30th Apr 2008 07:01
Kazakhmys PLC30 April 2008 30 April 2008 Kazakhmys PLC Production Report for the First Quarter Ended 31 March 2008 • Copper output was in line with expectations given the severe winter conditions • Ore output at 8.3 million tonnes, an increase of 7% versus Q4 2007, benefiting from production at new mines • Own cathode production of 76 kt was down 10% compared to Q1 2007, impacted by a scheduled maintenance shutdown at Balkhash smelter and the severe winter weather • Cathode production was in line with Q1 2006, a more comparable winter period • By-product precious metal output was also affected by the weather, though zinc output resisted the seasonal influences, assisted by timing factors • Zinc in concentrate production increased 6% from Q4 2007, due to timing of material processing • Silver production declined just 3% to 4 million oz from Q4 2007, as weather interrupted processing • Gold production was 2% below Q4 2007, but benefited from the commencement of operations at Akbastau mine • Benefits seen in key areas of the operations • Improvements were seen in equipment availability and delivery, though this remains a focus of management attention • Successful ramp up at Akbastau and Abyz mines • Good recovery rates seen in trial processing at new Nurkazgan concentrator • Growth projects at Aktogay and Boschekul remain on track with guidance given at the time of the 2007 Annual Results • Ekibastuz deal on track to complete by end of H1 2008 • Integration plan in progress • Potential for power industry in Kazakhstan remains strong • 14.6% stake in ENRC continued to show good return on investment with rise in commodity prices • 94% increase in market value of the shareholding from 2007 year end* • The holding is currently worth $4.65 billion • Equivalent to 515 pence per Kazakhmys share* Oleg Novachuk, Chief Executive Officer, said "We are pleased to report anincrease in ore production in the first quarter of 2008, principally frombringing new mines on stream. The difficult weather conditions, withsignificantly below average temperatures and unusually high snowfall, did impactcathode production but we expect this to balance out over the year. The outlookfor production in 2008 remains in line with the guidance given at the time ofour 2007 full year results. Global copper demand appears to be strong withlimited new supply being introduced globally to meet this demand." For further information please contact: Kazakhmys PLC Tel: +44 20 7901 7882John Smelt Head of Corporate Communications Tel: +44 787 964 2675Olga Nekrassova Financial Analyst Tel: +44 20 7901 7814 MerlinDavid Simonson Tel: +44 20 7653 6620Tom RandellLeonid Fink Tel: +44 20 7653 6620 NOTES TO EDITORS *As at 29 April 2008 This report corresponds to Kazakhmys PLC's first Interim Management Statement asrequired by the UK Listing Authority's Disclosure and Transparency rules,relating to the period from 1 January to 30 June 2008. Kazakhmys PLC is the largest copper producer in Kazakhstan and one of theleading copper producers in the world. Kazakhmys is a fully integrated copperproducer from mining ore through to the production of finished copper cathodeand rod. The Group produces significant volumes of other metals as by-products,including zinc, silver and gold. Existing operations include 20 open pit andunderground mines, 10 concentrators, two copper smelting and refining complexes,a copper rod plant, a zinc plant and a precious metals refinery. Production isbacked by a captive power supply and significant rail infrastructure. Kazakhmysalso owns MKM, a copper products fabrication company in Germany, and has Goldand Petroleum Divisions with assets in Kazakhstan and other parts of CentralAsia. The Group's strategic aim is to diversify and participate in thedevelopment of the significant natural resource opportunities in Central Asia. Copper Summary KAZAKHMYS COPPER PRODUCTION Q1 Q4 Q1 2008 2007 2007 Ore extraction '000 t 8,257 7,729 8,931 Average copper grade % 1.21 1.22 1.25 Average zinc grade(1) % 3.49 4.19 3.71 Copper in concentrate '000 t 86.0 96.8 104.7 own concentrate '000 t 80.1 84.7 93.5 purchased concentrate '000 t 5.9 12.1 11.2 Copper cathodes(2) '000 t 84.1 103.1 99.7 own concentrate '000 t 75.5 91.6 83.8 purchased concentrate '000 t 8.5 11.3 15.3 tolling concentrate '000 t 0.1 0.2 0.6 Copper rod '000 t 13.4 8.8 9.0 (1) Complex ores only(2) Includes copper used to produce copper rod Ore output increased by 7% from 7,729 kt in Q4 2007 to 8,257 kt in Q1 2008 dueto increases across all four regions but particularly in Balkhash and Karaganda.This was due to a combination of new mine production and mine restarts afteroverburden removal. There was also some benefit from the delivery of equipment.Delivery and lead times of mining equipment has been discussed in previousproduction reports and remains an important focus for the operations. Thisincrease in ore output was in spite of the severe weather conditions. Q1 2008 has on average been colder than 2006, which was seen as a harsh winter,and significantly worse than the mild winter of 2007. February was particularlycold, accompanied by high levels of snowfall. The weather reduced the number ofoperational days at the open pit mines and heavy snowfall created potentialflooding issues. The availability of power was impacted and transportavailability reduced as it focused on delivery of coal. Ore output decreased by 8% from the levels achieved in Q1 2007 mainly due to theweather. Production decreased at the Zhezkazgan complex, where the benefits ofnew production at Sary-Oba mine were offset by lower output at South mine. The Q1 2008 average copper grade of 1.21% is slightly decreased from the gradereported in Q4 2007 due to lower grade output at the Zhomart mine in Zhezkazgan,which was partially offset by increased grades in the Karaganda Region. Thedecrease in the average copper grade from 1.25% in Q1 2007 was caused by thereduction in output, during Q1 2008, from the high grade Kosmurun mine, in theKaraganda Region, as it reaches the end of its current deposit. Copper in own concentrate production decreased from the previous periods, by 5%from Q4 2007 and by 14% from Q1 2007, reflecting the changes in ore output andgrades. Ore processing was also affected by the severe winter weather, giventhe impact on production facilities and transportation mentioned above. Thisshift in priorities should reverse as the weather improves. The new Nurkazganconcentrator, in the Karaganda region, started trial processing in Q1 2008 anddemonstrated promising recovery rates, which are encouraging for processing thistype of complex ore. Cathode production from own concentrate showed a decrease from the previousperiods, by 10% from Q1 2007 and by 18% from Q4 2007, as a consequence of theoverall decrease in own concentrate production, the maintenance shutdown at theBalkhash smelter and movements in stock and work in progress. To show the seasonal impact, cathode production from own material in Q1 2008 wasjust 1.5% below the same period in 2006, which was a similarly cold period. In2008 copper cathode production was supported by lower ore output, but withsignificantly higher grade (9.8 million tonnes and 1.07% for Q1 2006). Therewas no smelter maintenance carried out in Q1 2006. Copper rod, which is produced to customer order, increased markedly as a resultof continued strong demand from Chinese customers. In Q2 2008 the smelter at Zhezkazgan will undergo maintenance work with aclosure of around 45 days. Copper in concentrate production should beunaffected, though cathode production is likely to remain subdued but shouldbalance out in the second half of the year. By-products Summary KAZAKHMYS COPPER BY-PRODUCTS PRODUCTION Q1 Q4 Q1 2008 2007 2007 Zinc in concentrate '000 t 33.6 31.6 38.6Zinc metal '000 t 12.4 12.1 14.9 Silver '000 oz 4,020 4,154 5,022own production(1) '000 oz 4,020 4,154 5,017tolling(2) '000 oz 0 0 5 Gold '000 oz 31.4 33.7 34.0own production(1) '000 oz 31.4 32.2 19.2tolling(2) '000 oz 0 1.5 14.8 (1) Includes slimes from purchased concentrate(2) Represents tolled materials provided via third parties Zinc in concentrate production in Q1 2008 was 34 thousand tonnes, an increase of6% on Q4 2007, due to timing of receipts of material from third partyprocessors. Q1 2007 was also an exceptional quarter, due to the receipt of twomonths backlog concentrate from third party processors and against this period,Q1 2008 saw a decline of zinc in concentrate output of 13%. Zinc metal production in the first quarter remained in line with the previousperiod, reflecting the continued emphasis, and