Camellia (LSE:CAM) Q2 2026 Earnings Call

0:00 Hello, and welcome to the CAML Results Call. Please note that this conference is being recorded. I'm going hand over to your host, Mr. Gavin Furter, to begin today's conference. Please go ahead. Good morning, and welcome to the Central Asia Metals plc H1 twenty twenty six results presentation. Thank you all for joining, and I'm looking forward to presenting what are a solid set of results to you today. So I think if we go skip through the next four slides, which is basically disclaimer, disclaimer,

0:32 disclaimer, disclaimer. It's getting bigger and bigger because of the multiple jurisdictions now, but and on to an overview of our business as it currently stands today. We have a portfolio of producing base metal assets complemented by some exciting exploration prospects. The producers are the Kunrad project that is in Kazakhstan. We are another 100%, and it's been producing copper profitably for us since 2012, and it's licensed out to 2034. We have the Sasa underground lead zinc mine in North Macedonia, again, owned that since, 2017 and has been producing lead zinc consistently for a fair amount of time with a mine life out to 2034 based on our current reserve statement and adding a small proportion of resources into that life of mine plan.

1:32 In terms of exploration, as I said, exciting prospects out in Kazakhstan, where we have two exploration companies focusing on base metals exploration and targeting high grade base metals projects that we can afford to build. So we've completed some maiden drilling programs at two of our projects, and we've added another important project to that portfolio in Kazakhstan as well. And lastly, but not least, Aberdeen Minerals, which is a minority position we hold in an exploration company, privately held, looking for copper and nickel mineralization up in Scotland. And most recently, we've agreed to invest another £1,150,000 into that business to fund another drilling program, and that will take our ownership there up to around 38.9 percent. So great underlying asset base. And today, we present a string of solid financials we go to the next slide, please which reflect this solid operational performance in an attractive commodity price environment. So having a look at the financial results on the left hand side, we produced revenue of $145,500,000 versus just under $100,000,000 in the same period last year, with EBITDA correspondingly higher at $75,500,000, up from $39,900,000 with a healthy margin of 52.

2:57 That has generated cash flow of $46,800,000, and that has driven a dividend that we announced today of 8P, which is right in the middle of our dividend policy range of 50%. So that 8P represents 40% of that free cash flow. Cash in the bank at the end of the period, dollars 97,200,000, leaves us in a very healthy position in terms of our balance sheet. And moving on to the operations, as you can see there, we've achieved a slight increase in production in Kazakhstan, which has been a really good result given the weather that we experienced in Q1, up 1% from the previous period. And importantly, North Macedonia and Sasa, we've seen some improvements in product production there. We've got an extra 5% of zinc metal and an extra 6% of lead metal as some of the improvement initiatives start kicking in in that, in that operation.

3:56 Unfortunately, we did suffer two LTIs. We do strive for a zero harm workplace. So the focus for the rest of the year is really getting, getting that number of 1.73 down, to our targeted number, but it's looking good so far in terms of that. But as I said, very, focused on health and safety there as well. So if we move to the next slide, please, which is our investment case for CAML. Now I think, if anything, this investment case has become stronger over the last few months. But we'll go through the three elements of it just quickly for you. So first of all, we've got cash generation. As I said earlier, almost $47,000,000 of cash generated, which is almost threefold increase period on period. And with $97,200,000 in the bank, you know, it is a really healthy position to be in. That cash generation is from a higher margin Kunai copper production and improving SASSA performance.

4:57 Returns, we've demonstrated consistent shareholder returns, returning over $437,000,000 back to our shareholders in cash since our IPO, which is a lot more than we've ever raised from the market. And we will continue with disciplined capital allocation. And importantly, we are now adding some really good growth to our portfolio. As I've mentioned earlier, the advancing exploration portfolio in Kazakhstan, Aberdeen Minerals, And the proposed Cygnus transaction, which we'll talk about a bit later in the presentation, has the potential to add a near term producer to our portfolio plus with significant exploration upside. So at this point,

5:38 we'll just talk about that capital allocation on the next slide a little bit. And I think what we've got here is the balancing of capital allocation, which is reflected in that AP dividend we just spoke about earlier and that we've announced today. That basically provides attractive returns to our shareholders while retaining enough capital and cash on the balance sheet to finance our growth ambitions. So as you can see in these three bullet points here, or three columns of the slide, we've returned a significant amount of money to our shareholders via share buybacks and dividends. The strong balance sheet supports our growth ambitions. We've paid over 208p of cash to our dividend since IPO. And now we're going to continue with a balanced approach to capital allocation, funding both returns to shareholders' growth and continuing with a financially strong base on our balance sheet. So effectively, this allows us to build on the strong foundations that we currently have and set the business up for long term success. So I'll hand over to Louise now, who's her and her team have been slaving over the summer to generate the financials that we're presenting today. Thanks Louise.

