26th Feb 2015 13:26
LONDON (Alliance News) - KAZ Minerals PLC on Thursday said it swung to a pretax loss in 2014 due to lower revenue, as the Kazakhstan-focused copper miner was hit by lower copper prices.
The FTSE 250-listed miner said earnings before interest, tax, depreciation and amortization totalled USD355 million, a smidgen down from USD359 million in 2013.
The company reported USD132 million in impairments and a further USD129 million on depreciation and other charges, leading to an operating profit of USD94 million, significantly down from USD191 million a year earlier.
KAZ experienced a USD181 million foreign exchange loss from the devaluation of the Kazakhstani tenge in 2014, and a rise in net finance costs to USD82 million from USD53 million in 2013.
This led to KAZ swinging to a pretax loss for the year of USD169 million, compared to a USD138 million profit a year earlier.
Revenue for the year fell to USD846 million from USD931 million, depressed by copper prices coming under pressure over the course of the year amid markets anticipating a supply surplus in the near-term. KAZ produced 83.5 kilotonnes of copper cathode in 2014, up from 76.8 kilotonnes a year earlier.
"Copper prices during the year came under pressure due to markets anticipating a global supply surplus in 2014 and the near-term, although a consensus is emerging that the market may return to deficit from 2017 as mines mature and average grades reduce across the industry," it said.
KAZ said it expects copper cathode production for its East Region and Bozymchak of 80 to 85 kilotonnes in 2015, but expects by-product grades to be temporarily lower in the East Region.
The company is not paying a dividend due to the financing needs of growth projects currently in the construction phase. The group said all of its major projects are currently on track.
"Our dividend policy...is for the board to consider the cash generation and financing requirements of the business and then recommend a suitable dividend. This maintains flexibility which is appropriate given the underlying cyclicality of a commodity business," said KAZ.
"2014 was a year of transformational change for the group. We successfully completed our restructuring in October 2014, and this has repositioned KAZ Minerals on the global cost curve, retaining a portfolio of first and second quartile operating and development assets," said KAZ Chief Executive Officer Oleg Novachuk.
In 2014, KAZ spent USD53 million in capital expenditure for its continuing operations, lower than anticipated. In 2015, KAZ will spend around USD80 to USD100 million in capital expenditure on the East Region, and sustaining capital expenditure will fall to around USD25 million.
KAZ said 2015 will be an "important year" for the company, which will commission the Bozshakol mine in the fourth quarter of 2015. The company reiterated it expects to be producing 300,000 kiltonnes of copper in concentrate by 2018, of which 80% will come from "new, large scale, low cost, open-pit mines."
Production also should start from the Aktogay mine, which is currently in the construction phase, in the fourth quarter of 2015.
In 2014, the company added a third project to its portfolio with the acquisition of Koksay for a total consideration of USD260 million, of which USD35 million is deferred to 2015 dependent on drilling results. KAZ said Koksay provides longer term growth prospects.
KAZ Minerals shares were up 0.5% to 255.20 pence on Thursday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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