MIDAS SHARE TIPS UPDATE: Central Asia Metals is mining serious money from waste rock

By JOANNE HART, FINANCIAL MAIL ON SUNDAY

Updated:

Kazakhstan may be best known as the butt of 'Borat' jokes in films starring Ali G actor Sasha Baron Cohen, but it is the wealthiest country in central Asia, rich in minerals and open to foreign investment. 

Nestled deep in the middle of this vast land lies the Kounrad mine, where around three million tons of copper were extracted between 1935 and 2005. 

Then the mine was discarded, leaving more than 625million tons of ore behind – rock that the Soviets and other owners had been unable to process. In 2007, London-listed Central Asia Metals moved on site and set about developing technology that could produce valuable copper from the ore. 

Digging deep: Midas recommended Central Asia Metals when production first started in Kazakhstan, back in 2012

Digging deep: Midas recommended Central Asia Metals when production first started in Kazakhstan, back in 2012

Production started in 2012 and it is still going strong today, delivering more than 130,000 tons of copper over the past decade at among the lowest costs in the industry. Kazakh­stan is proudly independent too, and seems relatively inured from the war-mongering efforts of neighbouring Russia. 

Chief executive Nigel Robinson expects to secure another 120,000 tons of copper from Kounrad over the coming years but, with a finite amount of ore to be processed, he and his team have long been keen to find other profitable mine sites. 

In 2017, they struck lucky, acquiring Sasa, a zinc and lead mine in North Macedonia. As an underground operation, Sasa is very different from Kounrad, but it is also a low-cost producer, even though Central Asia has invested in the site and ensures employees are well paid. 

Efficient management, low overheads and consistent production mean that the company is both highly profitable and a generous dividend payer. 

Robinson unveiled a 60 per cent rise in first-half profits to $67million (£58million) last week, raised the dividend by 25 per cent to 10p and said lead and zinc production would hit around 50,000 tons this year, with copper production estimated at 14,000 tonnes, ahead of earlier forecasts. 

Central Asia benefited from high metals prices earlier this year, but even though they have come down in recent months, the company should continue to generate plenty of cash. 

Brokers expect full-year profits of around $100million, while the dividend is likely to exceed 20p, putting the stock on a yield of more than 8.5 per cent. 

Robinson is actively searching for new mines too, and if the search is unsuccessful, shareholders may be in line for special dividends in a couple of years' time.

Midas verdict: Midas recommended Central Asia Metals when production first started in Kazakhstan, back in 2012. The shares were 89p then and have since risen to £2.28, paying consistently attractive dividends along the way. 

Like many mining stocks, Central Asia has fallen in recent months as metal prices have slipped, but the current price represents a buying opportunity. The company is well run, highly efficient and has a track record of rewarding shareholders: an attractive, long-term stock for new and existing investors. 

Traded on: AIM Ticker: CAML Contact: centralasiametals.com or 020 7898 9001 

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