29th Oct 2009 07:00
29 October 2009
Kazakhmys PLC Production Report for the Third Quarter Ended 30 September 2009 and Interim Management Statement
Production in first 9 months of 2009 in line with the same period 2008
Production of 82 kt benefited in Q3 from some continued use of stockpiled material
Q4 output is likely to be at a lower run rate, reflecting planned maintenance work and timing of processing
Gold production of 104 koz, a 13% increase compared to 9 months of 2008
Silver production increased 9% to 13,196 koz
Zinc in concentrate output of 109 kt, in line with 2008
22% increase in power generated in Q3 2009 from Q2 2009
Market recovery continues and further growth expected in Q4 2009
Positive cash generation, supported by rising commodity prices
Oleg Novachuk, Chief Executive Officer, said: "This is another solid set of results, demonstrating the continued management focus on operational efficiency. In the fourth quarter we will carry out some maintenance work and may see a rebuild of inventory, but we remain on track to meet our full year target of copper cathode equivalent output of 315 kt."
For further information please contact:
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Kazakhmys PLC |
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Kazakhmys PLC |
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John Smelt |
Head of Corporate Communications |
Tel: +44 20 7901 7882 Tel: +44 78 7964 2675 |
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Irene Burton |
Financial Analyst |
Tel: +44 20 7901 7814 |
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Zulfira Mukhamedyarovа |
Senior Manager - Media Relations |
Tel: +77 27 266 3317 |
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Merlin |
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David Simonson |
Tel: +44 20 7726 8400 |
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Tom Randell |
Tel: +44 20 7726 8400 |
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Leonid Fink |
Tel: +44 20 7726 8400 |
Notes to Editors
Kazakhmys PLC is a leading international natural resources group with significant interests in copper, gold, zinc, silver, power generation and petroleum.
It is the largest copper producer in Kazakhstan and one of the top ten worldwide with 20 mines, 10 concentrators and 2 copper smelters. Kazakhmys Copper operations are fully integrated from mining ore through to the production of finished copper cathode and rod. Total copper cathode equivalent produced in 2008 from own ore was 343 thousand tonnes. Production is backed by a captive power supply and significant rail infrastructure.
Kazakhmys Copper produces significant volumes of other metals, including zinc, silver and gold. In 2008, it produced 48 thousand tonnes of zinc metal and 137 thousand tonnes of zinc in concentrate. The Group is the fourth largest silver producer in the world (17 million ounces produced in 2008).
Kazakhmys Gold, which acquired Eurasia Gold Inc in July 2007, includes substantial new development and exploration opportunities. The Group produced 179 thousand ounces of gold in 2008 and has measured and indicated resources of 2.3 million ounces.
Kazakhmys Power owns the coal fired Ekibastuz GRES-1 plant, the largest in Kazakhstan with a nameplate capacity of 4,000 MW. In addition, it owns the Maikuben open cast coal mine, supplying around 20% of the power plant's fuel requirements producing over 3.6 million tonnes of coal in 2008.
Kazakhmys Petroleum is continuing its work programme at the East Akzhar exploration block, located on the eastern fringe of the Caspian depression, which was acquired in April 2007.
Kazakhmys also owns MKM, an upstream copper products fabrication company in Germany, which produces a range of pre- and semi-finished copper and copper alloy products.
The Group is part of the FTSE-100 index of companies listed on the London Stock Exchange and is also listed on the Kazakhstan Stock Exchange (KASE). It had revenues of $5.2 billion in 2008 with EBITDA of $2.0 billion. The Group employs some 67,000 people, principally in Kazakhstan. The Group's strategic aim is to diversify and participate in the development of the significant natural resource opportunities in Central Asia.
Copper Summary
Kazakhmys Copper Production
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
||
|
Ore extraction |
'000 t |
24,411 |
26,706 |
8,398 |
8,253 |
9,235 |
|
Average copper grade |
% |
1.18 |
1.25 |
1.15 |
1.18 |
1.32 |
|
Average zinc grade1 |
% |
4.02 |
3.22 |
3.98 |
3.82 |
3.07 |
|
Copper in concentrate |
'000 t |
269.9 |
291.1 |
91.5 |
91.0 |
105.7 |
|
own concentrate |
'000 t |
267.9 |
269.2 |
89.5 |
91.0 |
98.8 |
|
purchased concentrate |
'000 t |
2.0 |
21.9 |
2.0 |
- |
6.9 |
|
Copper cathodes equivalent production 2 |
'000 t |
256.9 |
275.4 |
83.1 |
88.2 |
101.1 |
|
own concentrate |
'000 t |
252.3 |
252.1 |
82.2 |
88.2 |
95.0 |
|
purchased concentrate |
'000 t |
4.6 |
23.2 |
0.9 |
- |
6.1 |
|
tolling concentrate |
'000 t |
- |
0.1 |
- |
- |
- |
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Copper rod |
'000 t |
7.6 |
32.7 |
2.9 |
2.6 |
9.1 |
1 Complex ores only.
2 Includes copper sold in concentrate and cathode converted into rod.
Production in the first 9 months of the year shows the impact of suspended high cost mines on reduced ore output. The suspension of these mines has been offset by improved efficiency in existing operations and the additional benefit from the use of stockpiled material. In Q3 there was some use of stockpiled material, but at a reduced level, as stockpiles have now been largely utilised. Output in Q4 2009 is likely to be lower than in Q3 2009, due to maintenance work and the timing of material processing.
Ore output in the first 9 months of 2009 reduced by 9% to 24.4 million tonnes, compared to the corresponding period in 2008, reflecting the reduction in the number of operating mines. The decrease was partially offset by an increase in output at continuing operations, which were assisted by the transfer of equipment and personnel from the suspended mines. Production in 2009 was also assisted by bringing into production Nurkazgan West underground mine in Karaganda region. Extraction in Q4 may be slightly below Q3, as Taskura (part of the North group of mines) will cease its production, as the ore body will have been exhausted.
