Kaz Minerals lifts copper guidance as Aktogay ramps up

Kaz Minerals reported a 14% increase in copper production to 75 kt in its third quarter on Thursday, which its put down to the ramp-up at Aktogay, as it lifted its full-year copper production guidance to between 250 kt and 270 kt.

The FTSE 250 company also raised its gold production guidance for the year to between 160 koz and 180 koz, after a bumper nine months to 30 September.

At Bozshakol, it said that project was now approaching design capacity with copper production of 27 kt in the third quarter, up from 29 kt in the second.

It said the sulphide plant operated at 100% of design throughput in August and 93% for the quarter as a whole, while its copper output for the third quarter was impacted by an “expected reduction” in grade.

The clay plant achieved 81% of its design throughput in the third quarter, up from 69% in the second, while gold guidance for 2017 was raised to between 110 koz and 120 koz at Bozshakol, following “strong” year-to-date output.

At Aktogay, the company’s copper guidance increased to between 85 kt and 95 kt, following production of 31 kt in the third quarter, up from 21 kt in the second.

Sulphide copper production there was 23 kt in the quarter, up from 15 kt in the prior three months, with operations declared commercial from October.

Oxide copper cathode production was 8 kt in the third quarter at Aktogay, rising from 6 kt in the second.

Finally, in the East Region and Bozymchak, third quarter copper production reached 17 kt from 16 kt in the second quarter, with the project said to be on track for full year guidance of around 65 kt.

Kaz said high zinc grade areas in the East Region had not yet been accessed, with full-year zinc guidance revised to between 60 kt and 65 kt.

It said it was “on track” for the top-end of its gold guidance range of between 50 koz and 60 koz, and increased its silver guidance to between 2,600 koz and 2,850 koz.

On the financial front, Kaz reported net debt of $2.22bn as at 30 September, down from $2,44bn on 30 June.

It said it had $1.68bn of available liquidity, including cash and cash equivalents of $1.35bn and $332m of undrawn facilities.

Kaz also reported that $74m in VAT refunds, in relation to project capital expenditure, was received in the third quarter.

“Following another strong quarter from our new sulphide operations at Aktogay we have raised the group's copper production guidance for 2017 to 250-270 kt,” said chief executive Oleg Novachuk.

“Aktogay's sulphide concentrator reached commercial levels of production at the end of Q3 and we expect to reach full capacity during 2018.”

Novachuk also pointed out that at Bozshakol, the main concentrator operated at 100% of design throughput in August.

“Kaz Minerals is rapidly improving its gearing metrics as we deliver against our operational targets in an improving market for copper.”