the productivity by reducing the haulage time of the ore to the surface, 'cause it'll be shorter distances to which to truck that ore. We've also took the opportunity to put a new paste fill reticulation line into the new central decline, which will be used in the future. Next slide, please, Emma. So that's, that's a lot of work that's been going on on-site at Sasa for the transition project. We've also been quite busy on drilling on-site, and just to remind everybody, at Sasa, there are effectively three ore bodies.
The one that we're currently operating in is known as Svinja Reka. That's the one off to the left you can see there, and we're going down below the 800 level as we speak, and operating in 990 and 910 level. But to the right of it, Kozja Reka and Golema Reka are historically mined areas where we feel there's some potential for additional ore as we go lower. And so we've done approximately 9,500 meters of drilling this year onto those three ore bodies to try and explore and find more ore for the future. And if you just go to the next slide, Emma, and this is my last slide on the operational side. You'll see we're having a bit of success on that, and our Sasa resources and reserves, if you allow for depletion over the course of the year, of around about 800,000 tonnes of mined ore that I mentioned before. We've had a slight increase in our reserves of about one million tonnes on a net basis, having taken that depletion into account.
So that's a result of the exploration work. We're looking for more material as we progress this year, and we've got around about 6,600 meters of drilling planned for 2024. Just one last note before I hand over to Louise to talk about business development and growth of the business. Since 2017, when we acquired Sasa, you can see the statistics at the bottom. Through our drilling and exploration work, we've increased the reserve tonnage. It was 10.9 million tonnes at the time. We've actually depleted it by five million tonnes, but we're looking now at nine million tonnes. It's about 3.1 million tonne overall increase in the Sasa tonnage during our ownership. And on that note, I'll now hand over to Louise to go through sustainability and growth of the business.
Thanks very much, Nigel. Yeah, so we're on slide 30. Yes, just wanted to touch on this slide really. Like many smaller mining companies, we've been on a really steep learning curve over the last few years with sustainability. While we understood what our stakeholders wanted us to report on externally, and while we sought ways to improve on key areas, effectively the already strong performance that we had on the ground. And we're really pleased this year to note that the strong position that we believe we're now in has been reflected in the ratings that we've got, particularly for key ratings companies, MSCI and Sustainalytics. And our ratings have improved gradually over the years that we have been putting our sustainability reports out.
So, we're very pleased with our performance there. Just on to slide 31, just a few key highlights on our sustainability performance in 2023. Environmentally, we've had a great year. We've completed the solar power project, and, for the first time, we've worked on estimating our Scope Three emissions, and there's much more detail on that in our forthcoming climate change report. We also began work on a corporate biodiversity strategy, because we know that that's an area that lots of our stakeholders are becoming increasingly focused on. In terms of health and safety, we also had a good year. We had one LTI.
Clearly, one is one too many, but it is an improvement on last year's performance, so 2022's performance, and also, we beat our target, which was for LTIFR below 1.41. And finally, in terms of our charitable donations, we've doubled our commitment to the foundations that we've got during 2023, and we spent the year focusing on long-term sustainability development, and also supporting immediate needs in the local communities as well. We skip 32 and move to slide 33 to give you an update on our business development activities. Business development remains a top priority for CAML right now.
As you've heard from Nigel and Gavin, we've got a strong platform from which to grow, and we've got two really good quality, long life, low cost operations that generate significant free cash flow from us. We've got a strong balance sheet, and we've got no debt. In terms of our strategy, what we're looking to do, that remains the same. We're focusing primarily on base metal opportunities within the European time zone. We're ranging from early stage exploration through development, through to production opportunities, and we continue to look for those larger transformational opportunities to move the business forward. We're really pleased that in the last two sets of financial results that we have, that we've presented to you, that we've been able to discuss two business development transactions that we've undertaken within the period.
So if we look back to our interim results that we presented to you in September, just to give you an update on CAML Exploration, or CAML X, as we are referring to it, that subsidiary is now fully set up. We've got now our ownership set up at 80%, and our exploration partners have a 20% ownership. And since then, we've been making several applications for licenses in Kazakhstan, two of which we've obtained, and there's another six applications which are underway. Moving on to the next slide, 34, and then moving on to a separate announcement that we've made this morning. We're delighted to announce that we've agreed to make a proposed investment into Aberdeen Minerals this morning. This investment is going to be in two stages.
It's initially a GBP 3 million investment for a 29% interest in the business, and then we also have a warrant to invest an additional GBP 2 million, and that would take us to 38% ownership. We've been really impressed with the Aberdeen team, particularly the CEO, who leads the team up in Scotland, based right there, next to the operational site, the exploration site. So Aberdeen's got what we believe is a very promising copper nickel project called Arthrath. We've already seen encouraging geophysics and drilling results from that project and the team's got a very compelling exploration model, which focuses and looks for higher grade, increasing grade nickel and copper sulfides at depth. In addition to that, there's also a district scale exploration opportunities available to the Aberdeen team as well.