The average copper grade over the first 9 months of 2009 was 1.18%, compared to 1.25% in 2008. This was due to the suspension of output from the high grade Akbastau mine in the Karaganda region at the end of 2008. This decline was partially offset by improved grades at Zhomart mine in the Zhezkazgan Complex and the suspension of output at the low grade Kounrad mine in Balkhash. Copper grade in Q3 was slightly below Q2 2009 mainly due to declining grades at the maturing Annensky mine, in the Zhezkazgan region.
Over the first 9 months of 2009, the production of copper in own concentrate was in line with 2008, despite the lower levels of mined ore and metal grade. Concentrate production benefited from the processing of stockpiled material, particularly in the first six months of the year, and an improvement in recovery rates.
Copper Summary
Kazakhmys Copper Production (continued)
Copper cathode equivalent production from own concentrate of 252 kt, to 30 September 2009, was in line with the same period in 2008, reflecting the output of copper in concentrate. Output of cathode from own material in the final quarter is expected to be lower than in Q3, due to lower production from stockpiled material and timing of material processing. The decrease in the final quarter should lead to the total cathode equivalent output for the year being in line with the 2009 full year target of 315 kt.
By-products Summary
Kazakhmys copper By-products Production
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9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
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Zinc in concentrate |
'000 t |
108.8 |
104.6 |
32.4 |
36.6 |
38.2 |
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Zinc metal |
'000 t |
8.6 |
35.2 |
- |
- |
10.6 |
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Silver |
'000 oz |
13,198 |
12,124 |
4,051 |
4,709 |
3,794 |
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own production1 |
'000 oz |
13,196 |
12,123 |
4,051 |
4,708 |
3,794 |
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tolling2 |
'000 oz |
1.6 |
0.9 |
- |
0.6 |
- |
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Gold |
'000 oz |
110.7 |
93.4 |
37.5 |
42.9 |
29.8 |
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own production1 |
'000 oz |
104.1 |
92.1 |
36.2 |
38.9 |
29.4 |
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tolling2 |
'000 oz |
6.6 |
1.3 |
1.3 |
4.0 |
0.4 |
1 Includes slimes from purchased concentrate.
2Represents tolled materials provided via third parties.
Zinc by-product
Zinc in concentrate production for the 9 months of 2009 was 4% above the corresponding period in 2008. Despite the reduction in ore output and metal mined, zinc in concentrate production in 2009 benefited from the processing of previously stockpiled material. Production was also assisted by an improvement in recovery rates, supported by an upgrade of the Karagaily concentrator.
There was an increase in metal in ore mined in Q3 2009 compared to Q2 2009, with the recommencement of extraction at Abyz and an increase in grades in the East region. These factors were not fully reflected in zinc in concentrate production, which was 11% lower in Q3 than in Q2 2009, due to lower receipts of material from a third party processor.
Silver by-product
The processing of stockpiled ore from Abyz and Akbastau, mainly in the first half of the year, led to a 9% increase in silver production to 13,196 koz in the nine months to 30 September 2009 from the same period in 2008. Production was also assisted by an improvement in recovery rates and lower levels of work in progress at the end of September 2009 compared to December 2008.
The production of silver in Q3 2009 was 14% below the previous period, due to an increase in work in progress during the quarter.
Gold by-product
The production of gold from own material in the first 9 months of 2009 increased to 104.1 koz, compared to 92.1 koz in the same period of 2008. The processing of stockpiled material, mainly from Abyz mine, and an improvement in recovery rates, supported by an upgrade at the Karagaily concentrator, led to the increased production in the 9 month period.
Gold metal output declined by 7% in Q3 2009, compared to the previous quarter, as Q2 benefited from a substantial release of work in progress.
Kazakhmys Copper Review by Region
Zhezkazgan Complex
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
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Ore extraction |
'000 t |
18,088 |
17,873 |
6,127 |
6,053 |
5,860 |
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Average copper grade |
% |
0.87 |
0.83 |
0.86 |
0.87 |
0.88 |
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Copper concentrate |
'000 t |
369.2 |
360.9 |
119.4 |
121.8 |
126.1 |
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Copper in concentrate |
'000 t |
136.8 |
129.5 |
45.7 |
45.9 |
44.6 |
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Copper cathodes1 |
'000 t |
84.1 |
132.7 |
28.5 |
24.5 |
48.7 |
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own concentrate |
'000 t |
84.1 |
131.5 |
28.5 |
24.5 |
47.8 |
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purchased concentrate |
'000 t |
- |
1.2 |
- |
- |
0.9 |
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tolling2 |
'000 t |
- |
- |
- |
- |
- |
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Copper rod |
'000 t |
7.6 |
32.7 |
2.9 |
2.6 |
9.1 |
1 Includes copper used to produce copper rod.
2Represents tolled materials provided via third parties.
Ore extraction during the 9 months in 2009 was slightly above the comparative period which, combined with a modest increase in grade, led to higher production of copper in concentrate. A more integrated approach to metal processing across Kazakhmys Copper, led to the transfer of some concentrate from Zhezkazgan to the smelter at Balkhash, so that the output of cathodes within Zhezkazgan smelter no longer reflects the production of concentrate from within the Complex.
As already mentioned in the Q2 production report, there were a number of operational changes within the Complex, although these did not lead to an overall change in output volumes. Operations were suspended at the higher cost West mine. This suspension was offset by a significant recovery at South mine, which was affected in 2008 by repair work on the main shaft lifting equipment. Both South and East mines also benefited from the transfer of personnel and equipment from West mine.
