Baimskaya project update

BAIMSKAYA PROJECT UPDATE

In its announcement on 28 October 2020, the Independent Committee of KAZ Minerals PLC (“KAZ Minerals” or “the Group”) stated that the risks to the Baimskaya project were significant and had recently increased, noting that discussions with the Russian government regarding the provision of transport and power infrastructure for the operational phase of the project were ongoing. The outcome of these discussions was uncertain and had the potential to further increase the capital and operating costs of the project.

Today the Ministry for the Development of the Russian Far East and Arctic has submitted for approval by the Prime Minister of the Russian Federation a multi-party Complex Development Plan (“CDP”) for new infrastructure in the Chukotka region. The CDP includes infrastructure to be used by KAZ Minerals for the Baimskaya project.

Under the CDP, KAZ Minerals will now take responsibility for a portion of the infrastructure capital costs. Together with a revised cost for the tailings storage facility and the impact of an approximate one year delay to the project schedule, the capital construction budget for the Baimskaya project is now estimated to be close to $8 billion.

Given the changes in the infrastructure plan, the bankable feasibility study (“BFS”) is now expected to be completed in the first half of 2021. In light of the delay to the finalisation of the BFS, the Independent Committee is providing an update reflecting the Group’s current understanding of the key parameters of the Baimskaya project ahead of the planned shareholder vote on the Acquisition of KAZ Minerals by Nova Resources B.V..

Michael Lynch-Bell, Senior Independent Director and Chair of the Independent Committee, said: “When recommending the offer from Nova Resources of 640p per share, the Independent Committee of KAZ Minerals stated that the risks on the Baimskaya project were increasing. The Complex Development Plan for Chukotka submitted today within the Russian government has resulted in higher infrastructure costs and a delay to the bankable feasibility study. Recognising that shareholders require up to date information on Baimskaya ahead of the planned vote on the offer, the Independent Committee has taken the decision to publish the latest available project parameters based on the study work completed to date.”

Details of the Complex Development Plan

The CDP is an agreement co-authored by multiple public and private entities, including KAZ Minerals, which provides a high-level project plan to deliver infrastructure to the Chukotka region. The document incorporates target dates for activities by the Russian government and private and state-owned businesses, which may also require future agreements to implement. The key items of infrastructure required for the Baimskaya project contained in the CDP are set out below:

Power

A new Liquefied Natural Gas (“LNG”) power plant is to be constructed at Cape Nagloynyn in Chaunskaya Bay for start-up in 2026. The CDP also includes the investigation of an alternative nuclear power station option at the same location. The regional government of Chukotka is to finance and construct power lines from Cape Nagloynyn to the Baimskaya project site, via Bilibino by 2026.

Port

The Russian government will construct sections of a new port facility at Cape Nagloynyn, to be completed by 2026, including dredging and facilities for the power plant. KAZ Minerals is now responsible for arranging the financing and construction of other sections of the port, including electrical infrastructure, port equipment and accommodation. The new port will receive supplies for the operating phase of the Baimskaya project, whilst also serving as the export route for copper concentrate to international markets.

Road

A 428 km permanent road linking the Baimskaya site to the new port has been split into two sections which are approximately equal in length. The first section, from Baimskaya to Bilibino, will now be financed and constructed by KAZ Minerals by 2024. The financing of the second section of the road, from Bilibino to Cape Nagloynyn, which is expected to have other users, remains under discussion.

Impact on KAZ Minerals’ capital expenditure and bankable feasibility study timing

Whilst the Baimskaya project continues to benefit from strong support from the Russian government, under the CDP KAZ Minerals will now be responsible for sections of the port and a circa 200 km section of the permanent road. Initial estimates obtained from Russian design institutes indicate additional construction costs for KAZ Minerals to be in the region of $600 million for this infrastructure.

The bankable feasibility study continues to progress. However, to accommodate changes to the infrastructure plan (for which certain items now fall under the responsibility of the KAZ Minerals’ project team) and evaluate the resulting impact on the project, including a delay to the project schedule, the BFS is now expected to be completed in the first half of 2021.

Project parameters update

The Baimskaya project is now expected to commence production by the end of 2027 and have an annual ore processing capacity of 70 Mtpa. The BFS is being prepared with an initial mine life of approximately 20 years based on JORC measured and indicated resources. However, recent drilling indicates potential for the mine life to be extended by around 5 years. Life of mine copper and gold processing grades are estimated at 0.47% copper and 0.27 g/t gold respectively. The project will deliver elevated production and grades in the first five years and accordingly net cash costs are lower during this period.

