Credit Suisse ups Kaz Minerals to 'outperform'

Kaz Minerals got a boost on Friday as Credit Suisse upgraded its stance on the stock to ‘outperform’ from ‘neutral’ and hiked the target price to 630p from 370p.

It noted that over the past two years, Kaz’s growth outlook has been met with fears over operational delivery and funding shortfalls. However, the Bozshakol mine has reached commercial production and is contributing cash flow, the Aktogay mine is now ramping up at an even faster rate and the funding risk is now limited even under bearish copper price assumptions.

“We think this justifies Kaz moving to a more de-risked valuation and thus upgrade,” CS said.

CS pointed out that the company has consistently guided to around 300kt of production in 2018 versus 140kt in 2016 and said this looks achievable.

The bank also said while debt levels are high, given the strong operational performance, new debt facilities raised, reduced project capex and the cash buffer of around $1.1bn, the risk of a funding gap is limited.

In addition, it highlighted the fact Kaz has guided that by the end of the first half of 2017 it will refinance its pre-export financing debt facility, which will give more breathing room and should squash any further fears of a funding gap.

At 0905 BST, the shares were up 3.4% to 504.51p.