31st Jul 2014 09:21
LONDON (Alliance News) - Kazakhmys PLC Thursday said its copper production fell in its second quarter and first half as the company reduces activity as part of its ongoing restructuring plan.
The FTSE 250 miner said its copper cathode equivalent production fell 2.8% to 69,700 tonnes for the three months ended June 30 from 71,700 tonnes in the previous year, with particular falls in production at its Khezkazgan region in Kazakhstan as mining activity was reduced in its high cost zones.
However, the company did say its copper in concentrate production increased 1.9% to 79,600 tonnes, and the average grade it received for copper during the three month period increased to 1.01% from 0.94%.
In the first half, Kazakhmys copper cathode equivalent production fell 3.6% to 139,200 tonnes and its copper in concentrate production fell 3.4% to 152,500 tonnes.
Kazakhmys also said zinc production fell 2.3% to 61,700 tonnes, silver production fell 27% to 5.2 million ounces and gold production increased 0.3% to 51,000 ounces in its first half.
The company said its copper cathode equivalent production volumes remain on target to meet its full-year production guidance of 285,000 tonnes to 295,000 tonnes, and its second half output should benefit from planned reduction of work in progress.
Kazakhmys recently said it is restructuring to shift towards a production model dominated by large-scale, low-cost, open-pit mines.
"During the first half of 2014 management has remained focused on efficient production, reducing output in higher-cost areas in order to protect margins and conserve cash," Chief Executive Oleg Novachuk said in a statement.
Last week, the company unveiled an agreement to dispose of mature mining assets in the Zhezkazgan and Central Regions of Kazakhstan as part of the restructuring plan.
Kazakhmys also said it wants to rename itself as KAZ Minerals PLC following the disposals, which will leave it as the owner of the mining and producing assets in the East Region and the Bozymchak mine in Kyrgyzstan.
Kazakhmys said that it has agreed to transfer the companies owning the disposal assets to Cuprum Holding, which is owned by board members Vladimir Kim and Eduard Ogay. Ogay will step down from the Kazakhmys board as he will become the chief executive of Cuprum, though Kim, a former Kazakhmys chairman, will remain on the board.
As part of the deal, Kazakhmys will make a working capital payment comprising of USD150.0 million in cash, about USD80.0 million representing the unspent amount of sustaining capital expenditure budget of the assets for the first seven months of 2014, and about USD10.0 million in tax refunds to be received from the government of Kazakhstan.
Kazakhmys shares were down 3.4% to 328.70 pence, putting it amongst the top-10 FTSE 250 fallers on Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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