Kazakhmys disappoints with mixed H1 output

July 31. ShareCast

Kazakhmys disappoints with mixed H1 outputKazakhstan-focused copper miner Kazakhmys, which recently set out plans to restructure, gave a mixed production update for the first half with copper production in line with forecasts but by-product output weak.

Copper cathode equivalent output totalled 139,200 tonnes in the first half, down from 144,300 the year before but in line with analysts’ estimates.

Kazakhmys said it remains on track to hit the full-year production guidance of 285,000-295,000 tonnes, with output benefitting from a planned reduction of work in progress in the second half.

Meanwhile, zinc and gold output improved but silver production declined year-on-year, with all volumes lower than expected, according to broker Canaccord Genuity.

The company announced earlier this month that it would split its operations, transferring less profitable, mature assets in the Zhezkazgan and central regions of Kazakhstan to Cuprum Holding, a company owned by two of its major shareholders.

The new group, which will be called Kaz Minerals, will continue to own assets in the east of the country and the Bozymchak mine in Kyrgyzstan, as well as its other major growth projects.

The restructuring is dependent on the approval by shareholders at a meeting on 15 August.

Kazakhmys’ chief executive Oleg Novachuk said that the proposed restructuring will “significantly change the nature of our business, moving the company towards its strategic goal of production dominated by large scale, low cost, open pit mines”.

Rob Broke, an analyst at Westhouse Securities, said that the second-quarter production report gave “a mixed set of results which, although slightly negative at the legacy ‘Cuprum’ assets, were in line at the assets set to be kept in the new Kaz Minerals, assuming the proposal is agreed”.

The stock was down 3.1% at 329.7p by 10:36.