Kaz Minerals on track for full-year guidance after 'strong' third quarter

The FTSE 250 company said copper production for the third quarter totalled 76.2 kt, compared to 78.9 kt in the second quarter, meaning it was on track for the top end of its full-year guidance of between 280 kt and 300 kt.

Gold production in the three months ended 30 September came in at 50.7 koz, down from 54.3 koz in the second quarter, with the board expecting full-year production to reach the top end of its 180 koz to 200 koz guidance range.

Group silver production guidance increased to around 3,500 koz, and its zinc in concentrate guidance rose to between 45 kt and 50 kt.

At Aktogay, Copper production in the third quarter was 31.7 kt, below the previous quarter at 34.3 kt, as throughput was reduced by scheduled maintenance.

The average copper grade there was 0.56% in the quarter, up from 0.55% quarter-on-quarter and higher than expected due to positive variance against the mine plan.

Full year copper production at Aktogay was on track to achieve the upper end of the board’s guidance range of 120 kt and 130 kt.

At Bozshakol, copper production in the third quarter was 30.3 kt, compared to 30.6 kt in the second quarter, as higher ore throughput was offset by lower copper grades and recoveries.

Gold production there reduced to 37 koz from 41 koz quarter-on-quarter, due to previously anticipated lower average gold grades and recoveries.

Kaz said it was on track to achieve its full-year copper production guidance at Bozshakol of between 110 and 120 kt, and the upper end of its gold production guidance of 140 to 150 koz, with mill maintenance deferred from earlier in the year scheduled to take place in the fourth quarter.

In the East Region and at Bozymchak, third quarter copper production came in at 14.2 kt, up from 14 kt in the second quarter, with the operation on track to achieve its full year guidance of around 50 kt.

Gold production totalled 13.7 koz in the quarter, up from 13.3 koz quarter-on-quarter, with the board saying it could exceed its full-year guidance of 40 to 50 koz.

Full-year guidance for silver production at the East Region and Bozymchak was lifted to around 2,000 koz, following the “strong” third quarter output of 554 koz.

Kaz also reported strong zinc-in-concentrate output at the operation, benefiting from higher grades, with 15.7 kt produced in the third quarter, up from 14.8 kt in the second.

Full-year zinc-in-concentrate guidance was increased to between 45 and 50 kt.

Achieving the top end of its gold guidance remained dependent on the restart of the Bozymchak mine in the fourth quarter, the board explained, where production had been temporarily suspended since 7 October, in a bid to ensure employee safety following recent political instability in Kyrgyzstan.

Looking at the impact of Covid-19, Kaz said “comprehensive measures” remained in place to protect staff and mitigate the risk of disruption to its operations.

It said the pandemic had no major impact to its operations or sales in the third quarter.

Reported Covid-19 infection rates in Kazakhstan reduced to “a low level” during the quarter, the firm noted, although the risk of new restrictions in the fourth quarter remained.

“Kaz Minerals has delivered strong production in the third quarter and the nine months to September 2020, despite the challenges posed by Covid-19,” said chief executive officer Andrew Southam.

“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 the fourth quarter, 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.”

At 0809 GMT, shares in Kaz Minerals were down 0.29% at 626.21p.