Good morning and welcome to Central Asia Metals Half One 2025 interim financial results. We'll start off on the results summary slide. We'll just run you through some of the production and finance highlights. If we could move to the next slide, please. Thank you. Next one. Sorry, we'll just mute that while we got a fire alarm on. Apologies for that. Okay, hopefully they don't throw us out of the building because that's not normal, but let's see how we get on. Right, let's start again. So, welcome to the Central Asia Metals Half One interim financial results for 2025. We'll start off with a summary of production and financial highlights. You can see on the right-hand side of your slide there that we produced 6,218 tons of copper from our Kounrad operation in Kazakhstan.
From our Sasa lead-zinc mine in North Macedonia, we produced 8,692 tons of zinc and 12,613 tons of lead. All this was done in a very safe fashion. We're very pleased that we achieved zero lost time injuries for the first half. These operations drove good financial performance. We generated a revenue of $99.5 million and EBITDA of $39.9 million for a margin of 40%. Importantly today, we announced a dividend at 4.5p, supplemented by a $10 million share buyback program, which will commence today. That keeps our cash returns to shareholders consistent and comparable to the Half One 2024. We have a strong balance sheet and positive cash flow, $47.7 million in the bank, and that'll be boosted by returns received related to the New World Resources transaction of both the break fee plus also the sale of shares in that company.
Kounrad maintains its position on the cost curve and the capital projects at Sasa are effectively completed for the year. That gives you the backdrop to the financials that Louise is going to run you through right now.
Thanks, Gavin. If we go to, yeah, market conditions slide, thank you. If we just spend a minute looking at the market conditions which frame the results that we're announcing this morning. In terms of commodity markets, we saw a lot of volatility middle of the period due mainly to the Trump trade wars. Taking everything into account for the full six months and comparing that with H1 2024, we saw a 3% increase on the average copper price we received, a 1% increase on the average zinc price, and a 7% decrease on the lead price that we received. In terms of treatment charges, right now it's a good time to be a miner rather than a smelter. I think, as we've mentioned before, our treatment charge contracts run from April to April.
What we are seeing is a reduction in treatment charge for this year versus last year of around 40%. For the first half of this year, that translated into a reduction of treatment charges of around $3 million. Looking at foreign exchange, some good news for us, some bad news for us. Kazakh tenge weakened by about 10% period on period, and that helps us when we come to report our costs in U.S. dollars. On the flip side, the Macedonian dinar, which is pegged to the euro, was stronger versus the U.S. dollar, and that adversely affects our U.S. dollar costs for the Sasa operation. Looking now at the income statement, as Gavin mentioned, we've reported revenue of $99.5 million. That was very similar to revenue for the first half of last year, just 2% lower.
That reflects lower sales volumes across all the metals, but that was impacted on the positive side by the lower treatment charges that I just mentioned. Cost of sales were up by 14% or around $7 million. Lots of factors at play there, really. A lot of those related to the Sasa operation. We had an increase in the revenue royalty that we pay North Macedonia for the metal that we produce, called the concession fee. That increased from 2% to 4% from January. That accounted for over $2 million in fees, up from $1.2 million last year. We also had higher wages at both operations, although at Kounrad that was mitigated largely by a weaker tenge. There was the currency effects that I've just mentioned of the weaker dollar versus the Macedonian dinar.
We also had some additional depreciation because now we've started using the dry stack tailings plant and landform that we completed in the first half. We also paid over $2 million extra for the silver that we buy for our silver streaming commitment. We see that effectively canceled out on the higher revenue number as well, but that does contribute to an increased cost of sales. If we look at our admin costs, they look like they're up quite significantly at a 24% increase. That works out at just less than $3 million, and all of that really is related to our business development activities. $2.3 million of that additional BD costs, which was related to the New World Resources attempt to acquire that company.
