Central Asia Metals PLC
LSE:CAML
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Central Asia Metals PLC
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Good morning, ladies and gentlemen. Welcome to Central Asia Metals, CAML's Full Year 2022 results. Just flicking through the slides, just standard disclaimer and starting off with the company preview. Just to remind everybody what CAML does and where it does it. We have operations in Kazakhstan, which is SX-EW solvent extraction electro-winning plant that produces pure cathode copper of the magnitude around 13,000 to 14,000 tonnes. And last year, we announced 14,254 tonnes of cathode copper.
We have a Life of Mine in Kazakhstan out to 2034. And on the back of the success at Kounrad in Kazakhstan, we acquired the Sasa mine in North Macedonia in late 2017. This is a more traditional underground zinc and lead mine in the northeast of Macedonia. And last year, we produced 21,473 tonnes of zinc in concentrate and 27,354 tonnes of lead in concentrate. And our guidance this year is 19,000 to 21,000 tonnes of zinc and 27,000 to 29,000 tonnes of lead.
Turning to the next slide, Slide 5, just some of the highlights of our results for 2022, the financial numbers that Gavin, our CFO, will expand upon in a minute. We generated revenue of $232.2 million and an associated EBITDA of $131.6 million. That's an EBITDA margin of 57%. The free cash flow, an important number for CAML, because it drives the dividend was $89.7 million for the year. And that drove us to announce this morning a final dividend for 2022 of 10p, making 20p a for the full year of 47% of our free cash flow on 2021, but in absolute terms, the same number as 2021, a 20p full year dividend. We have cash in the bank of $60.6 million. And we have no debt now having fully repaid the debt that we took on to acquire Sasa 5 years ago last August. That was $187 million of debt repaid in the 5 years. And last, but still by no means least, we have an LTIFR, the Lost Time Injury Frequency Rate for last year of 0.83, an improvement on the previous year, which was 1.69.
Just turning to slides to Slide 6. Just to reemphasize what our strategy is and what drives CAML and our business. Our purpose is to produce metals, base metals that is essential for modern living profitably and in a safe and sustainable environment for all of our stakeholders. And that informs our strategic objectives Certainly, in the short term, to focus on sustainability and everything that we do to be sustainable. And you can see the 5 pillars there and will expand upon that more later. I think Gavin will prove that we target low-cost high-margin operations when he goes through the finances. And finally, ensuring that the money that we make on those businesses, we allocate prudently both for growing the business and developing the businesses in the 2 operations as well as paying money back to our stakeholders. And last, but by no means and probably the largest challenge we have at the moment is delivering growth of the business to expand upon a very strong baseline that we have.
And on that note, I'll hand over to Gavin, and we're moving on to the financial results in a little bit more detail. Gavin?
Thanks very much, Nigel. If we move on to Slide #8, the market conditions. I'd like to emphasize there in the table on the bottom left is that the prices that we achieved year-on-year were only higher in the case of zinc, we actually got lower prices for copper and for lead during the year. And of course, CAML is not isolated from the inflation impact that we felt globally. And in Kazakhstan, we had inflation of just over 20%; and in North Macedonia, around 14%, Energy markets in that bottom right-hand chart, quite stark there.
We can see the brown line is what CAML achieved or Sasa at least achieved in terms of electricity prices with the jumping around 4x in the first of July. And on average, we had around 3.6x increase in our energy price through H2, which resulted in a $4.7 million increase in the electricity charges for the half. So that sort of sets the theme if we move on to the income statement on Slide 9. As Nigel said, gross revenues of $232.2 million only slightly off year-on-year. Cost of sales reflecting those inflationary pressures up 8%, which we think is a good result given the global inflationary environment.
If we look at the breakdown of the cost of sales, primarily again due to the electricity price that we're seeing at Sasa plus also some payroll costs coming through as we respond to the inflationary pressures with pay rises for our staff on both sides. Looking at the admin expenses, up 13%. I just want to emphasize that the large proportion of that increase is noncash and related to share-based payments, which is the [ alternate ] schemes that senior management and other staff participate in. Lower finance costs, as Nigel said, we've repaid our debt, so no more paying high interest costs there. And with the profit before tax decreasing as a result of an impairment, which I'll talk about later in more detail. down about 50%. However, on an adjusted basis, our EPS has actually gone up to 48.1% from 47 -- sorry, $0.4815 up from $0.4770 the previous year.
