Macquarie hikes target price on KAZ Minerals

In a research note dated 15 September, analyst Alon Olsha also told clients he believed the company was turning into a genuine alternative investment to the more established copper pure plays, pointing to KAZ´s "peer-beating volume growth" and first quartile cost position.

Olsha marked up his target price for the stock from 200p to 260p while retaining his 'outperform' stance.

A radical makeover of the miner was almost complete, with the outfit´s two projects expected to begin commercial production and to be commissioned in the second half of 2016 and first half of 2017, respectively.

Over the next two years, the company´s copper output would recover towards 300,000 tonnes as costs remained flat after having been pared following its restructuring in 2014.

"This dramatic shift down the global industry cost curve positions KAZ as a viable and attractive alternative to more established and expensive listed copper producers."

Critically, Olsha believed KAZ would be successful in waiving a covenant test on its debt later in 2016 and in refinancing its facilities.

"Moreover, the company’s primary source of funding is Chinese and there are other significant ties to the mainland, including Chinese contractors and smelting partners. These inter-dependent interests should serve to facilitate a smooth refinancing, in our view," he said.

The company´s shares were then trading at about a 21% discount to peers in terms of their EV/EBITDA multiples.