Good morning, everybody, and welcome to Central Asia Metals Plc's interim results for the period ending thirtieth of June, 2024. We've just gone through the standard disclaimer there. I've got the pleasurable task of just giving the highlights of the results summary, and you can see some numbers on screen there. In the period, we generated $103.8 million of gross revenue, with an associated EBITDA, that's earnings before interest, tax, depreciation, and amortization, of $49.1 million or a 47% EBITDA margin. That generated strong free cash flows in the first six months of $30 million. And I'm delighted this morning to announce that the board has approved a £0.09 interim dividend on that free cash flow for the first six months.
We maintain a strong balance sheet position. We have cash in the bank of $56.3 million as at the half year, and we are debt-free, and also, we managed the business in a very safe manner in the first six months, with a lost time injury frequency rate of 0.8, and that represents one, sadly, one too many, but one LTI at our site at Sasa. Just turn to the next page, please. Succession planning. Just post the period end, we announced the something we've been working on for a while, actually, in terms of succession planning for the executive team, and I'm delighted to say that I'll be handing over to Gavin Ferrar here as the CEO in about three weeks' time from the end of September.
Over the past two months, we've been doing a handover, and Gavin's been taking more responsibility for the business. And likewise, I'm also delighted that Louise is stepping up to being the Chief Financial Officer from the first of October as well. I have to say, it's been a pleasure and a privilege for me to have been the CEO for the last six and a half years, and prior to that, the CFO for nine years. And I'm also delighted that I'm staying with the team to help Gavin, Louise, and the rest of the team as we go through challenging periods in terms of trying to grow the business.
I believe I'm handing the business over in a strong position, and so without any further ado, I'll hand over to Gavin, Gavin and Louise, should I say, to take you through the details of our first six months results.
Yeah. Thank you, Nigel. And before I jump into those results, I think, you know, on behalf of everybody, all our stakeholders, shareholders, communities, staff, et cetera, just wanna thank Nigel for doing a fantastic job, in his tenure as CEO, and prior to that, CFO. I think, you know, he's right. He has left the company in very good shape. So, I'm very privileged for the two of us to be taking it over from here. Thanks, Nigel. Yeah. Right, onto the operations, if we can... Yeah, can we go to the previous slide, please? I think, yeah, there we go. Thank you. Just to remind you, we've got two operations. Kounrad, in Central Kazakhstan, is the foundation of our business.
It's been in production for 12 years now, with a life out to 2034. We produced 6,608 tonnes of copper during H1, and are on track to achieve guidance of 13,000-14,000 tonnes of copper there. Sasa, which we bought in 2017, the underground lead zinc mine, has a life of mine out to 2039. In H1, we produced 9,014 tonnes of zinc in concentrate and 12,872 tonnes of lead in concentrate. Again, confident we're gonna achieve production guidance, which is set out on that slide, of 19,000-21,000 tonnes of zinc, 27,000-29,000 tonnes of lead. If we go to the next slide, please, we'll break that down into the separate assets.
At Kounrad, we've achieved steady production since we completed our expansion in 2015, which is shown in that histogram chart on the bottom left there. And they've produced over 160,000 tonnes of high-quality copper from that operation. We're constantly looking to improve efficiencies and recoveries there, and that's been shown in the Eastern Dumps , where we've essentially overperformed in terms of the initial production recoveries that we looked at when we first set out on this journey, and continue to look to improve those productions. But as I said earlier, you know, very much on track to achieve that 30-40 thousand tonnes.
You'll all note the seasonality of the production that we have at Kounrad, so second half is going to be higher than that 6,608, getting us comfortably into that guidance range. Now, to the next slide, please, for Sasa. With the transition to paste backfill mining, H1 was always going to be at a lower production run rate, which is reflected in the first line of that table there. We're around 30,000 tonnes light in the prior comparative period.