6:51 Thank you. If you go on to the next slide and then the next slide. Perfect. Thanks. So if we just start off by looking at some of the macro conditions that are important in understanding the very strong results that we have announced this morning. Obviously, we've had strong production performance in the first half of this year, but I think it's important to acknowledge the commodity prices, which has been very supportive of our financial results today. In particular, we can see in the little table at the bottom, we've got copper price which is 39% higher on average for the first half of this year versus H1 twenty twenty five and also the zinc price 26% higher in the first half of this year versus the first half of twenty twenty five.

7:36 Also, it's worth pointing out silver, the silver price has had spikes of up to $115 an ounce in the first half of the year. As we have explained before, silver doesn't affect our profitability, but it does affect our revenue and it does affect our cost, so you do see increased revenue and increased cost of sales because of that silver and so that's been very high silver prices during the period, which affect the way the P and L looks. Looking over to the right hand column, treatment charges, this has been very supportive for us as well during the first half of this year, so in total our treatment charges came in at £2,700,000 and that's £2,200,000 less than they were for the first half of last year, and that was very much supported by lead treatment charges actually turning negative in the second half of this year and we have those contracts to remind you from the April 1 all the way through the 04/01/2027, so we've locked in those negative last treatment charges.

8:37 And then finally just to look at foreign exchange and inflation, this is a little bit more of a negative story for us with a weaker US dollar against both of our operating currencies, so US dollar 7% weaker versus the first half of last year for the Dinar and 5% for the Kazakh tenge and that's really impacts increase as the impact of increasing local costs in both of the areas. Inflation, it remained elevated at 11% in Kazakhstan, a little bit lower at 4% in North Macedonia. What I should point out in terms of the zinc and in terms of foreign exchange, we had entered into some hedge contracts and so 50% of the hedge of the zinc production at SASSA for this year, we've hedged at 3,011.

9:27 So we've recorded the P and L a loss of around 1,400,000 for that. And on foreign exchange, we've also hedged some of the US dollar euro exposure because the Dinar is pegged to the euro and that's been more or less flat, think it's a tiny loss of around £100,000 for that hedge as well for the foreign exchange. Moving on to the next slide, we can talk through the income statement. So I think first to point out, our revenue is up 46% period on period and that is from £99,500,000 up to 145,500,000 and that's driven by the commodity prices being much higher that we talked about, the copper, zinc and silver up 128% versus the previous period, but it's also due to not just strong production performance but also higher sales.

10:25 Interestingly, in H1 twenty twenty five, we ended that period for copper with a fair bit of copper in stock, so our actual copper sales this year versus the first half of last year are 9% higher as well and zinc and lead really just reflect the increased production of the two pairs of around about 54% respectively. And of course, we were also helped on the revenue line with the reduction in treatment charges because that comes off on the revenue line in the P and L. Cost of sales, that was up by about £10,000,000 You could explain more than all of that with the increased silver purchase price, the £8,800,000 that we have to pay to purchase silver to fulfill our contract with OR royalty and also there was an increase in our depreciation, which I think was previously flagged, that was from £14,000,000 to 15,900,000 and that really reflects the sort of mathematically shorter life at SASSA that we're currently envisaged into 2034, and that gets you to effectively an increase of 11,000,000.

11:30 There's a big positive in cost of sales there, because Ransom MET, which is the revenue royalty that we pay, that reduced from £5,000,000 down to £800,000 and there was a reduction in the rate by about 90% there, so there's a positive for our cost of sales there. We did also have cost increases of £2,400,000 at the operations and that was largely related to this weaker US dollar against our operating currencies. And then finally, the last main factor in there is an increase in concession fee at Sassa due to the slightly higher production and due to the higher commodity prices as well. Admin relatively flat there, it's up by 3% or £500,000 £300,000 of that is increased business development costs mainly related to the potential Cygnus acquisition.

12:26 There's also a few other ups and downs from there because actually UK costs were generally flat. We had £100,000 up in Kazakhstan and then at SASSA there was also some elevated admin expenses in large part related to the severance pay that we've paid. So taking all that into account, EBITDA up by 89% to just under £76,000,000 and good EBITDA performance at both of the operations as well, 78% increase in our EBITDA at FINRAD and 62% increase in our EBITDA at SASSA, up now to £19,300,000 at SASSA. So if we look as well some other aspects to pull out on the P and L, one of the biggest swings is fair value movement in share based payment liability.

13:20 This is since we accounted for our LTIPs as being cash settled rather than equity settled, so there's a swing of around 9,000,000 net, that reflects the weaker share price performance up until the June 30 and so clearly that will move up and down period on period depending on the larger share price factors. Tax up quite significantly, up by 10,800,000 and that's driven by higher profits at CNRAD because those are taxed at 20% and also there's been an increase in CAMLAC withholding tax from 10% to 15% and that's referenced from the first of January this year. We did bring all our cash back to The UK in the first half but we just take half of that 50% of that through the P and L for the first half of this year.