We also spent $1.1 million on exploration, both for CamelX and Sasa, and that was up from around $0.3 million the first half of last year. We also disposed of Copper Bay, and we incurred fees for that of $0.4 million during the year as well. All in all, taking the revenue and costs into account, we've announced this morning EBITDA of $39.9 million at a margin of 40%. If we look quickly at the profit after tax, that's adversely affected by some quite significant non-cash share-based payments, which we changed the way we report those as effectively cash settled rather than equity settled last year. We had a $1.8 million swing on foreign exchange. We also look like we've got a higher effective tax rate. That's really due to consistent taxable profit in Kazakhstan, where our CIT is at 20%.
If we look at the cost of the two operations, at Kounrad we had a very good result cost-wise for the first half, where our C1 cost base in absolute terms decreased by $0.6 million. That's mainly due to the Kazakh tenge devaluation, but also there were some lower variable input costs, mainly reagents, and that was both usage and cost of those as well. Our C1 cost rose by $0.01 per pound, and that's just due to the slightly lower copper production versus the first half of last year. We did give our workforce an 8.5% wage increase, which was based on inflation figures, but that's largely been mitigated by the devaluation of the Kazakh tenge during the period. All in all, we've reported a margin of 72% for Kounrad, which is exactly the same as H1 last year.
Turning to Sasa, our run-of-mine costs increased at Sasa during the first half of this year from around $60 a ton last year to about $65 a ton this year. That's about an 8% increase. We've already covered some of the reasons why that was. There was the weaker dollar. There was also increased salaries and pay rises. We also incurred some higher costs for the new tailings disposal method. We had a full period of operating the paste backfill plant, and we also began to operate the dry stack tailings plant and the landform as well. Also, our electricity costs were higher than the first half of last year by just under $1 million as well.
If we look at our C1 cost base, that was actually only a 3% increase from $31 million to $32 million, and that was positively impacted by the lower treatment charges that I've already mentioned. For the first half of 2025, we've reported an EBITDA margin of 26% for Sasa. Capital expenditure for the period, we've spent $7.4 million. Of that, $6.3 million was sustaining CAPEX at both of the operations, $4.2 million at Sasa and $2.1 million at Kounrad. That's higher than the usual run rate at Kounrad, but we've had a good program of replacing anodes and cathodes, and that cost us about $1.1 million there. We also, I think previously told you, were planning on moving some material called Dump 15 further away from a railway line so we could easily leach that.
We spent some additional money there moving the material in Dump 15, and we've since completed that post the period end. Our capital projects are basically concluded now at Sasa. We spent $1.1 million on those, and that was really finishing off the dry stack tailings plant and the landform as well. We are still expecting to spend the additional $11 to $14 million of CAPEX this year. We only just started the raised boring program that just commenced in the first half of the year, and that will carry on throughout the second half. We've got an extension to the landform that we're planning to get started on this year. We still have some additional underground equipment to buy and also some additional underground development. All in all, we are reiterating our CAPEX forecast and guidance for the year of $18 to $21 million.
Looking at our balance sheet, just a few things to pull out of interest for you there. PPE looks like it's increased considerably, notwithstanding depreciation, and that really reflects the weaker US dollar versus the Macedonian dinar. Our group cash balance of $48 million, that includes the cash and also $0.3 million restricted cash. It excludes $1.8 million of what through the audit process we clarified as being cash in transit. We had added that into the cash figure that we reported in the Q2 production numbers, so that's been adjusted for these results. It's worth pointing out that post the period end, we sold the shares that we had acquired in New World Resources to try to push ahead with that transaction. We sold those for $18.7 million.
We also received a break fee of $1.6 million, so our cash position has been bolstered by that plus the cash in transit. Bank overdrafts, we built up an overdraft to $6.6 million as of 30th of June. That's substantially reduced by now, around about $1 million as it stands now. One other small thing to point out, we did have a line in the balance sheet, assets classified as held for sale. That was Copper Bay. That's now quoted as nil for the 30th of June position because we sold Copper Bay in April. Final slide for me, looking at our cash flow and our free cash flow. We generated $34 million cash from our operations during the first half of 2025. We paid $20.6 million in dividends. That was the 2024 final dividend. We paid taxes, that's income tax and withholding tax of $16.3 million.