Stepnoy and North mines increased their ore extraction by 15% and 6%, respectively, over the first 9 months of the year, compensating for smaller reductions elsewhere in the Complex. Stepnoy mine benefited from improved equipment availability and the commissioning of a conveyer early in the year, thereby improving ore transportation. North mine has temporarily benefited from production at the short life Taskura open pit, within the North group of mines. Mining operations at Taskura will cease in Q4 2009, as the deposit will be exhausted.
The overall average copper grade achieved during the 9 months of 2009 rose to 0.87%, from 0.83% achieved during the corresponding period in 2008. The increase was due to higher grade ore output from the relatively new Zhomart mine and suspension of output from the low grade West mine. These changes were partly offset by the lower ore grade at East mine and a gradual reduction of grade at Annensky mine as the mine matures.
Kazakhmys Copper Review by Region
Zhezkazgan Complex (continued)
The higher level of copper in concentrate production reflects the change in quantities of metal mined. The lower level of copper cathode production from own concentrate during the 9 months of 2009 reflects two main factors:
the direct sale of copper in concentrate to China - 20.4 kt , or 19.6 kt of copper cathode equivalent;
the transfer of copper concentrate to Balkhash smelter, to use the Group's two smelters more efficiently whilst a furnace at Zhezkazgan is undergoing planned maintenance.
Kazakhmys Copper Review by Region
Balkhash Complex
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
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Ore extraction |
'000 t |
1,686 |
2,354 |
551 |
589 |
930 |
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Average copper grade |
% |
1.33 |
0.99 |
1.35 |
1.28 |
1.05 |
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Copper concentrate1 |
'000 t |
144.3 |
203.1 |
50.7 |
47.4 |
96.0 |
|
Copper in concentrate |
'000 t |
26.0 |
28.9 |
9.4 |
8.3 |
13.3 |
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Copper cathodes |
'000 t |
153.2 |
139.9 |
50.9 |
52.8 |
49.6 |
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own concentrate |
'000 t |
148.6 |
117.8 |
50.0 |
52.8 |
44.4 |
|
purchased concentrate |
'000 t |
4.6 |
22.0 |
0.9 |
- |
5.2 |
|
tolling2 |
'000 t |
- |
0.1 |
- |
- |
- |
1 Excludes concentrate processed by third parties.
2Represents tolled materials provided via third parties.
Ore output at Balkhash during the first 9 months of 2009 was below the same period in 2008, due to the suspension of operations at the low grade Kounrad mine during Q4 2008. Metal in ore output was only 3% below the corresponding period in 2008, as increased output from the higher grade Shatyrkul mine offset the lost metal extraction at Kounrad. During H1 2008, production at Shatyrkul was reduced while work was undertaken to develop a new shaft in order to improve ventilation. Balkhash complex generally benefited from new equipment, following investments made in the previous year.
The changes in copper grade reflect the suspension of production at Kounrad.
In 2008 ores from Akbastau and Nurkazgan, in the Karaganda region, were processed at Balkhash, in order to utilise spare capacity while improvement works were undertaken on the Karagaily and Nurkazgan concentrators. As this additional processing at Balkhash has now ceased, with the suspension of Akbastau and the use of Nurkazgan concentrator, copper in concentrate production in the 9 months of 2009 has decreased by 10% compared to the same period in 2008.
The production of copper in concentrate was 13% higher in Q3 2009 compared to Q2 2009 as a result of reprocessing higher volumes of waste material, whilst metal in ore mined remained in line with Q2 output.
Copper cathode production from own material during the 9 months of 2009 increased by 26% compared to 2008. This increase was due to the transfer of concentrate from Zhezkazgan, bringing the production of copper cathodes at Balkhash smelter to 148.6 kt in 2009.
Kazakhmys Copper Review by Region
East Region
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
||
|
Ore extraction |
'000 t |
3,379 |
3,576 |
1,124 |
1,135 |
1,322 |
|
Average copper grade |
% |
2.87 |
2.82 |
2.81 |
2.89 |
2.76 |
|
Copper concentrate1 |
'000 t |
450.7 |
427.7 |
148.1 |
147.1 |
150.5 |
|
Copper in concentrate |
'000 t |
82.0 |
81.2 |
26.7 |
27.8 |
28.9 |
1Excludes concentrate processed by third parties.
Ore extraction in the East region during the first 9 months of 2009 was slightly below the comparative period, leading to a decrease of mined metal in ore by 4%. Belousovsky mine was suspended at the start of the year, but this was offset by an increase in output at the higher grade Yubileyno-Snegirikhinsky mine, as some personnel and equipment were relocated from Belousovsky mine. At Artemyevsky mine, as reported in H1 2009, production is constrained by backfilling work. A new backfill cement plant is under construction and this should assist in overcoming the production bottlenecks at Artemyevsky in 2010.
Copper in concentrate output actually increased over the first nine months of 2009, despite the lower metal in ore mined, as greater volumes from Yubileyno-Snegirikhinsky were processed at Nikolayevsky concentrator at an improved recovery rate.
Kazakhmys Copper Review by Region
Karaganda Region
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
||
|
Ore extraction |
'000 t |
1,258 |
2,903 |
596 |
476 |
1,123 |
|
Average copper grade |
% |
0.90 |
2.13 |
0.87 |
1.02 |
2.12 |
|
Copper concentrate |
'000 t |
198.3 |
178.4 |
81.7 |
68.9 |
70.4 |
|
Copper in concentrate |
'000 t |
16.8 |
24.4 |
6.0 |
6.4 |
10.0 |
Ore output in Karaganda during the first 9 months of 2009 was significantly below the corresponding period in 2008. This decrease was due to the suspension of operations at the high grade Akbastau mine. The decision was taken to preserve the ore body until a new concentrator is built nearby. This will substantially reduce the transportation costs incurred in production as at present the nearest concentrator is 220 km from the mine.
