2018 Full Year Results

RNS Number : 6867V

Central Asia Metals PLC

10 April 2019

CENTRAL ASIA METALS PLC

('CAML' or the 'Company')

2018 Full Year Results

Central Asia Metals plc (AIM: CAML) today announces its full year results for the 12 months ended 31 December 2018.

2018 Financial Summary

· 2018 dividend of 14.5 pence per share (2017: 16.5 pence)

o Includes final proposed dividend of 8 pence (2017: 10 pence)

o Represents 44% of 2018 adjusted free cash flow, in line with dividend policy

· Group gross revenue of $204.2 million (2017: $106.5 million)

· Group EBITDA of $125.3 million (2017: $53.9 million)

· Group EBITDA margin of 61% (2017: 51%)

· Sasa 2018 C1 zinc equivalent cash cost of $0.46 per pound (2017: $0.44 per pound)

· Kounrad 2018 C1 cash cost of $0.54 per pound (2017: $0.52 per pound)

· EPS from continuing operations of 31.33 cents (2017: 29.08 cents)

· Group net debt as at 31 December 2018 of $110.3 million (2017: net debt of $138.9 million)

o Cash in the bank as at 31 December 2018 of $39.0 million (2017: $45.8 million)

o 2018 gross debt repayments of $38.5 million

2018 Operational Summary

Sasa

· Zinc in concentrate production of 22,532 tonnes (2017: CAML attributable 3,625 tonnes)

· Lead in concentrate production of 29,388 tonnes (2017: CAML attributable 4,951 tonnes)

Kounrad

· Copper production of 14,049 tonnes (2017: 14,103 tonnes)

· 64% of 2018 production from Western Dumps

2019 Outlook

· Kounrad copper production guidance, between 12,500 and 13,500 tonnes

o Approximately 70% of 2019 copper production to be leached from Western Dumps

· Sasa production guidance

o Zinc, between 22,000 and 24,000 tonnes

o Lead, between 28,000 and 30,000 tonnes

· Capex at Sasa expected to reduce to c.$10 million for the current financial year, with minimal sustaining capex of c.$2 million at Kounrad going forward

Nigel Robinson, Chief Executive Officer, commented:

"2018 was the first full year that we have operated both Kounrad and Sasa, and we are pleased to report a successful year at both sites, with on-guidance production and strong Group financial results. In acquiring Sasa we have demonstrated a 132% increase in EBITDA to $125.3 million since 2017, at a broadly maintained EBITDA margin of 61% (2017: 51%, or 62% adjusted to exclude Sasa acquisition costs), despite an average 20% fall in the basket price of our base metals.

"EBITDA per share increased year on year by 65% and EPS from continuing operations rose by 8% from 2017 to 31.33 cents. We believe that, while taking other factors into account, these increases demonstrate the accretive nature of the Sasa acquisition.

"Since operations commenced at Kounrad in 2012, we have consistently delivered copper output at a C1 cash cost of production that is amongst the lowest globally and, for 2018, was $0.54 per pound (2017: $0.52 per pound). Including our base metals production from Sasa, we are pleased that our average Group copper equivalent C1 cash cost of production at $0.87 per pound is firmly within the lowest industry quartile.

"We are pleased to propose an 8 pence per share final dividend, equating to a full year dividend of 14.5 pence. Once the final dividend has been paid, the Company will have returned $162 million to its shareholders in the last seven years. The full year dividend represents 44% of our 2018 adjusted free cash flow and is therefore in line with our new policy of returning to our shareholders between 30% and 50% of our annual free cash flow. With low cost production from both operations, we are confident that we can continue to offer attractive returns to shareholders in 2019 and beyond.

"We move into 2019 as a highly cash generative resources company with two low cost operations producing three base metals with attractive market fundamentals. We believe that this forms the basis of an excellent platform from which to once again grow by acquisition, and we are encouraged by the quality of some of the opportunities that we are reviewing."

Analyst conference call

There will be an analyst conference call on Wednesday 10 April 2019 at 09:30 (BST) at the offices of Peel Hunt. The call can be accessed by dialling 0808 109 0700 and quoting the confirmation code 'CAML Full Year Results'. The presentation and a replay of the call will be available on the Company's website, www.centralasiametals.com.

For further information contact:

Central Asia Metals	Tel: +44 (0) 20 7898 9001
Nigel Robinson, CEO
Gavin Ferrar, CFO
Louise Wrathall, Investor Relations	louise.wrathall@centralasiametals.com

Peel Hunt (Nominated Advisor and Joint Broker)	Tel: +44 (0) 20 7418 8900
Ross Allister
James Bavister
David McKeown

BMO Capital Markets (Joint Broker)	Tel: +44 (0) 20 7236 1010
Jeff Couch
Thomas Rider
Neil Elliot

Blytheweigh (PR Advisors)	Tel: +44 (0) 20 7138 3204
Tim Blythe
Camilla Horsfall
Megan Ray

Note to editors

Central Asia Metals, an AIM-listed UK company based in London, owns 100% of the Kounrad SX-EW copper project in central Kazakhstan and the Sasa zinc-lead mine in North Macedonia. For further information, please visit www.centralasiametals.com.

CHAIRMAN'S STATEMENT

Highlights

2018 was the first full year that we have owned and operated two base metals operations and we are pleased that both Sasa and Kounrad have delivered the production and financial returns we expected. In parallel, we have maintained focus on our corporate and social responsibilities in ensuring our performance is felt by all of our stakeholders.

We propose a 2018 final dividend of 8 pence per share, giving a 2018 full year dividend of 14.5 pence per share. This represents 44% of our adjusted free cash flow and is therefore in line with our policy of returning between 30% and 50% of free cash flow to our shareholders.

We are very proud of the dividends that we have paid to shareholders since we commenced copper production at Kounrad in 2012, and we believe that our commitment to shareholder returns has made us unique as a resources business listed on the AIM Market of the London Stock Exchange ('AIM'). Once this dividend has been distributed, we will have made returns to our investors of $162 million in less than seven years.

We were also delighted to once again win an award at the prestigious Mines and Money Outstanding Achievement Awards. In 2018, Central Asia Metals was named 'Mining Company of the Year - Asia'.

Finally, having successfully integrated Sasa into the CAML group, we accelerated our business development activities in H2 2018 as we are once again looking to grow by acquisition when we find the right opportunity.

Recognising all our stakeholders

In the resources business, we firmly believe that companies must give something back to the countries from which they generate revenue, looking after their employees, the environment in which they operate and the local and wider communities.

At Sasa in 2018, as well as continuing to support the local community in terms of infrastructure, sporting and recreational facilities, we have sponsored 10 students through their mining degrees at Stip University. We also funded the purchase of new IT equipment and the renovation of five classrooms used for mining studies in the local secondary school.

In Kazakhstan, we set up a charitable foundation at the end of 2017 which became fully operational in 2018 and, through this organisation, we have funded many of the worthy causes that are presented to us. We are particularly proud of our continued support for the Kind Heart Centre for disabled children, purchasing new building facilities for the centre in 2018, which recently opened post their renovation. We have also continued to support the Balkhash orphanage, and have re-generated the playgrounds and recreational areas in Kounrad village that are now being enjoyed by residents of all ages.

We are now a business with over 1,000 employees and, while we strive for the highest health and safety standards, we are disappointed to report eight lost time injuries on our sites within the year. We have reinvigorated our efforts to keep our team safe, having made additional hires and, where appropriate, made adjustments to our procedures.

In accordance with local laws, we have paid taxes totalling $43.3 million in North Macedonia and Kazakhstan and believe therefore that we have made a meaningful contribution to the development of those economies. We intend to be long-term operators so we maintain and will always strive for strong relationships in our host countries.

Board and management changes

During 2018, we made some significant changes to our Board, reflective of the growth and direction of our business. Non-Executive Director Kenges Rakishev retired from the Board at our May 2018 AGM. Myself and my fellow Directors very much appreciate Kenges' input during his tenure with the Company.

While I maintained my role as Chairman of the Company, Nigel Robinson was appointed Chief Executive Officer and Gavin Ferrar was appointed Chief Financial Officer, while retaining his business development responsibilities. These management changes have provided continuity to the business, as both Nigel and Gavin have been with the Company for 12 years and five years respectively. In order to strengthen the technical team post our Sasa acquisition, we appointed Scott Yelland as Chief Operating Officer ('COO') in April 2018.

Outlook

We fundamentally believe in the strong long-term future demand for copper, zinc and lead and are pleased to have seen an increase in the prices of each of these commodities so far in 2019. While there may once again be some challenges for the market this year, we believe that the long-term future demand for these metals remains compelling.

We look forward to another positive year of production from our Sasa and Kounrad operations. We remain confident that we have two low cost operations, which we believe provide us with a solid platform from which to grow once more by acquisition, and this will be an area of increasing focus for us in 2019.

Finally, I would like to thank all of our employees and our Directors for their hard work and dedication throughout 2018 - we have enjoyed an excellent year and we very much look forward to the future, producing three base metals with attractive market fundamentals, generating profits and returns for our shareholders and helping to develop the communities in which we operate.

Nick Clarke, Chairman

CEO'S STATEMENT

Key achievements

We have enjoyed another successful year at CAML, delivering production in line with expectations at Sasa and above guidance at Kounrad while maintaining our competitive cost base at both operations.

Sasa produced 22,532 tonnes of zinc and 29,388 tonnes of lead in concentrate at a C1 zinc equivalent cash cost of $0.46 per pound, which is comparable to prior years. Our Kounrad operations continued to perform well and produced 14,049 tonnes of copper cathode. Kounrad's 2018 C1 copper cash cost was $0.54 per pound, demonstrating once again that the operation is one of the lowest cost copper producers in the world.

Despite challenging commodity prices, particularly in H2 2018, our strong operational performance ensured that we delivered record annual gross revenue of $204.2 million and record EBITDA of $125.3 million, maintaining our strong margin of 61%. We ended 2018 with net debt of $110.3 million, having made repayments totalling $38.5 million during the year.

The Group generated adjusted free cash flow of $73.8 million, enabling us to recommend an 8 pence per share final dividend, equating to a full year dividend of 14.5 pence per share, which represents 44% of 2018 adjusted free cash flow.

In December 2018, we completed the refinancing of Sasa debt that we inherited as part of the acquisition of the mine in November 2017. The refinancing has the advantage of consolidating all the Group debt into one facility with no requirement for cash sweeps, as well as enabling us to simplify the Sasa ownership structure in 2019.

Throughout 2018, we have spent considerable time integrating the Sasa operation into our business processes and made a number of key management changes at site. At the corporate level, we strengthened our technical team with the appointment of Scott Yelland in April 2018 as COO. We are confident that we now have the management team in place to ensure the steady and optimal operation of Sasa and Kounrad.

Corporate Social Responsibility ('CSR')

The welfare and health and safety of our employees is a key priority for the Group. We also continue to focus on looking after the local environment and ensuring that we have a positive impact on the communities close to our operations.

We are disappointed to report that we incurred eight lost time injuries during 2018 - six at Sasa and two at Kounrad. Given the exemplary record in previous years at our Kounrad operation, we have bolstered our health and safety team in 2018 with the appointment of a Group Health and Safety Manager and additional safety team members at Sasa. We have also focussed our efforts on the learning points from each incident.

During 2018, we spent $0.6 million at Sasa and Kounrad in supporting the local communities. This is a vital aspect of what we do in the areas close to the operations and, as a result, we enjoy good relations with local residents.

Sasa

During the year, Sasa's operational performance was strong and we produced 22,532 tonnes of zinc and 29,388 tonnes of lead in concentrates, which was at the upper end of guidance for both metals. At $0.46 per pound, Sasa's C1 zinc equivalent cost of production has remained low by industry standards and, despite some sector-wide headwinds for treatment charges, our site-based costs should remain competitive going forward. Sasa delivered 2018 EBITDA of $71.2 million, at a margin of 64%.

We commenced a life of mine ('LoM') study for Sasa during H2 2018, which is an in-depth review of the operation, from geology and resources, through to underground operations and eventual tailings disposal. This study will be ongoing throughout 2019 and will ensure that zinc and lead are produced optimally and as safely as possible for the future.

As part of this study, a c.6,000 metre drilling programme has been undertaken at Sasa, with drilling results incorporated into an updated Mineral Resource Estimate ('MRE'). This further underscores our view of mineral prospectivity at Sasa which will enable a long-life operation.

The construction of tailings storage facility 4 ('TSF4') continued throughout the year and will be completed and ready for utilisation within 2019, ensuring sufficient capacity for a further seven years. Notwithstanding capex incurred due to the tailings construction process, total 2018 Sasa capex was slightly below our expectations at $13.4 million. 2019 capex is expected to reduce to below $10 million.

Kounrad

The Kounrad operation performed well and, in 2018, produced 14,049 tonnes of high-quality copper cathode, which was above our guidance range. We continued to transition the leaching operation from the Eastern Dumps to the Western Dumps as planned and, during the year, 64% of the production was generated from the Western Dumps. By 2023, it is expected that all copper will be leached from the Western Dumps.

After almost seven years of continuous production, the SX-EW plant continued to perform to a high standard and we were pleased to achieve plant availability of 99.5%. As at 31 December 2018, Kounrad had produced 82,474 tonnes of copper cathode, an average of 1,030 tonnes per month since the commencement of operations.

Kounrad's C1 cash cost of copper production was $0.54 per pound, enabling the operation to deliver 2018 EBITDA of $66.8 million, at a margin of 72%.

Having undertaken two self-funded expansions at Kounrad during previous periods, we now only expect to incur minimal sustaining capital expenditure going forward. Indeed, 2018 capital expenditure was $1.4 million and is expected to be at similar levels in future years.

Shuak

During 2018, we completed the second exploration season at Shuak, undertaking both diamond and core hydrotransport drilling. While the results received were encouraging, we made the decision that this project is unlikely to be of sufficient scale to warrant development and have impaired the asset in full. Therefore, we plan to return Shuak to the current 20% shareholders, while retaining a minority interest for the future.

Market performance

2018 market conditions proved to be challenging for the Company with a decline in the prices of all three commodities over the course of the year, despite a positive start in January 2018. The prices for both zinc and lead peaked in mid-February 2018 at c.$3,618 and c.$2,640 per tonne respectively whereas copper's 2018 peak was in June at c.$7,263 per tonne.

During the second half of the year, all three metal prices declined further due to macro-economic headwinds caused primarily by the US-China trade wars and finished the year significantly below 2018 highs. Consequently, despite a strong operational performance at both sites, the depressed commodity prices impacted the CAML share price which fell by 29% to £2.17 at the end of 2018.

Outlook

We are enthusiastic about the future as we have two long life, low cost base metals operations that can deliver cash generative production throughout the mining cycle. These assets provide us with a strong platform for growth and, to date, we have been encouraged by some of the business development opportunities that we have reviewed.

We intend to pursue business development opportunities, primarily in the base metals sector, where we can add value for shareholders through accretion in earnings and/or long-term growth. We believe that, through our Sasa acquisition, we have demonstrated a track record in appraising appropriate assets for CAML.

We have given production guidance for Sasa of between 22,000 and 24,000 tonnes of zinc and between 28,000 and 30,000 tonnes of lead at slightly higher throughput levels. We look forward to the findings of the LoM study as this may demonstrate other potential incremental improvements that we can make at the mine and ensure that the operation is optimised.

Our 2019 guidance for Kounrad copper production of 12,500 to 13,500 tonnes reflects the transition to producing more of our copper from the Western Dumps.

Finally, we will continue to maintain strong health and safety and environmental standards at both of our operations and will continue to donate to and help with the many worthy causes that we see in and around the local communities.

Nigel Robinson, Chief Executive Officer

FINANCIAL REVIEW

Overview

CAML's 2018 growth reflects the acquisition of Sasa on 6 November 2017 as the Group became a diversified base metals producer adding sales of zinc and lead to its copper output from Kounrad. Throughout this Financial Review, all comparative data for 2017 relating to Sasa is presented for the two-month period of CAML ownership.