If we look at the segmental information, both assets have performed really well. Kounrad revenue down slightly due to that copper price coming down, as I mentioned earlier, yet still achieving an EBITDA margin of 77%. Revenue at Sasa conversely up because zinc prices were up, higher costs coming through as I've described, EBITDA margin, therefore, also down from 56% on the previous year to 52% in 2022. We move on to that development of EBITDA year-on-year on Slide 4. Now 2021 EBITDA at $141.5 million. The 2 big impacts you can see in that chart, waterfall chart dominated by the decrease in copper revenue of $8.4 million and cost of sales going up around $9 million, resulting in that $131.6 million EBITDA number at the end of the year.
Slide 11, if we look at the Kounrad cost base, as I mentioned previously, the main driver behind that cost increase is payroll. That translates into a $0.06 per pound increase pay rises were effective from first of January 2022, but we're also seeing the full year impact of some midyear increases that we gave staff there in 2021. Just to emphasize on the staff, what we've done is really pay the lower paid staff or high increases, whereas the higher paid staff got much smaller increases. Just to reflect, as I said, that inflationary pressure that we are seeing in Kazakhstan. Yet the margins that we're achieving there 77%, still one of the lowest cost copper producers in the world.
If we move on to Slide 6, please. Looking at Sasa, slightly different story there, as I mentioned, big fund site cost increase is due to electricity costs, but also we've reduced the tonnages coming through from 2021 to 2022, around about 12,000 tonnes less throughput, which drives the unit cost up a little bit. Other areas where we've seen increases are in reagents and grinding consumables. Those are things like consuming things like steel, copper and a few other reagents there. And fuel costs, again, no surprise, those have gone up about $0.50 a tonne as well as we see global energy costs rising all over the place.
Labor costs, again, went up to combat that inflation, but we are seeing some tailwinds from the currency that we're achieving there as well. So in effect, still a good EBITDA margin for Sasa at 52%. And you can see another line, the second last line, you can see the realization costs actually coming down. Those are the treatment charges. The cost that the stores are shared in converting our concentrates into metal. So overall, a good result on each of the mines.
If we move on to Slide 13, which is the CapEx. 2022 group CapEx was $17.4 million, up from $14.8 million on the prior year. That is primarily related to this cut-and-fill project, which we'll talk about in more detail later. The sustaining CapEx of $7.7 million at Sasa is mainly to do with underground development and some upgrades to flotation equipment and replacement of some underground fleet. Kounrad sustaining CapEx is slightly higher than the usual $2 million that we guide there because we went through an anode replacement program, which is something that happens every 3 to 4 years. So nothing out of the ordinary there.
Cut and Fill Project, as I mentioned, $7.2 million onto the balance sheet here, which is related to the Paste Backfill Plant, which is $5.6 million underground reticulation. That's the pipe work that we use -- going to use to in place the paste fill back underground. And the central decline, which is a new access into the ore body, $2.6 million spent there and dry stack tailings one of our new tailings facilities, again, more details to come at $1.8 million on that. Slightly below guidance. That's because we deferred a number of these costs into 2023. But the sort of 2023 CapEx, we're still guiding at $28 million to $30 million on that basis.
Slide 14 on the balance sheet. Actually, a pretty good, balance sheet is in good shape. As Nigel said, repaid all the debt borrowings of $1.4 million that you can see they relate to a small overdraft facility. And then cash on the balance sheet at the end of the period, $60.3 million, leaving the company in very good shape. If we talk about that impairment for a minute, that is a result of a number of issues. One is global macroeconomic issues. We've seen -- we've spoken about the increased costs. We've also seen risks increase around the world, and that impacts the discount rate that we apply when we do an impairment analysis on the discount rate has gone up to 12.52%.
Last year, we used 10.21%. The Life of Mine study also feeds into this. What we've done is we completely recalculated our reserves, resources and therefore, and run a new Life of Mine schedule on top of that. And the result of that is a 7.8% lower throughput from 900,000 tonnes per year to 830,000 tonnes, and that's the forecast throughput we had at Sasa. And those 3 things, in aggregate, have led us to run that $55.1 million through the balance sheet as an impairment. Now just to reemphasize that, that's noncash and doesn't impact the cash flows of the business at all.
Speaking of cash flows on Slide 15. We see the development year-on-year there, $59.2 million in the bank at the beginning of the year. Cash generated from operations, $122.6 million. Dividends paid during the year of $48.2 million, repaid that debt last $23.8 million going back to the lenders there. And then we've also paid taxes -- expanded that $7.4 million that I described earlier, which leaves us with $60.6 million in the bank, really good position. That's allowed the Board to announced that 10p dividend Nigel spoke about, and that's the basis of that free cash flow number of 89.7%. That dividend represents 47% of that free cash flow number, which is towards the top end of our 30% to 50% range.
But on that note, I'll hand back to Nigel or do we go to Louise?
Louise.
So, Louise?
