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2017 Full Year Results

KAZ MINERALS PLC AUDITED RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

FINANCIAL HIGHLIGHTS

  • Gross Revenues double to $1,938 million (2016: $969 million) as the Group delivers production growth into stronger commodity markets
    • 2017 full year copper sales volumes of 256 kt (2016: 141 kt)
    • Revenues in income statement of $1,663 million (2016: $766 million), excluding $275 million of pre-commercial revenues
  • Gross EBITDA of $1,235 million (2016: $492 million) driven by low cost volume growth
    • Gross EBITDA margin of 64% (2016: 51%)
    • EBITDA of $1,038 million (2016: $351 million), excludes $197 million of pre-commercial earnings
    • Operating profit increased by over three times to $715 million (2016: $218 million)
  • Highly competitive net cash cost of 66 USc/lb (2016: 59 USc/lb), all operations in the first quartile of the cost curve in FY 2017
    • Bozshakol gross cash cost of 121 USc/lb (2016: 106 USc/lb) at lower end of guidance range of 115-135 USc/lb and competitive net cash cost of 54 USc/lb (2016: 27 USc/lb), supported by strong gold production3
    • Aktogay net cash cost of 98 USc/lb (2016: 114 USc/lb). Gross cash cost of 100 USc/lb (2016: 114 USc/lb) was below guidance of 110-130 USc/lb due to higher average copper grade, lower maintenance expenditure and muted inflationary pressure
    • East Region and Bozymchak net cash cost of 42 USc/lb (2016: 68 USc/lb), due to gross cash costs of 208 USc/lb (2016: 191 USc/lb) at bottom of guidance range (205-225 USc/lb) and higher by-product credits
  • Free Cash Flow of $452 million (2016: $(60) million)
    • Driven by growth in operating cash flows and low sustaining capital expenditure requirements
    • Cash flow from operations of $752 million (2016: $(98) million)

OPERATIONAL HIGHLIGHTS

  • Copper production2 increased by 80% and gold production3 40% higher compared to prior year
    • Bozshakol and Aktogay contribute 192 kt of the Group’s copper production2 of 259 kt in 2017 as sulphide concentrators ramp up
    • 179 koz of gold production3 was at upper end of the Group’s increased guidance range of 160-180 koz

2018 GROWTH OUTLOOK

  • Group copper production2 guidance set at 270-300 kt, as higher throughput is expected to be offset by slightly lower average copper grades in FY 2018
    • Bozshakol expected to produce 95-105 kt with an average sulphide ore processed grade of 0.44%
    • Aktogay sulphide to ramp up to 90-105 kt and oxide 20-25 kt
    • East Region and Bozymchak copper production2 expected to remain stable in 2018 at around 65 kt
    • Gross cash cost guidance of 130-150 USc/lb at Bozshakol and 110-130 USc/lb at Aktogay, due to expected reduction in grades and as normal maintenance schedules are established
    • East Region and Bozymchak gross cash cost guidance of 230-250 USc/lb, reflecting lower sales volumes and local inflation, with by-product credits expected to deliver a first quartile net cash cost.

 

$ million (unless otherwise stated)

2017

2016

Gross Revenues1,4

1,938

969

Gross EBITDA1,5,8

1,235

492

 

 

 

Revenues

1,663

766

EBITDA (excluding special items)1,8

1,038

351

Operating profit

715

218

Profit before taxation

580 

220

Underlying Profit1

476

180

EPS – basic and diluted ($)

1.00

(0.40)

EPS – based on Underlying Profit/(Loss) ($)1,6

1.07

(0.40)

 

 

 

Cash flow from operations

752

(98)

Free Cash Flow1,7

452

 (60)

 

 

 

Gross cash cost (USc/lb)1

138

156

Net cash cost (USc/lb)1

66

59

 

 

 

Net debt1

2,056

2,669

1  Definitions of non-IFRS financial metrics used throughout the press release are included in the Glossary.
2  Payable metal in concentrate and copper cathode from Aktogay oxide ore.
3  Payable metal in concentrate.
4  Includes revenues from pre-commercial operations.
5  Includes EBITDA from pre-commercial operations.
6  Reconciliation of EPS based on Underlying Profit is found in note 9 in the financial information.
7  Net cash flow from operating activities before capital expenditure and non-current VAT associated with expansionary and new projects, less sustaining capital expenditure.
8  Reconciliation to operating profit provided in note 4(a)(i) in the financial information

 

Andrew Southam, Chief Executive Officer, said: “The Group has delivered high production growth and low operating costs in 2017. Following the successful ramp up to date of Bozshakol and Aktogay our asset base is now dominated by large scale, low cost, modern copper mines which are set to generate significant cash flows in the future. We have established a strong platform to deliver further growth in 2018 and from the expansion of Aktogay, which leaves us well positioned to benefit from the expected tightness in the copper market, as declining global supply coincides with continued growth in demand.”

