Production Report for H1 and Q2

25 July 2013

KAZAKHMYS PLC PRODUCTION REPORT FOR SIX MONTHS AND THE SECOND QUARTER ENDED 30 JUNE 2013

l Copper cathode production from own material increased by 7% to 144 kt

§ Benefiting from stable grades and sound operating conditions

§ Production in line with full year targets

§ Optimisation review underway to improve cash flow and efficiency

l By-product output in line with full year targets

§ Zinc in concentrate production of 63 kt

§ Silver output of 7,141 koz, supported by a significant release of work in progress

§ Total gold production of 51 koz

l Kazakhmys Power

§ Net power generated at Ekibastuz GRES-1 of 6,589 GWh, reflecting lower domestic demand

§ Average realised tariff increased by 10% to 6.42 KZT/kWh

Oleg Novachuk, Chief Executive Officer, said: "It has been a solid first half with uninterrupted production and stable grades ensuring that we are on track for our annual production targets. A full review of our assets and operations is underway, which will focus on cash flow generation and value in production and I look forward to providing updates on our review over the course of the year."

For further information please contact:

REGISTERED OFFICE

6th Floor, Cardinal Place, 100 Victoria Street, London SW1E 5JL, United Kingdom.

Kazakhmys PLC is a leading international natural resources group with significant interests in copper, gold, zinc, silver and power generation.

It is the largest copper producer in Kazakhstan and one of the top worldwide with 16 operating mines, 9 concentrators and 2 copper smelters. Kazakhmys Mining's operations are fully integrated from mining ore through to the production of finished copper cathode and rod. Total copper cathode equivalent produced in 2012 from own ore was 292 kt. Production is backed by a captive power supply and significant rail infrastructure.

Kazakhmys Mining produces significant volumes of other metals, including zinc, silver and gold. In 2012, it produced 152 kt of zinc in concentrate. The Group is amongst the largest silver producers in the world with output of 12.6 Moz in 2012.

Kazakhmys Power includes a 50% interest in the coal fired Ekibastuz GRES-1 plant, the largest in Kazakhstan. The plant is undergoing a modernisation programme to take current capacity of 3,000 MW to its nameplate capacity of 4,000 MW. Kazakhmys Power also operates the captive power stations which supply electricity to Kazakhmys Mining.

The Group is listed on the London Stock Exchange, the Kazakhstan Stock Exchange (KASE) and the Hong Kong Stock Exchange (HKSE). It had revenues from continuing operations of $3.4 billion in 2012 with Group EBITDA of $1.9 billion. The Group employs around 60,000 people, principally in Kazakhstan. The Group's strategic aim is to optimise its current operations, deliver its major growth projects and to participate in the development of the significant natural resource opportunities in Central Asia.

Copper Summary

1Includes copper cathode converted into rod, excluding tolling.

In the first half of 2013, copper cathode production benefited from higher ore volumes, stable copper in ore grade and efficient material flow across the operations. There has been a focus on maintaining copper content in order to maximize returns. Output in the first half of 2012 was negatively impacted by severe weather at the start of the year.

Ore extraction of 19,589 kt in the first half of 2013 was 12% above the comparative period, driven by an increase in output from the Central Region. Extraction in Q2 2013 was slightly below the previous quarter with a reduction in output from the Zhezkazgan Region.

The average copper grade of 0.96% achieved in the first half of 2013 was slightly below the comparative period, but above the range anticipated at the start of the year.

In the first half of 2013, the output of copper in concentrate from own material increased by 7% to 157.8 kt from the prior period. This increase reflected higher ore extraction at grades similar to those achieved in the first half of 2012.

Copper in concentrate output from own material was 78.1 kt in Q2 2013 compared to 79.7 kt in the previous quarter. A 6% decrease in metal in ore mined, due to lower ore extraction and grade, was partially offset by the processing of stockpiled ore.