But, whilst we see those rates increasing in H2 to the annualized rates that we're looking to achieve, some challenges remain, but we do, as I say, remain on track to achieve that guidance range of 19,000-21,000 tonnes of zinc and 27,000-29,000 tonnes of lead. You can see that we've had fairly consistent production at Sasa since we've owned it, and you can see that consistency in the table on the right-hand side, where the grades remain more or less consistent. And, you know, aside from those H1 challenges around the transition to the paste fill methods, we are seeing, you know, good production run rates coming through there. So again, guidance well in range. We talk about those transition projects a little bit more.
Firstly, let's remind ourselves why we're doing these. Firstly, more efficient extraction of the resources, using much more selective mining methods underground. We've stretched that mining life out to 2039, with the implementation of these paste backfill methods. It's a much safer underground environment for our staff, as Nigel says, we do try to operate in the safest manner possible. Third, not least, is the tailings deposition strategy has changed completely, with the implementation of paste backfill, accounting in future for around 40% of the tailings going back underground. We've already put 130,000 tonnes of tailings underground in H1, and the dry stack tailings as well. So just breaking those down into the three components-...
Paste backfill plant up and running on a consistent run rate now. You'll recall in H1 earlier this year, we were going through commissioning. That plant is now commissioned. We've tested a variety of cement recipes and in placing around 30% of our tails for the H1 period has been placed back underground. As I said, 130,000 tonnes of those tailings back underground. We are filling voids from past mining, plus also our first stopes using the new paste fill methods. All is going on track as far as that's concerned.
Dry stack tailings, the dry stack tailings plant, as you can see in that photograph there, we expect to complete construction of that plant in the next couple of months, with filter cake, being placed onto the dry stack landform by the end of the year. The final element to the transition projects is the Central Decline . We have done around 3,300 meters of development on that to date. The connection has been made with the 800-meter level, and we expect to extend that, that decline to the 750-meter level by the end of the year. That's going to improve our haulage efficiencies, reduce personnel traveling times, and also improve ventilation at the mine.
So all three of those elements on track, for completion, well, at least the dry stack tailings and the decline for completion by the end of the year. Now, moving on to the sustainability aspects of our business. We break these down into, the five pillars, of our sustainability strategy. These are delivering value through stewardship, maintaining health and safety standards, focusing on our people, caring for the environment, and creating value for our community. To date, or in the H1 2024, we've gone a long way towards achieving those goals. We published our fifth annual Sustainability Report . Those are to GRI Standards . We've published our third annual Climate Change Report . We've started a comprehensive review of the group's health and safety culture.
We've also committed to conducting a human rights impact assessment, and we'll do that every three years going forward, and also continue with an internal assessment of our supplier screening process, and have produced a supplier code of conduct, which we provide to our suppliers and ask them to comply with. Sustainability efforts are mainly focused on our sites, as you would imagine, and at Kounrad, we've had no LTIs since 2018, so operating a very safe environment there. Importantly, the solar power plant, which we announced the completion of in November last year, has produced around 15% of our power consumption for H1 2024. Now, those are through some pretty harsh winter months, and you know, right now with the summer there, we're producing a lot more power.
A greater proportion of power is coming from that, power plant, which is, great news, and it's also allowing us to reduce our greenhouse gas emissions at that site. There was some flooding in, in Kazakhstan, which you may have read about in the press. We've donated $100,000 to support those communities that have been affected by the flooding as part of our wider sustainability program there. But through the Kounrad Foundation, where we allocate, around 0.5% of our revenue every year, we have a number of initiatives underway there. Some of them are more simple. We've donated, antenatal monitors and fetal monitors to the local hospital, and donation of musical equipment and books and furniture to the schools. But two sort of more long-term projects are underway.