Sasa's 2018 EBITDA was $71.2 million (2017: $14.5 million), with an EBITDA margin of 64%. Zinc and lead prices declined during H2 2018, although management integration of the Sasa asset combined with cost control has ensured that this mine continues to operate at approximately the lower quartile of global producers on a C1 zinc equivalent cash cost basis.

Kounrad's 2018 EBITDA was $66.8 million (2017: $63.6 million), with an EBITDA margin of 72%. The EBITDA has increased as a result of higher copper prices during the year and effective cost control, and this has enabled the project to continue producing copper at costs well within the lowest industry quartile.

Notwithstanding weakening commodity prices during H2 2018, the Group maintained a strong EBITDA margin during the year of 61% (2017: 62%, adjusted).

Income Statement

Profit before tax for the year was $72.7 million (2017: $49.8 million), an increase of 46% which primarily reflects the growth of the Group following the acquisition of Sasa in November 2017. Earnings per share from continuing operations increased by 7.7% to 31.33 cents (2017: 29.08 cents) which highlights the accretive nature of the Sasa acquisition.

Revenue

The Group generated 2018 gross revenue of $204.2 million (2017: $106.5 million), which is reported after deduction of treatment charges but before deductions of off-taker's fees, penalties, assay adjustments, silver purchases from the silver stream and distribution & selling costs. Net revenue post these deductions was $192.3 million (2017: $102.1 million).

Sasa

Sasa typically receives from smelters approximately 84% of the value of its zinc in concentrate and approximately 95% of the value of its lead in concentrate. A total of 18,792 tonnes (2017: 2,906 tonnes) of payable zinc in concentrate and 27,878 tonnes (2017: 4,559 tonnes) of payable lead in concentrate were sold from Sasa during the year. The average zinc price received was $2,819 per tonne (2017: $3,239 per tonne) and for lead was $2,170 per tonne (2017: $2,401 per tonne). After deduction of treatment charges, this generated gross revenue of $111.6 million (2017: $20.0 million).

A zinc and lead concentrate off-take arrangement has been agreed with Traxys for 100% of the Sasa concentrate production through to 31 December 2022.

Kounrad

CAML's copper off-take arrangement with commodity trader, Traxys Europe S.A., has been fixed through to approximately October 2022 and the commitment is for a minimum of 95% of the Kounrad copper cathode production. During 2018 the offtaker's fee for Kounrad was $2.5 million (2017: $2.6 million). A total of 13,695 tonnes (2017: 14,001 tonnes) of copper cathode from Kounrad was sold as part of the Company's off-take arrangements with Traxys and a further 386 tonnes (2017: 180 tonnes) were sold locally. The increase in local sales during 2019 has in part offset the local payable VAT. Total Kounrad copper sales were similar to 2017 levels at 14,081 tonnes (2017: 14,181 tonnes).

Copper revenue benefitted from a 6.7% increase in the average copper price received, which was $6,518 per tonne in 2018 compared to $6,107 per tonne in 2017. This generated gross revenue for Kounrad of $92.6 million (2017: $86.4 million).

Cost of sales

Group 2018 cost of sales was $76.4 million (2017: $31.4 million), consisting $23.1 million of Kounrad-related costs (2017: $22.7 million) and $53.3 million (2017: $8.7 million) of Sasa-related costs. This includes depreciation and amortisation charges during the period of $33.4 million (2017: $10.8 million), which increased significantly as a result of the Sasa acquisition fair value uplift. Cost of sales have also increased due to payroll costs of $12.1 million (2017: $5.1 million) and the costs of reagents, electricity and materials of $19.7 million (2017: $7.6 million). These reflect the acquisition of Sasa with a significant increase in number of staff and the associated costs with the mining operation.

Sasa

CAML acquired Sasa in November 2017 so only incurred costs for two months of that year, therefore Sasa cost of sales has increased to $53.3 million (2017: $8.7 million) due to significantly higher sales volumes of base metals. Concession fees of $2.8 million (2017: $0.5 million) were charged by the North Macedonian authorities at the rate of 2% on the value of metal recovered during the period.

There is also a significant increase in the Sasa depreciation charge as a result of the Group accounting for a full year of depreciation for the mine, and due to the fair value uplift. Total 2018 Sasa depreciation was $27.7 million (2017: $4.1 million).

Other significant items included in cost of sales are labour costs of $10.7 million (2017: $1.5 million) and cost of reagents and materials of $13.8 million (2017: $2.0 million).

Kounrad

Kounrad cost of sales for the year was $23.1 million (2017: $22.7 million). The increase compared with 2017 was due to increased mineral extraction tax ('MET') resulting from the higher average copper price received during the year. MET for the year was $5.2 million (2017: $5.0 million) and is charged by the Kazakhstan authorities at the rate of 5.7% on the value of metal recovered during the year. Copper production from the Western Dumps, which commenced in April 2017, has resulted in slightly higher electricity consumption, due to higher iron content as well as additional labour costs of approximately 5 cents per pound.

Over the coming years, the proportion of copper that Kounrad produces from the Eastern Dumps will fall as production from the Western Dumps gradually increases, resulting in a sustained increase in electricity consumption. Kounrad depreciation and amortisation charges were $6.3 million (2017: $6.6 million).

During the year, the Kazakhstan Tenge significantly depreciated against the US Dollar, which resulted in a benefit for the cost base. The average exchange rate for the year was 345 KZT/USD (2017: 326 KZT/USD), resulting in the Kazakhstan Tenge being worth on average 5.8% less in US Dollar terms in 2018 compared to 2017.

C1 cash cost of production

C1 cash cost of production is a standard metric used in the mining industry to allow comparison across the sector. In line with the Wood Mackenzie approach, CAML calculates C1 cash cost by including all direct costs of production at Kounrad and Sasa (realisation charges such as freight and treatment charges, reagents, power, production labour and materials) as well as local administrative expenses. Royalties and depreciation and amortisation charges are excluded from the C1 cash cost.

C1 cash costs	2018	2017
Kounrad copper C1 cash cost ($/t)	0.54	0.52
Sasa zinc equivalent C1 cash cost ($/t)	0.46	0.44
Cu equivalent production (t)	31,459	35,263
Cu equivalent C1 costs ($/lb)	0.87	0.76
Fully inclusive ($/lb)	1.64	1.30

Note: The copper C1 cash cost and zinc C1 cash cost have been calculated according to Wood Mackenzie methodology. 2017 Sasa calculation has been based on full year production.

Sasa

Sasa's C1 cash cost of zinc equivalent production was $0.46 per pound (2017: $0.44 per pound) which is at the lower end of the second quartile of the zinc industry cost curve. This broadly similar C1 cash cost figure reflects lower treatment charges during the year compared to 2017 against an increase in payroll costs, as the Group awarded an average 16% pay rise to the Sasa team during the year.

Kounrad

Kounrad's 2018 C1 cash cost of production remains firmly in the lowest quartile of the industry cost curve for copper production at $0.54 per pound (2017: $0.52 per pound). This has increased due to an average 4.8% increase in payroll costs at Kounrad and as a result of an increase in power consumption due predominantly to pumping costs associated with leaching the Western Dumps as well as high iron content but was mitigated by the benefits of the weaker Kazakhstan Tenge. The average C1 cash cost since production commenced in 2012 is $0.57 per pound. Approximately 70% of the C1 cash cost base in Kazakhstan is denominated in Tenge.

Group

CAML reports its Group C1 cash cost on a copper equivalent basis incorporating the production costs at Sasa. The Group's 2018 C1 copper equivalent cash cost was $0.87 per pound (2017: $0.76 per pound). This number is calculated based on Sasa's annual zinc and lead production, which equates to 17,410 copper equivalent tonnes (2017: 21,161 copper equivalent tonnes), based on 2018 average commodity prices achieved, added to Kounrad's copper production of 14,049 tonnes (2017: 14,103 tonnes).

The Group C1 cash cost on a copper equivalent basis has increased largely as a result of the decline in the zinc and lead prices which reduce the copper equivalent tonnes. The marginal increases in both operations C1 cash costs as described above have also increased the Group C1 cash cost.

In addition to the Group C1 cash cost of copper equivalent production, CAML also reports a fully inclusive cost that includes capital expenditure, local taxes including MET and concession fees, interest on loans and corporate overheads associated with the Kounrad and Sasa projects. In prior periods, CAML reported its fully inclusive unit cost to include depreciation but exclude capital expenditure. In 2018, this methodology was adopted as the Group believes that this is a better representation of the cost to the Company of operating its two assets. This is primarily due to the significant fair value uplift depreciation charge for the acquisition of Sasa.

The Group's fully inclusive copper equivalent unit cost for the year was $1.64 per pound (2017: $1.30 per pound). As expected, the Group's fully inclusive unit cost post the Sasa acquisition increased when compared to 2017. This is primarily due to the decline in zinc and lead prices during 2018 which decreases the volume of copper equivalent tonnes calculated. It also increased due to the inclusion of capital expenditure incurred during the period at Sasa, including the construction of TSF4, additional finance costs that have arisen with interest payments and the debt refinance in December 2018, and the concession fee recognised on sales of zinc and lead payable in North Macedonia.

Administrative expenses

During the year, administrative expenses were $24.0 million (2017: $15.2 million). The increase was largely as a result of the enlarged size of the Group following the Sasa acquisition in 2017 for which the operation incurs administrative expenses of $4.8 million (2017: $1.1 million). The Group costs have also increased as a result of the recognition of share-based payment costs of $4.9 million (2017: $2.8 million). Payroll costs have also increased in 2018, totalling $9.7 million (2017: $8.0 million).

Discontinued operations

During the year the Group completed the second exploration season at Shuak. The results from this meant CAML is of the opinion that this project is unlikely to be of sufficient scale to warrant development by the Company. Although there is expected to be some value retained in these assets as it plans to retain a minority shareholding, it has been classified as held for sale and impaired in full amounting to $2.2 million. The results of Shuak have been included in discontinued operations.

The assets and liabilities of the Copper Bay entities presented as held for sale in the consolidated balance sheet have now been impaired in full amounting to $4.0 million. The financial results of the Copper Bay entities for 2018 and the comparative period for 2017 are shown within discontinued operations in the Consolidated Income Statement.

The Group exited its position in Zuunmod UUL LLC in April 2018, which was previously held for sale in the comparative period ending 31 December 2017.

Acquisition accounting

The acquisition accounting of CMK Resources Limited (previously Lynx Resources Limited) was finalised during the year with no changes made to the consideration paid. However, the silver streaming commitment was reviewed and revalued to a fair value of $28.1 million and an adjustment was made in relation to tax liabilities arising pre-ownership. These amendments reduced the fair value of the net assets of Sasa and consequently increased the goodwill recognised on consolidation to $22.4 million.

There was also an adjustment recognised in relation to the withholding tax payment ('WTP') for $5.9 million on acquisition, however, this balance was considered recoverable under the tax indemnity under the SPA so there was no impact on goodwill (Note 6 of the Financial Statements). Post year end $5.5m of this balance was recovered (see note 38 for details).

Balance sheet

During the year, there were additions to property, plant and equipment of $15.0 million (2017: $4.1 million). The additions were a combination of $1.4 million Kounrad sustaining capital expenditure, $6.8 million Sasa sustaining capital expenditure, and costs associated with the construction of TSF4 amounting to $6.6 million. There was a further $0.2 million incurred in relation to head office assets.

During the year, there were additions to intangible assets of $0.9 million (2017: $2.0 million) capitalised in relation to exploration and evaluation costs incurred on the Shuak exploration project. This asset however has been classified as held for sale following the decision by the Board to transfer the majority of the Group's holding to the minority shareholder and therefore the exploration and evaluation assets have been impaired in full.

As at 31 December 2018, current trade and other receivables were $10.1 million (31 December 2017: $19.7 million) and non-current trade and other receivables were $2.1 million (31 December 2017: $2.5 million). Current trade and other receivables as at 31 December 2018, include trade receivables from customers of $3.8 million (2017: $6.3 million) and $1.5 million in relation to prepayments. In the prior period the $5.9 million withholding tax that arose before ownership was included in other receivables. An agreement with the previous owners in relation to this balance has meant the Group have offset this balance against the deferred consideration balance of $12.0 million so therefore has been reclassified to other payables.

As at 31 December 2018, a total of $2.8 million (2017: $2.7 million) of VAT receivable was still owed to the Group by the Kazakhstan authorities. During 2018, a final appeal was rejected by the Upper Court for the amount to be refunded, however, recovery is still expected through the local sales of cathode to offset these liabilities and a decision has been taken not to write off this balance. (See note 23 of the Financial Statements.)

As at 31 December 2018, current trade and other payables were $20.9 million (31 December 2017: $28.4 million). During 2018, instalments of $25.7 million (2017: $12.3 million) were paid towards the Group's 2018 corporate income tax liability and approximately $5.6 million (2017: $6.0 million) of 2018 corporate income tax will become payable by the end of March. There was also an amount of $12.0 million outstanding in relation to deferred consideration payable for the Sasa acquisition. In accordance with the SPA, $4.0 million was due prior to year-end, however, due to the WTP being related to the period prior to ownership of the asset this amount was withheld. Post year-end an agreement was reached with the previous owners which settled the amount of the deferred consideration and the WTP as a full and final payment to the previous owners of $6.5 million.

On 31 December 2018, the Group had cash of $39.0 million (31 December 2017: $45.8 million) including restricted cash of $4.4 million (31 December 2017: $2.8 million).

Cash flows

The strong operational performance of Sasa and Kounrad and the associated low costs of production resulted in robust cash flows for the Group during the year, with cash generated from operations increasing to $130.1 million (2017: $60.4 million). During the period, $39.6 million (2017: $23.1 million) was returned to shareholders as dividends.

Tax

$11.1 million of North Macedonia corporate income tax was paid during the period. Payments made during 2018 included $6.4 million towards the 2018 corporate income tax liability and $4.7 million of 2017 corporate income tax paid in April 2018.

$14.7 million of Kazakhstan corporate income tax was paid during 2018 (2017: $12.3 million). Payments made during 2018 included $13.6 million towards the 2018 corporate income tax liability and the final $1.3 million of 2017 corporate income tax paid in April 2018.

In July 2018, the WTP of $5.9 million including interest and penalties was made to the North Macedonian Public Revenue Office relating to financial transactions made during 2016 and 2017 prior to CAML ownership. This was paid in full by the Group, however, $5.5 million of this liability has been recovered from the previous owners in April 2019.

Debt

During the year, $38.5 million of Group debt was repaid. As at 31 December 2018, current and non-current borrowings were $38.4 million and $106.5 million respectively (2017: $40.1 million and 141.8 million).

In December 2018, CAML consolidated its borrowings into one corporate debt package, increasing and amending the size of its Traxys Europe S.A. facility by $60 million to $151 million. The Group used these funds to fully repay outstanding balances of the inherited Société Générale and Investec Sasa debt facility of $57 million and Ohridska Bank working capital facility of $1.7 million. The consolidation of the three debt facilities resulted in a 0.25% reduction of margin for the refinanced portion of the Sasa debt to 4.75%. The Group has also simplified the repayment schedule and will now repay $3.2 million each month as well as the removal of quarterly cash sweeps.

While some aspects of Sasa commercial arrangements were added to the security package of the Company's corporate facility, the key terms and covenants have remained the same:

- Remaining debt life of four years

- Interest rate 4.75% + 1 Month US Dollar LIBOR

- Removal of all cash sweeps

The debt is subject to financial covenants which include the monitoring of gearing and leverage ratios and these are all currently complied with. The refinance has also lifted the security granted in Bermuda, enabling the Group to restructure the CMK Mining entity and this process was completed in Q1 2019. It is intended to liquidate CMK Resources Limited in 2019.

According to IFRS 9, due to the amendment to the borrowings, the financial liability is considered modified and a gain is recognised through the Income Statement amounting to $0.8 million which reduces the finance cost.

Dividend

The Company's dividend policy is to return to shareholders a target range of between 30% and 50% of free cash flow, defined as net cash generated from operating activities less capital expenditure. The dividends will only be paid provided there is sufficient cash remaining in the Group to meet the ongoing contractual debt repayments and that banking covenants are not breached.