14:09 And then really just to finally focus on the EPS which is up by 330% period on period, we've also highlighted there an adjusted EPS. All that does is strips out a £1,500,000 unrealized hedge loss, which mathematically accounted for the hedge loss maybe in the second half of this year. So we've provided the adjusted EPS just so you can see the underlying profitability of the business on that basis.

14:39 So if we go into the next slide please and we can look at the costs of both of the operations now. At Kinra, our costs for the first half were up by 12¢ and that was really based on pretty much consistent cathode production, as you say, up by 1%. Was over half of that was related to the strengthening of cane gave versus the US dollar and actually if you look at that processing total line, where we've gone up from 8,400,000 to 9,500,000, over half of that was related to foreign exchange and the rest of the costs are up by about 6%, which is less than inflation, so all in all, a pretty good result there. A couple of other factors just to point out, we also see higher payroll there, again payroll is very much linked to the strength of the tender day and also to pay rises, inflation related pay rises we gave to workforce in January this year.

15:39 It's also worth pointing out power costs were slightly lower period on period, that was rather due to a large amount of power used in H1 twenty twenty five rather than necessarily a reduction per se in this half, that's just due to some changes in the chemistry. But it's worth pointing out that we know we are going to get a power increase for seven months this year starting from the June 1 that's because the tariff has been increased from rounded from 6¢ per kilowatt hour to 7¢ per kilowatt hour, so we will see a slightly higher power charge come through in the second half of this year. But all in all, think a good performance in costs, given the headwinds from the exchange rate and we've delivered an EBITDA margin to come out of 84%, helped by the strong copper prices for the first half of this year.

16:35 If you go on to the next slide and we can look at SASSA now, so we are very pleased with the performance of SASSA, so site operating costs more or less flat or up by 2% or $400,000 Again, we're dealing with a weaker U. S. Dollar, stronger operating currencies of 7% and that cost is factoring that in. We can also see the largest increase in costs that you can see in the processing line and a million of that increase is due to our tailings disposal costs where it was purposefully prioritised putting our tailings in the paste backfill underground and on the dry stack tailings as well to maintain the capacity in TSF-four.

17:20 So that's the main factor, but actually our mining costs have been very encouraging and that's an area where we have had a lot of emphasis on our improvements. So all in all, our mining costs are lower by £700,000 There's actually an increase there in fuel, which is just to do with some of the conflicts that we see in the world and actually, so taking that out, our savings would have looked even higher, reduced spare parts and payroll savings as well were two key factors from the headcount reductions, which we pushed through in November and also some additional ones in the first quarter of this year as well. Electricity costs remain stable because we hedge the electricity price for H1, so they remain stable versus H1 twenty twenty five.

18:11 All that is very positive on the site based costs and encouragingly our CET1 cost base is actually lower period on period, that's fallen from £32,100,000 down to £30,800,000 and that's really helped by those lower treatment charges that I mentioned and so that brings the overall package of realisation costs down from 6.4 to £4,700,000 and we've got an EBITDA margin now back into the 30% which we're very encouraged about. We move on to the next slide and just a quick look at our CapEx, which is very much on track, so group CapEx for the first half at £9,500,000 that's the CapEx of that was 8,000,000 underground development, underground equipment and also the raised boring project, it £1,400,000 of that and that project concluded in July this year.

19:08 At CNRAD we said £1,400,000 which is the usual drip of pipes, some new anodes and also £200,000 on replacement boilers as well. Then we reiterate our guidance from £14,500,000 to £17,500,000 for the two operations for the full year 2026. Exploration wise, it's worth pointing out we spent $1,600,000 at CAMLEX and CAMLEX B and we've done maiden drilling programs at two of those sites and we've done some geophysics at the third site as well. We still intend to do some more drilling as the year progresses there and we should still spend between 3 and £3,500,000 in Kazakhstan as well. We turn to the next slide please and we can look at the balance sheet.

19:59 PPE, what we see there, the difference there reflects depreciation plus CapEx and a little bit of adverse foreign exchange movements in the difference between the £239 and the £226,000,000 on the balance sheet. Investment in associates, that's our holding in Aberdeen Minerals. We have since the period end, we've agreed to invest the final £1,150,000 over just under $1,600,000 to take our percentage ownership up to 39, just under 39%. So the 1,200,000 of warrants mentioned there is what we exercised in January, so the second half will see the last portion of those warrants exercised.

