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.

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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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).

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Kaz minerals PLC HALF-YEARLY REPORT

FOR THE PERIOD ENDED 30 June 2017

OPERATIONAL HIGHLIGHTS

• Copper output more than doubled to 118 kt in the first half of 2017
• Aktogay ramp up progressing well, Bozshakol expected to achieve full capacity in second half
• By-products on track to meet or exceed 2017 guidance

FINANCIAL HIGHLIGHTS

• Gross Revenues¹ increased by 2.3 times, to $837 million (H1 2016: $363 million) on higher volumes and commodity prices
• Revenues of $721 million, excluding pre-commercial sales (H1 2016: $302 million)
• Gross EBITDA¹ of $505 million (H1 2016: $147 million) driven by increased revenues and low operating costs
• EBITDA¹ of $429 million, excluding pre-commercial earnings (H1 2016: $115 million)
• Operating profit of $291 million (H1 2016: $68 million)
• Net cash cost¹ of 64 USc/lb, maintained position amongst the lowest cost copper producers globally
• Bozshakol full year gross cash cost¹ now expected to be 115-135 USc/lb
• Aktogay guidance reduced to 110-130 USc/lb following strong first half performance
• East Region and Bozymchak guidance now set at 205-225 USc/lb

FINANCIAL POSITION

• Net debt¹ reduced to $2,442 million at 30 June 2017 (31 December 2016: $2,669 million), supported by higher operating cash flows, lower capital expenditure and refund of project VAT of $176 million
• Available liquidity of $1,563 million, including $1,223 million of cash and cash equivalents and $340 million available for drawing
• New $600 million PXF facility
• Gearing levels reducing rapidly

OUTLOOK

• Full year copper production target narrowed to 235-260 kt
• Aktogay sulphide to achieve commercial production and Bozshakol to reach design capacity in second half
• KAZ Minerals is delivering copper growth into a tightening market

¹  These metrics, used throughout this document, are non-IFRS measures that the Directors use internally to assess the financial performance of the Group. See glossary for definitions.

² Includes operations during the period prior to commercial production.

³ Reconciliation to operating profit provided in note 4(a)(i) in the financial information.

4   Reconciliation of EPS based on Underlying Profit/(Loss) is found in note 8 in the financial information.

Oleg Novachuk, Chief Executive, 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 EBITDA 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.”

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CHANGE OF VENUE FOR ANALYST PRESENTATION 

KAZ Minerals PLC announced on 3 August 2017 that it would release its half-yearly results for the six months ended 30 June 2017 on Thursday 17 August 2017 at 7.00am (UK time) and that a presentation for analysts would be held at 9:00am (UK time).

The venue for the presentation to analysts has been changed to The Lincoln Centre, 18 Lincoln’s Inn Fields, London WC2A 3ED.

The presentation can also be accessed by conference call and the dial-in details are unchanged as follows:

Telephone: +44 (0) 20 3003 2666

Please quote the password: KAZ Minerals (Half-Yearly Results 2017)

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

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NOTICE OF HALF-YEARLY RESULTS FOR THE PERIOD ENDED 30 JUNE 2017 

KAZ Minerals PLC will announce its half-yearly results for the six months ended 30 June 2017 on Thursday 17 August 2017 at 7.00am (UK time).

A presentation for analysts will be held in the Theatre & Theatre Gallery at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS on Thursday 17 August 2017 at 9.00am (UK time) 

The presentation for analysts can also be accessed by conference call on Thursday 17 August 2017 at 9.00am (UK time). The dial-in details are as follows:

Telephone: +44(0)20 3003 2666

Please quote the password: KAZ Minerals (KAZ Minerals Half-Yearly Results 2017) 

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

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KAZ Minerals PLC (“KAZ Minerals” or “the Group”) announces that it has completed an amendment and extension of its pre-export finance loan facility which includes an increase in the facility commitments to $600 million (the “new PXF”).

The new PXF extends the maturity profile of the existing facility by 2.5 years from December 2018 until June 2021. Under the revised repayment profile, principal repayments will commence in July 2018 and then continue in equal monthly instalments over a three-year period until final maturity in June 2021.

The facility amount has been increased to $600 million reflecting strong support from the market during syndication. The balance of the $600 million commitments over the $224 million outstanding under the existing facility as at 31 May 2017 will be available for drawing over a six month availability period until December 2017.

The interest basis of the new PXF is substantially the same as the existing facility, with a variable margin of between 3.0% and 4.5% above US$ LIBOR, dependent on the ratio of net debt to EBITDA¹ which will be tested semi-annually.

Financial covenants have been revised in the new PXF to increase headroom as the Group’s new mines at Bozshakol and Aktogay continue to ramp up production. The Group remains subject to temporary restrictions relating to the Group’s total debt, dividends, acquisitions and capital expenditure outside the scope of existing operating mines and major growth projects for as long as net debt to EBITDA¹ is above 3.5:1.

The refinancing was coordinated by Deutsche Bank AG, ING Bank and Société Générale Corporate and Investment Banking acting as Coordinating Mandated Lead Arrangers and Bookrunners. Other lenders in the facility are ABN AMRO Bank NV, Bank of China Limited, Citibank N.A., Crédit Agricole Corporate and Investment Bank, ICBC London, JP Morgan Chase Bank N.A., Natixis, Rabobank London and UniCredit S.p.A.. Deutsche Bank AG continues as the agent bank and ING Bank is the security trustee.