attractive conditions, formarketing zinc concentrate in the Central Asian market. Silver production from own material in Q1 2008 of 4.0 million ounces wasslightly below the previous period and 20% below the corresponding period of2007. This was due to lower levels of silver in purchased copper concentrate andthe extremely cold weather, which resulted in higher demand for power in theregion, causing disruptions to energy supply and consequential interruptions inoperations at the silver furnaces. This has led to a build up of silver inslimes, which will be processed during the year. No tolling of gold took place in Q1. No contracts have currently been signed totoll gold material in 2008, as the commercial terms are not sufficientlyattractive. Gold production, excluding tolled material, of 31.4 thousand ounceswas slightly below the previous quarter, though significantly ahead of Q1 2007.Production benefited from a reduction in work in progress along with an increasein grades and the commissioning of the new Akbastau mine, at the start of 2008.This was offset, compared to Q4 2007, by the decrease in ore processed from theNurkazgan and Kosmurun mines. Nurkazgan was affected by transportation issues,discussed above. The Karagaily concentrator, which had processed gold bearingores from Kosmurun, switched its focus to processing copper ores from the newAkbastau mine. The benefits of new production from the gold rich Abyz mine,which re-started production in 2008 after extensive overburden removal in 2007,will be seen later in the year when the ore, currently being stockpiled, isprocessed at the Karagaily concentrator. Kazakhmys Copper Review by Region ZHEZKAZGAN COMPLEX Q1 Q4 Q1 2008 2007 2007 Ore extraction '000 t 5,804 5,751 6,300 Average copper grade % 0.79 0.83 0.83 Copper concentrate '000 t 111.7 122.9 120.8 Copper in concentrate '000 t 40.0 42.9 46.5 Copper cathodes(1) '000 t 46.6 49.1 49.9 own concentrate '000 t 46.6 49.0 47.6 purchased concentrate '000 t -- 0.1 2.3 tolling(2) '000 t -- -- -- Copper rod '000 t 13.4 8.8 9.0 (1) Includes copper used to produce copper rod(2) Represents tolled materials provided via third parties Ore extraction at the Zhezkazgan complex in Q1 2008 performed well given theimpact of the severe winter weather. Output of 5,804 thousand tonnes was inline with Q4 2007. The complex benefited from increased output at North mine,where the Sary-Oba open pit is ramping up. The open pit will gradually increaseits production as the weather improves and the snow melts. Output was 8% below Q1 2007 as the benefits of Sary-Oba mine was offset by loweroutput at South mine. South mine reopened in December 2007 following a flood inSeptember 2007. Production has been maintained at reduced level in Q1 2008,whilst maintenance work is carried out, which should be completed by H2 2008. In Q1 2008, the copper grade in the Zhezkazgan mines was 0.79%, slightly belowthe previous periods. This was driven by lower grades at Annensky and Zhomartmines, both of which produced higher grade ore in 2007. Over 2008, output willincrease from the Zhomart mine which, combined with the new mine project atTaskura, commissioning in H2 2008, will compensate for this slight decline incopper grade. The change in production of copper in concentrate at the Zhezkazgan complexreflects the changes in ore extraction and grade. Cathode production from own concentrate showed a slight decrease from theprevious periods, by 2% from Q1 2007 and by 5% from Q4 2007, reflecting theoverall decrease in ore output and grades but offset by movements in stock andwork in progress. The smelter at Zhezkazgan will be closed for routinemaintenance during Q2 2008 and this will impact cathode output over the period. Copper rod, which is produced to customer order, increased markedly as a resultof continued strong demand from Chinese customers. Kazakhmys Copper Review by Region BALKHASH COMPLEX Q1 Q4 Q1 2008 2007 2007 Ore extraction '000 t 604 419 490 Average copper grade % 0.93 1.07 1.25 Copper concentrate(1) '000 t 37.8 47.6 41.2 Copper in concentrate '000 t 6.1 8.7 7.6 Copper cathodes '000 t 37.5 54.0 49.9 own concentrate '000 t 28.9 42.6 36.3 purchased concentrate '000 t 8.5 11.2 13.0 tolling(2) '000 t 0.1 0.2 0.6 (1) Excludes concentrate processed by third parties(2) Represents tolled