The final dividend for the year ended 31 December 2017 of 10 pence per Ordinary Share was paid to shareholders on 25 May 2018.

On 19 September 2018 the Company announced an interim dividend for the year ended 31 December 2018 of 6.5 pence per Ordinary Share and this was paid to shareholders on 26 October 2018. In conjunction with CAML's 2018 annual results, the Board proposes a final 2018 dividend of 8 pence per Ordinary Share which is 44% of adjusted free cash flow. The adjustment excludes $5.5 million WTP which is within Corporate income tax paid and has been recovered after the year end. This brings total dividends (proposed and declared) for the year to 14.5 pence (2017: 16.5 pence) payable on 20 May 2019 to shareholders registered on 26 April 2019. This latest dividend will increase the amount returned to shareholders in dividends and share buy-backs since the 2010 IPO listing to $162.0 million.

CONDENSED FINANCIAL INFORMATION

Consolidated Income Statement

for the year ended 31 December

Group

	Note	2018 $'000	2017 $'000 (restated)*
Continuing operations
Revenue	7	192,334	102,123
Presented as:
Gross revenue	7	204,152	106,479
Less:
Silver purchases from silver stream	7	(6,023)	(1,120)
Distribution and selling costs	9	(2,045)	(646)
Off-take buyers' fees	7	(3,750)	(2,590)
Revenue		192,334	102,123
Cost of sales	8	(76,418)	(31,425)
Gross profit		115,916	70,698

Administrative expenses	10	(23,950)	(15,202)
Other expenses	11	(1,030)	(12,600)
Other income		359	252
Foreign exchange (loss)/gain		(3,879)	3,362
Operating profit		87,416	46,510
Finance income	15	264	5,597
Finance costs	16	(14,999)	(2,319)
Profit before income tax		72,681	49,788
Income tax	17	(18,822)	(13,433)
Profit for the year from continuing operations		53,859	36,355
Discontinued operations
Loss for the year from discontinued operations	22	(7,274)	(76)
Profit for the year		46,585	36,279
Profit attributable to:
- Non-controlling interests		(1,439)	(36)
- Owners of the parent		48,024	36,315
		46,585	36,279
Earnings/(loss) per share from continuing and discontinued operations attributable to owners of the parent during the year (expressed in cents per share)		$ cents	$ cents
Basic earnings/(loss) per share
From continuing operations	18	31.33	29.08
From discontinued operations		(4.12)	(0.06)
From profit for the year		27.21	29.02
Diluted earnings/(loss) per share
From continuing operations	18	30.65	28.38
From discontinued operations		(4.12)	(0.06)
From profit for the year		26.53	28.32

*The comparatives have been restated to reflect the finalisation of acquisition accounting under IFRS 3 (see note 6).

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent company Income Statement or Statement of Comprehensive Income. The profit for the parent company for the year was $42,830,000 (2017: $26,826,000).

Consolidated Statement of Comprehensive Income Group
for the year ended 31 December	Note	2018 $'000	2017 $'000 (restated*)
Profit for the year		46,585	36,279
Other comprehensive (expense)/income: Items that may be subsequently reclassified to profit or loss:
Currency translation differences	27	(10,288)	8,269
Foreign exchange on intercompany loan		(13,020)	-
Other comprehensive (expense)/income for the year, net of tax		(23,308)	8,269
Total comprehensive income for the year		23,277	44,548
Attributable to:
- Non-controlling interests		(1,439)	(36)
- Owners of the parent		24,716	44,584
Total comprehensive income for the year		23,277	44,548
Total comprehensive income/(expense) attributable to equity shareholders arises from: - Continuing operations		30,551	44,624
- Discontinued operations		(7,274)	(76)
		23,277	44,548

*The comparatives have been restated to reflect the finalisation of acquisition accounting under IFRS 3 (see note 6).

Statements of Financial Position Registered no. 5559627

as at 31 December

Group Company

	Note	2018 $'000	2017 $'000 (restated)*	2018 $'000	2017 $'000
Assets Non-current assets
Property, plant and equipment	19	429,601	469,261	290	37
Intangible assets	20	61,311	69,915	3	8
Investments	21	-	-	5,491	11,821
Other non-current receivables	23	2,120	2,519	-	1,531
		493,032	541,695	5,784	13,397
Current assets
Inventories	24	7,529	6,998	-	-
Trade and other receivables	23	10,078	19,705	374,192	328,902
Restricted cash	25	4,376	2,812	4,222	2,672
Cash and cash equivalents	25	34,649	43,022	15,297	15,083
		56,632	72,537	393,711	346,657
Assets of disposal group classified as held for sale	22	61	5,760	-	-
		56,693	78,297	393,711	346,657
Total assets		549,725	619,992	399,495	360,054
Equity attributable to owners of the parent
Ordinary shares	26	1,765	1,765	1,765	1,765
Share premium	26	191,184	191,184	191,184	191,184
Treasury shares	26	(6,526)	(7,780)	(6,526)	(7,780)
Currency translation reserve	27	(89,454)	(79,166)	-	-
Retained earnings:
At 1 January		231,241	215,479	56,195	51,184
Profit for the year attributable to the owners		48,024	36,315	42,830	26,826
Other changes in retained earnings		(48,984)	(20,553)	(35,898)	(21,815)
		230,281	231,241	63,127	56,195
		327,250	337,244	249,550	241,364
Non-controlling interests		(1,384)	55	-	-
Total equity		325,866	337,299	249,550	241,364
Liabilities Non-current liabilities
Borrowings	31	106,549	141,839	106,549	89,711
Silver streaming commitment	30	22,905	25,711	-	-
Other non-current payables	29	-	8,000	-	-
Deferred income tax liability	37	27,670	31,196	-	-
Provisions for other liabilities and charges	32	5,069	5,319	-	-
		162,193	212,065	106,549	89,711
Current liabilities
Borrowings	31	38,400	40,075	38,400	24,000
Silver streaming commitment	30	2,263	2,056	-	-
Trade and other payables	29	20,916	28,361	4,996	4,979
Provisions for other liabilities and charges	32	47	46	-	-
		61,626	70,538	43,396	28,979
Liabilities of disposal group classified as held for sale	22	40	90	-	-
		61,666	70,628	43,396	28,979
Total liabilities		223,859	282,693	149,945	118,690
Total equity and liabilities		549,725	619,992	399,495	360,054

*The comparatives have been restated to reflect the finalisation of acquisition accounting under IFRS 3 (see note 6).

Consolidated Statement of Changes in Equity

for the year ended 31 December

Attributable to owners of the parent	Note	Ordinary Shares $'000	Share premium $'000	Treasury shares $'000	Currency translation reserve $'000	Retained earnings $'000	Total $'000	Non-controlling interests $'000	Total equity $'000
Balance as at 1 January 2017		1,121	-	(7,780)	(87,435)	215,479	121,385	91	121,476
Profit/(loss) for the year (restated*)		-	-	-	-	36,315	36,315	(36)	36,279
Other comprehensive expense - currency translation differences (restated*)	27	-	-	-	8,269	-	8,269	-	8,269
Total comprehensive income / (expense)		-	-	-	8,269	36,315	44,584	(36)	44,548
Transactions with owners
Issue of shares	26	644	191,184	-	-	-	191,828	-	191,828
Share based payments	10	-	-	-	-	2,823	2,823	-	2,823
Disposal of subsidiaries	21	-	-	-	-	1,262	1,262	-	1,262
Exercise of options		-	-	-	-	(1,492)	(1,492)	-	(1,492)
Dividends	35	-	-	-	-	(23,146)	(23,146)	-	(23,146)
Total transactions with owners, recognised directly in equity		644	191,184	-	-	(20,553)	171,275	-	171,275
Balance as at 31 December 2017 (restated*)		1,765	191,184	(7,780)	(79,166)	231,241	337,244	55	337,299
Profit/(loss) for the year		-	-	-	-	48,024	48,024	(1,439)	46,585
Other comprehensive expense - currency translation differences	27	-	-	-	(10,288)	-	(10,288)	-	(10,288)
Total comprehensive income / (expense)		-	-	-	(10,288)	48,024	37,736	(1,439)	36,297
Transactions with owners
Share based payments	10	-	-	-	-	4,904	4,904	-	4,904
Disposal of Zuunmod UUL LLC	21	-	-	-	-	(66)	(66)	-	(66)
Sales of EBT shares	28	-	-	55	-	-	55	-	55
Exercise of options	28	-	-	1,199	-	(1,199)	-	-	-
Foreign exchange on intercompany loan		-	-	-	-	(13,020)	(13,020)	-	(13,020)
Dividends	35	-	-	-	-	(39,603)	(39,603)	-	(39,603)
Total transactions with owners, recognised directly in equity		-	-	1,254	-	(48,984)	(47,730)	-	(47,730)
Balance as at 31 December 2018		1,765	191,184	(6,526)	(89,454)	230,281	327,250	(1,384)	325,866

*The comparatives have been restated to reflect the finalisation of acquisition accounting under IFRS 3 (see note 6).

Company Statement of Changes in Equity

for the year ended 31 December

Company	Note	Ordinary Shares $'000	Share premium $'000	Treasury shares $'000	Retained earnings $'000	Total equity $'000
Balance as at 1 January 2017		1,121	-	(7,780)	51,184	44,525
Profit for the year		-	-	-	26,826	26,826
Total comprehensive income		-	-	-	26,826	26,826
Transactions with owners
Issue of shares	26	644	191,184	-	-	191,828
Share based payments	10	-	-	-	2,823	2,823
Exercise of options		-	-	-	(1,492)	(1,492)
Dividends	35	-	-	-	(23,146)	(23,146)
Total transactions with owners, recognised directly in equity		644	191,184	-	(21,815)	170,013
Balance as at 31 December 2017		1,765	191,184	(7,780)	56,195	241,364
Profit for the year		-	-	-	42,830	42,830
Total comprehensive income		-	-	-	42,830	42,830
Transactions with owners
Share based payments	10	-	-	-	4,904	4,904
Sale of EBT shares		-	-	55	-	55
Exercise of options	28	-	-	1,199	(1,199)	-
Dividends	35	-	-	-	(39,603)	(39,603)
Total transactions with owners, recognised directly in equity		-	-	1,254	(35,898)	(34,644)
Balance as at 31 December 2018		1,765	191,184	(6,526)	63,127	249,550

Consolidated Statement of Cash Flows

for the year ended 31 December

	Note	2018 $'000	2017 $'000
Cash flows from operating activities
Cash generated from operations	33	130,131	60,412
Interest paid		(14,510)	(2,127)
Corporate income tax paid		(31,833)	(12,294)
Cash flow generated from operating activities		83,788	45,991
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired	6	-	(268,008)
Balancing receipt from acquisition		3,300	-
Purchase of property, plant and equipment	19	(15,019)	(4,082)
Purchase of intangible assets	22	(907)	(2,025)
Interest received	15	264	323
Increase in restricted cash	25	(1,564)	(2,694)
Net cash used in investing activities		(13,926)	(276,486)
Cash flows from financing activities
Proceeds from issues of shares (net)	26	-	142,945
Gain on currency hedge	15	-	2,977
Proceeds from borrowings	31	60,809	120,000
Repayment of borrowings	31	(99,265)	(8,362)
Dividends paid to owners of the parent	35	(39,603)	(23,146)
Settlement on exercise of share options	28	(21)	(1,491)
Net cash (used in)/received from financing activities		(78,080)	232,923
Effect of foreign exchange (loss)/gain on cash and cash equivalents		(248)	487
Net (decrease)/increase in cash and cash equivalents		(8,466)	2,915
Cash and cash equivalents at the beginning of the year	25	43,173	40,258
Cash and cash equivalents at the end of the year	25	34,707	43,173

Cash and cash equivalents at 31 December 2018 includes cash at bank and on hand included in assets held for sale of $58,000 (31 December 2017: $151,000) (note 22). The Consolidated Statement of Cash Flows does not include the restricted cash balance of $4,376,000 (2017: $2,812,000).

Notes to the Condensed Financial Statements

for the year ended 31 December 2018

1. General information

Central Asia Metals plc ('CAML' or the 'Company') and its subsidiaries (the 'Group') are a mining and exploration organisation with operations primarily in Kazakhstan and North Macedonia and a parent holding company based in the United Kingdom ('UK').

CAML owns 100% of the Kounrad SX-EW copper project in Kazakhstan and 100% of the Sasa zinc-lead mine in North Macedonia. The Company also owns 80% of the Shuak copper exploration property in northern Kazakhstan and a 75% equity interest in Copper Bay Limited. At the year end the decision was taken to impair the Shuak and Copper Bay assets in full. See note 22 for details.

CAML is a public limited company, which is listed on the AIM Market of the London Stock Exchange and incorporated and domiciled in England, UK. The address of its registered office is Masters House, 107 Hammersmith Road, London, W14 0QH. The Company's registered number is 5559627.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The Group's Consolidated Financial Statements have been prepared in accordance with International Financial Reporting standards ('IFRS') and IFRS Interpretations Committee ('IFRSIC') interpretations as adopted by the European Union, and the Companies Act 2006 applicable to companies reporting under IFRS. The Consolidated Financial Statements have been prepared under the historical cost convention with the exception of assets held for sale which have been held at fair value. The accounting policies which follow set out those policies which apply in preparing the Financial Statements for the year ended 31 December 2018. The Group Financial Statements are presented in US Dollars ($) and rounded to the nearest thousand.

The parent company meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council. The parent company Financial Statements have therefore been prepared in accordance with FRS 101 (Financial Reporting Standard 101) 'Reduced Disclosure Framework' as issued by the Financial Reporting Council. As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to share-based payments, financial instruments, fair value measurements, capital management, presentation of a cash flow statement, new standards not yet effective, impairment of assets and related party transactions. Where relevant, equivalent disclosures have been given in the Group Financial Statements of Central Asia Metals plc.

The preparation of the Group Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements are explained in note 4.

Going concern

The Group meets its day to day working capital requirements through its profitable operations at Kounrad and Sasa. The Group manages liquidity risk by maintaining adequate committed borrowing facilities and the Group has substantial cash balances as at 31 December 2018. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence over a period of at least 12 months from the date of approval of the Financial Statements.

The Group sells and distributes its copper cathode product primarily through an off-take arrangement with Traxys Europe S.A. with a minimum of 95% of the SX-EW plant's forecasted output committed as sales for the period up until approximately October 2022. During the year, 100% of Sasa's zinc and lead concentrate was sold to credit-worthy customers and on 1 January 2018, CMK Mining Limited (previously named Lynx Mining Limited) entered into a zinc and lead concentrate off-take arrangement with Traxys, which has been fixed through to 31 December 2022. The commitment is for 100% of the Sasa concentrate production.

The Group therefore continues to adopt the going concern basis in preparing its Consolidated Financial Statements. Please refer to notes 7, 25 and 29 for information on the Group's revenues, cash balances and trade and other payables.

New and amended standards and interpretations adopted by the Group

The Group has adopted the following standards and amendments for the first time for their annual reporting period commencing 1 January 2018:

· IFRS 9 "Financial Instruments" - In the current period the Company has adopted IFRS 9 Financial Instruments on its effective date of 1 January 2018. IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement and introduces new requirements for classification and measurement, impairment and hedge accounting. IFRS 9 is not applicable to items that have already been derecognised at 1 January 2018, the date of initial application. Receivables that were previously measured at amortised cost under IAS 39 are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. Therefore, such instruments continue to be measured at amortised cost under IFRS 9. The classification of financial liabilities under IFRS 9 remains broadly the same as under IAS 39.

The main impact on measurement from the classification of liabilities under IFRS 9 relates to the element of gains or losses for financial liabilities designated at fair value through profit or loss attributable to changes in credit risk. The Company has not designated any financial liabilities at fair value through profit or loss therefore this requirement has not had an impact on the Company. IFRS 9 requires the Company to record expected credit losses on all of its receivables, either on a 12 month or lifetime basis. An assessment of its intercompany loans advanced to subsidiaries repayable on demand (see note 23) was made and it was concluded that the subsidiaries have sufficient cashflows to repay these loans over the next five years and there was no reasonable expectation that these intercompany loans would be demanded before this, as a result expected credit loss is immaterial.