Including the additional costs for external infrastructure now expected to be incurred by KAZ Minerals, a revised cost for the tailings storage facility and the impact of an approximate one year delay to the project schedule, the capital construction budget for the Baimskaya project is now estimated to be close to $8 billion in nominal terms. The construction plan for the processing plant will ramp up the two lines in consecutive phases around 12 to 18 months apart with around 5% of the capital budget expected to be incurred after production commences from the first line. The project is expected to require sustaining capital expenditure of approximately $70 million per annum in 2020 US dollar terms, with additional maintenance included in operating costs. As sales ramp up, timing differences between production and sales proceeds are expected to result in a peak working capital requirement of $700 million in nominal terms over the initial years of operation.

The project is expected to apply for and receive TASED tax incentives and as a “new project” is expected to qualify for an exemption from the recent increase in MET for the first five years following commercial production.

A summary of the key project parameters is set out in the table below:

		Years 2-6¹	Years 7-11¹	Remaining mine life
Annual production²
Copper	kt	320	280	240
Gold	koz	540	410	365
Silver	koz	5,100	4,500	3,600
Molybdenum	kt	6	5	5
Copper Equivalent Production³	kt	470	400	345

Processing grades
Copper	%	0.58	0.47	0.40
Gold	g/t	0.36	0.25	0.22
Silver	g/t	3.16	2.63	2.10
Molybdenum	%	0.015	0.012	0.012

Costs⁴
Net cash cost	USc/lb	45	90	110

Years from commencement of production.
Payable metal in concentrate.
Copper production, plus gold, silver and molybdenum production, converted into copper units assuming analyst consensus long term average price forecasts of $6,700/t for copper, $1,500/oz for gold, $18/oz for silver and $20,000/t for molybdenum.
Stated in 2020 US dollar terms.

The stated parameters are an interim update reflecting the Group’s current understanding of the Baimskaya project. Sections of the project have not yet been advanced to feasibility study level. The project schedule and budget remain subject to change during ongoing work and review by the Project Assurance Committee’s independent advisors, after the project team’s completion of its study work. Future negotiations and agreements (including potential take or pay contracts) may also be required following the CDP to secure the external infrastructure, which could further impact the project’s capital budget, operating costs and schedule.

For further information please contact:

KAZ Minerals PLC
Chris Bucknall	Investor Relations, London	Tel: +44 20 7901 7882
Anna Mallere	Investor Relations, London	Tel: +44 20 7901 7814
Maksut Zhapabayev	Corporate Communications, Almaty	Tel: +7 727 244 03 53
Brunswick Group
Carole Cable, Charlie Pretzlik		Tel: +44 20 7404 5959

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Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

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Q3 2020 Production Report

KAZ MINERALS GROUP Production Report for nine months and THE third QUARTER Ended 30 September 2020

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Operational highlights
- All metals on track to achieve or exceed full year production guidance, assuming no new material Covid-19 impact
- Copper production¹ of 76.2 kt (Q2 2020: 78.9 kt), on track for top end of full year guidance of 280-300 kt
- Gold production² of 50.7 koz (Q2 2020: 54.3 koz), forecast to reach top end of 180-200 koz guidance range
- Group silver production² guidance increased to c.3,500 koz and zinc in concentrate guidance to 45-50 kt
Aktogay
- Copper production¹ in Q3 of 31.7 kt, below previous quarter (Q2 2020: 34.3 kt), as throughput reduced by scheduled maintenance
- Average copper grade in Q3 of 0.56% (Q2 2020: 0.55%) higher than expected due to positive variance against the mine plan
- Full year copper production¹ on track to achieve upper end of guidance range of 120-130 kt
Bozshakol
- Copper production² of 30.3 kt (Q2 2020: 30.6 kt), as higher ore throughput was offset by lower copper grades and recoveries
- Gold production² reduced to 37.0 koz (Q2 2020: 41.0 koz) due to expected lower average gold grades and recoveries
- On track to achieve full year copper production² guidance of 110-120 kt and the upper end of gold production² guidance of 140-150 koz, with mill maintenance deferred from earlier in the year scheduled to take place in Q4
East Region and Bozymchak
- Copper production² of 14.2 kt (Q2 2020: 14.0 kt), on track to achieve full year guidance of c.50 kt
- Gold production² of 13.7 koz (Q2 2020: 13.3 koz), could exceed full year guidance of 40-50 koz
- Silver production² full year guidance increased to c.2,000 koz, following strong Q3 output of 554 koz
- Strong zinc in concentrate output, benefiting from higher grades, with 15.7 kt produced in Q3 (Q2 2020: 14.8 kt). Full year zinc in concentrate guidance increased to 45-50 kt
- Achieving top end of gold guidance is dependent on the restart of the Bozymchak mine in Q4, where production has been temporarily suspended since 7 October, to ensure employee safety following recent political instability in Kyrgyzstan
Covid-19
- Ensuring the safety, health and wellbeing of employees and contractors is the Group’s first priority
- Comprehensive measures remain in place to protect staff and mitigate the risk of disruption to operations
- There has been no major impact to the Group’s operations or sales in Q3
- Reported Covid-19 infection rates in Kazakhstan reduced to a low level during the quarter, but the risk of new restrictions in Q4 remains