One is a renovation of a youth center in the town of Balkhash, and the other one is supporting a STEAM program within the local education community. That involves sponsoring of teachers and equipment to develop pupils in those key science, technology, engineering, arts, and math streams. Moving on to Kounrad with a sustainability similar strategy we follow there. We did, as Nigel said, sadly, have one LTI at Sasa. Fortunately, it wasn't a serious injury, but, and even though our LTI FR, our frequency rate of injuries remains below our target, we take each of these incidents very seriously and take as many learning points as we can from them. Very proud to achieved conformance with the Global Industry Standard for Tailings Management .
That was slightly post-period end, but a lot of hard work went into that over the last year. This was a voluntary initiative embraced by the staff on site and also at head office, and we're very proud of what they've achieved for a company of our size to achieve conformance there. Sorry, we've jumped forward a few slides. Can we go back? Thank you. Again, we have the foundation at Sasa, similar amount of money being paid into that to fund local community programs.
and there, we've basically paid for a renovation of a local kindergarten, with some new furniture going in there as well, plus also, again, on the medical front, X-ray machine donated to the medical center at Makedonska Kamenica, and we continue to look at longer-term programs that we will hopefully implement over the next few years. Now, it's a great pleasure. I hand over to Louise, who's gonna take over-
Yes
... the previous role as CFO, to run you through the financials.
Thank you, Gavin. Okay, so if we can start with looking at the market conditions that we experienced in the first half of this year, that obviously affected the financial results that we've reported this morning. Firstly, in terms of commodity markets, we had generally supportive commodity prices during the first half of the year, particularly positive sentiment for copper, and that was particularly driven from financial markets, and all in all, we received a copper price that was 6% higher than the first half of 2023, a lead price that was 3% higher, and the zinc price ever so slightly lower at 1%. In terms of inflation, the global inflation that rose significantly in 2022, we're starting to see that slow now.
For the first half of the year, we had inflation in Kazakhstan of just over 8% and just over 3% in North Macedonia. In terms of the currencies that affect us, for our operating currencies, there was a weak tenge in the first half of the year. This typically helps our Kounrad costs in dollar terms, and then also we saw a weakening of the US dollar relative to sterling. That has two impacts on us, particularly. Firstly, it increases our group admin costs, and also it increases effectively the cost of our dividend because we receive our revenue in dollars. We now move on to look at the income statement for the first half of this year.
We delivered EBITDA of $49.1 million at a margin of 47%. This was pretty much identical to the first half of 2023, but that was driven by a gross revenue increase of 4% versus an increase in cost of sales of 5%. In terms of the revenue, this was predominantly due to increases in revenue from Kounrad. We sold slightly more copper, but as I said, at a 6% higher price. In terms of Sasa, increases in our lead revenue were pretty much exactly offset by lower zinc revenue. Cost of sales, I'll talk about that in more detail on the specific... the site-specific slides. So, just talking about the group admin, group admin costs increased by 12% or $1.5 million period on period.
There's a couple of larger items in there just to point out. One was a larger-than-normal employees' National Insurance charge, which was related to share option exercises, and there was also increased business development and also exploration costs as well of $0.3 million during the period. You'll also see on the income statement that there's a quite big swing in foreign exchange. It's a swing of a positive swing of $3.4 million when compared to the first half of last year, and that's primarily due to the weaker tenge that we discussed in terms of market conditions. Then, all in all, we ended the period reporting EPS of $0.1314, and that was a 15% increase on that which we delivered in the first half of 2023.
Here, we just show a waterfall chart, which just shows the, the movement, which, as we've discussed, was very, very limited anyway. So we've got first half of EBITDA for 2023, $48.9 million. The next three columns just show the increase in copper revenue, increase in the lead revenue, and the fact that the decrease in the zinc revenue was really offset that lead revenue that we discussed previously. This chart does also show a positive $0.6 million impact on slightly lower treatment charges and also lower freight as well. All in all, we reported the $49.1 million EBITDA at the 47% margin. Looking at the cost specifically for the two sites, our C1 cash cost for Kounrad was $0.78 per pound.