20:46 Inventory, we were very pleased to see that that's decreased by £3,000,000 that reflects a lot of the effort that we've put in at SASSA in a program to reduce our inventory, which is actually reduced from around about this time last year to here by almost £5,000,000 and we see £3,000,000 of that reflected in these results, so that's very pleasing to see. Other factors to point out there is as we announced, we completed a share premium cancellation in April this year and that really transferred from the share premium account to the £106,000,000 into our distributable reserves, into retained earnings, sorry, to create distributable reserves primarily for future dividends.

21:32 That sees that bigger swing on the balance sheet there. And then finally, just to say that we've got a really strong balance sheet ended June 30 with $97,000,000 of cash, we also have 400,000 of restricted cash and the 97,000,000 does include a 900,000 overdraft, but that's all the borrowings that we have. Then final slide for me, if we move to the next one, thank you, and we can look at the H1 twenty twenty six free cash flow. So if we go across the waterfall chart, we've got cash generated from operations of £71,000,000 £17,300,000 of dividends, that was the twenty twenty five final dividend of 7.5 p.

22:21 Income tax and withholding tax at 19.8, that's less cash tax than we see on the P and L, that's because particularly in Kazakhstan you pay your tax base on last year's profit, so there will be a catch up that we'll have to do in paying some more tax from August to December this year, we've put that plan in place, but that £19,800,000 does include the full amount of the withholding tax of around £10,000,000 that we paid when bringing our dividends back to The UK all of them in the first half of this year.

22:56 CapEx exploration at Aberdeen Investments, we've already talked about. The share buyback of £4,800,000 we completed a £10,000,000 share buyback, half of which was in the second half of last year and the £4,800,000 was completed by March this year, that was the final portion of that £10,000,000 that we committed to buy back. So we ended the period with the £97,000,000 of cash that I mentioned, excluding the £400,000 restricted cash flow, including the £900,000 overdraft. When we look at our adjusted free cash flow and our adjusted free cash flow, which informs the dividend calculation, we have added back on half of that withholding tax just to spread that evenly over the two six month period.

23:43 So that gives us adjusted free cash flow for the six months of £46,800,000

23:49 and that's an 189% increase versus the £16,200,000 that we generated in the first half of twenty twenty five. So I'll hand back to Gary to run through the operations. Thanks, Louise. Alright. We'll to start with the Cunrad on the next slide, please. Thank you. Yes, solid performance at Conrad, as you've seen in the numbers that Louise was talking about, both in terms of cost and revenues. As I said earlier, the cathode production was up 1%, with sales up a little bit against the previous periods due to inventories held in 2025. But we're on track to meet that full year guidance of 12,000 to 13,000 tonnes, solidly on track for that. And copper prices continue to be high, so looking for good revenue from Conrad from the end of June out to the end of the year as well. So we did have that one LTI.

24:41 Fortunately, it wasn't too serious. But again, lots of learning to be taken from these things and procedures in place to try and prevent a similar accident happening again. And in terms of cumulative production at Cunard, really good. Since we started producing in 2012, we've done over 185,000 tons of cathode copper, all at very good quality, all sold into the market, so no problem. So excellent performer here. And as I said earlier, licensed out to 2034. So we jump on to the next slide, please, where we talk about a little bit of the outlook for the business at Coonran. So with those record high copper prices we achieved

25:22 in 2020, in the first half at least, we're leveraging the strong operational performance, and we're looking to continue that into the second half of this year. Our focus remains on maximizing the efficiency of the asset. We've got industry leading margins there, and we'd like to keep it that way. The only significant update really in terms of resources and reporting is that in support of the Cygnus transaction, we've published updated mineral resource and made an ore reserve actually at Cunrad out this month as well. So that is both Jawke and 40 three-one 101 compliant. And the Jawke ore reserve currently stands at shy of 408,000 tons of contained copper. But as those of you who followed us for a while know, the amount we can recover from that, recovery rates range between sort of 3855%, really, depending on where we're leaching. So we're never going to recover that whole four zero seven. And as I said before, we've taken out 185. And that leaves, in terms of theoretically, 75,500 tonnes remaining. And that's more than sufficient support operations out of 2,034. But if you look at that little chart that we've got in the middle of the slide there, we have outperformed our forecast recoveries all the way through the operations. So we would look at that 75,400 tonnes as a minimum to 2034 with potential to extend beyond that if we can get the license renewed.

26:51 That solar plant, as Louise was saying, with an increase in electricity tariffs, is becoming ever

26:55 more valuable and has supplied 18% of our electricity for the first half of the year. Moving on to SASSA. As I said before, we started to see the benefits of the full review that we conducted in 2025. Now that review spanned resources reserves, operating procedures, financial metrics. And we are seeing some of the production metrics coming through that are reflecting an improved performance at SASSA. Not only are the ore mined tonnages higher, but also the metal that is contained within that ore, as I said, is 5% higher in zinc and 6% higher in lead, again, timely given the enhanced zinc prices we're benefiting from right now as well. So guidance of 18,000 to 20,000 tons of zinc and 26,000 to 28,000 tons of lead is still in range. We're looking to achieve that this year. And again, with the zinc prices remaining robust, we're looking for a solid financial performance coming out of Slater over the rest of the year.