Group production summary³		9m 2020	9m 2019	Q3 2020	Q2 2020	Q3 2019
Copper production¹	kt	230.0	230.5	76.2	78.9	82.9
Aktogay	kt	99.3	111.4	31.7	34.3	37.3
Bozshakol	kt	90.7	79.2	30.3	30.6	32.1
East Region & Bozymchak	kt	40.0	39.9	14.2	14.0	13.5
Gold production²	koz	160.4	146.2	50.7	54.3	58.5
Silver production²	koz	2,642	2,496	901	948	944
Zinc in concentrate	kt	39.5	28.9	15.7	14.8	10.5

Payable metal in concentrate and copper cathode from Aktogay oxide ore.
Payable metal in concentrate.
See appendix for metal production by asset.

Andrew Southam, Chief Executive Officer, said: “KAZ Minerals has delivered strong production in Q3 and the nine months to September 2020, despite the challenges posed by Covid-19. Copper output from our mines in Kazakhstan has been uninterrupted in 2020, with year to date copper volumes maintained at a similar level to 2019 whilst by-product output is significantly ahead. Whilst maintenance is scheduled for Q4, we are on track to achieve the upper end of our copper and gold guidance ranges and have increased production guidance for silver and zinc.”

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Recommended Offer

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

28 October 2020

RECOMMENDED CASH ACQUISITION

of

KAZ MINERALS PLC

by

NOVA RESOURCES B.V.

(a company indirectly owned by joint offerors (i) Oleg Novachuk and (ii) Vladimir Kim)

to be effected by means of a Scheme of Arrangement
under Part 26 of the Companies Act 2006

Summary

The board of Nova Resources B.V. (“Bidco“) and the Independent Committee of KAZ Minerals PLC (“KAZ Minerals“) are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Bidco for the entire issued and to be issued share capital of KAZ Minerals (other than the KAZ Minerals Shares already owned or controlled by the Consortium) (the “Acquisition“). As at 27 October 2020 (being the last Business Day prior to the date of this announcement), the Consortium owned or controlled 186,079,209 KAZ Minerals Shares, representing approximately 39.39 per cent. of KAZ Minerals’ issued share capital (excluding shares held in treasury) as at that date. It is intended that the Acquisition will be implemented by way of a scheme of arrangement.
Under the terms of the Acquisition, KAZ Minerals Shareholders will be entitled to receive:

For each KAZ Minerals Share: 640 pence in cash

The Acquisition values the entire issued and to be issued share capital of KAZ Minerals at approximately £3.0 billion, and represents a premium of approximately:
- 24.9 per cent. to the Closing Price of 512.4 pence per KAZ Minerals Share on 2 October 2020 (being the last Business Day prior to agreement having been reached with the Independent Committee);
- 12.1% per cent. to the Closing Price of 570.8 pence per KAZ Minerals Share on 27 October 2020 (being the last Business Day prior to the date of this announcement);
- 16.5% per cent. to the volume-weighted average price of 549.2 pence per KAZ Minerals Share for the one-month period ended 27 October 2020 (being the last Business Day prior to the date of this announcement); and
- 26.5% per cent. to the volume-weighted average price of 505.8 pence per KAZ Minerals Share for the six-month period ended 27 October 2020 (being the last Business Day prior to the date of this announcement).
The cash consideration payable to KAZ Minerals Shareholders by Bidco pursuant to the terms of the Acquisition will be financed with the proceeds of the VTB Facility Agreement.
If, on or after the date of this announcement, any dividend and/or other distribution and/or return of capital is declared, made or paid or becomes payable in respect of the KAZ Minerals Shares, Bidco reserves the right to reduce the consideration payable under the terms of the Acquisition for the KAZ Minerals Shares by an amount up to the amount of such dividend and/or other distribution and/or return of capital, in which case any reference in this announcement to the consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced.
The KAZ Minerals Shares owned or controlled by the Consortium (being 186,079,209 KAZ Minerals Shares as at 27 October 2020, being the last Business Day prior to the date of this announcement) will not be Scheme Shares and will not be acquired by Bidco pursuant to the Scheme but will be acquired by Bidco pursuant to the Share Exchange Agreement. The registered holders of the KAZ Minerals Shares owned or controlled by the Consortium will not be permitted to vote such KAZ Minerals Shares at the Court Meeting, but will be permitted to vote such KAZ Minerals Shares at the KAZ Minerals General Meeting.