Yes, I've just seen a few highlights on our sustainability efforts last year as well. So on Slide 17, if we can go, please. Just a couple of adjustments to our sustainability framework last year. Firstly, as we've mentioned to you before, we report to what's called the GRI standards and their standards adjusted to what's called universal standards, which incorporated an adjusted approach to the stakeholder engagement based materiality assessment. So we did that process last year. It's called double materiality, and it considers really the impacts of the material topics on society, but also on economic factors related to our business as well.
So we reran our stakeholder-based materiality topic. You can see those highest and high priority topics on the slide. There are some adjustments year-on-year, although albeit we're not comparing apples with apples. But it's interesting to point out that environmental compliance is new to our material topics and hazardous waste management, i.e., tailings what heap leach, et cetera, has moved up the list. So that's informed our sustainability reporting. Obviously, when we know our material topics, that's what we report on. And you'll see that in the forthcoming sustainability report, which we'll publish in Q2.
And the second thing in terms of the framework is we have revisited the new and sustainable development goals that we believe we'll contribute to, and we felt confident to add another 2 to those, which is number #9 industry and innovation and #12, which is responsible production and consumption. We've also mapped those quite carefully to our material topics and our long-term targets and acknowledge really that the 5 of those that we believe will contribute to in a primary sense and then the 3 more supporting towards those SDGs. So we've adjusted our approach likely to that as well.
So moving on to Slide 18. I'll just do a quick overview of the 5 key sustainability pillars that we have and that we report to. The first one being delivering value through stewardship, and that's looking towards the governance aspects of the business. we have 3 key work streams last year. One was we developed a whole new corporate governance training platform ourselves and certainly we pushed through 4 courses our employees have been through. We also started a new growth where we our suppliers based on a social assessment. That information, the questions we asked is available on our website, but it covered things like child labor, human rights, minimum wages, those sorts of aspects. I think the third key piece of work that we undertook was to do a human rights due diligence assessment across our business as well. And going forward into this year, we're going to be incorporating some environmental aspects into our supplier screening process. And also we're going to move forward with any recommendations that came through from the human rights review as well.
Moving on to Slide 19 on health and safety. Obviously, this is a very important aspect for us. Nigel already covered our LTIFR. And I think it's just important to know we've set ourselves a target last year to improve on an LTIFR of 1.69, and we did achieve that with our LTIFR of 0.83. On that basis, we have lowered our target this year going forward. As ever, training is key to help our employees recognize potentially dangerous situations that they put themselves in. And so we managed to deliver a 14% increase in our group health and safety training, last year versus 2021.
Going on to Slide 20 and focusing on our people. There are a few key aspects that we have been focusing on. Last year, there was a lot of the point to building a really impressive trailing team as we transition our mining method towards the paste fill mining method, which will incorporate some differences in practical mining at Sasa. So that's been a big area of focus for us last year. Also diversity, we're starting to try to push through some changes there.
We've developed a diversity and inclusion focus groups at both sites where we need and discuss our objectives and what we can try to achieve. Because for the long term, we've set ourselves a target of a 25% increase in female employees by 2025. And we'll start to be -- from this year onwards, our aim is to be interviewing at least 20% female interviewees for each eligible role going forwards. Obviously, maintaining strong union relationships is key for us as well, and we've always been proud that we've had very strong local employment which is 100% local employment in Kazakhstan, and that 98% local employment at Sasa with only 12 expats.
Going on to Slide 21. We've put a slide now on its own in terms of our climate change progress. You'll recall, we set ourselves a target of 50% reduction in our group Scope 1 and Scope 2 greenhouse gas emissions by 2030 from a 2020 base. And the chart that you should be able to see on Page 21 is a waterfall chart, which highlights the progress we've made from the 98,000 tonnes of carbon dioxide equivalent emissions that we produced in 2020, and that's now reduced by 40% in the 2 years to 58,000 tonnes in 2022. 50% of the initial 2020 greenhouse gas emissions would get you to 49,000 tonnes by our 2030 target. And I think key to getting us a large part of the way towards that is the Kounrad solar power project, which we agreed to build in 2022, started building in Q4 2022, and we're on track to complete that project by the end of this year.
If we move on to Slide 22. Aside from the climate change work that we have undertaken, we've also had some other key focus areas in terms of looking after our environment. We undertook a human rights asset retirement obligation study with help from [ Golders ] there, that piece of work done and that's incorporated as well. led to our financials. And we also were delighted to get our environmental soda impact assessment approved for the cotton fill project at CAML. That was a key achievement at Sasa last year, which paved the way rates to push ahead with the construction aspects at the site. This year, we'll be moving forward to put a bit more emphasis on to our group biodiversity strategy.