Copper cathode production from own concentrate increased by 7% to 144.3 kt in the first half of 2013, from the prior period, benefiting from the higher level of copper mined and processed and a small build up of work in progress at Balkhash smelter.

Copper cathode production from own concentrate in Q2 2013 was in line with the previous quarter, reflecting the output of copper in concentrate.

Other Metals Summary

1 Includes a small volume of by-product production from the former Kazakhmys Gold mines: Central Mukur and Mizek.

2 Includes slimes from purchased concentrate.

Zinc (by-product)

In the first half of 2013 lower ore volumes, a reduced zinc grade from the Artemyevsky mine and extensive stripping work at Abyz mine led to a 19% reduction in zinc in ore mined and a 12% decline in zinc in concentrate compared to the prior period.

Due to the complexity of processing copper-zinc ore from Akbastau mine, 245 kt of ore containing approximately 3.8 kt of zinc was stockpiled in the first half of 2013. The stockpiled material is unlikely to be processed in the near future, pending further technical studies.

Zinc in concentrate production of 31.1 kt in Q2 2013 was 3% below the previous quarter as the lower level of zinc in ore mined was partially offset by processing higher volumes of ore.

Silver (by-product)

Silver output increased significantly in the first half of 2013, mainly due to the processing of higher volumes of ore, a reduction of work in progress and higher recovery rates. Repairs at the precious metals refinery reduced output in Q2 2012.

In Q2 2013 silver output was 12% higher than the previous quarter, despite an anticipated reduction in average grade. The increase in output was mainly due to movements in work in progress.

In the second half of 2013 silver output is likely to decline to match current mined output.

Other Metals Summary

Gold (by-product)

In the first half of 2013, gold metal in ore extraction was impacted by the commencement of stripping works at Abyz mine in January 2013 and a reduction in gold content and ore output from the Artemyevsky mine. Gold production, however, increased by 7% as the comparative period was impacted by a substantial increase in work in progress due to the repairs at the precious metals refinery mentioned above. 

The output of gold in Q2 2013 increased 4% to 24.9 koz from the previous quarter. A reduction in gold in ore mined was offset by the processing of stockpiled material and improved recovery rates.

Kazakhmys Mining Review by Region

Ore extraction of 11,295 kt in the first half of 2013 was in line with the comparative period. Several mines across the region increased output, offsetting the reduction in output from Annensky, where operations at some sections were suspended in 2012 due to depletion.

Output declined in Q2 2013, compared to the previous quarter, as activity was reduced in high cost areas and stripping work commenced at the Itauz pit at North mine in February 2013 with extraction scheduled to resume in Q3 2013.

The average copper grade rose to 0.80% in the first half of 2013, above the comparative period, as activity moved to higher grade sections as part of the Group's focus on value in production.

The output of copper in concentrate increased by 15% in the first half of 2013, reflecting the higher level of metal in ore mined.

In June 2013, the Satpayev concentrator was suspended and the ore is being sent to other Zhezkazgan concentrators, raising their utilisation levels.

Kazakhmys Mining Review by Region

Higher output from the Konyrat and Akbastau mines increased ore extraction to 6,124 kt in the first half of 2013, 60% above the comparative period in 2012. Mining at Konyrat recommenced in June 2012. The increase in output from these two mines offset the decrease in ore extraction at Nurkazgan mine, where the main conveyor has been undergoing major reconstruction work. The upgrade has now been completed and should increase the mine's capacity.

There has been no extraction at Abyz mine, where stripping work commenced in January 2013. Mining will be resumed by the end of 2013.

In the first half of 2013, the average copper grade declined to 0.76% impacted by higher output from the relatively low grade Konyrat mine (0.30%). The output from Konyrat offset a rise in grades at Akbastau mine, where operations moved to more mineral rich areas.

The increase in metal in ore mined is reflected in a 13% rise in the production of copper in concentrate to 41.2 kt in the first half of 2013.

Copper in concentrate production in Q2 2013 was in line with Q1 2013. The decrease in ore grade and corresponding reduction in metal in ore mined was offset by the processing of stockpiled ore.

