Production Report for Q2 2014

31 July 2014

KAZAKHMYS PLC PRODUCTION REPORT FOR SIX MONTHS AND THE SECOND QUARTER ENDED 30 JUNE 2014

l Total Group copper cathode equivalent output 139 kt

§ Measures to protect profit margins continued throughout the first half of 2014

§ Group copper cathode equivalent production volumes remain on target to meet full year production guidance of 285 kt to 295 kt

§ Second half output to benefit from planned reduction of work in progress

l By-product output

§ Zinc in concentrate output of 62 kt

§ Silver output of 5,224 koz

§ Gold output of 51 koz

l East Region and Bozymchak

§ East Region copper cathode equivalent output of 41 kt in first half of 2014

§ Full year target for the East Region and Bozymchak of around 80 kt of copper cathode equivalent

Oleg Novachuk, Chief Executive Officer, said: "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. We recently announced further details of our proposed restructuring, which will significantly change the nature of our business, moving the Company towards its strategic goal of production dominated by large scale, low cost, open pit mines. I look forward to reporting on our progress."

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. It is the largest copper producer in Kazakhstan and one of the top worldwide with 16 operating mines, 7 concentrators and acopper smelter. Kazakhmys Mining has a full range of facilities enabling it to process ore extracted through to finished metal. Total copper cathode equivalent output from own ore was 294 kt in 2013. The Group has two major copper projects under construction.

Kazakhmys Mining produces significant volumes of other metals, including zinc, silver and gold. In 2013, it produced 134 kt of zinc in concentrate. The Group is amongst the largest global silver producers with output of 14 Moz in 2013.

Kazakhmys Power operates three captive power stations which supply electricity to Kazakhmys Mining and third parties. In 2013, net power generated by captive power stations was 5,723 GWh.

The Group is listed on the London Stock Exchange, the Kazakhstan Stock Exchange and the Hong Kong Stock Exchange. It had revenues from continuing operations of $3.1 billion in 2013 and a GroupEBITDA of $1.1 billion. The Group employs around 53,000 people, principally in Kazakhstan.

Proposed Group Restructuring

In February 2014, the Group announced plans for a potential restructuring of its business in order to improve profitability and cash returns.

On 23 July 2014, Kazakhmys made a further announcement on its proposed restructuring, having entered into an agreement to transfer certain mature assets in the Zhezkazgan and Central Regions, to Cuprum Netherlands Holding B.V., a company owned by Vladimir Kim and Eduard Ogay. The transaction is subject to certain consents, approvals and conditions, including the approval of independent shareholders. On 23 July 2014, the shareholder circular including notice of general meeting to be held on 15 August 2014 was published.

Following completion of the transaction, the Group will continue to own the mining and producing assets in the East Region and the Bozymchak mine in Kyrgyzstan, as well as the major growth projects at Bozshakol, Aktogay and Koksay. It is proposed the Company be renamed KAZ Minerals PLC following completion.

Copper Summary

1 Excludes ore output from the Bozymchak mine, which has been stockpiled ahead of commissioning of the concentrator.

2 Includes own material processed by third parties.

3 Includes copper cathode converted into rod, excluding tolling.

4 Copper cathode equivalent of copper in concentrate sold. The copper cathode equivalent is only recognised as 'produced',

when the concentrate is transferred to the customer. Copper cathode equivalent is recognised at a recovery rate of 96.5%.

Throughout the first half of 2014 management focused on protecting profit margins. Ore extraction of 18,175 kt was 7% below the comparative period in 2013 with a reduction in output in some high cost areas of the Zhezkazgan Region and continued stripping work at North mine. Output in the Central Region was restricted by maintenance and equipment downtime at the concentrators.

In Q2 2014, ore output increased by 10% to 9,531 kt, when compared to Q1 2014, although output remained below the level achieved in Q2 2013. The increase in ore output was mainly due to the completion of maintenance work at concentrators in the Central Region, which enabled the mines to ramp up ore production. There was also an increase in ore output at North mine in the Zhezkazgan Region.

The average copper grade was 1.02% in the first half of 2014, higher than in the comparative period.

In the first half of 2014, the volume of copper in ore mined declined by 1% when compared to the first half of 2013 as the lower ore volumes mined were partially offset by a higher copper grade. Copper in concentrate output from own material decreased by 3% to 152.5 kt in the first half of 2014, impacted by an increase in stockpiled ore.

In the first half of 2014, own copper cathode equivalent production of 139.2 kt was 4% below the comparative period in 2013, mainly reflecting the decline in copper in concentrate output. At the end of June 2014, there was an increase of concentrate in transit of 2.1 kt of copper cathode equivalent, which will be recognised as 'produced' in Q3 2014.

In Q2 2014, copper in concentrate output from own material was 9% above Q1 2014, reflecting the higher volumes of extracted ore. The increase in copper in concentrate output was offset by a build-up of work in progress at the Balkhash smelter at the end of

Copper Summary

the period. Accordingly, copper cathode equivalent output in Q2 2014 was in line with Q1 2014.