Ore output increased in Q3 2009 by 25% as the Nurkazgan West underground mine gradually ramped up its production and operations recommenced at Abyz, following the completion of stripping work.
The average copper grade over the first 9 month of 2009 decreased to 0.90%, compared to 2.13% in 2008. The lower average copper grade reflects the suspension of the high grade Akbastau mine. The reduction in grade in Q3 2009, compared to Q2 2009, was due to a lower grade and higher output at Nurkazgan West mine.
Production of copper in concentrate in Karaganda region decreased by 31% during the 9 months of 2009 compared to 2008, generally reflecting the suspension of mining at Akbastau. The regional numbers are also impacted by the processing of ores from Kosmurun and Akbastau outside Karaganda during 2008, and the processing in Karaganda during H1 2009 of stockpiled ore from Akbastau and Abyz.
Other Divisions Review
kazakhmys POWER PRODUCTION
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
||
|
Coal extraction |
'000 t |
2,593 |
2,578 |
940 |
749 |
807 |
|
Coal extraction attributable to Kazakhmys* |
'000 t |
2,593 |
1,184 |
940 |
749 |
807 |
|
Net power generated |
GWh |
6,171 |
7,965 |
2,410 |
1,981 |
2,459 |
|
Net power generated attributable to Kazakhmys1 |
GWh |
6,171 |
3,404 |
2,410 |
1,981 |
2,459 |
|
Net dependable capacity2 |
MW |
2,258 |
1,951 |
2,268 |
2,256 |
1,782 |
1Period from acquisition on 29th May 2008.
2The net dependable capacity is the real productive capacity of GRES-1. It is calculated by taking the maximum design capacity of the generation units and then factoring in the physical condition of the units (e.g. wear and tear) and internal consumption of electricity.
Net power generated has recovered in Q3 2009, compared to the previous quarter, and is similar to Q3 2008. For the year to date, however, net power generated remains behind the same period of 2008, following a weak H1 2009.
The demand for electricity in Kazakhstan reduced significantly in Q4 2008 and remained low at the start of 2009. This decrease reflected weakness in the global economy, and major industrial groups with captive power generation sold their surplus power onto the market. A moderate increase in demand was seen in April 2009, and industrial groups began to reduce their sales to the market and absorb more of their own captive power production. In addition, seasonal maintenance outages at other power stations have enabled GRES-1 to gain market share.
Net dependable capacity for the first nine months of 2009 increased by 307 MW, compared with the same period of 2008, due to the major overhaul of Unit 6 in 2008 and planned maintenance on other units.
The major overhaul of Unit 5 started in mid April 2009 and is expected to be completed in Q4 2009. This overhaul will raise the unit's gross dependable capacity from 430 MW to the nameplate capacity of 500 MW.
Ore extraction at Maikuben West coal mine during the first 9 months of 2009 was in line with the corresponding period in 2008. Q3 2009 coal output exceeded output from the previous quarter and Q3 2008 by 26% and 16%, respectively, reflecting stronger demand from power producers, including Ekibastuz GRES-1.
.
Other Divisions Review
kazakhmys gold PRODUCTION
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
||
|
Ore extraction |
'000 t |
1,407 |
1,630 |
661 |
608 |
773 |
|
Gold ore grade |
g/t |
1.40 |
1.50 |
1.33 |
1.38 |
1.50 |
|
Gold in ore to pads |
'000 oz |
59.8 |
70.1 |
26.2 |
26.0 |
32.9 |
|
Gold precipitation |
'000 oz |
35.2 |
42.0 |
15.6 |
13.0 |
20.1 |
|
Gold doré production |
'000 oz |
35.3 |
41.9 |
15.6 |
13.6 |
19.8 |
|
Silver production |
'000 oz |
33.8 |
31.4 |
14.9 |
12.5 |
10.5 |
Ore extraction decreased from Q3 2008 and the 9 months of 2008 due to the closure of the Zhaima deposit in September 2008. In Q3 2009, ore output rose following maintenance work of equipment undertaken in 2009 at Mizek. Extraction at Mizek and Mukur has moved to less mineral rich areas, resulting in the lower gold grade achieved during the 9 months of 2009, compared to the same period in 2008.
Exploration and site development work continues as planned at the Bozymchak Gold Project in Kyrgyzstan, following the completion of the feasibility study at the beginning of 2009.
kazakhmys petroleum
Kazakhmys Petroleum is continuing its work programme at the Eastern Akzhar exploration block. As previously reported, the testing of the first deep well encountered technical difficulties, which are being rectified.
The drilling of the second deep well was completed at the beginning of September 2009 and preparation work is underway to start the testing of the well.
The drilling of a third deep well was started at the end of September. As at 28 October, 2,016 metres out of a projected 5,200 metres had been drilled.
3D seismic data covering the north western part of the licensed area, which was obtained during 2009, is being processed and interpreted. The results are expected to identify a prospective site for future deep well drilling.
Interim Management Statement
MATERIAL eVENTS AND tRANSACTIONS
Sale of 25% of Ekibastuz power plant to Samruk
On 13 October 2009, the Group announced the sale of a 25% stake in its Ekibastuz GRES-1 power plant to the National Welfare Fund Samruk-Kazyna JSC ("Samruk-Kazyna") for a consideration of $339 million in cash, which will primarily be used by Kazakhmys to repay debt. The transaction implies a gross valuation for the Ekibastuz power plant of $1,356 million.
The value of the transaction was determined by reference to the price paid by the Group when it acquired the Ekibastuz power plant in May 2008, plus subsequent investments in the business by Kazakhmys. The transaction follows a Memorandum of Understanding, signed in October 2008, between Kazakhmys and Samruk-Energy JSC, a subsidiary of Samruk-Kazyna, to consider a strategic partnership at Ekibastuz.