In terms of the funding that we're going to provide, that will enable the team to drill around 10,000 meters at Arthrath, and dependent on results from that, they'll also look at update or undertaking a mineral resource estimate, and also potentially a scoping study as well. So just to wrap up our presentation today, we just want to reiterate, we've delivered a very strong financial performance during a period of lower zinc prices year-on-year. Looking further out towards the rest of 2024, this year will be truly transformational year for us. We will have completed all three of the main components of the Sasa capital projects, and we will be well on our way to a solely paste fill mining operation there, with only sustaining capital investment then required for the long term.
At Kounrad, we expect to deliver consistency of performance there, and also to increase the renewable power component, as the full potential of this $3 million investment into the solar power plant comes to fruition in the summer months. And finally, we look forward to hopefully some exciting exploration results at Sasa, at CAML X, in Kazakhstan, and also from our investment with our new partners at Aberdeen Minerals. And of course, we will continue to look for that major transformational acquisition, which will really set CAML for a real positive step into the future. On that note, I wanted to hand back to Sergey, and we're ready to take any questions that you have.
Thank you very much. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. If you wish to cancel your request, please press star two. Again, please press star one to ask a question. Now, the first question comes from Marina Calero from RBC Capital Markets. Please go ahead.
Good morning. Thanks for the call. I have a couple of questions. The first one is on your investment in Aberdeen Minerals. Assuming the exploration results are successful, when do you think we could see the scoping study being completed?
Thanks very much, Marina. The investment, the initial $3 million, and then the $2 million warrant, that would fulfill a budget for Aberdeen for approximately 24 months. So all being well in terms of the exploration, we would expect to see that MRE and the scoping study within the 24-month period.
Okay, that's very clear. And then I have another question on your cost. I know you don't provide cost guidance, but can you give us a bit more color on how you expect your receiving costs at Kounrad and your cost per ton at Sasa developing during the year?
Yeah, I mean, as, as you say, we don't, we don't necessarily provide cost guidance on this, but if we, s o we don't expect any, any changes at Kounrad, really. I think we've given the production guidance there, and, you know, it depends what- you know, I think we've got, you know, most of those cost inflationary sort of pressures I was talking about earlier are now sort of embedded in that, that operation. At Sasa, the only areas where we may see a little bit of additional cost now is in the operation of the paste backfill plant and also the dry stack tailings plant. Yeah, yeah. I mean, that's, that's two elements that we didn't have in the, in the mix before, but again, those are kind of, you know, in the sort of single figure dollar per ton range.
But at a macro level, Marina, what I would add is that we are seeing inflation in both countries coming down slowly. Still, I think we've put a headline figure there of around 10% for both countries, but we're seeing certainly North Macedonia, it's coming down, and electricity has been a big beneficiary, and we hope it continues that way. But, likewise, in Kounrad, we are seeing inflation declining, as everybody is around the world, to be honest with you. We expect to hopefully stabilize our costs after what's been quite a difficult couple of years, really.
Okay. That's very clear. Thank you.
Thank you, and as a reminder, to ask a question, please signal by pressing star one. Our next question comes from Richard Hatch from Berenberg. Please go ahead. Your line is open.
Thanks very much. Sorry if I missed that just off the back of that last question, just on cost inflation. Should we be sort of pushing in, like, a few percentage points of just real cost inflation, or are you expecting them to stay flat? Sorry if I missed your answer on that one.
Well, I wouldn't say flat. I think that'd be a bit optimistic, if I'm honest with you. Certainly, we, you know, a few percentage points of inflation cause it's still there. And to Gavin's point, we, we would expect a, a level of, of cost through managing on a full year basis, or six months maybe for this year, and the following year a full year basis, the paste backfill plant, plant and the dry stack tailings plant. T hey are transitional projects. The challenge we have at Sasa in that sense is transitioning, because there are areas that will become redundant in that operation b ut it takes time to actually take that cost out of the business while you're incurring the other costs. So we'll have to manage that tightly. So we'd expect, you know, smaller levels of inflation maybe than this year, but there will be some cost rises.
Okay, helpful. Thanks, Nigel. And then just on treatment charges for the lead and zinc into 2024, can you just give us a bit of a steer on what you're seeing on that one, please?
Yeah, sure, Richard. I think, I think the benchmark chat at the moment is that zinc is gonna come off quite significantly and lead is gonna remain more or less flat. So we do expect to benefit from that reduction in zinc TCs, and that's as a function of a little more smelter capacity opening up in Europe post the sort of peak of the energy crisis there. And we're also seeing some of the mines that were shut down as a result of that zinc price coming off that I mentioned, you know, having been restarted. So there's certainly some fundamentals behind that lowering of the zinc TCs.