Aside from this the Company only holds receivables with no financing component that have maturities of 12 months or less. This requirement has not significantly changed the carrying amounts of the Company's financial assets under IFRS 9. Comparative figures for the year ended 31 December 2017 have not been restated and are still accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement.

· IFRS 15 "Revenue from contracts with customers" - which is based on the principle that revenue is recognised when control of a good or service transfers to a customer. IFRS 15 replaces IAS 18 Revenue and establishes a five-step model to account for revenue arising from contracts with customers: identification of the customer contract; identification of the contract performance obligations; determination of the contract price; allocation of the contract price to the contract performance obligations; and revenue recognition as performance obligations are satisfied. In addition, guidance on interest and dividend income has been moved from IAS 18 to IFRS 9 without any significant changes to the requirements. Management has reviewed the agreements with Traxys and is comfortable that there is no significant change to revenue recognition. The Silver Stream agreement is not impacted by the new standard due to the fact that the Group did not recognise the original deposit in the agreement as it was received prior to ownership and therefore the Group does not recognise any deferred revenue. See note 6 - Business combinations for more details. In summary, there was no impact of adopting IFRS 15 for the Company in the current year or comparative year.

The adoption of these amendments did not have any impact on the amounts recognised in prior periods or the current period.

The following standards, amendments and interpretations to existing standards relevant to the Group are not yet effective and have not been early adopted by the Group. The items disclosed are those that could have an impact on the Group.

· IFRS 16 "Leases" was issued in January 2016. It will result in lease contracts generally being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases. The standard will affect primarily the accounting for the Group's operating leases. The Group has reviewed all of its contracts and agreements which could be considered a Lease per IFRS 16. As at the reporting date, the Group has non-cancellable operating lease commitments of $969,536, of which the London office lease is of the most significant value alongside some apartments and vehicles leased. Aside from this, all of these relate to payments for short-term and low value leases which will be recognised on a straight-line basis as an expense in profit or loss. The standard must be applied for financial years commencing on or after 1 January 2019. Due to the immaterial impact the Group will not adopt the standard before its effective date. The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.

There are no other standards that are not yet effective that would be expected to have a material impact on the Group.

Basis of consolidation

The Group Financial Statements consolidate the Financial Statements of CAML and the entities it controls drawn up to 31 December 2018.

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Intercompany transactions, balances and unrealised losses/gains on transactions between Group companies are eliminated. Unrealised losses/gains are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Business combinations

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred and reported within other expenses.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.

After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill is allocated to the cash-generating unit expected to benefit from the business combination in which the goodwill arose. Where the recoverable amount is less than the carrying amount, including goodwill, an impairment loss is recognised in the Income Statement. The carrying amount of goodwill allocated to an entity is taken into account when determining the gain or loss on disposal of the unit.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Non-controlling interests

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately within equity in the Consolidated Statement of Financial Position distinct from parent shareholder's equity.

Where losses are incurred by a partially owned subsidiary, they are consolidated such that the non-controlling interests' share in the losses is apportioned in the same way as profits.

Where profits are then made in future periods, such profits are then allocated to the parent company until all unrecognised losses attributable to the non-controlling interests but absorbed by the parent are recovered at which point, profits are allocated as normal.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker which is considered to be the Board.

Foreign currency translation

The functional currency for each entity in the Group is determined as the currency of the primary economic environment in which it operates. The Consolidated Financial Statements are presented in US Dollars, which is the Group's presentation currency.

Transactions in currencies other than the functional currency are initially recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. All differences are taken to the Income Statement.

The results and financial position of all the Group entities that have a functional currency different from the US Dollar presentation currency are translated into the US Dollar presentation currency as follows:

· assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the reporting date;

· income and expenses for each Income Statement are translated at average exchange rates; and

· all resulting exchange differences are recognised in other comprehensive income.

On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the Income Statement.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended.

The cost of the item also includes the cost of decommissioning any buildings or plant and equipment and making good the site, where a present obligation exists to undertake the restoration work.

Development costs relating to specific mining properties are capitalised once management determines a property will be developed. A development decision is made based upon consideration of project economics, including future metal prices, reserves and resources, and estimated operating and capital costs. Capitalisation of costs incurred and proceeds received during the development phase ceases when the property is capable of operating at levels intended by management and is considered commercially viable. Costs incurred during the production phase to increase future output by providing access to additional reserves, are deferred and depreciated on a units-of-production basis over the component of the reserves to which they relate. Ore reserves may be declared for an undeveloped mining project before its commercial viability has been fully determined. Development costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to a future economic benefit. Development costs expenditures are not depreciated.

Depreciation is provided on all property, plant and equipment on a straight-line basis over its total expected useful life. As at 31 December 2018 the remaining useful lives were as follows:

· Construction in progress - not depreciated

· Land - not depreciated

· Plant and equipment - over 5 to 21 years

· Mining assets - over 2 to 21 years

· Motor vehicles - over 2 to 10 years

· Office equipment - over 2 to 10 years

Mineral rights are depreciated on a Unit of Production basis ('UoP'), in proportion to the volume of ore extracted in the year compared with total proven and probable reserves at the beginning of the year. Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the related mine are depreciated on a straight-line basis.

Construction in progress is not depreciated until transferred to other classes of property, plant and equipment.

The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable, and are written down immediately to their recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required, these are made prospectively.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset is included in the Income Statement.

Intangible assets

a) Exploration and evaluation expenditure

Capitalised costs include costs directly related to any Group exploration and evaluation activities in areas of interest for which the there is a high degree of confidence in the feasibility of the project. Exploration and evaluation expenditure capitalised includes acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploration drilling, trenching, sampling and activities in relation to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource.

Exploration and evaluation assets are measured at cost less provision for impairment, where required.

b) Mining licences, permits and computer software

The historical cost model is applied, with intangible assets being carried at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with a finite life have no residual value and are amortised on a straight-line basis over their expected useful lives with charges included in either cost of sales or administrative expenses:

Computer software - over 2 to 5 years

Mining licences and permits - over the duration of the legal agreement

The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable.

Impairment of non-financial assets

The Group carries out impairment testing on all assets when there exists an indication of an impairment. If any such indication exists, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell or its value in use.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the Income Statement.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

The best evidence of an asset's fair value is the value obtained from an active market or binding sale agreement. Where neither exists, fair value less costs to sell is based on the best available information to reflect the amount the Group could receive for the cash-generating unit in an arm's length sale. In some cases, this is estimated using a discounted cash flow analysis.

A previously recognised impairment loss is reversed if the recoverable amount increases as a result of a reversal of the conditions that originally resulted in the impairment. This reversal is recognised in the Income Statement and is limited to the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised in prior years.

Goodwill is also reviewed annually, as well as whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non-financial assets other than goodwill which have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

Revenue

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations and establishes a five-step model to account for revenue arising from contracts with customers. These steps are as follows: identification of the customer contract; identification of the contract performance obligations; determination of the contract price; allocation of the contract price to the contract performance obligations; and revenue recognition as performance obligations are satisfied.

Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control - at a point in time or over time - requires judgement. The Group has adopted IFRS 15 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 January 2018). Accordingly, the information presented for 2017 has not been restated - i.e. it is presented, as previously reported, under IAS 18, IAS 11 and related interpretations. Additionally, the disclosure requirements in IFRS 15 have not been applied to comparative information.

Revenue is measured at the fair value of consideration received or receivable from sales of metal to an end user, net of any buyers discount, treatment charges, freight costs and value added tax. The Group recognises revenue when the amount of revenue can be reliably measured and when it is probable that future economic benefits will flow to the entity.

Revenue is recognised when all significant risks and rewards of ownership are transferred to the buyer, usually when title has passed to the buyer and the goods have been delivered in accordance with the contractual delivery terms.

The value of consideration is fair value which equates to the contractually agreed price. The off-take agreements provide for provisional pricing i.e. the selling price is subject to final adjustment at the end of the quotation period based on the average price for the month following delivery to the buyer. Such a provisional sale contains an embedded derivative which is not required to be separated from the underlying host contract, being the sale of the commodity. At each reporting date, if any sales are provisionally priced, the provisionally priced copper cathode, zinc and lead sales are marked-to-market using forward prices, with adjustments (both gains and losses) being recorded in revenue in the Income Statement and in trade receivables in the Statement of Financial Position.

The Company may mitigate commodity price risk by fixing the price in advance for its copper cathode, zinc and lead sales with the off-take partner. The price fixing arrangements are outside the scope of IAS 39 Financial Instruments: Recognition and Measurement and do not meet the criteria for hedge accounting.

The Group reports both a gross revenue and revenue line. Gross revenue is reported after deductions of treatment charges but before deductions of off-takers fees, silver purchases from Silver Stream and freight.

The only changes to the new accounting policy under IFRS 15 compared with IAS 18 are the performance obligation under IFRS 15 and control of the items sold under IFRS 15 compared to risk and rewards of the ownership being transfer under IAS 18. Otherwise the application of the new policy is identical to that in the comparative data.

Inventory

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method.

The cost of finished goods and work in progress comprises raw materials, direct labour and all other direct costs associated with mining the ore and processing it to a saleable product.

Net realisable value is the estimated selling price in the ordinary course of business, less any further costs expected to be incurred to completion. Provision is made, if necessary, for slow-moving, obsolete and defective inventory.

Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Statement of Comprehensive Income.

Current and deferred income tax

The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the reporting date in the countries where the Group's subsidiaries operate and generate taxable income.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the Statement of Financial Position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are only recognised when they arise from timing differences where their recoverability in the short term is regarded as being probable.

Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

Restricted cash

Restricted cash is cash with banks that is not available for immediate use by the Group. Restricted cash is shown separately from cash and cash equivalents on the Statement of Financial Position.

Investments

Investments in subsidiaries are recorded at cost less provision for impairment.

Share capital

Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

Treasury shares

Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled or reissued. Where such Ordinary Shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders.

Share based compensation

The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each reporting date, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement, with a corresponding adjustment to equity.

Trade and other receivables

Trade and other receivables are accounted for under IFRS 9 using the expected credit loss model and are initially recognised at fair value and subsequently measured at amortised cost less any allowance for expected credit losses.

The allowance for expected credit losses for trade receivables is established by considering on a discounted basis the cash shortfalls it would incur in various defaults scenarios for prescribed future periods and multiplying the shortfalls by the probability of each scenario occurring. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The allowance is the sum of these probability weighted outcomes. The allowance and any changes to it are recognised in the statement of comprehensive income within net operating expenses. A provision matrix is used to calculate the allowance for expected credit losses on trade receivables which is based on historical default rates over the expected life of the trade receivables and is adjusted for forward looking estimates. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against net operating expenses in the statement of comprehensive income.

Trade and other payables

Trade and other payables are not interest bearing and are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

Silver Stream commitment

The Silver Stream arrangement has been accounted for as a commitment as the Group has obligations to deliver silver to a third party at a price below market value. Management has determined that the agreement is not a derivative as it will be satisfied through the delivery of non-financial items (i.e. silver commodity from the Company's production), rather than cash or financial assets. The commitment is amortised via cost of sales based on a unit of production method.

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

Provisions

a) Asset retirement obligation

Provisions for environmental restoration of mining operations are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

b) Employee benefits - pension

The Group, in the normal course of business, makes payments on behalf of its employees for pensions, health care, employment and personnel tax, which are calculated based on gross salaries and wages according to legislation. The cost of these payments is charged to the consolidated statement of comprehensive income in the same period as the related salary cost.

c) Employee benefits - retirement benefits and jubilee awards

Pursuant to the labour law prevailing in the North Macedonian subsidiaries, the Group is obliged to pay retirement benefits for an amount equal to two average monthly salaries, at their retirement date. According to the collective labour agreement, the Group is also obliged to pay jubilee anniversary awards for each 10 years of continuous service of the employee. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. In addition, the Group is not obligated to provide further benefits to current and former employees.

Retirement benefit obligations arising on severance pay are stated at the present value of expected future cash payments towards the qualifying employees. These benefits have been calculated by an independent actuary in accordance with the prevailing rules of actuarial mathematics. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to profit and loss over the employees' expected average remaining working lives.

Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a Group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event") and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred discounted) at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the Consolidated Income Statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the Consolidated Income Statement.

3. Financial risk management

The Group's activities expose it to a variety of financial risks; market risk (including foreign currency exchange risk, commodity price risk and interest rate risk), liquidity risk, capital risk and credit risk. These risks are mitigated wherever possible by the Group's financial management policies and practices described below. The Group's risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group's operating units.

Foreign currency exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. The primary Group currency requirements are US Dollar, British Pound, Kazakhstan Tenge, Euro and North Macedonian Denar.

The following table highlights the major currencies the Group operates in and the movements against the US Dollar during the course of the year:

	Average rate			Reporting date spot rate
	2018	2017	Movement	2018	2017	Movement
Kazakhstan Tenge	344.71	326.00	18.71	384.20	332.33	51.87
Macedonian Denar	52.12	51.69*	0.43	53.69	51.27	2.42
British Pound	0.75	0.78	0.03	0.79	0.74	0.05

*for the 2 month period ended 31 December 2017 (note 6)

Foreign exchange risk does not arise from financial instruments that are non-monetary items or financial instruments denominated in the functional currency. Kazakhstan Tenge and North Macedonian Denar denominated monetary items are therefore not reported in the tables below, as the functional currency of the Group's Kazakhstan-based and North Macedonian-based subsidiaries is the Tenge and Denar respectively.

The Group's exposure to foreign currency risk based on US Dollar equivalent carrying amounts at the reported date:

In $'000 equivalent	Group
	2018
		USD	EUR	GBP
Cash and cash equivalents		12,792	6	774
Trade and other payables		-	(452)	(2,522)
Net exposure		12,792	(446)	(1,748)

Group

In $'000 equivalent	2017
In $'000 equivalent		USD	EUR	GBP
Cash and cash equivalents		4,895	48	3,473
Trade and other payables		-	(42)	(3,781)
Net exposure		4,895	6	(308)

Trade and other receivables excludes prepayments and VAT receivable and trade and other payables excludes corporation tax, social security and other taxes as they are not considered financial instruments.

At 31 December 2018, if the foreign currencies had weakened/strengthened by 10% against the US Dollar, post-tax Group profit for the year would have been $231,000 lower/higher (2017: $1,114,000 lower/higher).

Commodity price risk

During the year and prior to re-financing, the Group's Treasury policy allowed limited hedging up to a maximum of 50% of the Group's rolling 12-month copper production by fixing the price in advance for its copper cathode sales and zinc and lead prices hedging up to 75% of annual production. The current debt facility limits copper, zinc and lead price hedging in 2019 up to a maximum 50% of the next 12 months production.

The Group's hedging policy for 2019 is not to hedge all commodity prices, however a hedging program can be put in place on the approval of the Board of Directors.

During the year ended 31 December 2018, the Group fixed the price of 3,000 tonnes of copper cathode with the Group's off-take partner at $7,325/t and 1,875 tonnes at $6,002/t (2017: 5,125 tonnes).

The following table details the Group's sensitivity to a 10% increase and decrease in the copper, zinc and lead price against the invoiced price. 10% is the sensitivity used when reporting commodity price internally to management and represents management's assessment of the possible change in price. A positive number below indicates an increase in profit for the year and other equity where the price increases.

Estimated effect on earnings and equity

2018

$'000

2017

$'000

10% increase in copper, zinc and lead price

20,526

10,648

10% decrease in copper, zinc and lead price

(20,526)

(10,648)

Liquidity risk

Liquidity risk relates to the ability of the Group to meet future obligations and financial liabilities as and when they fall due. The Group currently has sufficient cash resources to facilitate the debt and a material income stream from the Kounrad and Sasa projects. The Group has no undrawn borrowings as at 31 December 2018 (2017: nil).

Capital risk

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal structure to reduce the cost of capital.