That was $8.1 million higher than it was in the first half of last year. We spent $7.4 million on CAPEX that we've talked about, and we spent the $16.7 million on buying those New World Resources shares during the first half as well. We drew down $5.9 million of our overdraft, so we ended the period with the cash of $47.7 million. In terms of our free cash flow, we're reporting adjusted free cash flow of $16.2 million. Just to reiterate that post the period end, we have received the $18.7 million US dollars in cash from selling the shares, the $1.6 million break fee, and the $1.8 million of cash in transit as well. I'll hand back to Gavin now, who will run through the operations.
Thanks, Louise. If we kick off on Kounrad, some of the highlights there were really just yet another consistent and reliable performance from Kounrad over the period with that 6,218 tons of copper that we produced. That means we're on track to meet our guidance of 13,000 to 14,000 tons for the year. As I said, steady as she goes, not a huge amount to report here. The solar plant, if you remember, we built that and commissioned it back in November 2023. That's actually supplying around 17% of our power requirements at Kounrad now. That's really starting to pay for itself with some of the electricity costs going up there. We actually achieved a record in May where we produced 22% of our electricity requirement from that little plant of ours. That's all gone quite well. As I said, steady as she goes at Kounrad, producing really well.
If we look at the next slide, as Louise said, that relocation of Dump 15, that's all complete now. We've had some additional CAPEX, and part of the reason for that is just to maintain production and keep the plant fully invested so that we can extend it all the way to 2034 and potentially beyond. If you look at that leach curve at the bottom there, the western dumps are outperforming and the eastern dumps have also outperformed over their life. All of that points to the original forecast of 79,000 tons that we still have. We're calling that now the minimum recoverable given the outperformance of both west and eastern dumps. That might lead us to think about extending the life of that license at some point as well. There's quite a lot of work to be done around that.
Sustainability activity is still a good part of our business. We think it's important to support local communities and we do that through the foundations plus also some other donations. Most importantly here, we've had zero lost time injuries at Kounrad since May 2018, which is a simply amazing achievement when you think about the various hazards that exist around mining projects and assets. Some of our newer activities include a biodiversity management plan that's been put in place at Kounrad and we've also instituted a big safety and occupational health assessment there as well. As I said, local communities remain important and, you know, through cultural, medical, educational, and youth initiatives we continue to support the local communities around Kounrad. If we move on to Sasa, as we mentioned earlier, we produced that 8,692 tons of zinc and 12,613 tons of lead.
If we look at the table on the right-hand side, I'm pleased to report that the tonnages of the ore mined has actually gone up 8%. If you recall from last time we presented to you, that was one of the key targets that we set ourselves to get back up to that sort of 800,000 ton level. That's what we've been targeting. Unfortunately, you'll notice that the grades for both zinc and lead are lower. That's because we're still having a few teething problems with the new mining methods that's causing a little bit of dilution. We're also encountering variable geology at depth in the mine. We'll talk about that on the next slide. You would have seen this was apparent through H1 with both lead and zinc production being down when we announced back in July.
We've reduced our guidance modestly and currently on track to achieve that guidance. Go to the next slide. What we've done at Sasa because of these issues is effectively implemented a full strategic review. We started this in about the middle of H1 just to have a look at the whole operation at Sasa. We expected the ore body to narrow at depth, which is one of the reasons we're putting these new mining methods in place. What we did encounter and what we weren't expecting was a high level of variability both in terms of geometry and also grade as we moved into the lower levels of the mine. As I said earlier, there was a little bit of dilution from the new mining methods and as we get better at doing those, that'll reduce. We really need to understand that ore body better.