This represents a $1.3 million increase in absolute terms, and of that, almost 40% of that is related to payroll, and that's really us doing our bit to support our employees through times of extremely high inflation in Kazakhstan. As a reminder, in 2022, inflation in Kazakhstan was about 20%. In 2023, that was 10%. So it's coming down, but inflation is still a factor and does affect our employees there. There was also an increase in the price of some of the key reagents that we use for, particularly for the solvent extraction part of our processes, and also a slight increase in electricity costs.
Interestingly, the increase period on period in terms of the tariff was about 33%, so it really is due to the solar power plant that we've only had a $0.01 per pound increase in electricity, so all in all, a good result at Kounrad in terms of the cost, and it remains an extremely high-margin operation with a margin of 72%. Moving on to Sasa, and starting with our run-of-mine costs, which we always report, those came in at $63 per tonne. That looks like a significant increase on the first half of 2023, which was $56 per tonne.
But the main point there is $4.6 per tonne of that increase was all volume related because, as Gavin mentioned, our mining rate was around about 30,000 tonnes lower for the first half of this year than it was the first half of the previous year. So taking that aside, really, the bulk of the cost increase that we're looking at at Sasa is related to us now having run the paste backfill plant for a full six months, and that's cost us an extra $800,000 to run that plant. If we look at the Sasa C1 cost base, all in all, in absolute terms, the cost base has stayed pretty much exactly the same.
That reflects a slight increase in the site base costs and also a decrease offsetting that by lower realization costs as well. In terms of the CapEx that we spent in the first half of 2024, our group CapEx came in at $8.3 million. That's broken down into $3.1 million project CapEx at Sasa and $5.2 million sustaining CapEx at both of the operations, plus $0.1 million for CAML Ex , CAML Exploration as well.
In terms of the development CapEx, there was a very small amount of that, $0.6 million, just finishing the commissioning, et cetera, for the paste backfill plant, and then $1.2 million for both the dry stack tailings plant and landfill and the Central Decline as we develop that down to the 750-meter level, which we'll do by the end of this year. In terms of our guidance, we gave guidance, we broke the guidance down into sustaining CapEx and expansionary CapEx. But effectively, the guidance range was $22-$25 million that we gave in January, and we still expect to be on track with that guidance, notwithstanding the fact that we've only spent the $8.3 million in the first half.
And that's really due to some quite significant purchases we still need to make in the second half, and also completing some work streams, particularly on the dry stack tailings as well. We are reiterating the same CapEx guidance for the business for the full year. Onto the balance sheet. And probably the most exciting thing that's happened to our balance sheet for some time is our investment in Aberdeen Minerals, which we concluded at the end of May, and that's given us a 28.7% position in the business. And that's reflected on a new line of our balance sheet called Investment in Associate , and the figure there is the £3 million that we invested in US dollars, 'cause that's obviously the currency we report in. Other assets as well.
That also includes a valuation for the warrants that we've got for Aberdeen as well. So you may remember we've got GBP 2 million worth of warrants, which and that allows us to increase our position to 38% in the business if we're pleased with the exploration results. That's been valued the same way as Aberdeen values them by the Black-Scholes method, and that's also in other assets as well. And then really the only other thing to point out here is, obviously, we've got a strong and flexible balance sheet, very limited borrowings of GBP 0.4 million. That's just related to some overdraft working capital facilities that we've got with North Macedonian banks. And importantly, we have got capacity with those banks exceeding $10 million. And then just running through our cash flow.
We started January with cash of $57.2 million. We generated $42 million of cash from our operations. The £20.1 million dividend number, that's the final dividend that we paid in the first half for 2023, and that was 9 pence per share. Interestingly, with income tax and withholding tax paid at $8.2 million, that's actually $10 million lower than we paid for the first half of last year. So that's been a positive movement in terms of our cash flow. We see the $3.9 million investment in Aberdeen, which is the cost of that, plus some, the investment cost, plus some legal costs. And also, we've got there $3.9 million cash settlement of options.