And we have done several biodiversity studies that both of our [indiscernible]. We studied at both of our sites in the past but we're aiming this year to pull that together to a more group approach as to how we deal with biodiversity aspects. We'll also be finalizing our Sasa water management strategy. in transitioning to the paste fill mining approach, we'll start moving towards 2 of our key long-term targets, which is a 75% reduction in freshwater obstruction at Sasa by the end of 2026 and also 70% of our tailing to be stored in a more environmentally responsible manner by the end of 2026. And by that, we mean underground in the paste backfill and in the dry stack tailings as well.
Moving on to Slide 23, unlocking value for communities this covered various aspects. One is, as already mentioned before, is local employment, which is key the creating value for the communities. The other is local procurement as well. And we've put some stats in there, $54 million spent with local suppliers in North Macedonia, near $11 million spent local suppliers in Kazakhstan in 2022. And that really helps to develop value in the countries in which we operate. We also have our charitable foundations at both of the sites. And we're proud of the work that we do there, trying to make positive changes to develop our communities. We've made some improvements in the disabled daycare center in Sasa during the year. And Kounrad, we provided some significant financial support to a new children's rehabilitation center in Balkhash.
And we've also sponsored some tuition fees for medical students in the local areas to try and keep newly trained doctors within the Balkhash region as well. And there's a few bullet points at the bottom of the slide, which we're particularly proud of what we've delivered from 3 projects, which we have previously invested in. One was a crisis center where last year, we provided refuge for 42 adults and 36 children flea difficult domestic situations. We continue to support over 100 children with disabilities in the Kind Heart Center that we built and supported a couple of years ago and also continued support for the Center for the Blind over 130 people last year as well. Going forward, we're looking to increase the amount of funding we put into our 2 foundations from 0.25% of revenue to 0.5% of revenue from 2023 going forwards.
That's my sustainability summary. So I'm going to hand back to Nigel to talk about the operations.
Thanks very much, Louise. Going on to Slide 25, but just before I do, just to say that shows how much focus we do put on sustainability aspect of the business, and Gavin has already just alluded to the profitability of the business. I think this is just an expansion now of the operations that drive that profitability. Many of you on the call will be fully aware of the Kounrad operation. That's an aerial photograph, you can see on Slide 25. We now estimate we've got just over 5,000 tonnes of recoverable copper in the eastern dumps and about 106,000 tonnes of recoverable copper on the Western Dumps to actually produce to the end of the Life of Mine, which is 2034 in terms of license terms.
Just turning to Slide 26. So many of you again will have seen this chart before. It just shows our historical production on the right-hand side. since 2016, now we've been pretty steady between 13,000 and 14,000 tonnes. And as I mentioned before, last year was actually a record year for us, 14,254 tonnes. But we have optimized the output, and we expect to stay at those kind of levels before it's slightly declines a little bit as we get towards the end of the license period. Eastern Dumps and Western Dumps slightly different, as you can see on the left-hand side, estimating 45% to 50% recovery on the East. And in certain areas, we've achieved more than that. And on the Western Dumps, 35% to 42%, where most of the copper is now coming from around about 85% of our copper production is now on the Western dumps as opposed to the Eastern Dumps. And you can see the standard leach curve there in terms of how we recover the copper over a period of time, different for different cells in the East and the West.
Slide 27, Louise mentioned, we are constructing a solar power plant. It's quite small in terms of size. It's only 4.77 megawatts and will provide around about 16% to 18% of our electrical requirements because there are constraints in Kazakhstan in terms of the size of solar plant that you can build and then directly feed into your own plant. But attempt to actually improve our greenhouse gas emissions in Kazakhstan, and it's also been designed such that we can potentially increase the size of that solar plant in the future, should we be able to should we need to. Development cost of that is around about $5 million will have a reduction on our greenhouse gas emissions in Kazakhstan about 10%, and I think around about 6% at group level. We expect that power plant to come on stream at the end of this year.
Moving over finally, on Kounrad, Slide 28, and I won't labor this too much, but we're coming up almost 11 years of production now at Kounrad. We celebrated 10 years last year and some interesting statistics in terms of the number of people we employ, the amount of revenue that we have generated in that 10 year, 10.5 year period, which is getting close to $1 billion, something as a company, we're very proud of because it's producing value effectively out of waste. Very low C1 cash cost. Over the life of that operation, it's around about $0.56 per pound. A few headwinds encountered over the last year that Gavin mentioned, but still a very low-cost operation. And 100% local employment, again, something we're very proud of. All the staff that are locally sourced, if you like, and we've trained them over to actually run that plant with just a slight hand on the telephone corporate level and also the establishment of the Kounrad Foundation something we're proud of and some of the points that Louise has mentioned there in terms of how we support the community in the local area.