Overall copper cathode equivalent production volumes remain on target to meet the Group's guidance of 285 kt to 295 kt for 2014. Output should benefit from a planned reduction of work in progress in the second half of 2014.

Other Metals Summary

1 Includes a small volume of production from former Kazakhmys Gold's mines and slimes from purchased concentrate.

2Silver granule equivalent of silver in concentrate sold. Silver metal contained in the concentrate sold is only recognised as

 'produced' when the concentrate is transferred to the customer. Silver granule equivalent is recognised at a recovery rate

 of 90.0%.

Zinc

In the first half of 2014, the extraction of zinc bearing ore was in line with the corresponding period in 2013. An increase in zinc grade, mainly at Orlovsky mine, and a corresponding rise in zinc metal in ore mined of 15%, was not reflected in zinc in concentrate output due to a build-up of stockpiled ore at Akbastau mine in the Central Region.

In Q2 2014, zinc in concentrate output reduced by 5% to 30.0 kt from the previous quarter, reflecting lower volumes of zinc metal in ore mined and processed.

Silver

Silver metal in ore mined in the first half of 2014 was 4% below the comparative period due to lower extraction volumes and grade in the Zhezkazgan Region.

In the first half of 2014, the output of silver was 27% below the comparative period in 2013 which benefited from a significant release of work in progress.

The output of silver in Q2 2014 was 14% below Q1 2014, which does not reflect the underlying 2% increase in silver metal in ore mined. The decrease in output is explained by a build-up of work in progress in Q2 2014 compared to a release of work in progress in Q1 2014.

Other Metals Summary

Gold

Gold metal in ore extracted in the first half of 2014 was 11% above the prior period due to higher ore grades at the Orlovsky, Sayak and Akbastau mines. Gold production in the first half of 2014 was in line with the comparative period, as although there was a benefit from the release of work in progress, the first half of 2013 saw a contribution from the processing of stockpiles and higher output from the former Kazakhmys Gold's mines.

Stripping works at Abyz mine, which were planned to be carried out in the first six months of 2014, have been suspended pending a study on the development of an underground mine. No further output is expected from Abyz in 2014. As announced on 23 July, the absence of output from Abyz, combined with a lower level of anticipated commercial production from Bozymchak in 2014, has reduced the Group production target for gold output for the full year from 120 koz to 100 koz.

The output of gold in Q2 2014 was 19% below Q1 2014 and does not reflect the underlying 6% increase in gold metal in ore mined, as the prior period production was supported by a significant release of work in progress.

Kazakhmys Mining Review by Region

1 Excludes ore output from the Bozymchak mine, which has been stockpiled ahead of commissioning of the concentrator.

2 Includes own material processed by third parties.

East Region 

In the first half of 2014, ore extraction in the East Region was 2% below the comparative period due to lower extraction volumes at the mature Yubileyno-Snegirikhinsky mine. Mining is expected to cease at Yubileyno-Snegirikhinsky in the next two years due to depletion. Output from the Region's three other operating mines was in line with the prior year.

The average copper grade achieved in the first half of 2014 was 2.55%, mainly due to the mining of higher grade sections at Orlovsky mine. It is expected that the grade at Orlovsky mine will reduce from its current level of 3.84% but remain above 3% for the remainder of the year.

In the first half of 2014, copper in concentrate output increased by 9% to 44.4 kt compared to the prior period. The increase in copper in concentrate production reflects a 7% rise in metal in ore mined due to the higher grade achieved at Orlovsky mine. Copper in concentrate output also benefited from an increase in recovery rates at the Nikolayevsky concentrator, which is undergoing a modernisation programme. Although allowing higher recovery rates, the modernisation programme does at times restrict processing capacity and the timing of the completion of this modernisation work at Nikolayevsky could result in a build-up of material to be processed in 2015.

Copper in concentrate production in Q2 2014 was in line with the previous quarter. Production in both quarters was impacted by the modernisation programme at the Nikolayevsky concentrator, mentioned above.

In the first half of 2014, own copper cathode equivalent production in the East Region increased by 14% to 41.1 kt, reflecting the 9% increase in copper in concentrate output. In addition, there was a build-up of work in progress at the Balkhash smelter in the first half of 2013.

Bozymchak Project (Kyrgyzstan)

The commissioning of the crushing equipment and concentrator commenced in March 2014. Commercial ore processing is expected to begin in the fourth quarter of 2014.

Kazakhmys Mining Review by Region 

Stripping work at the mine led to 62 kt of ore being extracted in Q2 2014. At the end of June 2014, 586 kt of ore had been stockpiled, containing approximately 6.0 kt of copper and 39.0 koz of gold.

These stockpiles will be more than sufficient for processing in the remainder of the year and ore extraction will remain limited.

East Region and Bozymchak mine are on track to produce around 80 kt of copper cathode equivalent in 2014.