Andrew Southam, Chief Financial Officer, said: “We are pleased to announce the signing of the amendment and extension of the PXF facility with an enlarged syndicate of 12 banks participating. The amended facility demonstrates continuing support for the Group from its lenders, with all existing banks maintaining or increasing their participation and four new banks joining the syndicate. The new PXF will enhance our financial flexibility as we complete the ramp up of output from our new mines at Bozshakol and Aktogay.”

1. EBITDA is calculated on broadly the same basis as “Gross EBITDA” as defined in the KAZ Minerals PLC Annual Report 2016

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KAZ Minerals PLC (“the Group”) announces that the refund of VAT paid during the construction of the Bozshakol and Aktogay projects has commenced. Following the completion of audit and other administrative procedures the Group has received $166 million in VAT refunds to date in 2017. The recoverable VAT paid during the construction of the two projects was included within non-current receivables as at 31 December 2016.

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KAZ MINERALS PLC AUDITED RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2016

FINANCIAL HIGHLIGHTS

• Gross EBITDA¹ of $492 million (2015: $208 million) driven by Bozshakol and Aktogay
  • EBITDA of $351 million (2015: $202 million), excludes pre-commercial earnings
  • Operating profit up 142% to $218 million (2015: $90 million)
• Gross Revenues² increase 43% to $969 million (2015: $677 million)
  • 2016 full year copper sales volumes of 141 kt (2015: 84 kt), offset 12% lower copper price
  • Revenues were $766 million (2015: $665 million)
• Group net cash cost of 59 USc/lb (2015: 109 USc/lb)
  • Bozshakol gross cash cost of 106 USc/lb and net cash cost of 27 USc/lb, supported by lower costs in start-up period
  • East Region and Bozymchak gross cash cost of 191 USc/lb and net cash cost of 68 USc/lb (2015: 109 USc/lb)
• Gross liquid funds of $1,108 million, net debt of $2,669 million at 31 December 2016
  • Aktogay project budget reduced by $200 million to $2.1 billion
  • $100 million of final payments at Bozshakol will now fall in 2017
  • New $300 million Development Bank of Kazakhstan facility and $50 million increase to PXF obtained in December 2016
  • Gearing metrics significantly improved and set to reduce further

OPERATIONAL HIGHLIGHTS

• 73% growth in copper production to 140 kt
  • Bozshakol output of 45 kt copper cathode equivalent from 50 kt copper in concentrate in 2016
  • Aktogay output of 18 kt copper cathode from oxide ore, production from sulphide ore commenced in February 2017
  • Optimised Bozymchak mine tripled copper and gold production

2017 OUTLOOK

• Industry leading production growth and low cost position to continue in 2017
  • Aktogay to reach commercial production and Bozshakol to reach design capacity in the year
  • Group copper production³ to increase to 225-260 kt, gold production³ 135-170 koz
  • Zinc in concentrate expected to be 70-75 kt, silver production³ 2,750-3,000 koz
  • Bozshakol and Aktogay 2017 gross cash cost guidance of 125-145 USc/lb
  • East Region and Bozymchak 2017 gross cash cost guidance of 230-250 USc/lb, impacted by lower copper volumes

¹  Includes EBITDA from pre-commercial operations.

²   Includes revenues from pre-commercial operations.

³   Copper, gold and silver production used for the 2017 guidance is payable metal in concentrate produced plus finished metal production.

⁴  Reconciliation of EPS based on Underlying Profit/(Loss) is found in note 8 in the financial information.

⁵  Net cash flow from operating activities before capital expenditure and non-current VAT associated with expansionary and new projects, less sustaining capital expenditure.

⁶  Cash operating costs, including pre-commercial production costs, excluding purchased cathode, divided by the volume of copper cathode equivalent sales.

⁷ Cash operating costs, including pre-commercial production costs, excluding purchased cathode, less by-product Gross Revenues, divided by the volume of copper cathode equivalent sales.

⁸ Reconciliation to operating profit provided in note 4(a)(i) in the financial information.

Oleg Novachuk, Chief Executive, said: “The successful launch of our major growth projects has increased copper output by 73% at an industry leading net cash cost of 59 USc/lb. Following the recent commencement of production at the Aktogay sulphide concentrator both Aktogay and Bozshakol are operational. KAZ Minerals is now well positioned to achieve its target of 300 kt of copper production in 2018, delivering significant copper growth with low operating costs into a strengthening market.”

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KAZ Minerals PLC announced on 8 February 2017 that it will release its preliminary results for the year ended 31 December 2016 on Thursday 23 February 2017 at 7:00am (UK time) and that a presentation for analysts would be held at 9:00am (UK time).

The presentation for analysts will now commence at 9:45am (UK time). All other details remain unchanged, as set out below.

The presentation will be held in the Theatre & Theatre Gallery at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS and can also be accessed by conference call. The dial-in details are as follows:

Telephone: +44 (0) 20 3003 2666

Please quote the password: KAZ Minerals

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

PLEASE FOLLOW THE LINK TO DOWNLOAD THE FULL ANNOUNCEMENT

KAZ Minerals PLC will announce its preliminary results for the year ended 31 December 2016 on Thursday 23 February 2017 at 7.00am (UK time).

A presentation for analysts will be held in the Theatre & Theatre Gallery at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS on Thursday 23 February 2017 at 9.00am (UK time).

The presentation for analysts can also be accessed by conference call on Thursday 23 February 2017 at 9.00am (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