20th Aug 2015 06:57
LONDON (Alliance News) - Kaz Minerals PLC on Thursday said it swung to a tiny pretax profit in the first half of the year, despite the company's revenue being hampered by lower commodity prices.
The miner also said the Bozshakol mine will not be commissioned on schedule before the end of the year due to the recent fire at the site, and said this has been pushed back until early 2016.
The FTSE 250 miner reported a small USD2.0 million pretax profit in the first half of 2015, swinging from a USD104 million loss a year earlier despite revenue dropping to USD341.0 million from USD425.0 million.
In the first half of 2014, the company booked a USD181.0 million loss on foreign exchange, which was not repeated in the first half of 2015, leading to the improvement in results.
Earnings before interest, tax, depreciation, amortisation and exceptional items came in at USD88.0 million, falling from USD195.0 million.
Revenue was down due to lower production levels caused by maintenance work and lower copper, silver and gold prices.
"The group continues to deliver its strategy to develop large-scale, low-cost, open-pit copper mines in Kazakhstan. Whilst lower commodity prices have affected the profitability and cash flow generation of our existing assets in the first half of 2015, we believe copper is a commodity with strong medium and long term fundamentals," said the company.
Copper in concentrate production totalled 43,000 tonnes in the first half, slightly down from 44,400 tonens a year earlier. The company said it is on track to deliver its full-year guidance range of 80,000 to 85,000 tonnes, as production is expected to rise in the second half once the Aktogay mine begins the initial production of oxide.
Zinc and silver production was "strong" in the period, and Kaz said its full-year production is expected to be at the top end of its guidance range of 90,000 to 95,000 tonnes of zinc and 2.3 to 2.5 million ounces of silver granules.
Kaz said gold production is expected to increase in the second half as the company completes optimisation work at the Bozymchak mine, but it reduced its full-year guidance to 34,000 to 38,000 ounces.
"Completion of the Bozshakol and Aktogay projects will improve the cost position of the group and deliver strong production growth at a time when the global copper market is expected to return to a deficit," it added.
A fire broke out at the Bozshakol mine earlier in August in the grinding area of the concentrator building. The company Thursday said it is still assessing the damage but said the budget for the mine remains unchanged.
However, the mine will not be commissioned until the first quarter of 2016, instead of the fourth quarter of 2015 due to the incident.
The group's sales were higher than production, with copper cathode sales totalling 39,500 tonnes. Around 3,600 tonnes of cathode was purchased externally in the period "to avoid the deferral of shipments to customers due to variances in monthly smelter cathode production," it said.
By Joshua Warner; [email protected]; @JoshAlliance
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