By-product output for East Region and Bozymchak

Zinc

The East Region accounted for all of the Group's zinc in concentrate output during the period. Copper-zinc ore from Akbastau mine was stockpiled and there was no contribution from Abyz mine, mentioned above, both of which are in the Central Region.

Silver

The East Region silver production in the first half of 2014 decreased to 1,668 koz, despite a similar volume of silver metal in ore mined compared to the same period in 2013. Silver production in the first half of 2013 benefited from a significant release of work in progress, whereas production in the first half of 2014 was impacted by a build-up of stockpiles.

Gold

The East Region's gold production in the first half of 2014 was 19% below the comparative period in 2013, mainly due to movements of work in progress. 

Gold production in the second half of 2014 should benefit from the use of stockpiled material and Bozymchak is expected to commence commercial production in the fourth quarter of 2014.

Kazakhmys Mining Review by Region

Ore extraction in the first half of 2014 was 10% below the comparative period as mining activity was reduced in high cost areas, such as the East and South mines. Output at North mine decreased reflecting continued stripping works and reduced extraction in high cost areas.

A simplified organisational structure was introduced in the Zhezkazgan Region in Q1 2014 in order to reduce costs. The East and West mines, which are interconnected, were combined under a single management team and are now being reported under East mine. South and Stepnoy mines were also combined and are being reported as South mine. The historic production data has been restated to reflect these changes.

Ore extraction in Q2 2014 was 6% above the previous quarter due to a planned increase of mined ore output at East and North mines.

The average copper grade achieved in the first half of 2014 was 0.78% compared to 0.80% in the prior year period, as extraction moved to lower grade sections at the South and Zhomart mines.

In the first half of 2014, the output of copper in concentrate decreased by 11% to 67.5 kt compared to the prior year, reflecting the decrease in metal in ore mined.

Copper in concentrate production in Q2 2014 increased by 6% compared to Q1 2014, reflecting the 7% rise in metal in ore mined with higher volumes of ore extracted during the quarter.

Kazakhmys Mining Review by Region

Ore extraction of 5,926 kt in the first half of 2014 was 3% below the comparative period in 2013.

Output in the Central Region was restricted by maintenance work at the Balkhash and Nurkazgan concentrators and equipment downtime during Q1 2014. Ore extraction volumes at Nurkazgan mine in the first half of 2014 increased compared to the prior period, as the upgrade to the main conveyor was completed during Q2 2013.

At Abyz mine, the stripping works which were planned to be carried out in the first half of 2014 have been suspended pending a study on the development of an underground mine. No output is expected from the mine during the remainder of 2014. Additional copper output from Akbastau mine will compensate for the suspension of operations at the mine.

Ore output in Q2 2014 increased to 3,244 kt, 21% above Q1 2014 following the completion of maintenance works at the concentrators which restricted ore output from Konyrat and Nurkazgan mines during the previous quarter.

In the first half of 2014, the average copper grade was above the comparative period in 2013 due to higher grades at Akbastau, Nurkazgan and Sayak mines.

The production of copper in concentrate was in line with the comparative period in 2013. The higher volume of copper metal in ore mined was offset by the stockpiling of complex copper-zinc ore from Akbastau mine, whilst the first half of 2013 benefited from additional material processed from stockpiles.

In the first half of 2014, 475 kt of ore extracted from Akbastau mine was stockpiled, containing approximately 9 kt of copper (H1 2013: 2 kt), which is unlikely to be processed in the near future.

Copper in concentrate production in Q2 2014 was 24% above Q1 2014 reflecting the increase in metal in ore mined and processed mentioned above.

Kazakhmys Power Review

1Electricity generated and sold to customers less internal consumption and transformer losses in

the power station.

2The net dependable capacity is the maximum capacity a unit can sustain over a specified period of time modified for seasonal limitations and reduced by the capacity required for station service and auxiliaries.

Net power generated in the first half of 2014 was 11% below the comparative period in 2013.

Internal sales in the first half of 2014 were 13% below the comparative period in 2013, impacted by the suspension of the Zhezkazgan smelter and two concentrators in the second half of 2013. The potential to transfer sales to third parties was limited by an increase in the availability of low cost hydro-electricity during Q2 2014.  

Net power generated in Q2 2014 decreased by 34% compared to the previous quarter, reflecting the start of the maintenance season and the seasonal decrease in electricity consumption.

Internal sales in Q2 2014 were 15% below Q1 2014, reflecting the seasonal impact mentioned above.

Kazakhmys Mining Production Appendix

1 Excludes ore output from the Bozymchak mine, which has been stockpiled ahead of commissioning of the concentrator.

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

1 Copper cathode equivalent of copper in concentrate sold.

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

1 Includes slimes from purchased concentrate.

2 Includes a small volume of by-product production from former Kazakhmys Gold's mines. Includes silver granule equivalent of silver in concentrate sold.

Kazakhmys Mining Production Appendix

1 Includes slimes from purchased concentrate and a small volume from former Kazakhmys Gold's mines.