Recommendation

The Independent Committee, which has been so advised by Citigroup and UBS as to the financial terms of the Acquisition, considers the terms of the Acquisition to be fair and reasonable. In providing their advice to the Independent Committee, Citigroup and UBS have taken into account the commercial assessments of the Independent Committee.
Accordingly, the members of the Independent Committee intend unanimously to recommend that KAZ Minerals Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Acquisition at the KAZ Minerals General Meeting, as the members of the Independent Committee who hold KAZ Minerals Shares have irrevocably undertaken to do in respect of their own beneficial holdings totalling 719,026 KAZ Minerals Shares (representing approximately 0.15 per cent. of the existing issued share capital (excluding shares held in treasury) of KAZ Minerals on 27 October 2020 (being the last Business Day prior to the date of this announcement)). Further details of these irrevocable undertakings are set out in Appendix 3 to this announcement.

Irrevocable undertakings

Bidco has also received irrevocable undertakings from Ferris, Denalot and Greenleas to vote in favour of the Scheme at the Court Meeting and the resolutions relating to the Acquisition at the KAZ Minerals General Meeting, in respect of 28,245,449 KAZ Minerals Shares, representing, in aggregate, approximately 5.98 per cent. of the existing issued share capital (excluding shares held in treasury) of KAZ Minerals on 27 October 2020 (being the last Business Day prior to the date of this announcement).
In total, therefore, Bidco has received irrevocable undertakings to vote, or procure votes, in favour of the Scheme at the Court Meeting and the resolutions relating to the Acquisition at the KAZ Minerals General Meeting in respect of 28,964,475 KAZ Minerals Shares in aggregate, representing approximately 6.13% per cent. of the existing issued share capital (excluding shares held in treasury) of KAZ Minerals on 27 October 2020 (being the last Business Day prior to the date of this announcement).

Background to and reasons for the Acquisition and recommendation

The Consortium believes that there is a strong strategic rationale for the Acquisition, recognising that KAZ Minerals’ focus on developing and operating large scale, low cost copper mines in Kazakhstan and the CIS region has enabled it to successfully progress a pipeline of growth projects, including its largest assets in Kazakhstan, Aktogay and Bozshakol. The Consortium also believes that KAZ Minerals’ decision to dedicate efforts to a capital intensive strategy focused on long term growth remains the optimal long term strategic path for KAZ Minerals. The Consortium recognises this may be misaligned with the preference of many investors in the mining sector.
Consequently, the members of the Consortium have concluded that KAZ Minerals’ long term development of Baimskaya would be best undertaken away from public markets as a private company. Accordingly, the Consortium is offering KAZ Minerals Shareholders an opportunity to crystallise the value of their investment in KAZ Minerals Shares in cash at a premium to recent trading levels.
In reaching its decision to recommend the terms of the Acquisition, the Independent Committee of KAZ Minerals has taken account of both the long term potential value of KAZ Minerals and the risks inherent in achieving this value. The Independent Committee believes that the Acquisition provides KAZ Minerals Shareholders with a fair value for KAZ Minerals’ operating assets and development portfolio in Kazakhstan and Kyrgyzstan, and crystallises a value for Baimskaya that reflects the Independent Committee’s view of the increasing risks in this project.

Information on Bidco and the Consortium

Bidco is a Dutch private limited liability company indirectly owned by a consortium comprising of Oleg Novachuk (the current chairman of KAZ Minerals) and Vladimir Kim (a non-executive director of KAZ Minerals) (together, the “Consortium“). Bidco is a wholly-owned subsidiary of Vostok Cooper B.V. (“Holdco“), itself a Dutch private limited liability company indirectly owned by the Consortium. As at the Effective Date, Oleg Novachuk will indirectly own 36.5 per cent. of Holdco and Vladimir Kim will indirectly own 63.5 per cent. of Holdco.
Oleg Novachuk and Vladimir Kim are joint offerors with respect to the Acquisition.