The transaction is subject to regulatory consents and approvals and completion is expected by the end of 2009. Kazakhmys will retain management control of Ekibastuz following the transaction.
Negotiation of loan facility
On 13 October 2009, the Group announced that it is in discussion with the China Development Bank and Samruk-Kazyna regarding a potential corporate loan facility of around $2 billion. The loan would help fund the development of the Group's major growth projects.
Letter of credit
On 19 October 2009, the pledge over the ENRC PLC shares, which secured the letter of credit issued in favour of AES Corporation, was removed and replaced with cash collateral. The letter of credit, for a total value of $102 million, arose following the early completion of the Ekibastuz and Maikuben West coal mine management contracts with AES Corporation in March 2009. Following release of the share pledge, all ENRC PLC shares held by the Group are free of any security.
Interim Management Statement
fINANCIAL Performance
Sales volumes
The following table sets out the sales volumes of the major products produced by Kazakhmys Copper:
|
9m 2009 |
9m 2008 |
||
|
Copper cathodes |
'000 t |
246.5 |
238.3 |
|
Copper rod |
'000 t |
6.9 |
31.0 |
|
Copper in concentrate |
'000 t |
20.4 |
2.9 |
|
Total copper products |
'000 t |
273.8 |
272.2 |
|
Zinc metal |
'000 t |
16.8 |
37.2 |
|
Zinc in concentrate |
'000 t |
98.5 |
66.2 |
|
Gold |
'000 oz |
102.9 |
95.0 |
|
Silver |
'000 oz |
12,700 |
12,250 |
Total copper product sales for the 9 months ended 30 September 2009 were in-line with the same period in the prior year. Copper cathodes, sold into China and Europe, benefited from a reduction in finished goods resulting in cathode and rod sales volumes exceeding the level of production by 16.1 kt. In 2008, copper rods were largely sold into China, however the premiums available in 2009 were lower, so sales of copper rods were restricted to meeting local demand. Copper in concentrate sales in 2008 were carried out on a trial basis into China. In 2009, sales of copper concentrate have continued on a monthly basis until August. No further copper concentrate sales have been contracted for 2009 with all copper concentrate expected to be processed into cathode and all material for 2009 has now been contracted and sold.
The zinc smelter was suspended in 2009 with all zinc concentrate now being sold rather than processed further into zinc metal. The sales recorded in the period are the result of running down material at the smelter. Gold and silver sales levels in the 9 months of 2009 have been broadly in-line with production volumes.
Interim Management Statement
FINANCIAL PERFORMANCE (CONTINUED)
Commodity Prices
The following table sets out the average realised prices for the major commodities:
|
9m 2009 |
9m 2008 |
|||
|
Copper1 |
$/tonne |
4,580 |
8,050 |
|
|
Zinc |
$/tonne |
1,100 |
2,043 |
|
|
Gold |
$/tr.oz |
924 |
910 |
|
|
Silver |
$/tr.oz |
13.8 |
16.5 |
|
|
Electricity tariff2 |
KZT/kWh |
3.0 |
2.5 |
|
1 The realised price excludes any impact from the copper hedges, mentioned below.
2 2008 tariff is in respect of the period from acquisition on 29th May 2008.
The following table sets out the average LME/LBMA prices:
|
9m 2009 |
9m 2008 |
||
|
Copper |
$/tonne |
4,650 |
7,966 |
|
Zinc |
$/tonne |
1,469 |
2,099 |
|
Gold |
$/tr.oz |
930 |
892 |
|
Silver |
$/tr.oz |
13.7 |
16.6 |
Realised prices differ from the average market prices, because the timing of sales tends not to occur evenly over the period. In 2009, the sale of zinc metal mainly took place in first the quarter, while the LME price shown above is the average for the nine months. Premiums or discounts to metal exchange prices, agreed with customers, also impact realised average prices.
The electricity tariff is the average realised price of power sales from Ekibastuz GRES-1 to Kazakhstan and Russia. The tariff within Kazakhstan has risen significantly during 2009, which reflects improving demand and a move by the authorities to raise tariff ceilings in order to encourage investment in the sector.
Copper hedging
As previously announced, the Group entered into a hedging programme over production of 8.5 kt per month during 2009. These hedges establish a price protecting floor at $3,045 per tonne and a cap at $4,034 per tonne, with the contracts expiring by 31 December 2009. The Group has made net settlements under these contracts of $62.5 million for the nine months to 30 September 2009. The market value of the unsettled portion of the contracts, as at 30 September 2009, was $(54.1) million.
Exchange rates
The KZT/$ exchange rate at 30 September 2009 was KZT 150.95 compared to KZT 150.41 at 30 June 2009, a movement of 0.4%. The average KZT/$ exchange rate for the nine months to 30 September 2009 was KZT 146.73 compared to an average rate of KZT 120.34 for the
Interim Management Statement
FINANCIAL PERFORMANCE (CONTINUED)
comparative period in 2008, a depreciation of 21.9% due to the devaluation of the KZT in February 2009.
The weakening of the KZT against the US dollar gives rise to foreign currency translation losses on the carrying value of net assets, which on consolidation are charged directly to equity.
The devaluation has a beneficial impact on the profitability of the Kazakhmys Copper mining business as its revenues are mostly based on US dollar metals prices and some of its costs are denominated in local currency. However, there is an adverse impact for Kazakhmys Power since its revenues are denominated in tenge.
Interim Management Statement
fINANCIAL POSITION
Except as described in this statement, there has been no significant change in the financial position of the Group since 30 June 2009.