The Group manages its capital in order to provide sufficient funds for the Group's activities. Future capital requirements are regularly assessed and Board decisions taken as to the most appropriate source for obtaining the required funds, be it through internal revenue streams, external fund raising, issuing new shares or selling assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The debt is subject to financial covenants which include the monitoring of gearing and leverage ratios and these are all currently complied with. The refinance has also lifted the security granted in Bermuda holding companies, enabling the Group to restructure CMK Mining Limited (now known as CMK Mining B.V.) and this process was completed in Q1 2019.

Consistent with others in the industry, the Group monitors capital on the basis of the following gearing ratio:

Net debt

	Note	2018 $'000	2017 $'000 (restated)
Cash and cash equivalents	25	34,649	43,022
Borrowings variable interest rates - repayable within one year	31	(38,400)	(40,075)
Borrowings variable interest rates - repayable after one year	31	(106,549)	(141,839)
Net debt		(110,300)	(138,892)
Total equity		325,866	337,299
Net debt to equity ratio		34%	41%

The Group has substantial cash balances as at 31 December 2018. The Group will continue to monitor any such risks and take appropriate actions.

Changes in liabilities arising from cash flows

The total borrowings as at 1 January 2018 were $181,914,000 (2017: $nil). During the year, total repayments of $99,265,000 (2017: $8,362,000) were made including the repayment of the SG Loan and the agreed principal repayments on its borrowings, there was also total drawdowns on the Traxys loan and working capital facility amounting to $60,809,000 (2017: $120,000,000). Other changes amounted to $1,491,000 leading to a closing debt balance of $144,949,000. See note 31 for more details. The cash and cash equivalents brought forward were $43,022,000 (2017: $40,258,000) with a $8,623,000 outflow (2017: 2,277,000 inflow) during the year and also foreign exchange losses of $248,000 ($487,000 gain) and so therefore a closing balance of $34,649,000 (2017: $43,022,000).

Credit risk

Credit risk refers to the risk that the Group's financial assets will be impaired by the default of a third party. The Group is exposed to credit risk primarily on its cash and cash equivalents as set out in note 25 and on its trade and other receivables as set out in note 23. The Group sells a minimum of 90% of Kounrad's copper cathode production to a credit-worthy off-taker and during the year 100% of Sasa's zinc and lead concentrate was sold to credit-worthy customers. On 1 January 2018, CMK Mining Limited (now known as CMK Mining B.V.) entered into a zinc and lead concentrate off-take arrangement with Traxys, which has been fixed through to 2022. The commitment is for 100% of the Sasa concentrate production. As of January 2019 this arrangement is now with CAML MK.

For banks and financial institutions, only parties with a minimum rating of BBB- are accepted. 15% of the Group's cash and cash equivalents including restricted cash at the year-end were held by an A+ rated bank (2017: 37% by an A+ bank). The rest of the Group's cash was held with a mix of institutions with credit ratings between A to BBB- (2017: A to BBB-).

The Directors have considered the credit exposures and do not consider that they pose a material risk at the present time. The credit risk for cash and cash equivalents is managed by ensuring that all surplus funds are deposited only with financial institutions with high quality credit ratings.

Interest rate risk

The Group's main interest rate risk arises from long-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. During 2018, the Group's borrowings at variable rates were denominated in North Macedonian Denars and US Dollars. The Group's borrowings are carried at amortised cost. The Group has borrowings at variable interest rates and a 1% point rise in market interest rate would have caused the interest paid to increase by $1,065,000 (2017: $293,000) while a similar decrease would have caused the same decrease in interest paid. The Group does not hedge its exposure to interest rate risk.

The Group had $13,044,000 of cash balances on short-term deposit as at 31 December 2018 (2017: $7,814,000). The average fixed interest rate on short-term deposits during the year was 1.2% (2017: 0.98%).

Categories of financial instruments

Financial assets

Cash and receivables:	Group
Cash and receivables:	31 Dec 18 $'000	31 Dec 17 $'000
Cash and cash equivalents including restricted cash (note 25)	39,025	45,834
Trade and other receivables	6,609	9,792
	45,634	55,626

Trade and other receivables excludes prepayments and VAT receivable as they are not considered financial instruments. All trade and others receivables are receivable within one year for both reporting years.

Financial liabilities

Measured at amortised cost:	Group
Measured at amortised cost:	31 Dec 18 $'000	31 Dec 17 $'000
Trade and other payables within one year	17,637	14,622
Borrowings payable within one year (note 31)	38,400	40,538
Borrowings payable later than one year but not later than five years (note 31)	106,549	108,400
Borrowings payable later than five years	-	37,600
	162,586	201,160

Trade and other payables excludes the Silver Streaming commitment, corporation tax, social security and other taxes as they are not considered financial instruments.

4. Critical accounting estimates and judgements

The Group has the following key areas where critical accounting estimates and judgements are required that could have a material impact on the Financial Statements:

Mineral reserves and resources

The major value associated with the Group is the value of its mineral reserves and resources. The value of the reserves and resources have an impact on the Group's accounting judgements in relation to depreciation and amortisation, impairment of assets and the assessment of going concern. These resources are the Group's best estimate of product that can be economically and legally extracted from the relevant mining property. The Group's estimates are supported by geological studies and drilling samples to determine the quantity and grade of each deposit.

Significant judgement is required to generate an estimate based on the geological data available. Ore resource estimates may vary from period to period. This judgement has a significant impact on impairment consideration and the period over which capitalised assets are depreciated within the Financial Statements.

The Kounrad resources were classified as JORC Compliant in 2013 and mineral resources were estimated in June 2017 and the Sasa JORC ore reserves and mineral resources were estimated in December 2018.

Impairment of non-current assets

Estimates are required periodically to assess assets for impairment. The critical accounting estimates are future commodity prices, ore reserves, discount rates and projected future costs of development and production. This includes an assessment of the carrying values of assets held for sale.

The carrying value of the goodwill generated by accounting for the business combination of the Group acquiring an additional 40% in the Kounrad project in May 2014 (the "Kounrad Transaction") and the CMK Resources Limited (previously named Lynx Resources Limited) acquisition in November 2017 requires an annual impairment review. This review will determine whether the value of the goodwill can be justified by reference to the carrying value of the business assets and the future discounted cash flows of the business. The key assumptions used in the Group's impairment assessments are disclosed in note 20.

Functional currency

The functional currency of the Kazakhstan subsidiaries is Kazakhstan Tenge and the functional currency of the North Macedonian subsidiaries is North Macedonian Denar, which reflects the currency of the primary economic environment in which these entities operate. Determination of functional currency may involve certain judgments to determine the primary economic environment and this is re-evaluated for each new entity, or if conditions change.

Decommissioning and site rehabilitation estimates

Provision is made for the costs of decommissioning and site rehabilitation costs when the related environmental disturbance takes place. The discounted provision recognised represents management's best estimate of the costs that will be incurred, but significant judgement is required, as many of these costs will not crystallise until the end of the life of the mine. Estimates are reviewed annually and are based on current contractual and regulatory requirements and the estimated useful life of mines. Engineering and feasibility studies are undertaken periodically; however significant changes in the estimates of contamination, restoration standards and techniques will result in changes to provisions from period to period.

Business combinations

All business combinations in the Group are accounted for under IFRS 3 "Business Combinations" using the acquisition method. When the Group acquires a business, it assesses the fair value of assets and liabilities acquired for the purpose of purchase price allocation as at the acquisition date. When discounted cash flow calculations are undertaken, management estimates the expected future cash flows from the cash generating unit ('CGU') by considering the future metal price, expected ore reserve, grade, mine life, moisture content and discount rate in order to estimate the expected present value of cash flows from the mine. The inputs to these factors are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. In the prior year, the Group completed the acquisition of CMK Resources Limited which has been accounted for under IFRS 3 "Business Combinations" using the acquisition method. The key assumptions used to determine the fair values of assets acquired and liabilities assumed are disclosed in note 6.

5. Segmental information

The Board is the Group's chief operating decision maker. Management have determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance. The Board considers the business from a project perspective.

The Group has two business segments consisting of the SX-EW copper plant at Kounrad in Kazakhstan and the Sasa zinc-lead mine in North Macedonia. The Group operations are controlled from a head office in London, UK, but this does not represent a separate business segment. The Copper Bay project and the Shuak exploration project in Kazakhstan are reported within discontinued operations (note 22).

The segmental results for the year ended 31 December 2018 are as follows:

	Kounrad $'000	Sasa $'000	Unallocated $'000	Total $'000
Gross revenue	92,644	111,508	-	204,152
Silver purchases from Silver Stream	-	(6,023)	-	(6,023)
Distribution and selling costs	(275)	(1,770)	-	(2,045)
Off-take buyers' fees	(2,535)	(1,215)	-	(3,750)
Revenue	89,834	102,500	-	192,334
EBITDA	66,833	71,221	(12,746)	125,308
Depreciation and amortisation	(6,335)	(26,951)	(56)	(33,342)
Foreign exchange (loss)/gain	276	(4,165)	10	(3,879)
Other income	359	-	-	359
Other expenses (note 11)	-	(561)	(469)	(1,030)
Finance income (note 15)	10	3	251	264
Finance costs (note 16)	(140)	(8,555)	(6,304)	(14,999)
Profit/(loss) before income tax	61,003	30,992	(19,314)	72,681
Income tax				(18,822)
Profit for the year after tax from continuing operations				53,859
Loss from discontinued operations				(7,274)
Profit for the year				46,585

The segmental results for the year ended 31 December 2017 are as follows:

	Kounrad $'000	Sasa $'000 (restated)	Unallocated $'000	Total $'000 (restated)
Gross revenue	86,443	20,036	-	106,479
Silver purchases from Silver Stream	-	(1,120)	-	(1,120)
Distribution and selling costs	-	(646)	-	(646)
Off-take buyers' fees	(2,590)	-	-	(2,590)
Revenue	83,853	18,270	-	102,123
EBITDA	63,565	14,547	(24,227)	53,885
CMK Resources Limited acquisition costs (note 6)	-	-	12,600	12,600
Adjusted EBITDA	63,565	14,547	(11,627)	66,485
Depreciation and amortisation	(6,695)	(4,238)	(56)	(10,989)
Foreign exchange (loss)/gain	(29)	2,683	708	3,362
Other income	268	(16)	-	252
Other expenses (note 11)	-	-	(12,600)	(12,600)
Finance income (note 15)	8	2,296	3,293	5,597
Finance costs (note 16)	(172)	(783)	(1,364)	(2,319)
Profit/(loss) before income tax	56,945	14,489	(21,646)	49,788
Income tax				(13,433)
Profit for the year after tax from continuing operations				36,355
Loss from discontinued operations				(76)
Profit for the year				36,279

EBITDA excludes the following items:

· Income tax expense;

· Finance income and expense;

· Other income/(expense);

· Foreign exchange;

· Depreciation and amortisation; and

· Discontinuing operations;

A reconciliation between profit for the year and EBITDA is presented below:

2018 2017

$'000 $'000

(restated)

Profit for the year	46,585	36,279
Plus/(less):
Income tax expense	18,822	13,433
Depreciation and amortisation	33,342	10,989
Foreign exchange loss/(gain)	3,879	(3,362)
Other income	(359)	(252)
Other expenses	1,030	-
Finance income	(264)	(5,597)
Finance costs	14,999	2,319
Loss from discontinued operations	7,274	76
Group continuing operations EBITDA	125,308	53,885
CMK Resources Limited acquisition costs	-	12,600
Group continuing operations adjusted EBITDA	125,308	66,485

Group segmental assets and liabilities for the year ended 31 December 2018 are as follows:

	Segmental assets		Additions to non-current assets		Segmental liabilities
	31 Dec 18 $'000	31 Dec 17 $'000 (restated)	31 Dec 18 $'000	31 Dec 17 $'000 (restated)	31 Dec 18 $'000	31 Dec 17 $'000 (restated)
Kounrad	80,384	99,872	1,395	1,050	(11,666)	(13,953)
Sasa	450,495	492,777	13,352	3,043	(78,720)	(137,864)
Assets held for sale (note 22)	61	5,760	907	2,002	(40)	(90)
Unallocated including corporate	18,785	21,583	296	-	(133,433)	(130,786)
	549,725	619,992	15,950	6,095	(223,859)	(282,693)

The assets and liabilities of the Copper Bay and Shuak entities have been classified as assets held for sale during the year ended 31 December 2018 (note 22).

6. Business combination

a) Summary of acquisition

In the prior year on 6 November 2017, CAML MK Limited, a wholly owned subsidiary of CAML, acquired 100% of the issued share capital of CMK Resources Limited, a holding company for a group of companies that owns the SASA mine. The acquisition has been accounted for under IFRS 3 'Business Combinations' using the acquisition method. The acquisition was classified as a reverse takeover under the AIM Rules for Companies.

Purchase consideration:	Provisional fair value	Fair value adjustment	Final fair value
	$'000	$'000	$'000
Cash consideration	340,178	-	340,178
Ordinary shares issued	48,883	-	48,883
Deferred consideration	12,000	-	12,000
	401,061	-	401,061
Less: net debt acquired	(67,000)	-	(67,000)
Total purchase consideration	334,061	-	334,061

The final assets and liabilities recognised as a result of the acquisition are as follows:

	Provisional fair value $'000	Fair value adjustment $'000	Final fair value $'000
Intangible assets	10,842	-	10,842
Property, plant and equipment	402,567	8,090	410,657
Inventories	2,420	-	2,420
Trade and other receivables	13,127	5,969	19,096
Cash and cash equivalents	8,470	-	8,470
Borrowings	(70,276)	-	(70,276)
Silver streaming commitment	(19,981)	(8,090)	(28,071)
Provisions for other liabilities and charges	(3,493)	-	(3,493)
Trade and other payables	(9,615)	(5,969)	(15,584)
Deferred tax liability	(21,558)	(810)	(22,368)
Net assets acquired	312,503	(810)	311,693
Purchase consideration	334,061	-	334,061
Goodwill	21,558	810	22,368

The fair value assessment process has been finalised during the year and within the permitted 12-month period. The provisional fair values reported as part of the 31 December 2017 Financial Statements have been revised to reflect new information obtained about facts and circumstances that were in existence at the acquisition date. There were two amendments to these provisional fair values:

- The fair value of the Silver Stream (note 30) which was originally reported as "deferred revenue" of $19,981,000 has been revised to $28,071,411 and is referred to as a Silver Streaming commitment. The Group acquired this as part of the acquisition and inherited a Silver Streaming commitment related to the production of silver during the life of the mine. The net present value of the future cash flows of the Silver Streaming agreement over the life of the mine was calculated by comparing the present value of selling the silver at market value compared to the present value of selling silver at the contractual fixed price. As a result of this fair value uplift there has been a corresponding increase in the fair value of mineral reserves in plant, property and equipment on acquisition.

- A withholding tax liability which was due on financial transactions relating to 2016 and 2017 pre the Group's ownership of the CMK Resources Group has been recognised as a payable as at acquisition date with a corresponding receivable as this balance is considered fully recoverable as it relates to a period prior to ownership. This has no overall impact on the net assets acquired.

The goodwill arising on the completion of the transaction, amounting to $22,368,000, is equal to the deferred tax liability which arises on the difference between the assigned fair value of the acquired assets and liabilities and their tax base.

7. Revenue

Group	2018 $'000	2017 $'000
International customers (Europe) - copper cathode	90,376	85,342
International customers (Europe) - zinc and lead concentrate	109,451	19,373
Domestic customers (Kazakhstan) - copper cathode	2,269	1,100
International customers (Europe) - silver	2,056	664
Total gross revenue	204,152	106,479
Less:
Silver purchases from silver stream	(6,023)	(1,120)
Off-take buyers' fees	(3,750)	(2,590)
Distribution and selling costs (note 9)	(2,045)	(646)
Revenue	192,334	102,123

Kounrad

The Group sells and distributes its copper cathode product primarily through an off-take arrangement with Traxys, which has been retained as CAML's off-take partner through to October 2022. The off-take arrangements are for a minimum of 95% of the SX-EW plant's output. The copper cathodes are delivered from the Kounrad site by rail or road under an FCA (Incoterms 2010) contractual basis and delivered to the end customers.