Timetable and Conditions

It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act (although Bidco reserves the right to effect the Acquisition by way of a Takeover Offer, subject to the consent of the Panel).
The Acquisition will be on the terms and subject to the Conditions and further terms set out in Appendix 1 to this announcement, and to be set out in full in the Scheme Document. The Conditions include (among others):
- approval of KAZ Minerals Shareholders at the KAZ Minerals Meetings;
- satisfaction of certain Regulatory Conditions; and
- the sanction of the Scheme by the Court.
It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and KAZ Minerals General Meeting, together with the associated forms of proxy, will be posted to KAZ Minerals Shareholders in due course and that the Court Meeting and the KAZ Minerals General Meeting will be held in December 2020 or early January 2021. The Acquisition is currently expected to become Effective in the first half of 2021, subject to the approval of the KAZ Minerals Shareholders, receipt of the relevant antitrust clearances and regulatory approvals and the sanction of the Scheme by the Court. An expected timetable of key events relating to the Acquisition will be provided in the Scheme Document.

Commenting on the Acquisition, Oleg Novachuk, Chairman of Bidco, said:

“We are pleased to announce this recommended cash offer for KAZ Minerals. Mr. Kim and I believe that KAZ Minerals has made notable progress as a public company since listing on the London Stock Exchange in 2005. However, driven by the current market uncertainty and the corporate circumstances of sequential development projects, we believe that KAZ Minerals’ long term interests would be best served as a private company. We remain confident that the execution of a higher risk, capital intensive strategy remains the optimal long term path for KAZ Minerals, but we recognise that our risk appetite may be misaligned with the preference of many investors in the mining sector. In taking this important step, we wanted to ensure that KAZ Minerals Shareholders were provided with the opportunity to crystallise the value of their investment at a premium valuation. We are confident that this recommended Acquisition delivers an attractive return to KAZ Minerals Shareholders.“

Commenting on the Acquisition, Michael Lynch-Bell, KAZ Minerals Senior Independent Director and Chair of the Independent Committee, said:

“Following extensive negotiations, the Independent Committee of KAZ Minerals intends to unanimously recommend the Acquisition to KAZ Minerals Shareholders as it represents an opportunity for KAZ Minerals Shareholders to realise their investment in KAZ Minerals at a premium in cash in the near term. We believe the offer provides a fair value for KAZ Minerals’ operating assets and development portfolio, and crystallises a value for Baimskaya that reflects the Independent Committee’s view of the increasing risks in this project.“

This summary should be read in conjunction with the following announcement and the Appendices. The Conditions to, and certain further terms of, the Acquisition are set out in Appendix 1. The bases and sources for certain financial information contained in this announcement are set out in Appendix 2. Details of irrevocable undertakings are set out in Appendix 3 to this announcement. Certain definitions and terms used in this announcement are set out in Appendix 4.

Enquiries:

Bidco / VTB Capital (Financial adviser to Bidco)
Alexander Metherell	+44 (0) 20 3334 8000
Giles Coffey
Elena Loseva

KAZ Minerals
Chris Bucknall, Head of Investor Relations	+44 (0) 20 7901 7882
Susanna Freeman, Company Secretary	+44 (0) 20 7901 7826

Brunswick Group (Financial PR adviser to KAZ Minerals)
Carole Cable	+44 (0) 20 7404 5959
Charles Pretzlik

Citigroup Global Markets Limited (Financial adviser and corporate broker to KAZ Minerals)
Robert Way	+44 (0) 20 7986 4000
Tom Reid
David Fudge

UBS AG London Branch (Financial adviser and corporate broker to KAZ Minerals)
Ian Hart	+44 (0) 20 7567 8000
Jason Hutchings
David Roberts

Clifford Chance LLP is acting as legal adviser to Holdco and Bidco.

Linklaters LLP is acting as legal adviser to KAZ Minerals.

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Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them (1)

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HALF-YEARLY RESULTS 2020

KAZ MINERALS PLC HALF-YEARLY REPORT FOR THE PERIOD ENDED 3O JUNE 2020

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FINANCIAL HIGHLIGHTS

Revenues of $991 million (H1 2019: $1,052 million) as 11% lower average LME copper price was partially offset by 2% increase in copper sales volumes and 16% higher gold revenues
Copper sales of 146.9 kt (H1 2019: 144.4 kt) and gold sales of 98.6 koz (H1 2019: 108.0 koz), lower than production due to timing of shipments
EBITDA¹ of $559 million, representing a 56% margin (H1 2019: $620 million, 59% margin)
Operating profit of $357 million (H1 2019: $410 million)
Strong cash generation, with net cash flows from operating activities of $310 million (H1 2019: $236 million)
First quartile net cash cost¹ of 68 USc/lb (H1 2019: 80 USc/lb), supported by increased copper sales volumes, strong gold by-product credits and weaker tenge exchange rate during the period
Gross cash cost¹ guidance lowered by 10 USc/lb for both Bozshakol (120-140 USc/lb) and East Region and Bozymchak (250-270 USc/lb)