Net debt
The net debt position of the Group, which consists of cash, current deposits and borrowings, amounted to $1,398 million at 30 September 2009, compared to $1,568 million at 30 June 2009.
Cash and deposits increased to $541 million at 30 September 2009 from $491 million at 30 June 2009. Cash generation benefited from strengthening commodity prices and higher power sales during the quarter which offset debt repayments on the Group's principal debt facility of $131 million.
The Group's $150 million standby revolving credit facility remains undrawn.
Holding in ENRC PLC
The Group's holding of 334,824,860 shares in ENRC PLC had a market value of $4,690 million based on a share price of 877 pence on 30 September 2009, compared to a value of $3,620 million at 30 June 2009.
In October 2009, the Group received a dividend of $20 million from ENRC PLC.
Kazakhmys Copper Production Appendix
Copper MINing
|
Zhezkazgan complex |
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
|
|
North |
ore ('000 t) |
2,883 |
2,712 |
970 |
978 |
1,050 |
|
grade (%) |
0.76 |
0.76 |
0.76 |
0.74 |
0.77 |
|
|
East |
ore ('000 t) |
3,836 |
4,010 |
1,292 |
1,285 |
1,330 |
|
grade (%) |
0.65 |
0.80 |
0.66 |
0.65 |
0.76 |
|
|
South |
ore ('000 t) |
3,899 |
2,212 |
1,355 |
1,389 |
616 |
|
grade (%) |
0.69 |
0.65 |
0.68 |
0.69 |
0.61 |
|
|
West |
ore ('000 t) |
69 |
1,724 |
- |
- |
597 |
|
grade (%) |
0.72 |
0.53 |
- |
- |
0.58 |
|
|
Stepnoy |
ore ('000 t) |
2,550 |
2,223 |
847 |
858 |
742 |
|
grade (%) |
0.81 |
0.82 |
0.81 |
0.80 |
0.86 |
|
|
Annensky |
ore ('000 t) |
2,418 |
2,508 |
815 |
747 |
701 |
|
grade (%) |
0.75 |
0.88 |
0.62 |
0.79 |
0.97 |
|
|
Zhomart |
ore ('000 t) |
2,433 |
2,484 |
848 |
796 |
824 |
|
grade (%) |
1.81 |
1.30 |
1.86 |
1.84 |
1.58 |
|
|
Complex total |
ore ('000 t) |
18,088 |
17,873 |
6,127 |
6,053 |
5,860 |
|
Complex average |
grade (%) |
0.87 |
0.83 |
0.86 |
0.87 |
0.88 |
|
Balkhash complex |
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
|
|
Kounrad |
ore ('000 t) |
- |
829 |
- |
- |
335 |
|
grade (%) |
- |
0.28 |
- |
- |
0.28 |
|
|
Sayak I, III |
ore ('000 t) |
1,281 |
1,293 |
417 |
450 |
510 |
|
grade (%) |
1.03 |
1.13 |
1.04 |
0.97 |
1.22 |
|
|
Shatyrkul |
ore ('000 t) |
405 |
232 |
134 |
139 |
85 |
|
grade (%) |
2.29 |
2.72 |
2.32 |
2.29 |
3.03 |
|
|
Complex total |
ore ('000 t) |
1,686 |
2,354 |
551 |
589 |
930 |
|
Complex average |
grade (%) |
1.33 |
0.99 |
1.35 |
1.28 |
1.05 |
Kazakhmys Copper Production Appendix
Copper MINing (continued)
|
East region |
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
|
|
Nikolayevsky |
ore ('000 t) |
413 |
377 |
163 |
150 |
185 |
|
grade (%) |
1.93 |
1.62 |
1.33 |
2.18 |
1.50 |
|
|
Artemyevsky |
ore ('000 t) |
922 |
1,138 |
290 |
299 |
402 |
|
grade (%) |
1.63 |
1.69 |
1.70 |
1.58 |
1.69 |
|
|
Irtyshsky |
ore ('000 t) |
360 |
363 |
128 |
105 |
126 |
|
grade (%) |
1.51 |
1.39 |
1.54 |
1.49 |
1.44 |
|
|
Belousovsky |
ore ('000 t) |
- |
177 |
- |
- |
55 |
|
grade (%) |
- |
0.96 |
- |
- |
1.04 |
|
|
Orlovsky |
ore ('000 t) |
1,222 |
1,146 |
408 |
408 |
400 |
|
grade (%) |
4.39 |
4.91 |
4.44 |
4.31 |
4.90 |
|
|
Yubileyno-Snegirikhinsky |
ore ('000 t) |
462 |
375 |
135 |
173 |
154 |
|
grade (%) |
3.22 |
3.29 |
3.26 |
3.30 |
3.19 |
|
|
Region total |
ore ('000 t) |
3,379 |
3,576 |
1,124 |
1,135 |
1,322 |
|
Region average |
grade (%) |
2.87 |
2.82 |
2.81 |
2.89 |
2.76 |
|
Karaganda region |
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
|
|
Nurkazgan (West, North) |
ore ('000 t) |
1,169 |
519 |
512 |
471 |
170 |
|
grade (%) |
0.86 |
0.68 |
0.78 |
1.00 |
0.42 |
|
|
Akbastau |
ore ('000 t) |
- |
1,723 |
- |
- |
706 |