We're drilling more holes, we're creating more drill platforms and making sure that we understand the ore body so we can plan ahead and utilize these mining methods to their best abilities. We're also tightening up on grade control and we're reviewing all aspects of the mine. This goes mining, processing, laboratories, admin, the works. We've also, in addition to a lot of internal initiatives that we've come up with, had some external consultants as a fresh pair of eyes over the operation as well to assist us with basically coming up with some recommendations. We've already started implementing some recommendations. We'll continue to do that through H2, looking to improve that performance at the Sasa operation.
Sustainability again, we got zero lost time injuries for the half, which is a good result for Sasa, much more complicated than Kounrad underground operations, lots of moving equipment and a full, more mechanical looking plant plus two new plants as well. Really good result from the guys on site there. As Louise said, we've now completed our dry stack tailings plant and we've placed around 60% of our tailings during the first half either onto the dry stack tailings landform or back underground as cemented paste. That's getting us some way towards approaching our target of 70% that we're looking to achieve by 2026. We've tested an emergency alarm system that relates to the wet tailings facility, the TSF4. That was partly due to the GISTM conformance that we announced about this time last year, plus also some local regulations, and that's gone really well.
We've also continued educational support both on site and in the communities around us, as well as starting a little Kickstarter program for businesses in the region to formulate some longer term sustainable programs there. In terms of exploration, we've got two programs underway there. One is the investment in Aberdeen Minerals in Scotland, looking at their Arthrex nickel-copper-cobalt project. Currently drilling what we call phase 2B, that's following up on phase 2A. Phase 2A effectively proved the geological hypothesis that there was mineralization at depth. Now it's basically chasing that mineralization and looking to bulk it up and guide us towards resource development there. We expect to make a decision on whether or not we invest the further £2 million into the business by the end of the year. That'll be based on the results from that phase 2B drilling program.
Early stage exploration in Kazakhstan, we've got four licenses active there. We've done a lot of surface work there, both in terms of geophysics and geochemical surveys, which have been completed on two of the licenses and are underway on the other two. Those will hopefully lead to us being able to make decisions on whether or not to drill these licenses in 2026. Good progress in Kazakhstan as well. We've also set up an entity in Kazakhstan to look at more advanced projects than these earlier stage exploration things as well. There are some very interesting projects coming into that pipeline as well. Right, getting on to capital allocation, which as I mentioned earlier today, there are a few changes there. We've got the 4.5p dividend and we're compensating that with that $10 million share buyback.
Total cash returns are around $21 million, and that is comparable to several previous periods where we've paid these dividends. That brings our total shareholder returns that we've announced to over $400 million since IPO. Over time, we're looking to revert back into our dividend policy of 30% to 50% of free cash flow. We remain committed to capital returns to shareholders while the company is looking to find a future growth opportunity as well. A little bit of a change there, but similar returns with the ultimate goal of getting back into policy and setting the company up for future growth. In summary, as I said, Kounrad is on track to achieve its full year guidance. Sasa is on track to achieve guidance, but there are challenges there, which I said we're basically looking to confront over this half and improve productivity and production at Sasa.
Capital allocation, just talked through that. We've got sustaining CAPEX at both projects now. Now that the actual capital projects are complete, we've got that 4.5p dividend out to the shareholders this morning, plus that $10 million buyback, which is active right now. We're still looking for a material growth opportunity. The New World Resources activities over the first half, which I'm sure many of you followed closely, basically prove a few things now. I think as a business, we're able to identify these opportunities outside of usual auction processes or things like that. We're able to finance them, and we also got really positive feedback from our major shareholders at the announcement of that potential transaction because we thought it was creative and a good thing to do. The timing of our withdrawal just demonstrates that sort of discipline and fiscal discipline that we've always shown as a business.
Our balance sheet remains flexible with a strong cash position, as Louise talked you through earlier. That'll allow us to access debt and to finance growth in the future. At that point, I'll stop and invite questions from the floor. Thank you very much.
Thank you. Ladies and gentlemen, if you would like to ask a question on today's call, please signal it by pressing *1 on your telephone keypad. Again, that is *1 for your questions today. Up first, we have a question from Will Dalby from Berenberg. Please go ahead, your line is open.