27:57 Similar to CUNRAD, we've published JORC and 40 three-one 101 compliance, all reserve statements and mineral resource estimates in support of the Cygnus transaction. And just getting back to that improvement program I was talking about, we're still continuing to do that with the emphasis on mining performance and cost control. And you can see from the chart on the right hand side, we have you can see improvements in tonnage, improvements in grades, which means less dilution, and that's reflected in the higher metal tons that we've produced. Next slide, please. We're not gonna sit on our laurels at SASSA. We continue to strive for more more improvements there.

28:44 And so far, you know, we we're looking at these improvements in productivity, staffing levels, and cost control. And as Louise was saying, really good results on the inventory management there as well. So for H1 twenty twenty six, I think we've done some really good things in terms of drill meters that we're getting

29:01 in lateral development, enhancing that grade control model and reducing the inventory numbers there. And those will continue. And into H2, we're going to continue to focus on executing on our life of mine plan and our 2026 budget. We're trying to improve maintenance planning through data collection and analysis there and also strengthening the team further. We had a new geologist join, new chief geologist join in H1. We've got a few key hires coming in. We've actually joined already, a few of them already, to strengthen the team mainly around planning and execution of underground mining, which is where we see the major opportunity for improvement there. So moving on to the business in more general on the next slide, please. So sustainability remains a core part, a core sort of element of our business success. And I won't go through the slide in a lot of detail. I'll just provide you with a few of the highlights that we achieved during the period. So in terms of health and safety, in 2025, we actually instituted a full review of the health and safety on both sites. We workshopped this all with the site guys as well and came up with a new sort of structure for a group safety culture, which we started implementing into 2026.

30:14 So that's been really well received on-site and at head office. As I said, unfortunately, we did suffer those two LTIs during the half, but the really stringent focus on health and safety always and moving forward. In terms of community investment, we continue to invest in education, infrastructure, and importantly, and more fun, this is some business acceleration program that we've got in in Sata where we've actually now financed four businesses and four startups there. And that's in conjunction with the other things that we're doing in terms of STEAM, children's centers, and just generally looking after our communities and maintaining that license to operate. And part of that is obviously environmental management, and that's been a continued focus.

31:00 Three key elements there that we've kicked off this year is we've actually completed our biodiversity management and climate resilience reviews across both operations. We're updating our closure plans, given the specifically given the changes at with the two new plants, that Luis mentioned there. And in terms of tailings management at Sutter, we've managed to put 77 of our tailings either back underground through a paste backfill or onto the dry stack landform, thus preserving PSF 4, which is the last wet tailings

31:32 facility for 2034 and beyond. So if we look at the capital outlook and allocation, if we can jump for two slides, please. Thanks. We've made really good advances across the entire exploration portfolio. Just a little more detail on what we've spoken about before. So in CAML XD, which is 100% owned by us, we have an option over an additional project in the Tengiz Basin. This is a highly prospective region for sediment hosted copper and also sits adjacent to the system license that we've got already. We've undertaken some field work there the minute we got hold of that option and have delineated drill targets with drilling of about 4,600 meters planned in the latter half of this year and into 2027. So that's a highly prospective license that we've got hold of there.

32:20 And that option is for three years, and we can extend it for another year basis exploration results there. CAMLEX continues to churn through its licenses. You know, excellent team out there. And, we've had maiden drilling programs, very exciting, at Ottia and Usnoyar. Know, 4,300 meters were drilled across 15 diamond holes, and actually, we've intersected mineralization in both. At Ottia, a structurally controlled polymetallic mineralized system was discovered with visible stylerite and galena. And at Usnoyar, we've looked at we've actually looked at the core and seen copper moly mineralization, and this system extends over 1.2 kilometers of strike. So assay results, we're all on tentative for those coming in quarter three, and those will guide future explorations on those two licenses.

33:07 And the third license we focused on in Kazakhstan was Shyandi. That was a geophysical survey that we've undertaken. We're in interpretation mode there to generate drill targets, and we'll decide on where to target that drilling in the second half of this year. Aberdeen Minerals, I think we've both spoken about that a fair amount. Effectively, we financed phase three drilling through that first warrant exercise. Phase four drilling will be financed through the final warrant exercise of 1,150,000 That will take our shareholding up to 38.9 percent. So wishing Fraser and his team in Scotland all the very best for that fourth phase of drilling. In terms of growth, on the next slide, please, we made lots of progress. You know, we've been talking about adding an asset to the business, and the proposed transaction with Cygnus is, you know, the sort of reaching its final phases here now.