Kazakhmys Mining Review by Region

1Excludes concentrate processed by third parties.

Ore extraction in the first half of 2013 was impacted by the suspension of operations at Nikolayevsky mine in Q3 2012, due to poor economic returns. In addition, output at Artemyevsky mine was restricted by equipment maintenance. Extraction declined 13% to 2,170 kt.

The average copper grade, at 2.35%, was lifted by the suspension of Nikolayevsky mine, a relatively low grade mine. There was also an increase in grade at Orlovsky mine, where operations were moved to higher grade sections, although this was partly offset by lower grades at the mature Yubileyno-Snegirikhinsky mine.

The average copper grade in Q2 2013 was lower than the previous quarter, due to the mining of lower grade sections at Artemyevsky mine and continued reductions in grade at Yubileyno-Snegirikhinsky mine.

Copper in concentrate output in the first half of 2013 decreased by 11% to 37.0 kt compared to the prior period, reflecting the 14% reduction of metal in ore processed. This reduction was partially offset by improved recovery rates across most of the Region's concentrators including Nikolayevsky concentrator, which has been undergoing a modernisation programme.

Output of copper in concentrate in Q2 2013 was in line with the previous quarter reflecting the comparable volumes of metal mined and processed.

Kazakhmys Power Review

1Results shown are for 100% of the business.

2Electricity generated and sold to customers less internal consumption and transformer losses in the power station.

3The net dependable capacity is the maximum capacity a unit can sustain over a specified period modified for seasonal limitations and reduced by the capacity required for station service and auxiliaries.

4External sales only. The weighted average tariff for electricity sold also includes an additional transmission fee on a small proportion of sales.

Ekibastuz GRES-1

Net power generated at Ekibastuz GRES-1 in the first half of 2013 was 7% below the comparative period. The decrease in output was driven by lower domestic commercial demand. Domestic sales fell by 1,402 GWh, partially offset by an increase of sales to Russia of 934 GWh. Demand for power in Q1 2012 was lifted by the exceptionally cold weather.

In Q2 2013 net power generated decreased by 21% compared to the previous quarter, reflecting standard seasonal factors, the additional supply of electricity from hydro-power stations in Kyrgyzstan and lower domestic power consumption.

The ceiling tariff for 2013 set by the Ministry of Industry and New Technologies is 7.30 KZT/kWh, compared to a ceiling tariff of 5.60 KZT/kWh for Q1 2012 and 6.50 KZT/kWh for the rest of 2012. The weighted average realised tariff achieved by GRES-1 in the first half of 2013 was 6.42 KZT/kWh, an increase of 10% compared to the prior period.

The average realised tariff is 12% below the ceiling tariff principally as sales to Russia, which represented 19% of total sales in the first half of 2013, take place below domestic rates.

The average realised tariff in Q2 2013 was 6.28 KZT/kWh, a reduction of 4% compared to Q1 2013. The decrease in realised tariff mainly reflects a change in sales mix, with an increase in sales to Russia.

Net dependable capacity increased by 335 MW in the first half of 2013 compared to the prior period, benefiting from the commissioning of Unit 8 in Q4 2012.

Kazakhmys Power Review

Captive power stations

Net power generated in the first half of 2013 was in line with the comparative period. Net power generated in Q2 2013 decreased by 15% compared to the previous quarter due to the start of the maintenance season and the seasonal decrease in electricity consumption.

The weighted average realised tariff for external sales in the first half of 2013 increased to 5.10 KZT/kWh, reflecting the new ceiling tariff approved by the Ministry of Industry and New Technologies of 5.10 KZT/kWh for the year.

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

1 Includes slimes from purchased concentrate.

2 Includes a small volume of by-product production from the former Kazakhmys Gold mines: Central Mukur and Mizek.

Kazakhmys Mining Production Appendix

1 Includes slimes from purchased concentrate.