KAZ Minerals Announced The Temporary Credit Line Suspension

KAZ Minerals Begins Testing And Commissioning At Aktogay

Kaz Minerals announced the approval of the temporary suspension of financial covenants stipulating the net debt and EBITDA ratio of the pre-export finance debt facility, which is scheduled to be tested in December 31, 2016. We are positive about the financial stability of the Company. Improving economic situation in China and a record production increase in the sector does not give us significant reasons to be concerned about the Company’s ability to continue its operating activities in the near future. Moreover, the agreements reached with banks indicate the solidarity with our view. We maintain our “Buy” recommendation with 12M TP GBp 436/share.

Kaz Minerals announced the approval of the temporary suspension of financial covenants stipulating the net debt and EBITDA ratio of the pre-export finance debt facility, which is scheduled to be tested in December 31, 2016. The next test will take place in June 30, 2017.

Current credit line occupies only 8% of the Company’s debt portfolio. Nevertheless, the main reason of covenant violations in 2016, in our opinion, was a significant industrial metals downward trend. Spot price for the copper for 2015 decreased by 33% y/y (from $ 6199 to $ 4649 per ton). However, due to the planned production increase in “Bozashkol” project during 2016, we expect improvement the net debt/EBITDA indicator during 2016-2018.

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