34:00 We've effectively put out the scheme booklet, which is the one that gets lodged with the Australian Exchange. That was published on the thirteenth of of August. And The UK circular to support The UK shareholder vote was published on the August 14. Now this, to remind you, is an all all share transaction. We value the Cygnus equity at around $232,000,000 Australian, and we're targeting completion in October this year. So if all goes well, are two key dates in that timetable on the right hand side. September 4 is the CAML shareholder vote. So those of you listening in, don't forget to lodge your votes by the September 2, please. And the Cigna scheme meeting occurs on the September 18 where the Cigna shareholders will vote, hopefully, in favor of the scheme. Now we do have both boards of directors strongly recommending that our shareholders vote in favor. We've had proxy advisers, Glass Lewis, ISS and CAML side suggesting that shareholders vote in favor as well.

35:00 And the scheme booklet I mentioned earlier sets out all of the advantages and disadvantages of the scheme, and I urge any Cigna shareholders listening today to have a careful look at that and vote accordingly. So assuming this completes in October, what we really end up with is more copper exposure in the business in a Tier one jurisdiction. So really populating that area of the pipeline between the early stage exploration we've spoken about and the operations that are underpinning this excellent set of financial results. If we move to the next slide, please, just a reminder to our shareholders of what we're buying. The Shiburtomo is a high grade copper gold suite of assets in a Tier one jurisdiction. There's effectively five copper gold deposits, most of which are located within 30 kilometers of an existing processing facility. Now this processing facility will need significant refurbishment and upgrading, but it is a brownfields opportunity for us that sort of accelerates permitting and timetable to production there.

36:05 Cygnus had started a preliminary economic assessment. That's been underway, and they needed to do quite a lot of drilling under the Australian rules to sort of get a lot of the resources into the PEA. We will continue with that drilling program. We'll also continue with that PEA study, which will probably be published, you know, if all goes well sometime early next year. You know, not only have we got these five deposits, but there's also significant exploration potential. If we go to the next slide. Yeah. This is a district that's produced over a million tons of copper and 3,500,000 ounces of gold historically, so we really are an elephant country here. And if you look at the the, I guess, there's five plus copper rand on the left hand side. That's the sort of five core assets that look at the former 6,400,000 ton measured indicated resource.

37:00 But that 18 kilometer strike length, all of those red arrows that you can see on that chart show you where the mineralization is either open at depth or a long strike. So there's a lot of exploration potential there, a large existing data set that the Cygnus team has been analyzing. And we will continue with the same team in Canada, remember. So we're not looking to change the team up at all in Canada. So we have a lot of continuity in terms of exploration knowledge and driving the exploration potential of the suite of tenements that Cygnus has pulled together. Not to mention that Cygnus itself has actually increased that resource base by 78%, just to show you what potential actually exists with this suite of tenements that exist out in Canada. So key days there, as I said, September 2 for our shareholders, September 18 for any Cigna shareholders that are listening in today.

37:53 Final slide in terms of our outlook for the year. As I said a couple of times now, we're still benefiting from very good prices, both copper and zinc, and we expect that to continue for the rest of the year. And that is going to drive, you know, good revenue as we look to achieve our 2026 full year guidance, and we're on track to achieve that both at Conrad and at SASSA. Spoken about the shareholder votes in support of the Cygnus acquisition. One thing I didn't mention earlier is that we have a TSX listing application underway, also in support of the Cygnus transaction. That's gone particularly well. We're waiting for a conditional approval from the TFX, you know, within the within the next few weeks. Certainly, in time for the closing of that transaction.

38:42 And then, as, you know, all of the technical guys in our management team, which is the three of us plus others, waiting on Tensor Hooks for those assay results to come out of Kazakhstan because the course certainly looks interesting, but the proof of the pudding is still awaited, so looking for that. And then in terms of capital allocation going forward, 8P dividend, we're very pleased to announce that today, 40% of our adjusted free cash flow. CapEx at both operations moving forward now is really just going to be sustaining CapEx and guidance. As Luis said, we're looking to sort of land within that 14,500,000 to $17,500,000 range. Cash on the balance sheet of $97,200,000 provides us with a huge amount of optionality going forward, both in terms of investment into exploration, at Kazakhstan, Scotland and Canada, and at the same time, providing our shareholders with a look through value in terms of capital returns there.

39:39 So a lot of flexibility and optionality now moving forward with CAML and the cash generation underpinning all of our growth ambitions, I think we set up for a really good future for the business. So thank you very much all for attending and listening today. I think it's time to hand over to the floor now for questions. And thank you very much, sir. Ladies and gentlemen, if you'd to ask an audio question, please press star one on your telephone keypad and just make sure that your line is not muted to cover your equipment. That is star one for questions. Our first question today is coming from Laura Chan calling from RBC. Please go ahead, Laura. Your line is open. Hi. Morning. Morning, Gavin, Louise. Congrats on the results. Just one question from my side, mainly on capital allocation.