Yeah. Okay, cool. And then just on the extra $2 million that you can invest in Aberdeen through the warrants, is the kind of, just listening to your kind of 24-month kind of story about the scoping and such like, is that more like a, you know, the $2 million exercise of the warrants is, you know, post-drilling 12 months down the line? Is that the way we should kind of think about it?
Yeah, basically. I think, I think the GBP 3 million takes them to around about 15 months. But yeah, it gives us an opportunity to assess the work to date, and for us to reappraise the investment. But all being well, we would intend to spend the full GBP 5 million with, with Aberdeen.
Yeah. Okay. Right. Fine. And then just, I mean, just more broadly on the business development, I mean, you kind of talk about we're still looking for that transformational deal. I think, you know, this one's interesting, but to your point, it's, you know, quite early stage and perhaps higher risk than a, you know, higher risk, but, you know, lower ticket sized than, you know, a more significant transaction. Where are we in the more significant transaction sort of journey? Quite a few e quity stories have been derated, right? There's some quite cheap, well, quote, unquote, cheap, projects out there that could fit your target ranges. You know, is the price still the factor or the issue factor, or, you know, where are we on that journey of that third asset, please?
Sure. No, absolutely. Actually, you know, where we are on that slide 33, where I sort of talked about our overall strategy, we put our usual stats on there in terms of the opportunities that we'd appraised, the NDAs we signed. But I think really what I would point you to is the differences year on year, is the number of site visits that we've undertaken, and the amount of money that we've spent on using external consultants, which Gavin also referenced in his finance section. So we made seven site visits in 2023 versus two in 2022, and we also used external consultants. So that's technical consultants, legal, those sorts of aspects, for four opportunities last year. And we've started, I think I can say we've started 2024 with a strong pipeline of opportunities as well. Obviously, we can't be confident that any of these come off, but a lot of these would be these larger transformational type opportunities. We are genuinely very excited about the future with Aberdeen, but totally acknowledge that we're still looking for that larger transformational opportunity, and that remains our core focus.
Okay. Understood. Thanks, team.
Thanks, Richard.
Tim Huff, Canaccord, please go ahead.
Yeah, thank you very much. Just following up on Hatch's last question there on growth. Your slide number eight in the presentation goes through strategic objectives, second of which is a prudent capital allocation strategy, and ostensibly, you mentioned dividends in there.
Yep.
I was a little bit surprised to see delivering growth at the bottom of the list there as a longer-term strategic objective. And even on that slide 17, where you, you know, you take the, the operating cash flow and then, go through where that's been invested over the past year, the first thing that comes off of there is the dividend. So I guess the question is: What, what are your capital allocation priorities? I mean, usually, it's a net OCF, and you usually see, sustainable CapEx coming out of there, and then internal, external growth opportunities, and then excess cash returns last. So I was wondering if you could go through or just remind us what your capital allocation priorities are.
It's a good question, and please don't be misled by the optics of one particular slide. I think, actually, internally, we did discuss maybe that goes at the top. I think certainly in our minds, as to the hardest thing to deliver is that particular bullet point, the delivering growth through the more transformational opportunity. I think what you've seen this morning is that, you know, whilst we still look for that transformational opportunity, we are, you know, and we want to deploy capital into that, that, the growth projects, we are prepared to both invest it in our own operations, in earlier stage operations, and importantly, back to shareholders, where we haven't got the money to spend on necessarily at the moment.
The transformational opportunity will be something that requires raising of equity, we suspect, and also debt, a combination of both, really, depending on what the opportunity is. So I think the message we're giving out today is that we still have strong cash flow, and we wish to deploy capital to, you know, and allocate it properly. And it's always a balance, isn't it, between internal external growth, as well as giving back to shareholders. And hopefully, we're getting that balance right, whilst we're still very active, looking for the growth opportunity, which is obviously harder than investing in earlier stage exploration opportunities, where we're just using our own balance sheet to invest in. The focus is very much, as Louise tried to emphasize, that we are active in the market, and we want to find the right opportunity to enhance shareholder value.
That's very true. Can I just have one follow-up question on that then?
By all means.
I guess I was just wondering how you view the cash versus dividend, the cash levels versus dividend balance, because I mean, obviously, if you're looking for that longer-term growth opportunity, and you mentioned raising equity, you probably want to build your cash balances were that to happen, so you issue less equity. But I guess, what's the maximum level of cash you really want to hold on the balance sheet? And do you use the dividend as the outflow to maintain that cash balance, i.e., if you have a really good year or a good couple of years like we have forecast, does that dividend actually go up instead of coming back?