That appears in cash flow from financing activities and therefore doesn't affect our free cash flow. And then we ended the period with $56.3 million worth of cash in the bank. For the first half then of the year, we've generated free cash flow of $30 million. I'll hand back to Gavin for the rest of the presentation.
Thanks, Louise, so let's start looking forward for the business, and I think if we jump onto the next slide, thank you, is the growth opportunities, and we spent a lot of time talking about these, and I think, you know, just wanna emphasize that we are still working very hard on finding the next asset for, for Central Asia Metals. We reviewed 23 potential acquisitions during the first half, and we've got a decent pipeline of opportunities under review. Key thing there is accretion for our shareholders. If they're not accretive, they just get thrown in the bin. Otherwise, we do go through a very formal process of, in certain cases, NDAs, due diligence, you know, site visits, et cetera, so all of those things have happened in the first half.
Can't say a whole lot more, but you know, we continue to search and have a decent pipeline. Louise mentioned the investment in Aberdeen of that three million pounds to get to 28.7%. She's also joined the board there, so giving us a voice there, even though we have a minority position. Key thing, and you can see in the top right-hand photograph, is that the funds that we provided have been used to put some drill holes into the lower parts of the target ore body, and visually having some very positive results coming out of there, with massive sulfides visible in over long intercepts in those drill cores.
So, pending the outcome of assay work there, we'll then look at potentially investing that additional GBP 2 million to further the exploration at Aberdeen. So very excited about that. Early-stage exploration in Kazakhstan, and this was really the first field season we've been able to undertake, and you can see from that photograph, there's not a whole lot on the ground there so very much ground truthing, some target generation, you know, very early-stage exploration. We are applying for some additional licenses, and next year will be largely, again, surface programs, geochemical and sampling, geological mapping, geophysical programs being undertaken with a view to establishing drill targets for 2026, really. So, early stage, but hopefully, we'll start building a pipeline of opportunities within Kazakhstan through that program as well.
Both at Aberdeen and at CAML Ex , I think we've got very high-quality teams that we're backing there, and that investment reflects not only the geological potential that we see but also the quality of those, those teams as well. So very active. Watch this space, I suppose is all we can say on that one. In terms of returns to shareholders, look, we've got a strong record of dividend payments, and that means we've paid to date around $360 million back to our shareholders, which is more money than we've ever raised from the market. I don't think there's very few junior mining companies that can say that, so it's something we can certainly be proud of.
We are debt-free, which means that we can be flexible with our balance sheet, and that's gonna support our growth aspirations. And as Nigel said, you know, very happy to declare that interim dividend of 9p, which represents 70% of our free cash flow. And we were confident paying outside of policy again this time because, you know, the board looked at the future cash flow generation of the business, the future prospects of the business, plus also in light of any sort of business development activities, and are confident that we can make that sort of return to our shareholders this time around. So can we go to the last slide, please? Which is just to summarise really what we've been saying through this presentation. We've had a really solid H1.
The financials reflect that, and looking ahead, we're on track to achieve guidance at both Kounrad and Sasa. We'll complete, you know, what's been almost three years now of project work at Sasa with that transition to paste backfill underway, and looking to complete the final elements of that by the end of the year, which is the dry stack tailings plant and the placement of dry stack cake onto that landform. Capital allocation priorities moving forward, we'll continue to invest in the business. You know, we continue to search for transformational growth opportunities. We're being very disciplined about that. As I said earlier, it's all about shareholder accretion, and we're also advancing our long-term growth through those two exploration programs that I discussed.
Dividend of 9p in H1, you know, with a good outlook for cash flow generation, moving forward as well. And as I said earlier, we're debt-free, cash of $56.3 million. You know, we've got a lot of flexibility in order to fund our aspirations there. So, very pleased with the situation that we have the business in right now. So at that point, I think we'll probably bring that formal part of the presentation to a close and invite some questions from all of the people online.