So moving along to Sasa. Quite a lot of work has gone into Sasa. And if I move to Slide 30 now just we emptied work in a shop there, you see quite a constrained area that Sasa operates in a beautiful part of the world in North Macedonia. It's a Skarn hosted deposit. It's an underground mine, sublevel caving operation at the moment. But as many of you know, we are transitioning slowly through to a cut-and-fill mining and then a paste fill with long-haul stoping, which is something new that we're reviewing on this call, I suppose, and something that we found through the work we've done over the course of the last year in updating our resources and our reserves and our Life of Mine thinking for Sasa, which has extended the life out to 2039.
Slide 31 is just the production for last year. I've already mentioned the production numbers. Our guidance for this year is informed by as we go lower in the mine. We've gotten slightly lower grades, both on zinc and lead. And so we've got this year a guidance of 19,000 to 21,000 tonnes of zinc in concentrate and then 27,000 to 29,000 tonnes of lead in concentrates as we transition down through the mine. You can see the history we there showing pretty constant levels of output from the mine all the way back to 2010 ahead of our time of our initial.
Just a few slides update on the transition projects as we're calling them, Slide 32. We started the central decline development back in 2021. We've now done almost 1.5 kilometers, both from the surface and the 910 level. And we expect that to hold through in May of this year. And then we'll continue to decline further down below the 750 level. The total length of that decline will be 4 kilometers. And as, I think, already previously mentioned, it will provide far more productive and efficient access into the lower reaches of the ore body improve the ventilation and improve our productivity as we go through into the lower levels of the mine. And it's over a number of years that we'll be doing it, expecting to complete the whole decline by 2024 when the 4 kilometers will have been there effectively tunneled.
Paste backfill plant, good process -- good progress, sorry I should say on that and to see some pictures, a picture paints a thousand words. We started the actual construction on site in September, and we've been working throughout the winter more or less unimpeded by any kind of weather impacts. The roof panels are on the cladding on now. The building is more or less complete. We are on track to start the dry commissioning side of that project in April and then into wet commissioning in May. The particulation pipework, the pipework that basically takes the paste fill from the plant itself into the voids that we'll be filling when we start Cut and Fill Mining. We're making good progress on that. That commenced in the second half of last year and is well on track completion ahead of the planned commissioning, as I mentioned, in May and then into actual Cut and Fill Mining in the second half of this year.
I suppose the final part of the transition project is obviously dry stack, slightly behind on that, but we always stand it that way. We will start work on the groundwork and installing the plant in the second half of this year. The design is being just adapted into North Macedonian format, something you have to do in all foreign jurisdictions to make sure it meets local regulatory approvals. But most of the major equipment has now been ordered and is on track to be delivered in the second half of this year, and then construction will start in the second half of this year, as I mentioned. Knight Piesold worked very closely with us in understanding what the land formats for the detailed design in terms of where you actually stack the dry -- the cake, if you like, the tailings themselves, which is probably more involved in project than we thought in the early days when we went down the Life of Mine review. But we're well on track. We understand that a lot better now and the construction will start in the second half of the year.
Something which has been marginally -- Slide 35, sorry, I'm on to now is the Sasa reserves and resources. We bolstered our technical team at the back end of 2021 and into 2022 with a good geologist, good technical services team at Sasa and used our skill set to review the actual mine planning, update the reserves and update the resources. And as a consequence of that work, and you can see the deeper drilling that we've done ahead of that work really is important as to the nature of the ore body as we go lower, which is slightly lower grade also slightly lower mining vents in some of the areas. And we've actually fed that all into standard modern software, should I say, which is lead drug for the resources modeling also [ Deswik ] in terms of the mine planning and the reserve modeling and got a very good robust model now of what the ore body is doing down at depth, which has informed us really in terms of our planning going into the future.
We've incorporated rather than percentage grade cutoffs, NSR cutoff because it's a polymetallic mine, which has also informed. And a number of changes have affected therefore, the resource which decreased by 1.2 million tons year-on-year. That's part the completion of around about 700 tonnes or 800 tonnes and also adjustments on the geological reinterpretation of the data from the group geologists. That's been signed off by Graham, our group geologist, and that's fed into the Svinja Reka ore reserve which is also slightly decreased. And there's a number of movements in that, both positive and negative, to give a 0.7 million tonne depletion. But I'm just saying, you can see the table on the right, we're confident we've got a very robust Life of Mine plan there.