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Response to speculation

KAZ Minerals PLC (“KAZ Minerals” or “the Group”) notes recent speculation regarding the Baimskaya copper deposit (“Baimskaya”).

KAZ Minerals continually evaluates potential new mining projects to identify attractive long-term investment opportunities for the Group. KAZ Minerals confirms that it is currently evaluating the potential acquisition of a majority stake in the Baimskaya project. Baimskaya is a large copper-gold porphyry deposit located in the Chukotka region of Russia, with JORC resources of 9.5 Mt of copper at an average copper grade of 0.43% and 16.5 Moz of gold at an average grade of 0.23 g/t.

There can be no certainty that any transaction will be forthcoming or on what terms it would occur.

Further information will be announced to the market as and when appropriate.

This announcement contains inside information.

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Notice of Preliminary Results for the Year Ended 31 December 2017

KAZ Minerals PLC will announce its preliminary results for the year ended 31 December 2017 on Thursday 22 February 2018 at 7.00am (UK time).

 A presentation for analysts will be held in The Lincoln Centre, 18 Lincoln’s Inn Fields, London WC2A 3ED on Thursday 22 February 2018 at 10.30am (UK time).

The presentation for analysts can also be accessed by conference call on Thursday 22 February 2018 at 10.30am (UK time). The dial-in details are as follows:

Telephone: +44 (0) 20 3003 2666

Please quote the password: KAZ Minerals

A webcast of the presentation for analysts will also be available on the KAZ Minerals website (www.kazminerals.com).

PLEASE FOLLOW THE LINK TO DOWNLOAD THE FULL ANNOUNCEMENT 

Total Voting Rights

In conformity with the Disclosure and Transparency Rules (“the Rules”), the Company hereby notifies the market of the following:

At the date of this announcement, the issued capital of the Company comprises 458,379,033 ordinary shares.

The Company currently holds 11,543,746 ordinary shares in treasury and therefore the issued share capital of the Company which carries voting rights of one vote per share comprises 446,835,287 ordinary shares (excluding treasury shares).

The above figure of 446,835,287 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Rules.

For further information, please contact:

Susanna Freeman
Company Secretary
Tel: + 44 (0)20 7901 7826

 

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Q4 Production Report 2017

KAZ MINERALS GROUP PRODUCTION REPORT FOR 12 MONTHS AND THE fourth QUARTER ENDED 31 december 2017

  • Full year copper production1 increased by 80% to 259 kt (FY 2016: 144 kt)
    • Copper at top of February 2017 FY guidance (225-260 kt) and in line with updated range (250-270 kt)
    • Full year gold production2 of 179 koz at upper end of guidance range (160-180 koz)
    • Q4 copper production1 of 65 kt (Q3 2017: 75 kt) reflecting expected grade reduction at Aktogay and Bozshakol concentrator maintenance
  • Bozshakol copper production2 of 23 kt in Q4 (Q3 2017: 27 kt)
    • Full year copper production2 of 101 kt (FY 2016: 48 kt), in line with guidance of 100-110 kt
    • Gold production2 maintained at 28 koz in Q4 (Q3 2017: 28 koz), FY 2017 output of 119 koz at top of range (110-120 koz)
    • Sulphide plant throughput limited in Q4 due to 13 day stoppage for maintenance in November
    • Changes to mining sequence resulted in a reduced sulphide ore mined copper grade of 0.49% in Q4 2017 and a processed grade of 0.44% is now expected for 2018. Copper production2 at Bozshakol is expected to be in the region of 100 kt in 2018
  • Aktogay copper production1 of 26 kt in Q4 (Q3 2017: 31 kt)
    • Full year copper production1 of 90 kt (FY 2016: 18 kt), in line with guidance of 85-95 kt
    • Main sulphide concentrator achieved 68% of design throughput in Q4
    • Oxide production of 7 kt in Q4 and 25 kt for the full year, at the top end of guidance of up to 25 kt
  • 17 kt of copper production2 in Q4 from East Region and Bozymchak results in FY production of 67 kt
    • Ahead of FY 2017 copper production2 guidance of c.65 kt
    • Q4 zinc in concentrate output of 12 kt, full year production of 58 kt below guidance of 60-65 kt due to delayed access to high grade ore at Artemyevsky
  1. Payable metal in concentrate and copper cathode from Aktogay oxide ore.
  2. Payable metal in concentrate.

Andrew Southam, Chief Executive Officer, said: “I am pleased that in 2017 we achieved copper production targets across all of our assets including at Aktogay, where we launched sulphide production in February 2017 and declared the concentrator commercial in October. The performance of our two recently commissioned mines at Bozshakol and Aktogay has delivered an 80% increase in annual copper output into a tightening market and gold production at the top of our guidance range.”

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Notification in accordance with UKLR 9.6.14R

Pursuant to Listing Rule 9.6.14(R) the Company hereby notifies the market that Alison Baker, an independent non-executive director of the Company, has been appointed as an independent non-executive director of Centamin plc, a company listed on the London Stock Exchange and the Toronto Stock Exchange, with effect from 5 February 2018. 