40:31 The h one payout was, like, those at the midpoint of your policy. And with the transaction completing soon and should prove a new development spend ahead, how should we think about the h two payout ratio and does your capital allocation framework change structurally post close? And I guess just a related question is how should we think about your CapEx profile on a group level over the next kind of twelve to twenty four months, or if that development is then likely to come in? Okay. Thanks, Laura. So in terms of the dividend, we made the decision a year ago as a board to get the dividend back into policy. And I think that provides us with the flexibility to finance both capital returns and also our growth ambitions. And the AP dividend is, as I said, right in the middle of the range of that. I think apart from you, Laura, think it beat mostly discrete, consensus expectations.

41:28 So But look. And I think, you know, the the same remains. I think, you know, if if we continue to benefit from, you know, really good commodity prices, that'll give us a little more firepower to, you know, keep the dividend, you know, in that sort of towards the mid to upper end of that range. But at the same time, we will have a larger shareholder base if the Cygnus transaction closes. So there will necessarily be some dilution on a per share basis of that dividend moving forward. But we will look to continue to pay a dividend. And depending on what we end up doing with Shibugamo and the timelines there, we'd have to flex within that policy in order to finance the development there. So in terms of development CapEx, the second half of your question, yeah, look, we've got, I think, Gurisa set out quite well what the rest of the year is for the Kazakh exploration, and it's all set out in this presentation as well.

42:28 Shibugamo, we've got a fairly good handle, having spoken to management there over the last few months of what we're going to be spending. So I don't think it's going to be an enormous amount of money for the first year. Certainly, we're going to be completing drilling programs. We're going be completing that PEA and looking at options to accelerate into the DFS. And it's really once that DFS starts that the capitalist, well, if you want to call it CapEx, really, will start development expenditure will start ramping up probably into the latter half of twenty twenty seven and into '28. So I don't if that answers all of your questions. Just let me know if it doesn't. Yeah. No. That's that's fairly clear. Thanks a lot. I'll hand it over to the queue. Thank you for your questions, Laura. Next, we'll be going to Nick Chalmers of Cavendish. Please go ahead.

43:20 I hope you're well. Proved performance at SASSA in the first half. Obviously, you're still in the midst of the operational improvement program. Is there much more in the way of cost cutting that's that's gonna be under taken there? Or is it more about my vision of the the underlying performance going forward? And and how should we be thinking about per ton mining costs there in the second half? Do you think there's there's more improvement to come or is the h one level the sort of normalized level we should be thinking of going forward? Look, as I said, we're continuing to try and improve there, Nick. So I think probably a conservative approach would be to keep those costs flat through the year, if I were you. We are looking for more operational efficiencies, efficiencies around planning and making sure that we're not presented with any sort of geological surprises, which I think is the message we gave the market about a year ago. We were struggling a little bit with grade control and with drill density informing the planners and, hence, the miners. So a lot of investment into that has been made just to try and make that a lot more efficient. And then, as I said earlier, there's a few mining efficiencies that are coming through. But I think a lot of the cost it's an interesting one because we've obviously always been a sort of cost conscious business.

44:49 But in the inflationary environment that we're operating in right now, it does make it quite difficult to reduce the cost significantly. So we're kind of fighting a little bit of a rising tide, but as much as we can, at the same time, introducing all of the sort of initiatives and savings there as well. So next steps, really, once we get a firmer grip on that asset, we'd be picking it apart again and seeing if we can go beyond 2034 and looking at what the mine plan could be moving forward if we inform ourselves a little more drilling as well. So quite a way to go yet, but we are pleased to be seeing the benefits of some of those initiatives now reflected in these results. One more question, if I may. Appreciate for Chubikanu until the transaction has got over the line. But I mean, assuming that all closes on on time, what should we be thinking of in terms of timing of that PEA and budget to get there?

45:54 Well, in terms of timing, as I said earlier, we're probably looking at doing a little bit more drilling. I think Cygnus continues with the drill rigs on-site anyway. So we're just going be sort of picking up that program and pushing it forward into the sort of middle of next year. And then once we've got a handle on those resources, we could sort of drive that into a PEA that's been run-in parallel. So we're probably looking sort of what we were gonna be quarter quarter two, quarter three next year. Some of that. Some might depend on. One of the things we've talked about is, obviously, you can make changes to what your approach after PEA, but we want a PEA to to reflect as much as it can at this stage what we want to do, so one of the factors will be some trade off studies that we plan to do, where there are some obvious questions we've asked throughout the process, would we go about that aspect like that, would we change something else, So it will be a little bit dependent on those kind of isolated pieces of work that we might do to feed into a PEA as well. So there's an opportunity for us to sort of pause, step back, and have a look at, you know, different approaches.