OPERATIONAL HIGHLIGHTS

No material disruption to output or sales from Covid-19 in the year to date
Copper production² increased by 4% to 153.8 kt (H1 2019: 147.6 kt) driven by high ore throughput and improved grades at Bozshakol
Gold production³ increased by 25% to 109.7 koz (H1 2019: 87.7 koz), also due to higher processing volumes and grades at Bozshakol
Covid-19 risks remain in the second half but all metals currently on track to achieve full year production guidance

COVID-19 RESPONSE

Ensuring the safety, health and wellbeing of employees and contractors is the Group’s first priority
Comprehensive measures have been taken to protect staff and operations including restricted access, testing and isolation, re-organisation of shifts and increased stocking of critical spares and consumables
Support has been provided to vulnerable local communities
Additional Covid-19 related costs of $15 million incurred to sustain operations in the first half

FINANCIAL POSITION AND DIVIDEND

Net debt¹ increased by $38 million to $2,797 million at 30 June 2020 (31 December 2019: $2,759 million)
Gross liquid funds¹ of $1,101 million at 30 June 2020 (31 December 2019: $541 million)
Borrowings of $3,898 million at 30 June 2020 (31 December 2019: $3,300 million)
$200 million remains undrawn of the DBK-Aktogay II facility to fund investment in the Aktogay expansion project and $26 million remains to be drawn under the CAT facility
Interim dividend of 4.0 US cents per share declared (H1 2019: 4.0 US cents per share)

GROWTH PROJECTS

Aktogay expansion project on track for late 2021 startup
Capital expenditure of $149 million in first half, full year guidance now set at around $300 million
$1.2 billion project budget unchanged
Baimskaya copper project Bankable Feasibility Study expected to be completed by end of 2020
Capital expenditure of $74 million in first half, full year guidance increased by $40 million to $190 million to progress detailed engineering

OUTLOOK

Covid-19 risks remain but full year production guidance maintained after strong performance in first half
Copper price has recently risen due to increased demand combined with supply disruption, long term outlook is positive due to lack of new projects to replace declining output
Consistent operational performance provides platform to deliver the Group’s growth pipeline

$ million (unless otherwise stated)	Six months ended 30 June 2020	Six months ended 30 June 2019

Revenues	991	1,052
EBITDA¹	559	620

Operating profit	357	410
Profit before tax	249	289
Profit for the period	197	227
Ordinary EPS and EPS based on Underlying Profit¹ – basic ($)	0.42	0.48
Ordinary EPS and EPS based on Underlying Profit¹ – diluted ($)	0.40	0.47

Net cash flows from operating activities	310	236
Free Cash Flow¹	251	182

Gross cash cost¹ (USc/lb)	137	144
Aktogay	113	101
Bozshakol	120	157
East Region and Bozymchak	242	236

Net cash cost¹ (USc/lb)	68	80
Aktogay	108	96
Bozshakol	12	42
East Region and Bozymchak	88	103

Borrowings	3,898	3,299
Cash and cash equivalents	801	739
Current investments	300	–
Net debt¹	2,797	2,560

1 Alternative Performance Measures (“APMs”) are used to assess the performance of the Group and are not defined or specified under IFRS. For further information on APMs, including justification for their use, please refer to APMs section on page 51.

2 Payable metal in concentrate and copper cathode from Aktogay oxide ore.

3 Payable metal in concentrate.

Andrew Southam, Chief Executive Officer, said: “Despite challenging conditions for all miners in the first half of 2020 as a result of Covid-19, KAZ Minerals recorded EBITDA of $559 million and grew net cash flow from operations by 31% to $310 million. Thanks to the dedication and hard work of our employees we have increased copper and gold production and maintained our low cost position, recording a net cash cost of 68 USc/lb. Covid-19 risks remain, but the Group is on track to achieve its full year production guidance after an excellent performance in the first half.”

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Baimskaya infrastructure update

Following recent press coverage KAZ Minerals today provides an update on the provision of infrastructure for the operational phase of the Baimskaya copper project.

As set out in the update announced on 5 June 2020, the Russian government and the Group are continuing to work together on the details of the power and transport infrastructure required for the project. A new proposal under consideration is for the construction of a new port and LNG power plant at Cape Nagloynyn in Chaunskaya Bay. The LNG power plant would provide power for the operations phase. The Baimskaya project site would be linked by approximately 400 km of road to the new port which would be used for the shipment of concentrate.