Informing that moving forward, and we've been fairly prudent on the output, and that was partly led some of the impairment charge. We're planning now an 830,000 tonne per annum output. But also, we've got a detailed drilling program, both this year and next year and about 10,000 [ meats ] of drilling at the 3 ore bodies that we have at Sasa. So, this is Slide 36. We -- just to remind people, we have the Svinja Reka ore body, which is where we're currently operating. And then there's Kozja Reka and the Golema Reka ore bodies close by, which have historically been mined. But whilst we've been the owners, we've not done any mining there. We've got a drill program, as I say, just in excess of 10,000 meters, both on surface and underground to actually understand those ore bodies and feed into the Life of Mine plan in the future, which will potentially give some optimization.
Slide 37, just to emphasize the first 5 years, we've now owned that for just over 5 years. And since acquiring it, the amount of CapEx we spent on the asset to transition into this modern method of mining and this Cut and Fill Mining, we generated revenue of EBITDA, should I say, sorry, $301.5 million. We've paid off all the debt, $187 million of debt that we took to acquire the assets in the first place. We've established good community relationships with a Sasa Foundation. I think, established ourselves as an owner of that business and a long-term owner of the business, and established our credibility in country as a long-term owner of the mine. We have 98% local employment at Sasa. And you can see the statistics there, on how much zinc and lead we have produced and also some of the statistics for revenue and how much tax we paid locally on Slide 37.
Just moving quickly to the end of the presentation anyways. But something, as I mentioned right at the beginning, which is important to come, which is how we allocate the capital that we -- the cash that we generate from our projects in a sensible manner. And you can see on Slide 39 that our returns to shareholders, I think we've always been known for good returns back to shareholders. We have just announced this morning a 10p dividend for the second half of the year, which is a bit more challenging than first half of last year, that represented in excess of the 50% of the free cash flow generated in that second half. But overall, we felt it was a good, good decision to move to 47% for the full year, which is a 20p full year dividend for 2022. And we've now paid back nearly $300 million in dividends or 152p per share since we started paying dividends back in 2012.
Business development, obviously, one of our main challenges at least to grow the business and not a lot of organic growth in both Sasa or Kounrad. A little bit maybe at Sasa but not significant, certainly for the business. And so where we're looking to grow is outside of those 2 operations. have been active in that area. We continue to be active, and we're looking for the right opportunities. The pyramid chart there showing 2 site visits undertaken, 17 NDAs signed in about 40 opportunities reviewed, but we've not yet found the one that we've made a decision to actually invest in at this stage.
And just finally, moving on to Slide 40, just a summary outlook really just to bring it all and wrap it all up, to be honest with you, a strong sustainable business. We believe we have that. We've got our capital allocation priorities right, both investing back into the business. giving money back to our shareholders, growing the treasury balance that we have and looking for that next opportunity. And our outlook for this year is we expect metal prices to stay fairly stable. We've got good confidence in our guidance that I've already mentioned for the production of those metals. We are debt-free now, so we have debt capacity to look for opportunities.
One of the challenges we have is completing the projects on site to site completely exact plan go through the commissioning stage, which I think as a management team aspect is a riskier part of the stage, but we've got a good team in place to actually deliver on that and get through the commissioning later the initial phase of the central decline, certainly as that holds through in May, that will be moment for the company and also construct the Kounrad solar power plant in Kazakhstan and then start our transition over to this modern methods -- paste fill method of mining at Sasa.
And on that note, I think that's the end of the presentation. I'll hand it back to the team for any questions that you may have for the management team here at CAML.
[Operator Instructions] The first question comes from the line of Alexander Pearce.
So my question is on the Life of Mine study at Sasa. So you now model 830,000 tonnes versus obviously the potential for 900,000 tonnes before. It sounds like this is mine constraint. So I just wonder whether you could provide any more detail on likely the likely throughput profile to get to that 80% from where you are now given the transition to both capital and long-haul stoping? And then second part of that is do you have a rough split between those mining methods over the Life of Mine, so we can get a better idea of cost profile. And then finally, do you think you're being relatively conservative overall with this 830,000 tonnes? And is there any potential for incremental upside if you brought forward development of some of the other ore bodies, for example?
Okay. Good questions, Alex. I think the middle one in terms of split may have to come back to in terms of if you're asking what's the split between long hole stoping cuts and fill and sublevel caving give you an accurate answer. We have got the detail behind that, but I don't get it immediately to mind. In terms of the constraints, I think when we initiated the life of mine review, I think it's fair to say that Scott and the team thought the main constraint we would have will be the plant and that if we invested in more flotation cells and another mill potentially, you could easily get to 900,000 tonnes.