Hi, morning Gavin, Louise, thank you for the call. Just a couple of questions from me, maybe starting with Sasa. Just looking to maybe get a bit more color in light of that review you've had with external consultants. How should we be thinking about the mine plan there now? Is this sort of a, you know, adapt and rebase lower situation in terms of grades and mining rates, or is it more kind of wait and see how these improvement measures turn out? I guess more specifically, what sort of grades and mining rates can we expect from Sasa going forward? That's the first one.
Thank you. I think the mining rates, certainly as we demonstrated, are, you know, it's possible to get back up to that 800,000 sort of level with the new mining methods and potentially beyond that. I think what we're trying to do is, you know, identify the areas that we can improve, not only in mining, but also processing, right the way through to laboratory and other processes that we've got on the operation. We just thought it was worth having a look at everything there. Clearly, we'll be prioritizing those things towards production initially and then rolling out the rest at the appropriate times. In terms of the grade, yes, we have been confronted with slightly lower grades, but also a highly variable ore body. We just need to make sure we understand that a little bit better.
That'll improve the dilution metrics I was talking about earlier and also our planning as we go ahead. We'll be running additional mine plans and various other things in the background just to make sure that we've still got a good handle on the asset. At the moment, I think what we're trying to do is stick to the current plan and just make all of these improvements to ensure that we can get the metal out of the ground within that guidance range.
Thanks, Gavin. Second, just on Copper Bay, what's just interested to get your understanding of the development progress there, given the contingent payment structure. Where are you modeling receiving those payments?
I think we handed over a project that was fully permitted and with a full DFS. Now it's completely up to the new owners as to whether they're going to reconfigure any of that project or whether they're just going to start constructing. I think they're probably still in a process of getting their team together and pulling a construction team together. Really the best outcome there would probably be, if you think about standard construction periods for these things, it's probably going to take them 18 months to 24 months to construct, and then there's ramp up. As you recall, the milestones on those payments are related to actual copper produced. We've got to wait for them to produce that amount of copper. It could well be three years up plus.
Thanks. I think just the last one, and then I'll free up the line, is around the dividend buyback decision. I just, you know, obviously the shares have had a bit of a negative reaction this morning. Kind of reading into that, potentially, you know, could be some of the commentary around returning or looking to return to the dividend policy of 30 to 50%. I just wonder whether you could maybe give a bit more color on your rationale behind getting for the buyback. I know the buyback plus the lower dividend sort of nets out sort of the run rate that you've had in recent periods. I think it would just maybe be helpful to have a little bit more color there.
I think it's been a big debate at the board for the last few times we've debated the level of dividend. I think what we've got to do is sort of balance the shareholder returns against our sort of strategic ambitions as well. That is one of the key areas that we thought with the share buyback, we had a little bit more flexibility around that. We put the share buyback in place and ensure those returns to shareholders that are consistent. If we had a large transaction to finance, then we'd have the option to deploy that cash in that direction. It just gives us a little bit more flexibility.
I think the sort of overall philosophy remains fairly similar in terms of both returns to shareholders plus also in the absence of a material transaction, then we have the option to either continue that buyback and if something comes up, then we can pause it or put it in a band somehow. I think it just gives us a lot more flexibility around the capital returns program to our shareholders.
Very clear. Thank you very much. That's all for me.
Thanks, Will.
Thank you. Up next, we have a question from Julio Mondragon from BMO Capital Markets. Please go ahead, your line is now open.
Morning Gavin, morning Louise. Just a couple of questions on my side. In terms of the operational review performed by external consultants, you just mentioned that to Will, but what are the key outcomes of it? As in, what things are to improve at Sasa? Also, is there any material CAPEX or OPEX related to these improvements? How do you expect to see the results of these improvements?