It's a good question, actually. I think in terms of, I'd let Gavin answer as well, actually, because in terms of what's the maximum cash on the, c ertainly, from a minimum cash, we tend to look at how much do we burn each month, look at the number of months we feel. So we'd probably say a minimum cash level will be around about, for the current operations, maybe $30 million, that kind of level. Maximum cash, I mean, it's a nice problem to have, isn't it? We hope that in the future, even paying back strong dividend returns will still grow the treasury side of it, whilst we're looking for this major growth opportunity.
Yeah. I think there's no metric, Tim, on a minimum cash level and then pay everything out.
Yeah.
I think that's key. And I think, you know, when we discussed the dividend that was announced today, that was discussed in the context of what are the other needs of the cash, and what is the cash generation of the business going to be over the next 12-24 months. And we were confident enough that there'd be more than enough cash to finance things like Aberdeen Minerals, you know, exploration in Kazakhstan, finance the continued capital expenditure at Sasa and at Kounrad, plus also end the year with a very healthy cash balance. And as Nigel said, that becomes a slightly different sort of issue to discuss and contend with.
Yeah.
But I think it's a first world problem, I think, in the vernacular today.
Yeah. I think there's a recognition, Tim, that we don't know where this transformational opportunity will come from, how much it'll cost, what size it'll be. We hope it'll be of the size of a Sasa or more than that, to be honest with you. But looking forward in the current operations, we are coming to the end of a capital program, and we see light at the end of the tunnel on that, and ongoing sustaining capital, which is more than manageable within the cash flow generation of the business. And I'm very confident in the metals that we produce. I mean, the world's gone through very inflationary environment, and I suspect the whole world's cost base has gone up by 15%-20%, and that can only be good for the metal prices into the future. If we can contain our costs, then we'll be generating even better cash flows for the future. So I think it's a sign of confidence and trying to get the balance right on how we allocate capital for today with an eye to the future as well.
Okay, that's really helpful. Thank you.
We will now take our next question from Oliver O'Donnell, from VSA Capital. Please go ahead.
Good morning. Thanks for taking my questions. Just two things. Sasa, I think said in a medium-term target of about 88,300 tons a year for three plus. Now you've done a bit more drilling, further progress in the decline work. Are you able to give any more color on what the route to achieving that looks like and whether that's still the case? And then on Aberdeen Minerals, will you be able to do any network as part of the drilling? Would that be included in the scoping study, or is it very much likely to be a sort of desktop study? Thanks.
Well, I'll answer the first bit. I'll probably answer the second bit, but I'll let Louise answer that. She's closer to Aberdeen than I am. But on the first bit, the 830 still remains the target, Oliver, in terms of output at Sasa. This year, obviously, we're still completing the transition, still got work on the infrastructure and the, and the dry stack tailings plant. As I mentioned, still completing off the central decline, but over the next couple of years, what you'll see is that instead of only 30% coming up through the declines and 70% through the Golema Reka shaft, that will transition over to ultimately 100% coming up through that new central decline. We're developing the phases, as we go lower in the ore body.
We have the flotation plant with probably a constraint of about 850,000 tonnes per annum. So all those factors taken into consideration, our realistic aim at the moment is to get up to 830,000 tonnes, and I think you'll see us do that in the next couple of years as we ramp up production, and we finish off the transition, and move completely to... Well, sorry, that's not strictly true. We will still be doing sub-level caving for a couple of years, but there will be a higher level of, you know, paste fill mining being done in the lower levels of the ore body, the ore body.
Yeah, in terms of, of Aberdeen and the question on the metallurgy, yes, the simple answer is yes, there will be. In fact, Aberdeen was able to get, a grant funding, a portion of grant funding from the British government, from a group called the Automotive Transformation Fund, and that's specifically to look into, quite innovative metallurgical test work for the, for the nickel and the copper, and the- copper and the cobalt ores there, particularly looking at, hydrometallurgical-type solutions for those as well. So that work's underway, and yes, that would form part of any, financial studies, to be done in the future.
Great. Thanks very much.
Thanks, Oliver.
Thank you. And if there are no further questions at this time, I'd like to hand the call back over to Nigel Robinson, Chief Executive Officer, for any additional or closing remarks. Over to you, sir.
Well, thank you very much, and thanks to everybody for attending and also the questions. And I suppose, just in summary, really just to emphasize what Louise mentioned, that, you know, our outlook for this year is to finish off on the transition projects at Sasa, to strengthen our two operations there, and we develop them for the future. But a continued focus is on growing the business and looking for that transformational opportunity. We have a really solid base to build from, but the challenge really is to find that operation- that transformational, sorry, opportunity in the course of this year. We've got guidance similar to the previous years.
We expect to deliver on that guidance, maintaining the costs, and we'll be looking at the metal prices into the future, which in the early parts of this year, have improved both the zinc and copper as the some various supply constraints and demand starts coming through for those metals. So we look forward to an exciting 2024, and thank our shareholders and supporters for investing in the business in the past.
Thank you.