|
grade (%) |
- |
2.55 |
- |
- |
2.48 |
|
|
Kosmurun |
ore ('000 t) |
- |
299 |
- |
- |
120 |
|
grade (%) |
- |
2.73 |
- |
- |
2.94 |
|
|
Abyz |
ore ('000 t) |
89 |
362 |
84 |
5 |
127 |
|
grade (%) |
1.51 |
1.72 |
1.44 |
2.78 |
1.63 |
|
|
Region total |
ore ('000 t) |
1,258 |
2,903 |
596 |
476 |
1,123 |
|
Region average |
grade (%) |
0.90 |
2.13 |
0.87 |
1.02 |
2.12 |
|
Total |
ore ('000 t) |
24,411 |
26,706 |
8,398 |
8,253 |
9,235 |
|
Average |
grade (%) |
1.18 |
1.25 |
1.15 |
1.18 |
1.32 |
Kazakhmys Copper Production Appendix
Copper processing
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
||
|
Zhezkazgan complex |
||||||
|
Copper concentrate |
'000 t |
369.2 |
360.9 |
119.4 |
121.8 |
126.1 |
|
Copper in concentrate |
'000 t |
136.8 |
129.5 |
45.7 |
45.9 |
44.6 |
|
Balkhash complex |
||||||
|
Copper concentrate |
'000 t |
144.4 |
203.1 |
50.7 |
47.4 |
96.0 |
|
Copper in concentrate |
'000 t |
26.0 |
28.9 |
9.4 |
8.3 |
13.3 |
|
East region |
||||||
|
Copper concentrate |
'000 t |
450.7 |
427.7 |
148.1 |
147.1 |
150.5 |
|
Copper in concentrate |
'000 t |
82.1 |
81.2 |
26.8 |
27.8 |
28.9 |
|
Karaganda region |
||||||
|
Copper concentrate |
'000 t |
198.3 |
178.4 |
81.7 |
68.9 |
70.4 |
|
Copper in concentrate |
'000 t |
16.8 |
24.4 |
6.0 |
6.4 |
10.0 |
|
Total own processed |
||||||
|
Copper concentrate |
'000 t |
1,162.6 |
1,170.1 |
399.9 |
385.2 |
443.0 |
|
Copper in concentrate |
'000 t |
261.7 |
264.0 |
87.9 |
88.4 |
96.8 |
|
Own ore processed by third parties |
||||||
|
Copper concentrate |
'000 t |
24.5 |
18.9 |
6.3 |
10.1 |
7.4 |
|
Copper in concentrate |
'000 t |
6.2 |
5.2 |
1.6 |
2.6 |
2.0 |
|
Total own |
||||||
|
Copper concentrate |
'000 t |
1,187.1 |
1,189.0 |
406.2 |
395.3 |
450.4 |
|
Copper in concentrate |
'000 t |
267.9 |
269.2 |
89.5 |
91.0 |
98.8 |
|
Purchased concentrate |
||||||
|
Copper concentrate |
'000 t |
7.6 |
78.7 |
7.5 |
- |
24.8 |
|
Copper in concentrate |
'000 t |
2.0 |
21.9 |
2.0 |
- |
6.9 |
|
Total copper in concentrate |
'000 t |
269.9 |
291.1 |
91.5 |
91.0 |
105.7 |
Kazakhmys Copper Production Appendix
Copper smelter / refinery - copper cathodes production
|
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
||
|
Zhezkazgan smelter |
||||||
|
Own concentrate |
'000 t |
84.1 |
131.5 |
28.5 |
24.5 |
47.8 |
|
Purchased concentrate |
'000 t |
- |
1.2 |
- |
- |
0.9 |
|
Sub - total |
'000 t |
84.1 |
132.7 |
28.5 |
24.5 |
48.7 |
|
Tolling |
'000 t |
- |
- |
- |
- |
- |
|
Total including tolling |
'000 t |
84.1 |
132.7 |
28.5 |
24.5 |
48.7 |
|
Balkhash smelter |
||||||
|
Own concentrate |
'000 t |
148.6 |
117.8 |
50.0 |
52.8 |
44.4 |
|
Purchased concentrate |
'000 t |
4.6 |
22.0 |
0.9 |
- |
5.2 |
|
Sub - total |
'000 t |
153.2 |
139.8 |
50.9 |
52.8 |
49.6 |
|
Tolling |
'000 t |
- |
0.1 |
- |
- |
- |
|
Total including tolling |
'000 t |
153.2 |
139.9 |
50.9 |
52.8 |
49.6 |
|
Grand total |
'000 t |
237.3 |
272.6 |
79.4 |
77.3 |
98.3 |
Kazakhmys Copper Production Appendix
By-products Mining - Zinc
|
ZINC |
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
|
|
East region |
||||||
|
Nikolayevsky |
grade (%) |
2.04 |
3.68 |
2.20 |
1.77 |
4.10 |
|
Artemyevsky |
grade (%) |
4.90 |
5.30 |
4.34 |
4.70 |
5.90 |
|
Irtyshsky |
grade (%) |
3.64 |
3.62 |
3.61 |
3.68 |
4.03 |
|
Belousovsky |
grade (%) |
- |
1.92 |
- |
- |
1.79 |
|
Orlovsky |
grade (%) |
4.66 |
4.55 |
4.86 |
4.62 |
4.00 |
|
Yubileyno-Snegirikhinsky |
grade (%) |
2.43 |
3.57 |
2.47 |
2.22 |
3.04 |
|
Region average |
grade (%) |
3.99 |
4.37 |
3.91 |
3.81 |
4.39 |
|
Karaganda region |
||||||
|
Kosmurun |
grade (%) |
- |
3.93 |
- |
- |
3.64 |
|
Akbastau |
grade (%) |
- |
0.67 |
- |