Thank you. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad, and please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, it is star one to ask a question, and we will start with the first question from Peter Mallin-Jones from Peel Hunt. Please go ahead.
Good morning, everybody. Congratulations on rolling off to the board properly, Nigel, and everyone else stepping up onto more exalted roles. I had one quick question really around sort of cash balances, and obviously paying outside the dividend policy at the interim. Is it fair to say that sort of $50-60 million is a sort of running cash flow that you'd want to maintain, and we should think about dividends being used to sort of hold that level of cash? Or, you know, should we think that you'd be returning more towards that policy for the dividend over the next few halves?
I'm afraid the answer is it depends, Pete. But, thanks. Look, as I said, the board is, you know, looking at, you know, cash flow projections going forward. We were very comfortable with going outside the policy right now. And the reason I say it depends is that if we you know, the only time we'd revise the policy or the dividend strategy is in light of a large acquisition. And, you know, we're always hopeful we'll conclude one of those things, but the timing of these things is always uncertain. You know, and the possibilities of success are variable on these things. So it does make it quite difficult to kind of answer your question with any kind of great sort of precision.
But I think, you know, in terms of running cash balances, we've always looked at that sort of number, that you mentioned as a, you know, in fact, maybe even less as a minimum. We run slightly lower cash balances, you know, shortly after payment of these dividends, but we always try and retain enough to fund, you know, three to four months of working capital, is probably the kind of... Not, it's not a policy, but it's something that we've always been comfortable with, given the cash generation of the business. Whether we pay out more or less, just really depends on how successful we are on the BD front. Okay. Yeah.
Understood. Thank you.
Our next question comes from Richard Hatch from Berenberg. Please go ahead.
Yeah, thanks. Morning, all, and yeah, indeed, congrats, Nigel, and all the best, and congrats, Gavin and Louise. Yeah, a few questions. First one, just on the cost profile at Sasa, just as we transfer the mining method, can you just give us a bit of a steer as to whether you're expecting costs to materially change at that operation, from a mining perspective, please?
Look, I think... Richard, thank you. It's a bit of a, it's a good question because... There, there's a lot of elements to consider here. So, as Louise pointed out, that paste backfill plant, you know, the operation of that has already added, you know, $800,000 to our cost base. So we always expected with the addition of two plants, effectively, for the dollar costs to go up per ton. But... The context is also quite important, is that we're, you know, we're in the final year of, of projects and construction, so you could probably consider that the complement that we're running at Sasa is probably at its highest. And we'll be looking at, you know, efficiencies there moving forward.
And it's slightly difficult to quantify that right now, but I think the context remains the same as what we sort of set out, you know, two, three years ago, is that, you know, the overall cost base will probably go up by around 5%-10%, given the new mining methods, which are more selective, plus also running these two plants. You know, within that, you know, two- to three-year period, we have seen a lot of inflation, which again, you know, Louise spoke about. So you have to adjust for that as well, because we are seeing some of that inflation coming through and getting baked into that cost base as well, you know, particularly through the wage inflation that we've seen.
But, you know, we don't expect costs to sort of, you know, increase significantly, beyond that sort of 5%-10%, if you can kind of, you know, put in those other elements-
Yeah
... in there as well. Yeah.
Okay. Gotcha. Okay, thanks, Kevin. Second one is just on treatment charges. I mean, if you look at spot Chinese TCs, they're negative, right? Now, I appreciate you don't sell into China, but can you just give us a bit of a steer as to what you're seeing on the TCs? I appreciate you locked them in as well, so can you just help us a bit with how we should be thinking about treatment charges for Sasa in particular over the next year or so?