I think the first point I'd make is that there's a combination of both an internal review, which has been undertaken, plus the external review. The recommendations are a compilation of both of those really. I'll answer your second question first. There's no material CAPEX around this. I think what we're trying to look for is a lot of incremental improvements in terms of the way we operate in order to achieve the tonnages we're targeting, get the throughput through the mill at the sort of optimized rate as well, and therefore produce as much metal as we can. I think that that's the overall philosophy. One of the areas that might take a little bit more understanding, as I said, is the geology, which has actually turned out to be, the deeper we drill, the more different it turns out to be than our original interpretations.
We need to look quite carefully at that and just make sure that we've got a better handle on the geology in the lower levels of the mine so that we can, A, plan ahead appropriately and B, deploy the correct mining method to the geometry and width of the ore body that we are confronted with.
Perfect. Thank you very much. One more question, if I may. In terms of your operational costs, what's the outlook for the rest of the year, right? What in H2 2025 and in 2026? What is your exposure to the tenge at both operations?
I can talk a little bit about the cost. I think, look, we're looking to, I'd love to say we're going to improve those costs, particularly at Sasa, but I think we've still got some work to do there. We're clearly looking to save money where we can and improve things as quickly as we can at Sasa. Some of these programs may take a little longer to roll out. In terms of 2026, I think is when we're going to start seeing, again, I'm sort of open to correction here, but I think that's when we start looking at improvements late 2025, early 2026 really to start coming through on that front. In terms of the proportions of exposure to local currency, have you got those numbers?
About 60 to 70% in Kazakhstan. It's a large number. It'll be a pretty significant number, probably higher than that in North Macedonia, because a lot of the costs are either dinar or euro. Obviously, in Kazakhstan, we've actually seen the tenge continuing to weaken into the second half, so that would have a positive impact. Unfortunately, we've seen the opposite with the dinar and the euro. That's continued to strengthen versus the dollar into the second half. The only other thing I'd point out is that the dry stack tailings plant and landform, we've run that for up half of the first half. In the second half, we're going to be running that for the full six-month period as well. Electricity, we are hopeful that that could come down and we could get some savings there.
A lot of the other aspects will be sort of pretty much fixed in. Just to answer what Gavin said about the strategic review that's underway with both our internal ideas and external consultants, that's focused on both productivity improvements and cost improvements as well. It's not just productivity that we're looking at.
Perfect. Thank you very much, both.
Thanks, Julio.
Thank you. As a reminder, ladies and gentlemen, to ask a question today, please signal by pressing *1 on your telephone keypad. We'll pause for a brief moment. There's *1 for your questions today. We have another question now from Laura Chan from RBC Capital Markets. Please go ahead, your line is open.
Hi guys, thanks so much for the call. My question is about the New World acquisition and I guess the not being successful in it going through. I just came to hear your thoughts about learnings moving forward and acquiring something else and what could you have done differently?
Thanks, Laura. Morning. We're all really disappointed by the outcome there, but I think ultimately what we were confronted with was an interloper with very deep pockets and absolutely determined to purchase this asset at whatever price. Could we have done anything differently? I think probably not in this case because ultimately it was always going to come down to price. We got to a point where we thought, looking at it from various angles, the acquisition cost, the risks of execution of the project, risks around CAPEX, various other things, it was starting to get to a point that it no longer made sense for our shareholders. That's the decision we made then; we thought a rational decision to pull out.
What it did demonstrate, as I said earlier, is our ability to identify, finance, and then present something to the market that had a positive impact on our business. I think we'll be taking a lot of comfort from that moving forward. As we repopulate that business development pipeline, we've got a fairly good handle given the interaction we had with our shareholders through the process of where their sensitivities lie, where our sensitivities lie, and therefore how to configure the next one when it comes along.
Thanks so much.
Thanks, Laura.
Thank you. As there appears to be no further questions at the moment, I would now like to hand the call back over to you, Mr. Ferrar, for any additional or closing remarks.
Thank you very much to all of you who attended this morning. The presentations are available on our website. I think this presentation will be uploaded as well at some point, but I appreciate your continued support and interest in the business. Thanks very much.