materials provided via third parties The increased ore extraction in Q1 2008, compared to Q1 2007 and Q4 2007, wasdue to greater output from the Kounrad mine, which although still undergoingextensive overburden removal is enjoying modest output of relatively low gradeore. Production at Shatyrkul mine has reduced while operations are developed atanother shaft. During 2008, there was a successful transfer of activity fromShatyrkul mine to Sayak mine to compensate for the lost output. The average copper grade has decreased from Q1 2007 and Q4 2007 levels to 0.93%,as a result of the rising output at Kounrad mine, which has a grade of 0.29%. Production of copper in concentrate of 6.1 thousand tonnes in Q1 2008, was adecline of 20% from Q1 2007 and 30% from Q4 2007. This reduction was principallydue to stockpiling of ore, which will be processed later in the year. Theadditional decline from Q4 2007 was the result of reduced deliveries ofstockpiled Nurkazgan ore to the Balkhash concentrator, due to the severe winterweather conditions. This should be reversed as the weather improves and isdiscussed in the section on Karaganda. The smelter at Balkhash was closed for 35 days for maintenance during Q1 whichreduced output of cathode from the Complex. The Balkhash smelter processesconcentrates from the East and Karaganda regions as well from its own Balkhashconcentrator and the reduction in copper cathode output from own material inBalkhash also reflects the changes in copper in concentrate production in eachof these contributing regions. As previously mentioned, power output at Balkhash was affected by the coldweather, causing some stoppages. The power station at Balkhash will be shut formaintenance in stages during H2 2008, with minimum disruption anticipated. The construction of the new sulphuric acid plant at Balkhash, with target annualcapacity of 1.2 million tonnes, continues to be on track with previous guidanceand production is expected to start operations in H2 2008. Kazakhmys Copper Review by Region EAST REGION Q1 Q4 Q1 2008 2007 2007 Ore extraction '000 t 1,048 1,005 1,146 Average copper grade % 2.96 3.16 2.69 Copper concentrate(1) '000 t 134.6 147.4 126.2 Copper in concentrate '000 t 25.1 27.8 23.7 (1) Excludes concentrate processed by third parties Despite the severe weather conditions and decreased production at Nikolayevskymine in Q1 2008, ore extraction in the East region increased by 4%, compared toQ4 2007, to 1,048 thousand tonnes. This was the result of increased output atOrlovsky and Irtyshsky mines, both benefiting from the delivery of previouslyordered equipment. Ore extraction in Q1 2008 was 9% lower than in Q1 2007, due to decreased outputat Artemyevsky mine, which is undergoing backfill work. Production atNikolayevsky mine was lower year on year, due to heavy snowfall and waterresulting from melting snow. The decrease in the copper grade to 2.96%, compared to 3.16% in Q4 2007, was dueto in the lower grade at the Orlovsky mine, though this was accompanied by anincrease in output volumes. The increase in copper grade, compared to Q1 2007,reflects the increased ore output at the relatively high grade Orlovsky mine. In Q4 2007 ore from Karaganda's Kosmurun mine started to be processed at theNikolayevsky concentrator in the East Region. This is reflected in the 6%increase in copper in concentrate production, from 23.7 thousand tonnes in Q12007 to 25.1 thousand tonnes in Q1 2008. Production in Q1 2008 decreased by 10%from the Q4 2007 levels due to changes in the composition of processed ores andthe weather, which adversely impacted recovery rates at the Nikolayevskyconcentrator. Through better technological processes, however, underlyingimprovements have been made in the recovery rates at the Nikolayevskyconcentrator. The Nikolayevsky concentrator will, therefore, continue to be usedto process material from Kosmurun as it has shown the best recovery rates forthe complex ores from this mine. Kazakhmys Copper Review by Region KARAGANDA REGION Q1 Q4 Q1 2008 2007 2007 Ore extraction '000 t 801 554 995 Average copper grade % 2.20 1.94 2.27 Copper concentrate '000 t 47.6 38.9 79.2 Copper in concentrate '000 t 7.0 4.2 12.6 Ore extraction in Karaganda increased significantly in Q1 2008, compared to theprevious quarter, with a rise of 44% to 801 thousand