In the beginning of July, company published production results for 6M 2017.
According to the report, Central Asia Metals (CAML) produced 7 027 tons of copper for the period ended June 30, 2017. This result was in line with our forecasts and demonstrated 2% YoY growth. Important step for the company was a commencement of copper recovery at the Western Dumps of Kounrad field, where production approximately reached 1 300 tons for 2q2017. In the second half of 2017, we expect acceleration of production on Western Dumps. Company began drilling and undertook wider exploration program at Shuak field for better estimation of potential projects’ parameters. As of June 30, 2017, Central Asia Metals has $41.7mln on its bank accounts and has no debt.
We think that CAML is on its way to fulfill operating plans for 2017 and reach production level between 13 000 - 14 000 tons, which was initially determined as a primary target for the year. Risk factor of maintaining production target is a requirement of higher level of production on Western Dumps site. Company is quite sensitive to its products selling prices. We expect a moderate volatility in the copper market with restrained long-term growth. Firm sustains an attractive financial profile and with effective maintenance of target level of production, it should achieve good financial results for 2017.
We keep our Buy recommendation with 12M price target of 290 GBP/share. We may adjust our target price after publication of financial results for 1H2017, which should occur in the beginning of September.