17th Jun 2014 09:09
LONDON (Alliance News) - Miner Kazakhmys PLC Tuesday said that the government of Kazakhstan has agreed to reduce mineral extraction tax rates at some of the company's mature assets, in a move worth about USD40 million a year at current metals prices.
In a statement, Kazakhmys said the lower tax rate will apply to its deposits in the Zhezkazgan region of Kazakhstan, excluding its Zhomart mine, and at the Konyrat mine in the central region.
The assets are among the company's most challenging, and were earmarked for sale in a restructuring the company announced in February. They have been particularly affected by declining grade and low profitability.
The company said the new rates are effective retrospectively from January 1, 2014 and are applicable for a year, at which point a new application can be made.
"We welcome this decision to reduce mineral extraction tax rates at our most challenging assets. Improved cash generation may encourage future investment, potentially extending the life of the assets and helping to maintain employment," Kazakhmys Chief Executive Oleg Novachuk said in a statement.
In a separate statement, Kazakhmys said it has completed the acquisition of the Koksay mine, which it had first announced in February, for USD260 million in cash including a deferred payment of USD65 million.
Koksay, which is located in south east Kazakhstan and is at scoping stage, will become the company's third major growth project. It has an estimated mine life of over 20 years with average annual production of around 80,000 tonnes of copper cathode equivalent, 60,000 ounces of gold, 400,000 ounces of silver and 1,000 tonnes of molybdenum in concentrate.
Kazakhmys announced a broader restructuring programme in February after it reported that it swung to a pretax loss in 2013 due to lower commodity prices. It wants to sell less-profitable assets and focus on large-scale, low-cost, open pit mines.
Kazakhmys shares were up 1.4% at 288 pence Tuesday morning, one of the biggest gains on the FTSE 250.
By Steve McGrath; [email protected]; @SteveMcGrath1
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