Kaz Minerals Narrows 2017 Copper Guidance As Profit Grows

Kaz Minerals Narrows 2017 Copper Guidance As Profit Grows

KAZ Minerals PLC on Thursday narrowed its full-year copper guidance, as copper output more than doubled and it reported an increased in interim profit.

The FTSE 250-listed Kazakhstan-focused miner narrowed the full-year copper guidance to between 235,000 tonnes and 260,000 tonnes. It had guided in July for copper production to be between 225,000 and 260,000 tonnes of copper.

KAZ said the Aktogay sulphide concentrator will achieve commercial production and Bozshakol will reach design capacity in the second half of 2017.

The firm said that it was delivering copper growth in a “tightening market” and that it maintains a “positive view on copper prices in the medium term, as suppliers face a number of challenges set against steadily increasing demand from traditional sectors such as construction, power and consumer goods in China”.

“Copper consumption could grow faster than currently expected if momentum towards new sources of demand, such as the adoption of more copper-intensive energy and transportation technologies continues to build,” KAZ said.

For the six months ended June 30, gross revenue increased to USD837.0 million from USD363.0 million last year due to higher volumes and commodity prices, while revenue, excluding pre-commercial sales, rose to USD721.0 million from USD302.0 million.

Pretax profit jumped to USD240.0 million from USD91.0 million and operating profit increased to USD291.0 million from USD68.0 million.

Net debt was reduced to USD2.44 billion from USD2.67 billion at the end of 2016, which KAZ said was due to higher operating cash flows, lower capital expenditure and a refund of project VAT of USD176.0 million.

During the period, copper output more than doubled to 118,000 tonnes from 56,000 tonnes last year, as production from low costs assets were ramped up.

Meanwhile, KAZ reported 93,000 ounces of gold production in the period, which it said was “good progress” against its full-year target of between 135,000 ounces and 170,000 ounces. Silver production was 1.75 million ounces and the company is now expected to produce between 3.10 million ounces and 3.35 million ounces of silver in 2017.

KAZ did not recommend an interim dividend and said it intends to resume dividend payments in the future.

Chief Executive Oleg Novachuk said: “I am delighted that the successful delivery of our two growth projects has been reflected in our operating and financial results. We have doubled copper production whilst maintaining our position amongst the lowest cost copper producers globally.

“This strong performance has resulted in a reduction in our gearing levels, with net debt falling and over half a billion dollars of gross earnings before interest, tax, deprecation and amortisation generated in the first half of 2017. We aim to complete the final stages of ramping up Bozshakol this year and Aktogay in 2018, supported by an improved outlook for copper,” Novachuk noted.

Shares in KAZ were up 1.3% to 717.00 pence on Thursday.