There are no further matters to be disclosed under LR 9.6.14(R).

For further information, please contact: 

 

Susanna Freeman
Company Secretary
Tel: + 44 (0)20 7901 782

PLEASE FOLLOW THE LINK TO DOWNLOAD THE FULL ANNOUNCEMENT

 

Holding(s) in Company

Total Voting Rights

In conformity with the Disclosure and Transparency Rules (“the Rules”), the Company hereby notifies the market of the following:

At the date of this announcement, the issued capital of the Company comprises 458,379,033 ordinary shares.

The Company currently holds 11,543,746 ordinary shares in treasury and therefore the issued share capital of the Company which carries voting rights of one vote per share comprises 446,835,287 ordinary shares (excluding treasury shares).

The above figure of 446,835,287 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Rules.

For further information, please contact:

Susanna Freeman
Company Secretary
Tel: + 44 (0)20 7901 7826

 

PLEASE FOLLOW THE LINK TO DOWNLOAD THE FULL ANNOUNCEMENT

Aktogay expansion project approved

  • $1.2 billion expansion project approved to double sulphide ore processing capacity at Aktogay from 2021
  • Annual copper production from sulphide ore to increase to 170 kt from 2022 to 2027 and 130 kt thereafter
  • Net cash cost guidance to 2027 maintained at 100-120 USc/lb
  • Capital investment supported by strong cash flows from Bozshakol and Aktogay

KAZ Minerals PLC (“KAZ Minerals” or “the Group”) announces a planned expansion of its processing facilities at the Aktogay copper mine in the East Region of Kazakhstan. Following the achievement of commercial production at the Aktogay sulphide concentrator in October 2017, the Board has approved the construction of a second concentrator which will double the current sulphide ore processing capacity from 25 million to 50 million tonnes per annum.

The expansion represents a low risk growth project, being a duplicate of the sulphide processing facilities successfully commissioned at Bozshakol and Aktogay. Construction will be managed by the KAZ Minerals projects division which delivered the original project, with contracts to be tendered in 2018. The capital budget for the expansion project is expected to be in the region of $1.2 billion with approximately $200 million to be invested in 2018. The remaining expenditure will be incurred from 2019 to 2021. The mining fleet will be upgraded to support the higher ore throughput.

Output from the new concentrator is expected to commence in the second half of 2021 with the facility ramping up during 2022. Copper production from sulphide ore at Aktogay will increase by 80 kt to an average of around 170 kt per annum from 2022 to 2027, supported by higher copper grades. Over the remaining life of the mine, when copper grades will be in line with the average resource grade of 0.34%, the Aktogay expansion will add 60 kt per annum, increasing annual production to around 130 kt. Due to higher processing volumes the life of the sulphide ore body will reduce from over 50 years to approximately 28 years. Copper cathode production from oxide ore at Aktogay will be unchanged at the current level of around 20 kt per annum for the remaining eight year life of the oxide deposit.

Net cash cost guidance to 2027 following the expansion is unchanged at 100-120 USc/lb in 2017 US dollar terms with efficiency gains from larger scale mining operations offsetting the effect of accelerated grade decline as processing volumes are brought forward. Sustaining capital expenditure will increase from $30-$40 million to $50-$60 million per annum from 2022 onwards. The expansion is expected to generate a return in excess of the Group’s cost of capital in the analyst consensus copper price scenario.

Oleg Novachuk, Chief Executive, said: “I am pleased to announce the planned expansion of our second major growth project, Aktogay, which will double its processing capacity from 2021. This expansion represents an opportunity for our proven project team to deliver a strong return on investment from an asset we know well by replicating the existing sulphide plant. Our outlook for copper remains positive and this development will help us to continue to grow in a tightening market. The capital expenditure over the period to 2021 for the expansion will be supported by strong cash flows from our new, low cost operations at Bozshakol and Aktogay.”

A call for analysts will be held at 10:00am UK time. To participate in the call in listen-only mode please use the following dial-in details:

Conference call dial in: +44 (0) 20 3003 2666
Password: KAZ Minerals
Webcast: http://view-w.tv/834-1089-19140/en
Presentation download: http://www.kazminerals.com/investors/presentation-library/

PLEASE FOLLOW THE LINK TO DOWNLOAD THE FULL ANNOUNCEMENT

 

Total Voting Rights

In conformity with the Disclosure and Transparency Rules (“the Rules”), the Company hereby notifies the market of the following:

At the date of this announcement, the issued capital of the Company comprises 458,379,033 ordinary shares.

The Company currently holds 11,543,746 ordinary shares in treasury and therefore the issued share capital of the Company which carries voting rights of one vote per share comprises 446,835,287 ordinary shares (excluding treasury shares).

The above figure of 446,835,287 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Rules.

For further information, please contact:

Susanna Freeman
Company Secretary
Tel: + 44 (0)20 7901 7826

Please follow the link to download the full announcement