tonnes. This was mainlydue to the commencement of the new Akbastau mine and the re-opening of Abyzmine, which was closed for overburden removal throughout 2007. This was onlypartially offset by decreased production at Kosmurun mine. The region showed areduction in output compared to Q1 2007, as the new output was offset by lowerproduction at West Nurkazgan and Kosmurun. West Nurkazgan, the highest ore producer in Q1 2007, is currently in the finalstage of open pit extraction. Nurkazgan is due to commence undergroundproduction towards the end of 2008. The new North Nurkazgan open pit mine will start ore extraction once weatherconditions permit and the recently commissioned Nurkazgan concentrator is readyto process this ore. Output from Kosmurun was reduced to avoid additional stockpiling of Kosmurun oreand potential ore oxidation. The current stockpile of Kosmurun ore is currentlybeing processed at the Nikolayevsky concentrator in East Region. Production atKosmurun is planned to increase after the stockpiled ore is processed. Kosmurunis currently nearing completion of its open pit operations. Major preparationworks will start in H2 2008 to take Kosmurun operations underground. Output at the newly restarted Abyz mine has been in line with expectations andthe ore has a rich gold content of 3.36 g/t along with a copper grade of 1.63%.The ore is currently being stockpiled while the Karagaily concentrator, inKaraganda Region, adapts production processes to maximise recovery rates fromthe ore. The Q1 2008 average copper grade of 2.20% increased from the grade reported inQ4 2007 due to production at Akbastau, which also allowed grade to remain steadycompared to Q1 2007, as Akbastau offset the decline in production at Kosmurun. Copper in concentrate production increased by 67%, to 7.0 thousand tonnes, fromthe levels reported in Q4 2007, in line with increased ore output and improvedgrades. The decrease in copper in concentrate production compared to Q1 2007 wasdue to the transfer in October 2007 of the processing of complex ores fromKosmurun mine from Karaganda to the Nikolayevsky concentrator in East Region. Previously stockpiled ore from Nurkazgan mine continues to be processed at theBalkhash complex, where there is spare capacity. During Q1 2008 another 0.3million tonnes of ore was shipped and processed, reducing the stockpiled ore to1.1 million tonnes. Once the cold season is over and rail transport availabilitywill improve, as the priority shifts from the transportation of coal, more orewill be shipped and processed at Balkhash. This ore will be processed at thenew Nurkazgan concentrator, when it is fully operational. The Nurkazgan concentrator started trial ore processing in February 2008, with52 thousand tonnes of ore being processed. Initial results demonstrated higherthan expected recovery rates which is an encouraging result for this type ofcomplex ore. Other divisions review KAZAKHMYS GOLD PRODUCTION Q1 Q4 Q1 2008 2007 2007 Ore extraction t 192 479 210Gold ore grade g/t 1.55 1.38 1.30 Gold in ore to pads '000 oz 8.6 26.0 6.6Gold precipitation '000 oz 6.9 15.9 6.0 Gold dore production '000 oz 7.9 15.5 7.2Silver production '000 oz 9.3 11.6 9.9 Production at Kazakhmys Gold uses a heap leaching process which is sensitive toweather as the process slows down in line with decreases in the temperature ofthe solution, with an optimal temperature of 15 degrees celsius. Ore extraction decreased from Q1 2007 due to the harsher winter conditions and,as expected, the seasonal change caused a significant decrease in productionwhen compared to Q4 2007. The increased gold in ore to pad, compared to Q1 2007, is a result of the highergold grade and a change in ore structure. The higher gold dore production was slightly ahead of Q1 2007 due to the releaseof gold work in progress stocks from the previous period. KAZAKHMYS PETROLEUM The main focus of the exploration activity is the Southern Akzhar (subsalt)section, where the 3D seismic survey is on track. The survey will continuethroughout 2008. The results of this survey will be used to plan the location offuture new deep wells. While the 3D seismic work is taking place, the company will drill a twin of anearly discovery well. The obligations under the exploration contract have been fulfilled on theNorthern Elimessai (suprasalt) section, with the completion of the shallow welldrilling programme which did not reveal petroleum which could be commerciallyextracted. Under the contract, from April 2009, each year a part of the explorationterritory must be returned to the Government, where no basis for commercialextraction is established. Completion of the shallow well drilling programmemeans that contractual obligations are being fulfilled and will allow the returnof explored territory to be carried out within this time frame. Financial Information MATERIAL EVENTS AND TRANSACTIONS Share buy-back programme At the end of January 2008, Kazakhmys PLC (the "Company") completed its sharebuy-back programme of up to $400 million, which commenced on 24 October 2007.The total number of ordinary shares purchased and cancelled was 15,079,577. Atan average price of £12.73 per share, this equated to a total cost of $390.1million, including expenses since the buy-back programme commenced. The averageclosing price and the volume weighted average price over the same period was£13.21 per share and £13.08 per share, respectively. The issued capital of theCompany, after completion of the buy-back programme, was 454,954,288 ordinaryshares. Acquisition of the Ekibastuz coal-fired power plant and the Maikuben West coalmine On 5 February 2008, the Company announced that it had signed an agreement withAES Corporation to acquire the Ekibastuz coal-fired power plant and the MaikubenWest coal mine. The total cost of up to $1.5 billion includes an initial cash consideration of$1.1 billion and a deferred cash consideration and other payments of up to $381million, payable under earnout provisions. Completion of the acquisition isexpected to occur by the end of H1 2008. Pre-export finance debt facility On 29 February 2008, the Company signed a five year pre-export finance debtfacility of $2.1 billion with a syndicate of banks to be used for generalcorporate purposes, including the acquisition of the Ekibastuz power plant andMaikuben West coal mine. No draw down of the debt facility has yet taken place. Final dividend in respect of the year ended 31 December 2007 At the time of the 2007 Annual Results, the Board recommended a final ordinarydividend in respect of the year ended 31 December 2007 of 27.4 US cents pershare. Subject to approval of shareholders at the Annual General Meeting to beheld on 30 April 2008, a dividend of $125 million should be paid to shareholderson 8 May 2008. FINANCIAL PERFORMANCE Sales volumes The following table sets out the sales volumes of the major products produced byKazakhmys Copper: Q1 Q4 Q1 2008 2007 2007 Copper cathodes '000 t 71.9 77.2 112.4 Copper rod '000 t 11.0 9.9 8.9 Total copper products '000 t 82.9 87.1 121.3 Zinc metal '000 t 4.9 7.7 10.8 Zinc in concentrate '000 t 18.1 14.0 21.8 Gold '000 oz 32.2 32.2 25.4 Silver '000 oz 4,405 5,176 3,376 Financial Information (contd) Copper cathode sales in Q1 2007 benefited from a large volume of goods intransit at the 2006 year end, which be recognised in January 2007. At the startof 2008, 28 thousand tonnes of copper cathodes were in transit, down from 49thousand tonnes at the beginning of 2007. During Q4 2007, there was a build-up of copper cathodes in stock and in transitof 16 thousand tonnes, resulting in sales being below production. In Q1 2008,the volume of cathodes in stock and in transit remained flat, so sales werebroadly in-line with production. In Q1 2008, the production of zinc metal was 12.4 thousand tonnes, in-line withoutput in Q4 2007. During Q4 2007, zinc metal inventory was built up toapproximately two month's production. The inventory level remained unchangedover Q1 2008 although it is expected to be reduced later in the year. Due toshipment delays at the quarter end, 8.7 thousand tonnes of zinc metal was intransit and will be recognised in sales in Q2 2008, explaining the lower volumeof zinc metal sold than produced. Gold sales were substantially higher than those in Q1 2007 but in-line with Q42007. The sales volume reflects the production which was substantially higherthan in Q1 2007. Silver sales were above production as stock levels reducedslightly in Q1 2008. Kazakhmys Copper experienced disruptions to its deliveries to China as a resultof the severe snowstorms in Q1 2008 and also from the Chinese