I think having owned the mine now for 5 years, we've recognized the current processing plant is probably working flat out most stage, and you've got to be careful that you don't over exhaust it. So I think that still is a constraint, but I think it's something we could actually get up to 900,000 tonnes with the right trade-off study. I do think that the drilling and what we've come out with this morning in terms of the life of mine study and the narrower mining which lower down and informing us to go to long-haul stoping lower down in some of those grades where they become less than 3.5 meters wide to -- if you did cut and fill in, in those particular areas, you would have pretty high dilution and not as good of recoveries, which again informs to go to long-haul stoping to maintain decent recoveries and minimize dilution.
But it's -- what is informing us, I think, is that to get the number of headings you might require to get to 900,000 tonnes, meaning that mining is potentially a constraint. So you've now got 2 constraints. And so I think prudently, we've said that, well, we could get to 830,000 tonnes, we're confident. We've been at 830,000 tonnes in the past 5 years that we've owned the mine. So I think we can get there. So I think it's just a practical application of what we've learned over the past year to give a prudent Life of Mine plan.
So in answer to your final part of the question, which are we being conservative? I think it's a realistic plan personally. I think we may be conservative it will depend on what we find in the drilling program at Kozja Reka and Golema Reka. If we find suitable ore there, and we're hopeful that we will do then that would inform us to maybe consider how we would increase the mining throughput to 900,000 tonnes. And I think the plant is an easier decision. Even though the footprint is a little bit constrained.
It's as you know, from having visited the mine, Alex. So -- but I think that's stuff doable, and we have a basic outline plans to flotation cells and mills that we could do that with. But as you know, on a mine, there's a lot of moving parts. And we need to think about all aspects of it to get a decent plan. I hope that answers your question, and we'll come back to you on the split and let Gavin and Louise have those statistics right to the top of the head.
The next question comes from Richard Hatch.
Just a question. I mean just listening -- looking at the reading through the impairment stuff, I mean you cut your long-term lead price by nearly 10% real. And I'm just kind of thinking with the way that prices have gone cost curve inflation and such like, it feels like the direction of the market is actually increasing the long-term price because you've got to take into account the higher cost of production. So if you do decide at some point to increase your long-term prices to account for that sort of theme, is there scope for the impairment to an extent being written back upwards, I guess, not the goodwill part, but the other element to it or not?
Yes, I'll take that, Richard. Yes. What you want to consider here is that the impairment is run as a snapshot in time as of 31st of December. So therefore, we use the consensus prices out of that date, no matter what our personal outlook might be. And frankly, I think people around this table will probably agree with you. And as you know, the consensus prices at that point, we're lagging spot by quite substantial margins. So we were stuck with using those prices. And to your point, as if in future, any of those metrics that drove that impairment do change, there is an opportunity to sort of write it back, if you like. But it's -- whether or not we elect to do that at the time is another story.
I think on the last point, Richard, personally, as an accountant, I wouldn't want to see us write it back. I'd rather have the balance sheet written down and just accept the business runs up its cash flow and its performance, its operating performance really because I think it is a technical matter. If you were to look at the impairment review, Dave the hotly did any work on Kounrad because there's such a large margin between the book value now at Kounrad and what the cash flows predict. So I'd rather to create that kind of distance, it after as well and don't have to keep me visiting this.
But what we know is always a debate between an analyst management team and a banker in terms of consensus prices then what prices are for electric going to quite right, I would have view how we view consensus being fairly prudent given what's happening in the world at the moment and the cost inflation experience. So if you put higher commodity prices, clearly, there's a lead to impairment. And I think the other thing is that the discount rate, that's probably a higher discount rate than many of us would feel having owned Sasa now for 5 years and establishing ourselves in the country. It's a bit perverse that you use a high discount rate. But we mustn't complain too much the audits have a role to play.
And it was a bit marginal, therefore, we've impaired it. But I don't think it affects the performance of the business at all. And I wouldn't want to yo-yo back to something that brought me fair value and cash flows back. Again, I've got to take another impairment another -- you remember when we bought the other percentage stake in Kounrad, Rich, I don't know if you remember back to this. We had a fair value uplift which is a hell of a thing to try and explain, but it didn't really impact what people's view of the business was in any shape or form because the business is a business somehow performs on its financial performance and cash flow to.
Yes. okay. Understood. I appreciate the color. Gavin, what I've got you, just on the -- on the working capital, another build in receivables, but revenues were broadly flat year-on-year. Is there any kind of timing elements to that? And should we expect to see a bit of a drift back of cash into the H1 cash flow on a working capital standpoint or not?
I think a lot of that working capital build, Richard, is actually to do with prepayments for the Cut and Fill Project. So it's about $4.7 million of that is prepayments that gets booked in there. rather than deferred so we're not necessarily waiting for revenue.