The off-take agreement provides for the option of provisional pricing i.e. the selling price is subject to final adjustment at the end of the quotation period based on the average price for the month following delivery to the buyer. The Company may mitigate commodity price risk by fixing the price in advance for its copper cathode sales with the off-take partner (see note 3).

The costs of delivery to the end customers have been effectively borne by the Group through means of an annually agreed buyer's fee which is deducted from the selling price.

During 2018, the Group sold 13,696 tonnes (2017: 14,001 tonnes) of copper through the off-take arrangements. Some of the copper cathodes are also sold locally and during 2018, 386 tonnes (2017: 180 tonnes) were sold to local customers.

CMK Resources Group

During the year ended 31 December 2018, the CMK Resources Group sold its zinc and lead concentrate to two European smelters. The agreements with the smelters provides for provisional pricing i.e. the selling price is subject to final adjustment at the end of the quotation period based on the average price for the month following delivery to the buyer and subject to final adjustment for assaying results.

The Group sold 18,792 tonnes (two-month period ended 31 December 2017: 2,906 tonnes) of zinc in concentrate and 27,878 tonnes (two-month period ended 31 December 2017: 4,559 tonnes) of lead in concentrate.

On 1 January 2018, the CMK Resources Group entered into a zinc and lead concentrate off-take arrangement with Traxys, which has been fixed through to 31 December 2022. The commitment is for 100% of the Sasa concentrate production.

The revenue arising from silver relates to a contract with Osisko where the Group has agreed to sell all of its silver at a fixed price of $5.48/oz, significantly below market value and arising from the silver stream commitment inherited on acquisition (note 30).

8. Cost of sales

Group	2018 $'000	2017 $'000 (restated)
Reagents, electricity and materials	19,676	7,600
Depreciation and amortisation	33,407	10,798
Silver Stream commitment	(2,627)	-
Royalties	7,995	5,459
Employee benefit expense	12,053	5,079
Consulting and other services	5,412	1,995
Taxes and duties	502	494
	76,418	31,425

9. Distribution and selling costs

Group	2018 $'000	2017 $'000 (restated)
Freight costs	1,670	252
Transportation costs	184	108
Employee benefit expense	76	72
Taxes and duties	-	32
Depreciation and amortisation	15	18
Materials and other expenses	100	164
	2,045	646

The above distribution and selling costs are those incurred at Kounrad and Sasa in addition to the costs associated with the off-take arrangements.

10. Administrative expenses

Group	2018 $'000	2017 $'000 (restated)
Employee benefit expense	9,709	7,982
Share based payments	4,904	2,823
Consulting and other services	6,754	3,321
Office-related costs	1,783	876
Taxes and duties	45	27
Depreciation and amortisation	755	173
Total from continuing operations	23,950	15,202
Total from discontinued operations (note 22)	153	533
	24,103	15,735

11. Other expenses

Group	2018 $'000	2017 $'000
CMK Resources Limited acquisition costs (note 6)	-	12,600
Loss on disposal of fixed assets	561	-
Impairment of receivable from previous owners	469	-
	1,030	12,600

The impairment of receivable from previous owners relates to the $5.9 million withholding tax payable relating to income from payments in 2016 and 2017. This tax relates to a period pre the Group's ownership and so due to the tax indemnity in place on acquisition was considered fully recoverable as per the acquisition accounting. A settlement was reached in April 2019 where previous owners would pay $5.5 million of the withholding tax payable and therefore the Group has recognised a $469,000 write off.

12. Auditors' remuneration

During the year, the Group obtained the following services from the Company's auditors and its associates:

	2018 $'000	2017 $'000 (restated)
Fees payable to the Company's auditors for the audit of the parent company and Consolidated Financial Statements	146	147
Fees payable to the Company's auditors and its associates for other services: - The audit of Company's subsidiaries	179	188
- Tax compliance services	26	53
- Acquisition of CMK Resources Limited including Reporting Accountant fees	-	2,382
- Other assurance services	58	34
	409	2,804

13. Employee benefit expense

The aggregate remuneration of staff, including Directors, was as follows:

Group	2018 $'000	2017 $'000
Wages and salaries	18,133	11,661
Social security costs	1,775	1,833
Staff healthcare and other benefits	2,557	684
Other pension costs	509	350
Share based payments (note 28)	4,904	2,823
Total for continuing operations	27,878	17,351
Total for discontinuing operations	75	175
	27,953	17,526

The total employee benefit expense includes an amount of $1,137,000 (2017: $1,314,000) which has been capitalised within property, plant and equipment.

Company	2018 $'000	2017 $'000
Wages and salaries	4,778	5,348
Social security costs	1,325	1,257
Staff healthcare and other benefits	479	85
Other pension costs	146	70
Share based payments (note 28)	4,904	2,823
	11,632	9,583

Key management remuneration is disclosed in note 36.

14. Monthly average number of people employed

Group	2018 Number	2017 Number
Operational	885	375
Construction	8	9
Management and administrative	146	81
	1,039	465

The monthly average number of staff employed by the Company during the year was 15 (2017: 13).

15. Finance income

Group	2018 $'000	2017 $'000
Gain on currency hedge	-	2,977
Foreign exchange gain on intercompany borrowings	3	2,297
Bank interest received	261	323
	264	5,597

16. Finance costs

Group	2018 $'000	2017 $'000
Provisions: unwinding of discount (note 32)	489	192
Interest on borrowings (note 31)	15,225	2,106
Bank charges	117	21
Gain on modification of the debt facility (note 31)	(832)	-
	14,999	2,319

17. Income tax

Group	2018 $'000	2017 $'000 (restated)
Current tax on profits for the year	20,391	13,953
Deferred tax credit (note 37)	(1,569)	(520)
Income tax expense	18,822	13,433

Taxation for each jurisdiction is calculated at the rates prevailing in the respective jurisdictions.

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

Group	2018 $'000	2017 $'000 (restated)
Profit before taxation including loss from discontinued operations	65,407	49,712
Tax calculated at domestic tax rates applicable to profits in the respective countries	27,410	9,006
Tax effects of:
Expenses not deductible for tax purposes	2,982	3,582
Profit not subject to tax - Group operations in Bermuda	-	180
Movement on unrecognised deferred tax - tax losses	(10,001)	1,185
Movement on recognised deferred tax (note 37)	(1,569)	(520)
Income tax expense	18,822	13,433

Corporate income tax is calculated at 19% (2017: 19.25%) of the assessable profit for the year for the UK Company's, 20% for the operating subsidiaries in Kazakhstan (2017: 20%) and 10% (2017: 10%) for the operating subsidiaries in North Macedonia.

Expenses not deductible for tax purposes includes share based payment charges and transfer pricing adjustments in accordance with local tax legislation.

Deferred tax assets have not been recognised on tax losses primarily at the parent company as it remains uncertain whether this entity will have sufficient taxable profits in the future to utilise these losses.

18. Earnings/(loss) per share

(a) Basic

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to owners of the Company by the weighted average number of Ordinary Shares in issue during the year excluding Ordinary Shares purchased by the Company and held as treasury shares (note 26).

	2018 $'000	2017 $'000 (restated)
Profit from continuing operations attributable to owners of the parent	55,302	36,391
Loss from discontinued operations attributable to owners of the parent	(7,274)	(76)
Profitable attributable to owners of the parent	48,028	36,315

	2018 No.	2017 No.
Weighted average number of Ordinary Shares in issue	176,498,266	125,144,585

	2018 $ cents	2017 $ cents (restated)
Earnings/(loss) per share from continuing and discontinued operations attributable to owners of the parent during the year (expressed in $ cents per share)
From continuing operations	31.33	29.08
From discontinued operations	(4.12)	(0.06)
From profit for the year	27.21	29.02

(b) Diluted

The diluted earnings/(loss) per share is calculated by adjusting the weighted average number of Ordinary Shares outstanding after assuming the conversion of all outstanding granted share options.

	2018 $'000	2017 $'000 (restated)
Profit from continuing operations attributable to owners of the parent	55,302	36,391
Loss from discontinued operations attributable to owners of the parent	(7,274)	(76)
Profitable attributable to owners of the parent	48,028	36,315

	2018 No.	2017 No.
Weighted average number of Ordinary Shares in issue	176,498,266	125,144,585
Adjusted for:
- Share options	3,937,283	3,115,417
Weighted average number of Ordinary Shares for diluted earnings per share	180,435,549	128,260,002

Diluted earnings/(loss) per share	2018 $ cents	2017 $ cents (restated)
From continuing operations	30.65	28.38
From discontinued operations	(4.12)	(0.06)
From profit for the year	26.53	28.32

19. Property, plant and equipment

Group	Construction in progress $'000	Plant and equipment $'000	Mining assets $'000	Motor vehicles and office equipment $'000	Land $'000	Mineral rights $'000	Total $'000
Cost
At 1 January 2017	3,199	61,109	1,631	1,542	-	-	67,481
Acquisition of subsidiary (note 6) (restated)	8,722	48,216	-	-	643	353,076	410,657
Additions	3,903	26	-	132	21	-	4,082
Disposals	(28)	(396)	-	(46)	-	-	(470)
Change in estimate - asset retirement obligation (note 32)	-	(477)	-	-	-	-	(477)
Transfers	(5,129)	5,057	-	72	-	-	-
Exchange differences	371	1,648	5	3	-	11,934	13,961
At 31 December 2017 (restated)	11,038	115,183	1,636	1,703	664	365,010	495,234
Additions	14,398	108	-	513	-	-	15,019
Disposals	(24)	(596)	-	(60)	-	-	(680)
Change in estimate - asset retirement obligation (note 32)	-	(159)	-	-	-	-	(159)
Transfers	(7,439)	7,432	-	7	-	-	-
Transfer from stock	35	116	-	-	-	-	151
Exchange differences	(691)	(8,809)	(221)	(216)	(30)	(14,677)	(24,644)
Impairment	-	(43)	-	-	-	-	(43)
At 31 December 2018	17,317	113,232	1,415	1,947	634	350,333	484,878

Accumulated depreciation
At 1 January 2017	-	16,365	100	692	-	-	17,157
Provided during the year	-	6,321	69	142	-	2,805	9,337
Disposals	-	(435)	-	(19)	-	-	(454)
Exchange differences	-	(40)	(1)	(26)	-	-	(67)
At 31 December 2017 (restated)	-	22,211	168	789	-	2,805	25,973
Provided during the year	-	13,086	89	201	-	18,399	31,775
Disposals	-	(66)	-	(30)	-	-	(96)
Impairment	-	(6)	-	-	-	-	(6)
Exchange differences	-	(2,229)	(32)	(108)	-	-	(2,369)
At 31 December 2018	-	32,996	225	852	-	21,204	55,277

Net book value at 31 December 2017	11,038	92,972	1,468	914	664	362,205	469,261
Net book value at 31 December 2018	17,317	80,236	1,190	1,095	634	329,129	429,601

The Company had $290,000 of office equipment at net book value as at 31 December 2018 (2017: $37,000).

The CMK Resources Group no longer has any pledged building and equipment as security for the borrowings as the SG loan was repaid in full during the year. In the prior year $8,836,000 was held as security for the borrowings in relation to the SG loan (see note 31).

The reduction in estimate in relation to the asset retirement obligation of $159,000 (2017: $477,000) is due to a combination of adjusting the provision recognised at the net present value of future expected costs using latest assumptions on inflation rates and discount rates as well as updating the provision for management's best estimate of the costs that will be incurred based on current contractual and regulatory requirements and the estimated useful life of mine (note 32).

20. Intangible assets

Group	Goodwill $'000	Exploration and evaluation costs $'000	Mining licences and permits $'000	Computer software and website $'000	Total $'000
Cost
At 1 January 2017	10,293	3,600	30,951	58	44,902
Acquisition of subsidiary (note 6)	22,368	-	10,412	430	33,210
Additions	-	2,002	-	23	2,025
Assets classified as held for sale (note 22)	-	(5,602)	-	-	(5,602)
Exchange differences	803	-	367	3	1,173
At 31 December 2017 (restated)	33,464	-	41,730	514	75,708
Additions	-	-	-	28	28
Disposals	-	-	-	(6)	(6)
Exchange differences	(2,285)	-	(4,096)	(17)	(6,398)
At 31 December 2018	31,179	-	37,634	519	69,332

Accumulated amortisation
At 1 January 2017	-	-	4,108	35	4,143
Provided during the year	-	-	1,628	30	1,658
Exchange differences	-	-	(8)	-	(8)
At 31 December 2017	-	-	5,728	65	5,793
Provided during the year	-	-	2,134	433	2,567
Disposals	-	-	-	(6)	(6)
Exchange differences	-	-	(325)	(8)	(333)
At 31 December 2018	-	-	7,537	484	8,021

Net book value at 31 December 2017	33,464	-	36,002	449	69,915
Net book value at 31 December 2018	31,179	-	30,097	35	61,311

The Company had $3,000 of computer software and website costs at net book value as at 31 December 2018 (2017: $8,000).

Impairment assessment

Kounrad project

The Kounrad project located in Kazakhstan has an associated goodwill balance. In accordance with IAS 36 "Impairment of assets" and IAS 38 "Intangible Assets", a review for impairment of goodwill is undertaken annually or at any time an indicator of impairment is considered to exist and in accordance with IAS 16 "Property, plant and equipment", a review for impairment of long-lived assets is undertaken at any time an indicator of impairment is considered to exist. The discount rate applied to calculate the present value is based upon the real weighted average cost of capital applicable to the cash generating unit ('CGU'). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of the CGU is assessed by reference to the higher of value in use ('VIU'), being the net present value ('NPV') of future cash flows expected to be generated by the asset, and fair value less costs to dispose ('FVLCD'). The FVLCD is considered to be higher than VIU and has been derived using discounted cash flow techniques (NPV of expected future cash flows of a CGU), which incorporate market participant assumptions

The discount rate reflects equity risk premiums over the risk-free rate, the impact of the remaining economic life of the CGU and the risks associated with the relevant cash flows based on the country in which the CGU is located. These risk adjustments are based on observed equity risk premiums, historical country risk premiums and average credit default swap spreads for the period.

The key economic assumptions used in the review were a five-year forecast average nominal copper price of $6,985 per tonne and a long-term price of $7,472 per tonne and a discount rate of 8%. Assumptions in relation to operational and capital expenditure are based on the latest budget approved by the Board. The carrying value of the net assets is not currently sensitive to any reasonable changes in key assumptions. Management concluded and the net present value of the asset is significantly in excess of the net book value of assets, so no impairment identified.

Sasa project

The SASA project located in North Macedonia has an associated goodwill balance. In accordance with IAS 36 'Impairment of assets' and IAS 38 'Intangible Assets', a review for impairment of goodwill is undertaken annually or at any time an indicator of impairment is considered to exist and in accordance with IAS 16 'Property, plant and equipment', a review for impairment of long-lived assets is undertaken at any time an indicator of impairment is considered to exist.

The assessment compared the recoverable amount of the SASA Cash Generating Unit ('CGU') with its carrying value for the year ended 31 December 2018. The recoverable amount of the CGU is assessed by reference to the higher of value in use ('VIU'), being the net present value ('NPV') of future cash flows expected to be generated by the asset, and fair value less costs to dispose ('FVLCD'). The FVLCD is considered to be higher than VIU and has been derived using discounted cash flow techniques (NPV of expected future cash flows of a CGU), which incorporate market participant assumptions. Cost to dispose is based on management's best estimates of future selling costs at the time of calculating FVLCD. Costs attributable to the disposal of the CGU are not considered significant. The expected future cash flows utilised in the FVLCD model are derived from estimates of projected future revenues based on broker consensus commodity prices, future cash costs of production and capital expenditures contained in the life of mine ('LOM') plan, and as a result FVLCD is considered to be higher than VIU. The Group's discounted cash flow analysis reflects probable reserves as well as resources, and is based on detailed research, analysis and modelling.