Discussions with the Russian government are ongoing. Further details will be announced as appropriate.

For further information please contact:

KAZ Minerals PLC
Chris Bucknall	Investor Relations, London	Tel: +44 20 7901 7882
Anna Mallere	Investor Relations, London	Tel: +44 20 7901 7814
Maksut Zhapabayev	Corporate Communications, Almaty	Tel: +7 727 244 03 53
Brunswick Group
Carole Cable, Charlie Pretzlik		Tel: +44 20 7404 5959

REGISTERED OFFICE

6th Floor, Cardinal Place, 100 Victoria Street, London SW1E 5JL, United Kingdom.

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Q2 2020 Production Report

KAZ MINERALS GROUP Production Report for six months and THE second QUARTER Ended 30 June 2020

Highlights
- H1 2020 copper production¹ increased by 4% to 153.8 kt (H1 2019: 147.6 kt) driven by high ore throughput and improved grades at Bozshakol
- Gold production² increased by 25% to 109.7 koz (H1 2019: 87.7 koz) due to higher processing volumes and grades at Bozshakol
- All metals currently on track to achieve full year production guidance but Covid-19 risks elevated in second half
Aktogay
- First half copper production¹ of 67.6 kt (H1 2019: 74.1 kt) as stronger than planned sulphide copper grades of 0.56% (H1 2019: 0.58%) were offset by temporarily lower recovery rates and ore throughput in Q1
- Q2 copper production¹ increased by 3% to 34.3 kt (Q1 2020: 33.3 kt) due to higher recovery rates and ore throughput following scheduled maintenance in January
- On track for full year copper production¹ guidance of 120-130 kt, lower grades expected in the second half
Bozshakol
- Copper production² increased 28% in H1 2020 to 60.4 kt (H1 2019: 47.1 kt) with higher grades and an 18% increase in ore throughput, due to deferral of maintenance and the suspension of the clay plant in H1 2019
- First half gold production² 40% higher at 83.3 koz (H1 2019: 59.6 koz), also benefiting from higher processing volumes and grades
- Full year copper and gold guidance unchanged at 110-120 kt and 140-150 koz with scheduled maintenance in the second half
East Region and Bozymchak
- Copper production² in H1 2020 of 25.8 kt (H1 2019: 26.4 kt) with increased output in Q2 of 14.0 kt (Q1 2020: 11.8 kt) as the Nikolayevsky concentrator operated at full capacity following planned idling in January
- H1 2020 gold production² of 25.8 koz (H1 2019: 26.4 koz) with higher output in Q2 of 13.3 koz (Q1 2020: 12.5 koz) also benefiting from the increased processing at Nikolayevsky
- Zinc in concentrate output of 23.8 kt (H1 2019: 18.4 kt), due to higher grades of 2.62% (H1 2019: 2.11%)
- Full year guidance maintained for all metals
Covid-19 update
- Ensuring the safety, health and wellbeing of employees and contractors is the Group’s first priority and comprehensive measures have been taken to protect staff
- There has been no material disruption to operations or sales from Covid-19 to date. However, Kazakhstan imposed a second phase of quarantine measures from 5 July 2020 reflecting heightened risk in the country and to the Group’s operations for the second half of the year
- Ongoing restrictions on the movement of staff and contractors and deferred maintenance may impact production and unit costs in the second half

Group production summary³		6m 2020	6m 2019	Q2 2020	Q1 2020	Q2 2019
Copper production¹	kt	153.8	147.6	78.9	74.9	77.6
Aktogay	kt	67.6	74.1	34.3	33.3	37.4
Bozshakol	kt	60.4	47.1	30.6	29.8	23.3
East Region & Bozymchak	kt	25.8	26.4	14.0	11.8	16.9
Gold production²	koz	109.7	87.7	54.3	55.4	44.3
Silver production²	koz	1,741	1,552	948	793	926
Zinc in concentrate	kt	23.8	18.4	14.8	9.0	12.2

Payable metal in concentrate and copper cathode from Aktogay oxide ore.
Payable metal in concentrate.
See appendix for metal production by asset.

Andrew Southam, Chief Executive Officer, said: “In the second quarter of 2020 KAZ Minerals grew copper production across all of its divisions and delivered a 5% increase in Group output. This is an excellent performance in a challenging operating environment and reflects the dedication and resilience of our employees. We are entering the second half of the year with an elevated level of Covid-19 risk, however production of all metals is currently on track to achieve our full year targets.”