Okay. Fair enough. And I see there's a comment here about the [indiscernible]. And then just a last point -- last question is just on that run rate up to 830,000 tonnes. What is the kind of the time frame to which you're kind of considering running the plant up to 830,000 tonnes. I guess if you're an impairment model, you're running it at 830,000 tonnes long term. So when do you get there?
But we should be there next year I would have thought, Richard, because most of the infrastructure will be done, and we'll be moving to cuts and fills. I think we've had a couple of years where we've been less than 830,000 tonnes, as you've seen on the 5-year production profile. So we're aiming to get back there as soon as possible, really, once we've got the plant up and running and we've got the transition covered.
There are no further questions in the queue at the moment. [Operator Instructions] The next question comes from the line of Peter Mallin-Jones.
I was wondering if I might follow up on Alex's question around the Life of Mine plan. I hear you mentioned that you may look to expand the plant and add a mill and so forth in if the sort of drilling at Kozja Reka and Golema Reka comes through and allows you to open up mining in those zones. I was wondering if you can give us a sense of when that you may get to the point of those results being in and being able to take that sort of decision?
Good question, Pete. I mean we started the drilling on the Kozja Reka. We started that in February, and we'll start the drilling on the Golema Reka in April. So I would hope the latter part of this year will inform us as to drill results effectively from assays and everything else that comes back. But in terms of doing the trade-off study, Again, I would have thought it'd be latter part of this year, maybe into early next year because we've got enough on our plate to do the actual infrastructure and building the plant really. So -- but it is something that we have in mind to have a look at.
Okay. So it would be something that once the cut and fill transition is sort of bedding down and you've got the majority of the mine moved over in the areas where you're going to move it over then that creates bandwidth at site to start looking at potential expansions towards the 900,000 tonnes without stressing over the mine on the plant?
Yes, yes, effective. But we'd like to be 2 fast but an actual specific day we've got in mind to do that trade-off study. But I think it's something we will be looking at in [indiscernible].
And I think the trade-off study will lean more towards the sort of adjustments in the mine plan and how we get those tonnes out of the ground because -- and you recall from previous presentations, we have guided that we can expand that plant for minimal CapEx. And there is certainly -- it's not like we put in a whole new line and it's a few float cells and some stuff on the front end, as Nigel was saying. So it's not a huge drama on the plant side.
The next question comes from the line of Marina Calero.
I just have a question about Sasa. Can you give us a bit more color about the CapEx profile after 2023? I was just wondering if including long-haul stoping changes your CapEx outlook?
In the question because I don't really change the CapEx outlook.
No. I think we typically guide to a $8 million to $10 million of sustaining CapEx per year.
Specific drilling for it, which will be a bit of CapEx, but I think it will all be accommodated, if I'm honest with you, Marina, in the sustaining CapEx moving forward. We replaced the fleet and buy new drill rigs and trucks and loaders in every year, and that's all factored into that sustaining CapEx.
Yes. But I think in terms of the profile, the sustaining CapEx, as the guys say it's going to stay at that sort of $8 million to $10 million run rate that we've been guiding for the last few years. And then in terms of project CapEx, probably looking at between $10 million and $12 million sort of this year and then maybe a little bit more next year on the project, but I think nothing to that sort of level.
Okay. That's helpful. And One quick question on Kounrad, if I may. How many more years do you think you will be able to sustain production run rate of 13,000, 14,000 tonnes?
Yes. Good question. I mean we're at 2023 now. We've got a Life of Mine out to 2034. I think we can keep in the next 5, 6 years. But as we've openly stated in the presentation, the recoverable copper I'm just trying to find the page, it was about 111,000. I think, it was the number we quote there. Now that's not an exact number, Marina, in all honesty. -- you could divide that by the number of years and you get slightly less than 30,000. So it will tail off towards the end. But do work hard to try and be creative on the dump to try and extract more than what we planned for.
So we do theoretically plan for only a maximum of 50% of the East and a maximum of 42% on some of the Western Dumps. I suspect, hopefully, and it's a bit of, hopefully, we will extract more than that from some of those terms. And therefore, we'll be able to extend it. But I wouldn't like to commit to say it will keep it at 13,000 right through to 2034 our best estimate at the moment is the 111,600 tonnes from recoverable copper. But I would suspect and hope that we actually did that. The license ends 2034, I think there'll be every chance that we could extend that license, but we wouldn't be operating to the same level of output that we currently are.
There are no further questions. I'll hand back to the speakers to conclude today's conference.
Okay. Well, thank you very much for everybody attending. I appreciate your time. Hopefully, that's been a good insight into our results for last year and what we are facing as challenges and things that we need to do this year to deliver. But we'll happily take any calls outside of this particular call through any of the contact numbers that are on the presentation. Please feel free to call us, and we'll happily talk through some of the issues if you've got any other issues.