JUNE 10 2016 (The Conway Bulletin) — Analysts in London are positive about copper producer Central Asia Metals, despite its shares hitting 144.5p, the lowest level in four months, on Thursday. It had traded at a high of around 170p.

Canaccord Genuity set a price target of 190p, in line with the majority of analysts who rate it a “buy”.

Central Asia Metals is a Kazakhstan-based copper producer, which had recently seen its share price rise after announcing positive results for 2015 and saying that its ambitious expansion was on schedule. Kenes Rakishev, a powerful Kazakh businessman and son-in-law of defence minister Imangali Tasmagambetov, is Central Asia Metals’ largest shareholder with 19%.

Other shareholders own 10% or less in the company. Mr Rakishev has actively diversified his investment portfolio in recent years buying Kazakhstan’s largest bank, Kazkommertsbank, and acquiring a minority stake in a discount retail chain.

ENDS

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(News report from Issue No. 284, published on June 10 2016)

Shares of Central Asia Metals and KAZ Minerals, two Kazakhstan– focused producers, have followed copper’s ups and downs.

As shown in the graph above, shares in KAZ Minerals, which mines copper in northern and eastern Kazakhstan, have fluctuated more dramatically with copper prices.

Shares in Central Asia Metals, have been more stable.

With copper prices now sliding back towards $2/lb, share prices for both Central Asia Metals and KAZ Minerals are falling. This week, they were down 5.3% and 9% respectively.

ALMATY, APRIL 11 2016 (The Conway Bulletin) — Kazakhstan-focused copper producer Central Asia Metals posted a 12% decline in revenues in 2015, a drop it said was linked to the fall in commodity prices.

Although copper cathode production grew by 8.4% to 12,071 tonnes in 2015, a new high for the company, the average selling price for copper declined by 21%, bringing down earnings.

And with lower copper prices, Central Asian Metals said that the Kazakh government also earned 14% less from the mineral extraction tax it applied to its sales than it did in 2014.

On a more positive note, the company said that it had received permission from the government to expand its 15,000 tonnes/year copper recovery plant at the Kounrad mine.

And it also said that it will maintain its dividend payment, despite the tough market conditions.

Nick Clarke, CEO of Central Asia Metals, said: “While many resource companies are cutting dividends, we are pleased to be able to honour and exceed our dividend policy.”

The total dividend the company will pay for 2015 amounted to 12.5p, the same level as last year.

Its stock price closed at 171p on Thursday, up over a third for the week.

The company is also preparing for the presentation of the yearly results next Monday, which analysts expect to be positive.

“Central Asia Metals operates at a high margin and is thus less affected by low copper prices,” Martin Potts, mining analyst at FinnCap told The Bulletin. “It is an established business in Kazakhstan and it has already repaid all the money it has raised to its shareholders, something unique in this sector.”

In our chart above, we tracked just how closely Central Asia Metals shares and copper have been linked, but it is also possible to note a recent “decoupling” of the two since mid-March.

The stock had suffered from poor market conditions for commodities, but it picked up since it published an upbeat outlook for 2016, after it received government approval at the end of 2015 for the expansion of its Kounrad project in central Kazakhstan.

Analysts, however, remain cautious on the performance of the stock.

Peter Mallin-Jones, mining analyst at Peel Hunt which is a London based brokerage focused on small and medium sized companies, told The Bulletin that his downgraded share target price still held.

“The upward trend is in line with the general moves in the mining sector. KAZ Minerals is also showing a similar trend in the London Stock Exchange,” he said.

Since Feb. 1, its share price has gained 61% in the London Stock Exchange.

In the past week, equity researchers have increased their target price and their rating for KAZ Minerals, formerly known as Kazakhmys.

Copper prices have gone up in the past weeks and this has allowed the company to be more bullish in its forecast.

One sign of warning, however, comes from the strengthening tenge. The stability of the Kazakh currency at around 350/$1 over the past weeks confirms appears to suggest that it has founds an equilibrium.

This means that last year’s foreign currency gains for KAZ Minerals were a one-off boon and the company will have to rely solely on increased production if it wants to keep its growth rate.