new yearcelebrations. These factors held up a number of shipments at the Chinese border,however by the quarter end the affected shipments had reached theirdestinations. Commodity Prices The following table sets out the average realised prices for the majorcommodities: Q1 Q4 Q1 2008 2007 2007 Copper $/tonne 7,497 7,277 6,072Zinc $/tonne 2,442 2,415 3,527Gold $/tr.oz 940 789 644Silver $/tr.oz 18 14 13 The following table sets out the average LME/LBMA prices: Q1 Q4 Q1 2008 2007 2007 Copper $/tonne 7,796 7,188 5,933Zinc $/tonne 2,430 2,623 3,456Gold $/tr.oz 928 789 650Silver $/tr.oz 18 14 13 Realised prices will differ from average prices during the same period,principally because of timing issues and this effect is particularly noticeableover shorter time periods. Prices rose fairly steadily during Q1 2008 from$6,677 per tonne at 1 January 2008 to $8,520 at 31 March 2008. Realised priceswere lower than the LME averages due to some copper cathode shipments priced in2007 and a greater weight of shipments taking place in January and February,compared to March. Financial Information (contd) FINANCIAL POSITION Investment in Eurasian Natural Resources Corporation ("ENRC") PLC At 31 March 2008, the Group's 14.6% shareholding in ENRC PLC had a market valueof $3,689 million, an increase of $1,288 million from the 31 December 2007market value (53.6% increase). This represents a value of £4.07 per KazakhmysPLC share in issue as at 31 March 2008. Net liquid funds Net liquid funds consists of cash and cash equivalents, current investments andborrowings and amounted to $160 million at 31 March 2008, compared to $298million at 31 December 2007. The primary reasons for the reduction in net liquid funds were due to thecompletion of the share buy-back programme in January 2008 which consumed $120million of liquid funds, increased borrowings within MKM on account of highercopper prices which impact working capital levels, and the timing of taxpayments on account in Kazakhstan which are based on earnings for 2007. Foreign exchange rates The Kazakhstan tenge ("KZT") to US dollar exchange rate at 31 March 2008 stoodat KZT120.69/$, a change of 0.3% compared to the exchange rate at 31 December2007. The average rate for the three month period ended 31 March 2008 wassimilar to the average rate for 2007. Any weakening of the KZT against the US dollar gives rise to foreign currencytranslation losses which on consolidation are charged directly to equity. Adownward movement in the KZT has a beneficial impact on the profitability of theKazakh mining businesses in US dollar terms resulting from conversion of localcurrency costs. Kazakhmys Copper COPPER MINING Zhezkazgan complex Q1 Q4 Q1 2008 2007 2007 North ore ('000 t) 558 478 725 grade (%) 0.68 0.70 0.67East ore ('000 t) 1,322 1,428 1,348 grade (%) 0.82 0.82 0.84South ore ('000 t) 968 967 1,547 grade (%) 0.66 0.63 0.73West ore ('000 t) 488 488 550 grade (%) 0.45 0.41 0.41Stepnoy ore ('000 t) 716 746 610 grade (%) 0.84 0.86 0.71Annensky ore ('000 t) 947 873 840 grade (%) 0.81 0.98 1.01Zhomart ore ('000 t) 805 771 680 grade (%) 1.10 1.23 1.44 Complex total ore ('000 t) 5,804 5,751 6,300Complex average grade (%) 0.79 0.83 0.83 Balkhash complex Q1 Q4 Q1 2008 2007 2007Kounrad ore ('000 t) 145 41 48 grade (%) 0.29 0.48 0.38Sayak I, III ore ('000 t) 399 338 339 grade (%) 1.01 1.03 1.09Shatyrkul ore ('000 t) 60 40 103 grade (%) 1.98 2.01 2.18 Complex total ore ('000 t) 604 419 490Complex average grade (%) 0.93 1.07 1.25 East region Q1 Q4 Q1 2008 2007 2007Nikolayevsky ore ('000 t) 82 111 120 grade (%) 2.18 1.93 1.74Artemyevsky ore ('000 t) 333 313 399 grade (%) 1.67 1.70 1.70Irtyshsky ore ('000 t) 118 95 98 grade (%) 1.38 1.45 1.34Belousovsky ore ('000 t) 61 54 57 grade (%) 0.90 0.83 0.81Orlovsky ore ('000 t) 360 326 368 grade (%) 5.06 5.74 4.54Yubileyno-Snegirikhinsky ore ('000 t) 94 106 104 grade (%) 3.53 3.52 3.35 Region total ore ('000 t) 1,048 1,005 1,146Region average grade (%) 2.96 3.16 2.69 Karaganda region Q1 Q4 Q1 2008 2007 2007West Nurkazgan ore ('000 t) 222 263 634 grade (%) 0.96 0.88 1.18Akbastau ore ('000 t) 380 - - grade (%) 3.04 - -Kosmurun ore ('000 t) 74 291 361 grade (%) 2.58 2.90 4.18Abyz ore ('000 t) 125 - - grade (%) 1.63 - - Region total ore ('000 t) 801 554 995Region average grade (%) 2.20 1.94 2.27 Total ore ('000 