46:58 And we've already started doing that in conjunction with with the Canadian management team of Cygnus. So, yeah, we're trying to, as best we can, to hit the ground running in September, but at the end of the day, there may well be some reflection on the way forward there. And in terms of budget, I know that the finance team has been working together with the the guys in in Canada again to set out what we're gonna be doing. And, it's fairly modest for 2027, at least first half of twenty twenty seven, just, you know, finance probably, you know, two to three weeks plus Yeah. The GNA there and the and the study works. Yeah. I mean, again, it it depends on what we choose to do, but we will be probably in terms of the drilling and the kind of run of the business, we we'd certainly be talking millions rather than tens of millions.

47:44 Yeah. So yeah. Thanks. Thank you, mister Chalmers. Next, we'll be going to Richard Hatch of Berenberg. Please go ahead, Richard. Your line is open. Thank you. Yes. Morning. Thanks for the call. Just two questions. The first one is just on strategy. So obviously, with Chibogamo being a bit longer dated in terms of volumes, how should we think about possibilities for additional sort of near producing transactions? Or I mean, just looking at your portfolio as it stands at the moment with the exploration potential that you flag and also perhaps some improvements in some of the existing operations, should we view that the potential for a near producing additional asset is probably lower than the more probable?

48:38 And the second one is just on working capital. I mean, it was just very well controlled again, just a small sort of increase in working cap, but should we think about any working cap movements in the second half? Okay. I'll take the first question and hand it off. Thanks, Richard. So in terms of strategy, look, I think, you know, the Cygnus transaction closes, then clearly, focus for the, you know, the next twelve months is really going to be integration of that asset, setting up the direction of travel to get through to a feasibility study and a production date. So that's the next twelve months is going to take up a lot of our focus and management time on that. So we've got a pipeline of opportunities that we've always sort of kept warm in the background. You know, so but let's assume that, you know, Cygnus does close. So I can't see us doing anything else significant for, you know, the next twelve months.

49:42 But once we've got that set up and running and we're happy with the direction of travel and we've got a firm focus on what we're looking to achieve and a timeline to production there, then we may or may not have a look at something else. And it depends on what comes along. As you know, this is not an easy exercise, BD, in the junior mining space, particularly in the base metal space. But we always say never say never. We do have that flexibility on the balance sheet. So we've proposed an all share transaction so that we can have the flexibility to finance our growth ambitions. I'm not saying we're going go and spend a huge amount of money on a new operating asset. But if an opportunity arose for a merger with someone that's operating or close to operations, then clearly, we'd look at it if it made sense for the shareholders.

50:36 But I I I can't see us yeah. I can't see us doing anything significant, you know, in the next twelve months. On the working capital, should yeah. On the wooden capital, yeah, suppose a couple of things just top of my head would be on the inventory side, we'll still push harder at SASSA. We've done a lot of work and a lot of analysis, I think it had got a bit too high, the inventory, but we've also put a kind of system in place to better analyze what we need, how quick items can turn over, how long it takes to reorder certain items, making sure we're not being over cautious, but ensuring that we've got key items to ensure production continues, so that's an area we'll still carry on focusing on. The other thing off top of my head that you might see is in terms of payables, the tax aspect in Kazakhstan, so it looks quite high that we were owed money back from VAT in terms of receivable.

51:39 We've actually got, I think we've got a couple of million back since the June 30, but then on the sort of payable side, there was that aspect I mentioned about CIT, so you end up paying your tax on the profits from the previous year, but obviously commodity prices have been higher than the copper price in particular, So, we'll end up owing money on CIT in cash terms by the end of the year, so we decided we're going to pay that in kind of effectively equal installments from August through to December, so by the time you see those accounts in March, then that will be more normalized as well. So those are the three aspects in terms of receivables, VAT, payables, CIT and then keep pushing on the inventory aspects as well. Very good. Well done for, keep pushing at it. Thanks for your time. Thanks, sir. Thanks, Thank you, sir.

52:33 Ladies and gentlemen, once again, if you have any questions or follow-up, please press 1 at this time. We do not appear to have any further questions coming in. Mr. Ferrer, I'll turn the call back over to you for any additional or closing remarks. Thank you. Thanks, George. So, look, thanks, everyone, for joining us this morning to attend this presentation of our results. If any other questions come up, please, you've Richard's address and details on slide there. Please direct them there, we'll do our best to get back to you who have asked questions as quickly as possible. Lastly, I'll say, you know, again, just to reiterate, there's a couple of key votes coming up. Please do exercise your your right to vote. So thanks very much for that, and once again for your continued support of our business. So thanks very much, and good morning.