At 31 December 2018, the Group has reviewed the indicators for impairment, including forecasted commodity prices, discount rates, operating and capital expenditure, and the mineral reserves and resources' estimates and an impairment is not necessary. For the purposes of the impairment review a conservative discount rate of 12% was applied to calculate the present value of the CGU. The key economic assumptions used in the review were a five-year forecast average nominal zinc and lead price of $2,441 and $2,200 per tonne respectively and a long-term price of $2,604 and $2,264 per tonne respectively.

Management then performed sensitivity analyses whereby certain parameters were flexed downwards by reasonable amounts for the CGU to assess whether the recoverable value for the CGU would result in an impairment charge. The following sensitivities were applied:

Long-term zinc price reduced by US$100/t

Long-term lead price reduced by US$100/t

Discount rate increased to 12.5%

Production decreased by 2.5%

In isolation, none of the changes set out above would result in an impairment. This sensitivity analysis also does not take into account any of management's mitigation factors should these changes occur or the planned production optimisation in future years.

21. Investments

Shares in Group undertakings:

Company

	31 Dec 18 $'000	31 Dec 17 $'000
At 1 January	11,821	11,771
Investment in Shuak BV	35	50
Impairment of investment in Shuak BV	(143)	-
Impairment of investment in Copper Bay	(6,222)	-
At 31 December	5,491	11,821

Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid less impairment.

Details of the Company holdings are included in the table below:

Subsidiary	Registered office address	Activity	CAML % 2018	CAML % 2017	Date of incorporation
CAML Kazakhstan BV	Herikerbergweg 238, 1101 CM Amsterdam, The Netherlands	Holding Company	100	100	23 Jun 08
Shuak BV	Herikerbergweg 238, 1101 CM Amsterdam, The Netherlands	Holding Company	80	80	20 Sep 16
Sary Kazna LLP	Business Centre No. 2, 4 Mira Street, Balkhash, Kazakhstan	Kounrad project (SUC operations)	100	100	6 Feb 06
Kounrad Copper Company LLP	Business Centre No. 2, 4 Mira Street, Balkhash, Kazakhstan	Kounrad project (SX-EW plant)	100	100	29 Apr 08
Ken Shuak LLP	Business Centre No. 2, 4 Mira Street, Balkhash, Kazakhstan	Shuak project (exploration)	100	100	5 Oct 16
Copper Bay Limited	Masters House, 107 Hammersmith Road, London, W14 0QH, United Kingdom	Holding Company	75*	75*	29 Oct 10
Copper Bay (UK) Ltd	Masters House, 107 Hammersmith Road, London, W14 0QH, United Kingdom	Holding Company	75*	75*	9 Nov 11
Copper Bay Chile Limitada	Ebro 2740, Oficina 603, Las Condes, Santiago, Chile	Holding Company	75*	75*	12 Oct 11
Minera Playa Verde Limitada	Ebro 2740, Oficina 603, Las Condes, Santiago, Chile	Exploration - Copper	75*	75*	20 Oct 11
Zuunmod UUL LLC	Bodi Tower, Chinggis Square, 1^st Khoroo, District Chingeltei, Ulaanbaatar 15160, Mongolia	Exploration - Gold	-	85	3 May 07
ZMLUK Limited	Masters House, 107 Hammersmith Road, London, W14 0QH, United Kingdom	Holding Company	-	100	10 April 17
CAML MK Limited	Masters House, 107 Hammersmith Road, London, W14 0QH, United Kingdom	Holding Company	100	100	5 Sep 17
CMK Resources Limited (previously Lynx Resources Limited)	Cannon's Court, 22 Victoria St, Hamilton HM12, Bermuda	Holding Company	100	100	19 June 2015
CMK Mining B.V. (previously Lynx Mining Limited)	Prins Bernhardplein 200 1097 JB Amsterham, The Netherlands	Seller of zinc and lead concentrate	100	100	30 June 2015
CMK Europe SPLLC Skopje (previously Lynx Europe SPLLC Skopje)	str. Vasil Glavinov no. 7-b/4 Skopje Republic of North Macedonia	Holding Company	100	100	10 July 2015
Rudnik SASA DOOEL Makedonska Kamenica	28 Rudarska Street, Makedonska Kamenica, 2304, North Macedonia	Sasa project	100	100	22 June 2005

*Fully diluted basis

CAML MK

For the period ended 31 December 2018, CAML MK Limited (registered number: 10946728) has opted to take advantage of a statutory exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies. The members of CAML MK Limited have not required it to obtain an audit of their Financial Statements for the period ended 31 December 2018. In order to facilitate the adoption of this exemption, Central Asia Metals plc, the parent company of the subsidiaries concerned, undertakes to provide a guarantee under Section 479C of the Companies Act 2006 in respect of CAML MK Limited.

Copper Bay

At the year end the investment held in Copper Bay was impaired in full as although the Group is confident of making a sale in the near future, it is not clear of the cash generative abilities of these assets.

Shuak

On 22 November 2016, CAML signed a framework agreement to acquire an 80% effective interest in the subsoil use contract ('SUC') for the Shuak exploration property in northern Kazakhstan with 20% effectively being held by local partners. At the year end, this Company has impaired the investment in full and the Group has impaired the exploration and evaluation assets in full as a result of the Boards decision to no longer develop this asset. However, the Group still believe there is some value in these assets and expects to retain either a minority shareholding or royalty to future income from the asset.

Mongolia

In December 2016, CAML Mongolia BV signed an agreement with a third party to sell its entire interest in Monresources LLC for cash consideration of $100 with deferred consideration dependent on the outcome of future events. Confirmation of the transfer of shares to the third party was received in February 2017.

Following unsuccessful attempts to dispose of the Ereen project, CAML disposed of its interest in Zuunmod UUL LLC in April 2018 when ZMLUK Limited was dissolved in April 2018.

22. Assets held for sale

The assets and liabilities of Shuak entities have been presented as held for sale in the Statement of Financial Position as the Group plan to transfer the shareholding to the minority shareholding in 2019 retaining either a 10% holding or alternatively a royalty. The exploration assets held in Shuak have been impaired in full following the decision not to develop this asset and the plan to transfer the shareholding to the minority shareholding in 2019.

The assets and liabilities of the Copper Bay entities continued to have been presented as held for sale in the Statement of Financial Position following the decision of the CAML Board to sell the project in August 2017 and the Company progresses it sales process. The results of the Copper Bay entities for the year ended 31 December 2018 and the comparative year ended 31 December 2017 are shown within discontinued operations in the Consolidated Income Statement. At the year end the exploration assets and PPE held in Copper Bay have been impaired in full as although the Group is confident of making a sale in the near future, it is not clear of the cash generative abilities of these assets.

In the prior year, 2017, the Group continued to hold for sale the assets it owns in Mongolia. The Group disposed of its interest in Monresources LLC in February 2017 and its interest in Zuunmod UUL LLC in April 2018 (see note 21). The Mongolian assets were fully written-down.

Assets of disposal group classified as held for sale:	31 Dec 18 $'000	31 Dec 17 $'000
Cash and cash equivalents	58	151
Intangible assets*	-	5,602
Trade and other receivables	3	7
	61	5,760

*During the year there were additions of $907,000 in intangible assets in relation to Shuak as the Group completed the second exploration season at Shuak, undertaking both diamond and core hydrotransport drilling. It was then decided as the Group will not develop the project to recognise an impairment for the entire balance of intangible assets.

Liabilities of disposal group classified as held for sale:

31 Dec 18 $'000

31 Dec 17 $'000

Trade and other payables

The decision was also taken to impair the Shuak assets as the decision taken not to develop this asset and so we include the

impairment of both Copper Bay and Shuak in discontinued items. During the period the following have been recognised in discontinued operations:

Loss from discontinued operations:	2018 $'000	2017 $'000 (restated)
General and administrative expenses	(153)	(533)
Other income	-	100
Foreign exchange (loss)/gain	(927)	386
Impairment of exploration and evaluation assets	(6,194)	-
Income tax	-	(29)
Loss from discontinued operations	(7,274)	(76)
Cash flows of disposal group classified as held for sale:	2018 $'000	2017 $'000
Operating cash flows	(93)	151
Total cash flows	(93)	151

Copper Bay

The Group has reviewed the indicators for impairment under IFRS 6 Exploration and Evaluation of Mineral Resources as although the Group is confident of making a sale in the near future, it is not clear of the cash generative abilities of these assets. An impairment of its exploration and evaluation assets amounting to $4,018,000 has been recognised through discontinued operations.

Shuak

At the year end the Group has impaired the exploration and evaluation assets in full as a result of the Boards decision to no longer develop this asset amounting to $2,176,000. However, the Group still believe there is some value in these assets and expects to retain either a minority shareholding or royalty to future income from the asset.

23. Trade and other receivables

Current receivables	Group		Company
Current receivables	31 Dec 18 $'000	31 Dec 17 $'000 (Restated)	31 Dec 18 $'000	31 Dec 17 $'000
Receivable from subsidiary	-	-	215	122
Loans due from subsidiaries	-	-	373,182	327,891
Trade receivables	3,746	6,254	-	-
Prepayments	1,463	2,367	395	331
VAT receivable	2,006	1,563	189	547
Other receivables	2,863	9,521	211	11
	10,078	19,705	374,192	328,902

Non-current receivables
Loan due from subsidiary	-	-	-	1,531
Prepayments	71	39	-	-
VAT receivable	2,049	2,480	-	-
	2,120	2,519	-	1,531

The carrying value of all the above receivables is a reasonable approximation of fair value. There are no amounts past due at the end of the reporting period that have not been impaired apart from the VAT receivable balance as explained below. Management's policy is to assess all trade and other receivables for recoverability on a regular basis. A provision is made where doubt exists and amounts are fully written-off when information becomes known that the amounts due will not be recovered.

There are two loans due from subsidiaries. One loan is owed by CAML MK, a directly owned subsidiary for $315,116,000 (2017: $327,891,000), accrues interest at a rate of 5% per annum and is repayable on demand. There is another loan which is owed by CMK Mining, a subsidiary, for $58,067,000 (2017: $nil) which accrues interest at a rate of 4.75% per annum and is repayable on demand. These loans have been assessed for expected credit loss under IFRS 9, however, as the Group's strategies are aligned there is no realistic expectation that repayment would be demanded. Also, the expected future cash flows arising from the asset also significantly exceed the intercompany loan values so it is believed these loans can be repaid without any significant issue. It has been concluded that the expected credit loss is immaterial, and no adjustment recognised.

As at 31 December 2018, the total Group VAT receivable was $4,055,000 (2017: $4,043,000) which includes an amount of $2,813,000 (2017: $2,703,000) of VAT owed to the Group by the Kazakhstan authorities. In 2018, the Kazakhstan authorities refunded $223,000 and a further $700,000 is expected in June 2019 and this has been classified as current trade and other receivables as at 31 December 2018. The Group is working closely with its advisors to recover the remaining portion. The planned means of recovery will be through a combination of the local sales of cathode copper to offset VAT liabilities and by a continued dialogue with the authorities.

24. Inventories

Group	31 Dec 18 $'000	31 Dec 17 $'000
Raw materials	6,901	6,440
Finished goods	628	558
	7,529	6,998

The Group did not have any slow-moving, obsolete or defective inventory as at 31 December 2018 and therefore there were no write-offs to Income Statement during the year (2017: nil). The total inventory recognised through the Income Statement was $1,007,000 (2018: $772,000).

25. Cash and cash equivalents

Group Company

	31 Dec 18 $'000	31 Dec 17 $'000	31 Dec 18 $'000	31 Dec 17 $'000
Cash at bank and on hand	21,605	35,208	2,253	7,269
Short-term deposits	13,044	7,814	13,044	7,814
	34,649	43,022	15,297	15,083
Cash at bank and on hand included in assets held for sale	58	151	-	-
Total cash and cash equivalent	34,707	43,173	15,297	15,083
Restricted cash	4,376	2,812	4,222	2,672
Total cash and cash equivalent including restricted cash	39,083	45,985	19,519	17,755

The restricted cash amount of $4,376,000 (2017: $2,812,000) is held at bank to cover debt compliance and Kounrad SUC licence requirements. Short-term deposits are held at call with banks.

26. Share capital and premium

	Number of shares	Ordinary Shares $'000	Share premium $'000	Treasury shares $'000
At 1 January 2017	112,069,738	1,121	-	(7,780)
Issue of shares	64,428,528	644	191,184	-
At 31 December 2017	176,498,266	1,765	191,184	(7,780)
Treasury shares	-	-	-	1,254
At 31 December 2018	176,498,266	1,765	191,184	(6,526)

The par value of Ordinary Shares is $0.01 per share and all shares are fully paid.

Employee Benefit Trust shares

During the year there was an exercise of share options by senior management that were satisfied by employee benefit trust shares reducing the trust shares by 459,253 and a movement of $1,199,000 (2017: $nil). A further 30,000 trust shares were satisfied as part of the EBT loan repayment with a movement of $55,000 (2017: $nil).

27. Currency translation reserve

Currency translation differences arose primarily on the translation on consolidation of the Group's Kazakhstan-based and North Macedonian-based subsidiaries whose functional currency is the Kazakhstan Tenge and North Macedonian Denar. In addition, currency translation differences arose on the goodwill and fair value uplift adjustments to the carrying amounts of assets and liabilities arising on the Kounrad Transaction and CMK Resources acquisition which are denominated in Tenge and Denar. During 2018, a non-cash currency translation loss of $10,288,000 (2017: gain of $8,269,000) was recognised within equity.

28. Share based payments

The Company provides rewards to staff in addition to their salaries and annual discretionary bonuses, through the granting of share options in the Company. The Company effectively has two such option schemes in place, the Old Scheme and the New Scheme.

Old Scheme

The first share option plan was introduced by the Company in February 2008 and initially had an exercise price of $6.42. On the recommendation of the Remuneration Committee, the exercise price for the participants was reduced to $0.68 in February 2010 to reflect the changed economic circumstances of the Company and maintain some form of incentive for staff. Only those staff still employed by the Group at this time benefited from this decision and those participants who had left the Group maintained an exercise price of $6.42 on their options. The vesting of share options in the plan is purely conditional upon time served by the participant and as at 31 December 2018, all options have fully vested.

New Scheme

The Company introduced the second share option plan in October 2011. This scheme has an exercise price of effectively nil for the participants. The nil-cost share options granted under this scheme vest on the basis of a third annually depending on the achievement by the Group and the participant of the performance targets as determined by the CAML Remuneration Committee.

As at 31 December 2018, 16,000 (2017: 180,000) Old Scheme options and 3,295,600 (2017: 2,592,260) New Scheme options (including those issued to Nurlan Zhakupov) were outstanding. Share options are granted to Directors and selected employees. The exercise price of the granted options is presented in the table below for every grant. In general, options vest in one-third tranches over a three-year period. The Company has the option but not the legal or constructive obligation to repurchase or settle the options in cash.

Movements in the number of share options outstanding and their related weighted average price are as following:

2018 2017

(restated)

	Average exercise price in $ per share option	Options (number)	Average exercise price in $ per share option	Options (number)
At 1 January	0.39	2,772,260	0.44	2,491,537
Granted	0.01	1,067,414	0.01	714,836
Exercised	0.01	(364,074)	0.01	(434,113)
Expired	6.42	(164,000)	-	-
At 31 December	0.01	3,311,600	0.39	2,772,260

The related weighted average share price at the time of exercise was $3.71 (2017: $2.97) per share. Out of the outstanding options of 3,311,600 (2017: 2,772,260), 1,976,450 options (2017: 1,641,618) were exercisable as at 31 December 2018.

An amount of $4,904,000 (2017: $2,823,000) has been credited to retained earnings and expensed within employee benefits expense from continuing operations for the grant of stock options for the year ended 31 December 2018. Included in this amount is an additional dividend related share option charge of $699,232 (2017: $620,000). The number of shares covered by such awards is increased by up to the value of dividends declared as if these were reinvested in Company shares at the dates of payment. The outstanding share options included in the calculation of diluted earnings/(loss) per share (note 18) includes these additional awards but they are excluded from the disclosures in this note.