For further information please contact:

KAZ Minerals PLC
Chris Bucknall	Investor Relations, London	Tel: +44 20 7901 7882
Anna Mallere	Investor Relations, London	Tel: +44 20 7901 7814
Maksut Zhapabayev	Corporate Communications, Almaty	Tel: +7 727 244 03 53
Brunswick Group
Carole Cable, Charlie Pretzlik		Tel: +44 20 7404 5959

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6th Floor, Cardinal Place, 100 Victoria Street, London SW1E 5JL, United Kingdom.

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NOTICE OF HALF-YEARLY RESULTS FOR THE PERIOD ENDED 30 JUNE 2020

KAZ Minerals PLC will announce its half-yearly results for the six months ended 30 June 2020 on Tuesday 18 August 2020 at 7:00am (UK time).

In line with the current UK government public health advice and restrictions on public gatherings due to the Covid-19 virus, a presentation for analysts will be held virtually.

The presentation can be accessed by conference call on Tuesday 18 August 2020 at 10:00am (UK time). The dial-in details are as follows:

Telephone: +44 (0) 20 3936 3000

Please quote the participant access code: 321320

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

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REPORT ON PAYMENTS TO GOVERNMENTS FOR THE YEAR ENDED 31 DECEMBER 2019

KAZ Minerals PLC (“KAZ Minerals” or “the Group”) today provides information in accordance with DTR4.3A and The Reports on Payments to Governments Regulations 2014 (the “Regulations”) in respect of payments made by the Group for the year ended 31 December 2019.

Payments to Governments

The table below represents the Group’s consolidated report on payments made to governments under the Regulations. The table includes all payments made in excess of £86,000 ($110,000) for activities related to the exploration, prospection, discovery, development and extraction of minerals by project, government type and country, rounded to the nearest thousand US Dollars. Where the payment relates to activities that are reportable under the Regulations, as well as to activities which are not reportable, the payment has been included in its entirety if it is not possible to disaggregate it.

For the year ended 31 December 2019, payments to governments under the Regulations amounted to $325.8 million.

US$’000	Corporate income tax	Mineral Extraction Tax and Royalties⁽¹⁾	Withholding tax	Signature bonus	Licence fee⁽²⁾	Infrastructure and social payments⁽³⁾	Total
KAZAKHSTAN
Artemyevsky – License	–	14,116	–	–	–	–	14,116
Irtyshsky – License	–	7,853	–	–	–	–	7,853
Orlovsky – License	–	17,676	–	–	–	–	17,676
Legal entity	16,582	–	–	–	–	3,618	20,200
Total East Region	16,582	39,645	–	–	–	3,618	59,845
Aktogay license and legal entity	30,245	90,115	9,847	–	1,011	11,887	143,105
Bozshakol license and legal entity	20,376	71,029	12,551	–	133	5,657	109,746
Koksay license and legal entity	–	–	–	–	–	–	–
Other legal entities	1,252	–	–	–	–	–	1,252
	68,455	200,789	22,398	–	1,144	21,162	313,948
RECIPIENT
State Revenue Committee	68,455	200,789	22,398	–	133	3,608	295,383
Local government	–	–	–	–	1,011	17,554	18,565
	68,455	200,789	22,398	–	1,144	21,162	313,948
KYRGYZSTAN
Bozymchak licence and legal entity	–	8,444	2,703	–	–	171	11,318
RECIPIENT
State Tax Administration (central government)	–	5,852	2,703	–	–	–	8,555
Local government	–	2,592	–	–	–	171	2,763
	–	8,444	2,703	–	–	171	11,318
RUSSIA
Baimskaya licence and legal entity	–	–	–	–	–	548	548
RECIPIENT
Federal Tax Service	–	–	–	–	–	–	–
Local government	–	–	–	–	–	548	548
	–	–	–	–	–	548	548
UNITED KINGDOM
Legal entity paid to HMRC	–	–	–	–	–	–	–

Total Payments to Governments	68,455	209,233	25,101	–	1,144	21,881	325,814

The Mineral Extraction Tax is payable in Kazakhstan on the value of the mineral resources extracted based on the average price of the minerals on the London Metal Exchange or at the London Bullion Market Association. Royalties are paid by Bozymchak on sold metal. Mineral Extraction Tax includes taxes paid on water extraction.
Payments made as required under subsoil use license.
Infrastructure and social payments represent payments made to bodies, associations, trusts, state-owned enterprises and other public interest groups located in the regions in which the Group operates. These payments include the transfer of assets at their book value, which the Group regards as social payments because they benefit the local communities.

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