Yeah. I mean, look, the TC market is very interesting, right? Because we have seen the zinc price come off quite a lot over the last few months, but the TC suggests that the market's still structurally short of concentrates. It's a bit of a conundrum, and I think the prices of the metals are kind of reflecting, you know, a slightly gloomier economic outlook globally. What that means for us, TCs-wise, you know, LME Week coming up, we'll have a much better handle on it once we've had discussions with clients and potential clients around that conference. But what we've managed at Sasa is to be pretty close to benchmark every year. Now, the benchmark always gets announced, you know, quite a few months after we've concluded our negotiations.
And, you know, if you've got any visibility on benchmark, that's what I would be thinking in terms of, you know, if you wanna use that in your models going forward. It's a very efficient market, as we've discovered. Now, those spot TCs in China being negative is very interesting, but if we started selling things to China, our freight rates would go up significantly. So, you know, on a net-net basis, we wouldn't save a huge amount of money compared to where we, you know, where we're selling right now. So-
Yeah. Gotcha. Thank you. Understood. All right. Thank you. All right, and then just a clarification point on the CapEx. Appreciate it was eight million in cash for the first half, but it was twelve million IFRS, just to a point of clarification. So is your guidance for the year that you provided at the start of the year cash CapEx, is that correct? Otherwise, is
Yes.
Is that correct?
Yes, it is. Yeah. Yeah, you're absolutely right. So our PPE increased by $12 million, and actually, that was one aspect of the other assets where that did include prepayments, and you'll see that number has come down from $41.6 million to $38.1 million, and that reflects these prepayments for CapEx that we would, we had made, towards the end of last year, that have come to fruition in the first half of this year. Yeah, the $22-$25 million is effectively the cash CapEx that we expect to spend this year.
Right. Okay, thanks, Louise. And then the last one, it's just on business development. You know, is buying an operational mining asset the only focus, or would you be interested in buying, you know, mining-related assets such as royalty streams, other, you know, income flows, if the valuation was correct? I'm just sort of looking at the market, seeing some businesses which are, you know, materially mispriced, some sort of less mispriced. But, you know, does it have to be a physical mining asset or would you be willing to sort of consider a financial instrument kind of mining asset, given the fact that they do trade at different valuation multiples to a pure-play mining business? Thanks.
Look, it's not a crazy idea, put it that way, but it's not something that we've considered sort of closely, because our skill set really is primary mining and reprocessing of dumps and tailings. You know, while, you know, personally, both Louise and I are technically trained and have financial backgrounds, you know, are we going to run a royalty business as well as the guys who've set themselves up to do so? Probably not. I think we've got to be honest with ourselves. It's not a primary target. Now, clearly, if there's deep value available somewhere, we'll look carefully at it. But I think, you know, the other way to answer your question is that we're not exclusively looking for operating assets.
You know, we will take on development assets as well, but again, provided that it's going to produce metals, produce the right metals for us, produce them at a cost that's attractive, and be accretive to shareholders, so and be affordable to construct. I think that is the key thing.
Yeah.
You know, a lot of these CapEx bills that you see nowadays are, you know, inflated to the point where a lot of you know, companies, even of our size and our cash flow generation, would find it difficult to afford to actually construct these things. So, you know, those are the elements we look at. But I think, you know, building that pipeline, you know, organically within our business, you know, looking for a third operating asset, you know, doesn't preclude us, looking at something that is, you know, further up the development curve, somewhere in between, you know, what we've got on the, on the books right now.
Okay. Understood. Thanks. Thanks, all. Cheers.
Thanks, Richard.
Thank you. As a reminder, to ask a question, please signal by pressing star one. We'll pause for just a moment to allow you to signal. And it appears there are currently no further questions in the queue. With this, I'd like to hand the call back over to our host for any additional closing remarks.
Thanks very much to everyone who attended the call. You know, it's an honor and a privilege to, you know, be taking the reins at CAML from 1st October for both Louise and I. Thanks again to Nigel, but mainly thank you to all of our shareholders for the continued support and to our staff, you know, for generating, you know, this, you know, really good set of H1 results.