Share options outstanding at the end of the year have the following expiry date and exercise prices:

Grant - vest	Expiry date of option	Option exercise price $	2018 2017 (restated) Share options (number)
Old Scheme:
21 Feb 08	21 Feb 18	6.42	-	164,000
21 Feb 10	21 Feb 20	0.68	16,000	16,000
New Scheme:
8 May 12	7 May 22	0.01	100,000	100,000
24 Jul 13	23 Jul 23	0.01	60,155	60,155
3 Jun 14	2 Jun 24	0.01	196,355	223,001
8 Oct 14	7 Oct 24	0.01	214,354	289,755
22 Apr 15	21 Apr 25	0.01	358,948	507,195
18 Apr 16	18 Apr 26	0.01	621,790	697,318
21 Apr 17	21 Apr 27	0.01	676,583	714,836
2 May 18	2 May 28	0.01	1,067,415	-
			3,311,600	2,772,260

Employee Benefit Trust

The Company set up an Employee Benefit Trust ('EBT') during 2009 as a means of incentivising certain Directors and senior management of CAML prior to the Initial Public Offering ('IPO'). All of the shares awarded as part of the EBT scheme vested on the successful completion of the IPO on 30 September 2010.

2,534,688 Ordinary Shares were initially issued as part of the arrangements in December 2009 followed by a further issue of 853,258 in September 2010. The shares were issued at the exercise price of $0.68, which was the best estimate of the Company's valuation at the time.

29. Trade and other payables

Group Company

	31 Dec 18 $'000	31 Dec 17 $'000 (restated)	31 Dec 18 $'000	31 Dec 17 $'000
Trade and other payables including accruals	11,137	10,622	4,805	4,825
Deferred consideration (note 6)	6,500	4,000	-	-
Corporation tax, social security and other taxes	3,279	13,739	191	154
	20,916	28,361	4,996	4,979

Other non-current payables:
Deferred consideration (note 6)	-	8,000	-	-
	-	8,000	-	-

The carrying value of all the above payables is equivalent to fair value.

The Group made a provision for the 2018 Kazakhstan corporate income tax liability of $773,000 (2017: $1,331,000) having paid an amount of $13,588,000 in advance during the year (2017: $11,367,000). $1,259,000 was also paid during the year in relation to 2017 corporate income tax (2017: $927,000 in relation to 2016).

The Group made a provision for the 2018 North Macedonian corporate income tax liability of $4,677,000 having paid an amount of $6,372,000 in advance during the year. $4,651,000 was also paid during the year in relation to 2017 corporate income tax.

The prior year balance of corporation tax, social security and other taxes has been restated due to the North Macedonian withholding tax payable which was incurred in relation to the period prior to our ownership of CMK Resources and therefore treated as fully recoverable. This has since been negotiated with the prior owners and a settlement reached which is to be offset against deferred consideration.

All Group and Company trade and other payables are payable within less than one year for both reporting periods.

30. Silver Streaming commitment

The carrying amounts of the Silver Streaming commitment for silver delivery are as follows:

Group Company

	31 Dec 18 $'000	31 Dec 17 $'000 (restated)	31 Dec 18 $'000	31 Dec 17 $'000
Current	2,263	2,056	-	-
Non-current	22,905	25,711	-	-
	25,168	27,767	-	-

On 1 September 2016, the CMK Group entered into a Silver Purchase Agreement with Lynx Metals Limited which was subsequently transferred to Osisko. The Group acquired this agreement as part of the acquisition and inherited a Silver Streaming commitment related to the production of silver during the life of the mine. The Silver Streaming commitment is recognised in the Income Statement as the silver is delivered based on the units of production. As part of the review of the fair value of acquisition accounting the Silver Streaming commitment balance was fair valued and was revised to $28,071,411 by considering the future cash flows arising from the contractual obligation. See note 6 for more details.

31. Borrowings

Group Company

	31 Dec 18 $'000	31 Dec 17 $'000	31 Dec 18 $'000	31 Dec 17 $'000
Secured: Non-current
Bank loans	106,549	141,839	106,549	89,711
Secured: Current
Bank loans	38,400	40,075	38,400	24,000
	144,949	181,914	144,949	113,711

The carrying value of loans approximates fair value:

	Carrying amount		Fair value
	31 Dec 18 $'000	31 Dec 17 $'000	31 Dec 18 $'000	31 Dec 17 $'000
Ohridska Banka AD Skopje	-	5,539	-	5,539
SG Facility	-	62,664	-	62,664
Traxys	144,949	113,711	144,949	113,711
	144,949	181,914	144,949	181,914

During the year, $38.5 million of the principal amount of Group debt was repaid as well as a further $12.1 million interest. As at 31 December 2018, non-current and current borrowings were $106.5 million and $38.4 million respectively (2017: $141.8 million and $40.1 million).

In December 2018, CAML consolidated its borrowings into one corporate debt package, increasing and amending the size of its Traxys Europe S.A. facility by $60 million to $151 million. The Group used these funds to fully repay the outstanding balances of the inherited Société Générale and Investec Sasa debt facility of $57 million and Ohridska Bank working capital facility of $1.7 million. The consolidation of the three debt facilities resulted in a 0.25% reduction of margin for the refinanced portion of the Sasa debt to 4.75%. The Group has also simplified the repayment schedule and will now repay $3,200,000 each month and has removed the requirement for cash sweeps based on free cash-flow.

The debt financing agreement with Traxys Europe S.A. remains repayable on 4 November 2022. Interest is payable at LIBOR plus 4.75%. Security is provided over the shares in CAML Kazakhstan BV, certain bank accounts and the Traxys Kounrad off-take agreement as well as over the off-take agreement between CAML MK and Traxys Europe S.A.

The fair value of borrowings has been calculated by discounting the expected future cash flows at contracted interest rates.

As at 31 December 2018, the Group measured the fair value using techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly (Level 2).

The different levels have been defined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The debt is subject to financial covenants which include the monitoring of gearing and leverage ratios and these are all currently complied with. The refinance has also lifted the security over Bermuda holding companies, enabling the Group to restructure its CMK Resources entities and this process was completed in Q1 2019.

32. Provisions for other liabilities and charges

Group

	Asset retirement obligation $'000	Employee retirement benefits $'000	Other employee benefits $'000	Legal claims $'000	Total $'000
At 1 January 2017	2,087	-	-	-	2,087
Acquisition of subsidiary (note 6)	2,746	123	184	440	3,493
Change in estimate	(477)	57	(30)	-	(450)
Unwinding of discount (note 16)	192	-	-	-	192
Exchange rate difference	28	-	-	15	43
At 31 December 2017	4,576	180	154	455	5,365
Change in estimate	(159)	24	18	(108)	(225)
Unwinding of discount (note 16)	489	-	-	-	489
Exchange rate difference	(478)	(8)	(7)	(20)	(513)
At 31 December 2018	4,428	196	165	327	5,116
Non-current	4,428	159	155	327	5,069
Current	-	37	10	-	47
At 31 December 2018	4,428	196	165	327	5,116

a) Asset retirement obligation

The Group provides for the asset retirement obligation associated with the mining activities at Kounrad, estimated to be required in 2034. The provision is recognised at the net present value of future expected costs using a discount rate of 8.07% (2017: 8.07%). The reduction in estimate in relation to the asset retirement obligation of $159,000 (2017: $477,000) is due to a combination of adjusting the provision recognised at the net present value of future expected costs using an inflation rate of 5.59% (2017: 5.59%) as well as updating the provision for management's best estimate of the costs that will be incurred based on current contractual and regulatory requirements and the estimated useful life of mine to 2034.

Under current legislation entities operating mining and related activities in North Macedonia are required to take remedial action for the land where such activities have occurred based on a plan approved by the Ministry of the Environment as well as in accordance with international best practices. After the ceasing of mining activities the Group is obliged to restore the mining area and to return it to its initial condition. The Group has engaged an independent expert to conduct an independent assessment on the environment of the mining activities of the Group and to prepare an assessment of the restoration and the relevant costs connected with the mine, and the mining properties. The calculation was performed on a basis of this independent assessment performed by an environmental technical expert. The expected current cash flows were projected over the useful life of the mining sites and discounted to 2018 terms using a discount rate of 7.87% (2017: 7.98%). The cost of the related assets are depreciated over the useful life of the assets and are included in property, plant and equipment.

b) Employee retirement benefit

All employers in North Macedonia are obliged to pay employees minimum severance pay on retirement equal to two months of the average monthly salary applicable in the country at the time of retirement. The retirement benefit obligation is stated at the present value of expected future payments to employees with respect to employment retirement pay. The present value of expected future payments to employees is determined by an independent authorised actuary in accordance with the prevailing rules of actuarial mathematics.

c) Other employee benefit

The Group is also obliged to pay jubilee anniversary awards in North Macedonia for each ten years of continuous service of the employee. Provisions for termination and retirement obligations are recognised in accordance with actuary calculations. Basic 2017 actuary assumptions are used as follows:

Discount rate: 3.8%

Expected rate of salary increase: 2.5%

d) Legal claims

The Group is party to certain legal claims and the recognised provision reflects management's best estimate of the most likely outcome.

33. Cash generated from operations

_Group	Note	2018 $'000	2017 $'000
Profit before income tax including discontinued operations		65,407	49,801
Adjustments for:
Depreciation and amortisation		33,342	10,927
Silver stream commitment		(1,599)	(304)
Loss on disposal of property, plant and equipment	11	561	-
Foreign exchange loss/(gain)		3,879	(3,349)
Share based payments	28	4,904	2,823
Finance income	15	(264)	(5,597)
Finance costs	16	14,999	2,319
Other expenses	11	576	-
Impairment of held for sale assets	22	6,194	-
Changes in working capital:
Inventories	24	(683)	(1,259)
Trade and other receivables	23	(386)	3,868
Trade and other payables	29	3,549	809
Provisions for other liabilities and charges	31	(348)	70
Cash generated from operations		130,131	60,412

34. Commitments

Significant expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:

Group	31 Dec 18 $'000	31 Dec 17 $'000
Property, plant and equipment	475	762
Other	570	154
	1,045	916

35. Dividend per share

In line with the Company dividend policy, the Company paid $39,603,000 in 2018 (2017: $23,146,000) which consisted of a 2018 interim dividend of 6.5 pence per share and a final dividend for 2017 of 10.0 pence per share (2017: interim dividend of 6.5 pence per share and a final dividend for 2016 of 10.0 pence per share).

The Directors will propose a final dividend in respect of the year ended 31 December 2018 of 8 pence per share at the forthcoming Annual General meeting ('AGM').

36. Related party transactions

Non-Executive Directors

Mr Kenges Rakishev became a major shareholder of CAML on 23 May 2014 following completion of the Kounrad Transaction. He was appointed to the CAML Board on 9 December 2013 following the completion of the first part of the transaction. As part of the obligations on Kenges Rakishev for completing the Kounrad Transaction, he signed a relationship agreement with CAML setting out the terms of the relationship between himself and the Group.

In June 2017, Kenges Rakishev sold his 86.09% interest in JSC Kazkommertsbank ('KKB') to JSC Halyk Bank and resigned as Chairman of KKB in July 2017. The Group then used the facilities of KKB and JSC Halyk Bank within Kazakhstan for its normal day-to-day banking.

Kenges Rakishev has an interest in other finance and insurance entities in Kazakhstan. The Group has insurance relationships with such entities and has made an insurance claim under which a syndicate of insurers, including some related to Kenges Rakishev, have a potential liability.

In September 2017, Kenges Rakishev sold 10,605,875 Ordinary CAML Shares of $0.01 each at a price of 230 pence per share. In February 2018, he sold his remaining shareholding of 10,605,876 Ordinary Shares at a price of 275 pence per share. Kenges Rakishev resigned as Non-Executive Director on 23 May 2018.

During the year, the Group paid consultancy fees of $13,261 (2017: $75,000) to Nurlan Zhakupov, a Non-Executive Director of the Company, under a consultancy agreement in terms of which Mr Zhakupov provides services over and above his normal duties.

The Kounrad foundation, a charitable foundation set up in the prior period, was advanced $226,000 to formalise charitable donations to assist local causes. This is a related party by virtue of common Directors.

37. Deferred income tax liability

Group

The movements in the Group's deferred tax assets and liabilities are as follows:

	At 1 January 2018 $'000	Currency translation differences $'000	(Debit)/credit to income statement $'000	At 31 December 2018 $'000
Other timing differences	(121)	10	34	(77)
Deferred tax liability on fair value adjustment on Kounrad Transaction	(8,103)	1,056	366	(6,681)
Deferred tax liability on fair value adjustment on CMK acquisition (note 6)	(22,972)	891	1,169	(20,912)
Deferred tax liability, net	(31,196)	1,957	1,569	(27,670)

A taxable temporary difference arose as a result of the Kounrad Transaction and CMK Resources Limited acquisition, where the carrying amount of the assets acquired were increased to fair value at the date of acquisition but the tax base remained at cost. The deferred tax liability arising from these taxable temporary differences has been reduced by $1,535,000 during the year (2017: $557,000) to reflect the tax consequences of depreciating and amortising the recognised fair values of the assets during the year.

	At 1 January 2017 $'000	CMK Resources acquisition $'000	Currency translation differences $'000	(Debit)/credit to income statement $'000	At 31 December 2017 $'000 (restated)
Other timing differences	(82)	-	(2)	(37)	(121)
Deferred tax liability on fair value adjustment on Kounrad Transaction	(8,459)	-	(31)	387	(8,103)
Deferred tax liability on fair value adjustment on CMK acquisition (note 6)	-	(22,368)	(774)	170	(22,972)
Deferred tax liability, net	(8,541)	(22,368)	(790)	520	(31,196)

	At 31 December 2018 $'000	At 31 December 2017 $'000
Deferred tax liability due within 12 months	(1,017)	(1,597)
Deferred tax liability due after 12 months	(26,653)	(29,599)
Deferred tax liability, net	(27,670)	(31,196)

Where the realisation of deferred tax assets is dependent on future profits, the Group recognises losses carried forward and other deferred tax assets only to the extent that the realisation of the related tax benefit through future taxable profits is probable.

The Group did not recognise other potential deferred tax assets arising from losses of $8,465,000 (2017: $8,758,000) as there is insufficient evidence of future taxable profits within the entities concerned. Unrecognised losses can be carried forward indefinitely.

At 31 December 2018, the Group had other deferred tax assets of $2,085,000 (2017: $2,195,000) in respect of share-based payments and other temporary differences which had not been recognised because of insufficient evidence of future taxable profits within the entities concerned.

There are no significant unrecognised temporary differences associated with undistributed profits of subsidiaries at 31 December 2018 and 2017, respectively.

Company

At 31 December 2018 and 2017 respectively, the Company had no recognised deferred tax assets or liabilities.

At 31 December 2018, the Company had not recognised potential deferred tax assets arising from losses of $8,465,000 (2017: $8,218,000) as there is insufficient evidence of future taxable profits. The losses can be carried forward indefinitely.

At 31 December 2018, the Company had other deferred tax assets of $2,085,000 (2017: $2,195,000) in respect of share-based payments and other temporary differences which had not been recognised because of insufficient evidence of future taxable profits.

38. Events after the reporting period

In January 2019 there was a change to the structure in the Group with the entity CMK Mining Limited, now known as CMK Mining B.V., and its subsidiaries being transferred from CMK Resources Limited to CAML MK Limited. During Q1 2019 CMK Mining Limited was an entity in Bermuda and eventually continued as an entity in the Netherlands in order to simplify the structure within the Group. CMK Resources Limited remains a wholly owned subsidiary of CAML MK Limited but with no subsidiary companies of its own and is expected to be liquidated in 2019.

In April 2019, an agreement with the previous owners of CMK Resources Limited was finalised in respect of the $5.9 million withholding tax liability in North Macedonia that relates to activities of CMK Europe prior to our ownership. This tax liability had been accounted for as part of the acquisition accounting and was considered fully recoverable though the tax indemnity. The settlement amounted to $5.5 million, with an impairment of $469,000 million recognised during the year, and as part of this CAML paid the outstanding $12.0 million deferred consideration.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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