t) 8,257 7,729 8,931Average grade (%) 1.21 1.22 1.25 COPPER PROCESSING Q1 Q4 Q1 2008 2007 2007Zhezkazgan complexCopper concentrate '000 t 111.7 122.9 120.8Copper in concentrate '000 t 40.0 42.9 46.5Balkhash complexCopper concentrate '000 t 37.8 47.6 41.2Copper in concentrate '000 t 6.1 8.7 7.6East regionCopper concentrate '000 t 134.6 147.4 126.2Copper in concentrate '000 t 25.1 27.8 23.7Karaganda regionCopper concentrate '000 t 47.6 38.9 79.2Copper in concentrate '000 t 7.0 4.2 12.6 Total own processedCopper concentrate '000 t 331.7 356.8 367.4Copper in concentrate '000 t 78.2 83.6 90.4 Own ore processed by third partiesCopper concentrate '000 t 6.9 4.1 12.2Copper in concentrate '000 t 1.9 1.1 3.1 Total ownCopper concentrate '000 t 338.6 360.9 379.6Copper in concentrate '000 t 80.1 84.7 93.5 Purchased concentrateCopper concentrate '000 t 24.0 41.3 42.6Copper in concentrate '000 t 5.9 12.1 11.2 Total copper in concentrate '000 t 86.0 96.8 104.7 COPPER SMELTER / REFINERY - COPPER CATHODES PRODUCTION Q1 Q4 Q1 2008 2007 2007Zhezkazgan smelterOwn concentrate '000 t 46.6 49.0 47.6Purchased concentrate '000 t - 0.1 2.3Sub - total '000 t 46.6 49.1 49.9Tolling '000 t - - -Total including tolling '000 t 46.6 49.1 49.8 Balkhash smelterOwn concentrate '000 t 28.9 42.6 36.3Purchased concentrate '000 t 8.5 11.2 13.0Sub - total '000 t 37.4 53.8 49.3Tolling '000 t 0.1 0.2 0.6Total including tolling '000 t 37.5 54.0 49.9 Grand total '000 t 84.1 103.1 99.7 Kazakhmys Copper BY-PRODUCTS MINING, PROCESSING AND SMELTER / REFINERY ZINC Q1 Q4 Q1 2008 2007 2007East regionNikolayevsky grade (%) 2.91 2.74 2.74Artemyevsky grade (%) 5.30 4.91 5.41Irtyshsky grade (%) 3.28 3.25 3.15Belousovsky grade (%) 1.92 2.67 3.00Orlovsky grade (%) 5.06 5.03 4.14Yubileyno-Snegirikhinsky grade (%) 3.72 3.56 3.66 Region average grade (%) 4.46 4.29 4.25 Karaganda regionKosmurun grade (%) 4.70 3.88 2.00Akbastau grade (%) 0.60 - -Abyz grade (%) 3.39 - - Region average grade (%) 1.73 3.87 2.00 Overall average grade (%) 3.49 4.19 3.71 Zinc in concentrate '000 t 33.6 31.6 38.6Zinc metal '000 t 12.4 12.1 14.9 SILVER Q1 Q4 Q1 2008 2007 2007Zhezkazgan complexNorth grade (g/t) 11.39 8.79 9.04East grade (g/t) 19.14 16.22 16.52South grade (g/t) 13.46 14.48 16.08West grade (g/t) 13.01 11.71 11.98Stepnoy grade (g/t) 9.87 12.61 12.16Annensky grade (g/t) 12.87 16.66 26.09Zhomart grade (g/t) 6.31 6.86 8.26 Region average grade (g/t) 12.99 13.27 15.11 Balkhash complexKounrad grade (g/t) 1.92 0.07 0.87Sayak I, III grade (g/t) 6.58 5.17 5.53Shatyrkul grade (g/t) 0.65 1.49 2.00 Region average grade (g/t) 4.87 4.32 4.33 East regionNikolayevsky grade (g/t) 48.06 50.37 26.44Artemyevsky grade (g/t) 103.5 69.00 110.7Irtyshsky grade (g/t) 51.4 52.73 50.1Belousovsky grade (g/t) 40.47 47.95 45.10Orlovsky grade (g/t) 60.46 56.22 53.76Yubileyno-Snegirikhinsky grade (g/t) 70.88 58.37 41.39 Region average grade (g/t) 71.88 58.99 68.85 Karaganda regionNurkazgan grade (g/t) 2.31 2.84 2.77Akbastau grade (g/t) 37.27 - -Kosmurun grade (g/t) 70.35 55.34 27.01Abyz grade (g/t) 41.48 - - Region average grade (g/t) 31.30 30.42 11.57 Overall average grade (g/t) 21.65 19.97 21.02 Silver in concentrate '000 oz 3,069 4,382 3,669 own concentrate '000 oz 2,470 3,236 2,551 purchased concentrate '000 oz 599 1,146 1,118 Silver metal(1) '000 oz 4,020 4,154 5,017 GOLD Q1 Q4 Q1 2008 2007 2007 Balkhash complexSayak I, III grade (g/t) 0.33 0.52 0.24Shatyrkul grade (g/t) 0.08 0.38 0.32 Region average grade (g/t) 0.30 0.50 0.26 East regionNikolayevsky grade (g/t) 0.48 0.68 0.69Artemyevsky grade (g/t) 1.18 0.79 1.38Irtyshsky grade (g/t) 0.39 0.39 0.36Belousovsky grade (g/t) 0.44 0.47 0.49Orlovsky grade (g/t) 1.00 0.63 0.57Yubileyno-Snegirikhinsky grade (g/t) 0.80 0.73 0.61 Region average grade (g/t) 0.90 0.67 0.85 Karaganda regionNurkazgan grade (g/t) 0.29 0.32 0.31Akbastau grade (g/t) 1.10 - -Kosmurun grade (g/t) 2.73 4.52 1.53Abyz grade (g/t) 3.36 - - Region average grade (g/t) 1.38 2.53 0.75 Overall average grade (g/t) 0.94 1.17 0.71 Gold in concentrate '000 oz 16.5 47.4 19.3 own concentrate '000 oz 12.8 24.6 12.7 purchased concentrate '000 oz 3.7 22.8 7.5 Gold output(1) '000 oz 31.4 32.2 19.2 (1) Includes slimes from purchased concentrate This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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