- |
0.39 |
|
Abyz |
grade (%) |
4.89 |
3.49 |
4.84 |
5.64 |
3.67 |
|
Region average |
grade (%) |
4.89 |
1.51 |
4.84 |
5.64 |
1.23 |
|
Overall average |
grade (%) |
4.02 |
3.22 |
3.98 |
3.82 |
3.07 |
|
Zinc in concentrate |
('000 t) |
108.8 |
104.6 |
32.4 |
36.6 |
38.2 |
|
Zinc metal |
('000 t) |
8.6 |
35.2 |
- |
- |
10.6 |
Kazakhmys Copper Production Appendix
By-products Mining - Silver
|
SILVER |
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
|
|
Zhezkazgan complex |
||||||
|
North |
grade (g/t) |
11.64 |
9.94 |
12.04 |
11.11 |
8.57 |
|
East |
grade (g/t) |
18.93 |
18.62 |
18.54 |
20.25 |
17.73 |
|
South |
grade (g/t) |
17.89 |
13.01 |
17.66 |
17.17 |
13.86 |
|
West |
grade (g/t) |
17.01 |
14.49 |
- |
-- |
16.82 |
|
Stepnoy |
grade (g/t) |
9.89 |
8.93 |
13.43 |
8.58 |
8.74 |
|
Annensky |
grade (g/t) |
20.47 |
16.77 |
16.94 |
18.99 |
21.35 |
|
Zhomart |
grade (g/t) |
8.15 |
7.58 |
9.25 |
7.08 |
8.38 |
|
Region average |
grade (g/t) |
15.02 |
13.21 |
15.11 |
14.52 |
13.57 |
|
Balkhash complex |
||||||
|
Kounrad |
grade (g/t) |
- |
0.73 |
- |
- |
0.47 |
|
Sayak I, III |
grade (g/t) |
5.17 |
5.22 |
5.22 |
4.80 |
5.35 |
|
Shatyrkul |
grade (g/t) |
2.33 |
2.09 |
2.30 |
1.93 |
2.23 |
|
Region average |
grade (g/t) |
4.49 |
3.33 |
4.51 |
4.12 |
3.31 |
|
East region |
||||||
|
Nikolayevsky |
grade (g/t) |
21.65 |
36.69 |
24.54 |
14.04 |
37.98 |
|
Artemyevsky |
grade (g/t) |
89.36 |
103.09 |
76.55 |
88.55 |
124.89 |
|
Irtyshsky |
grade (g/t) |
58.67 |
54.68 |
58.34 |
58.38 |
57.11 |
|
Belousovsky |
grade (g/t) |
35.77 |
28.08 |
|||
|
Orlovsky |
grade (g/t) |
64.27 |
61.74 |
64.02 |
62.60 |
55.82 |
|
Yubileyno-Snegirikhinsky |
grade (g/t) |
27.84 |
43.15 |
25.75 |
27.41 |
31.94 |
|
Region average |
grade (g/t) |
60.34 |
68.31 |
56.29 |
57.28 |
70.51 |
|
Karaganda region |
||||||
|
Nurkazgan |
grade (g/t) |
2.40 |
2.17 |
1.83 |
3.18 |
2.03 |
|
Akbastau |
grade (g/t) |
- |
24.03 |
- |
- |
20.95 |
|
Kosmurun |
grade (g/t) |
- |
43.55 |
- |
- |
31.14 |
|
Abyz |
grade (g/t) |
59.66 |
46.45 |
60.18 |
50.96 |
52.95 |
|
Region average |
grade (g/t) |
6.47 |
24.94 |
10.08 |
3.68 |
22.78 |
|
Overall average |
grade (g/t) |
20.12 |
20.99 |
19.57 |
19.04 |
21.81 |
|
Silver in concentrate |
('000 oz) |
12,733 |
13,404 |
4,278 |
4,066 |
4,617 |
|
Own concentrate |
('000 oz) |
11,071 |
9,815 |
3,689 |
3,561 |
3,962 |
|
Own concentrate processed by 3rd parties |
('000 oz) |
1,443 |
1,374 |
370 |
505 |
- |
|
Purchased concentrate |
('000 oz) |
219 |
2,215 |
219 |
- |
655 |
|
Silver metal |
('000 oz) |
13,196 |
12,123 |
4,051 |
4,708 |
3,794 |
Kazakhmys Copper Production Appendix
By-products Mining - gold
|
GOLD |
9m 2009 |
9m 2008 |
Q3 2009 |
Q2 2009 |
Q3 2008 |
|
|
Balkhash complex |
||||||
|
Sayak I, III |
grade (g/t) |
0.34 |
0.38 |
0.29 |
0.29 |
0.42 |
|
Shatyrkul |
grade (g/t) |
0.40 |
0.48 |
0.37 |
0.39 |
0.51 |
|
Region average |
grade (g/t) |
0.36 |
0.40 |
0.31 |
0.32 |
0.43 |
|
East region |
||||||
|
Nikolayevsky |
grade (g/t) |
0.26 |
0.39 |
0.28 |
0.13 |
0.40 |
|
Artemyevsky |
grade (g/t) |
1.09 |
1.18 |
0.86 |
1.04 |
1.44 |
|
Irtyshsky |
grade (g/t) |
0.38 |
0.36 |
0.37 |
0.38 |
0.38 |
|
Belousovsky |
grade (g/t) |
- |
0.38 |
- |
- |
0.32 |
|
Orlovsky |
grade (g/t) |
0.96 |
1.02 |
1.01 |
0.97 |
0.90 |
|
Yubileyno-Snegirikhinsky |
grade (g/t) |
0.43 |
0.58 |
0.36 |
0.42 |
0.39 |
|
Region average |
grade (g/t) |
0.78 |
0.86 |
0.72 |
0.74 |
0.86 |
|
Karaganda region |
||||||
|
Nurkazgan |
grade (g/t) |
0.29 |
0.29 |
0.28 |
0.35 |
0.29 |
|
Akbastau |
grade (g/t) |
- |
0.82 |
- |
- |
0.72 |
|
Kosmurun |
grade (g/t) |
- |
2.09 |
- |
- |
0.93 |
|
Abyz |
grade (g/t) |
5.53 |
4.14 |
5.54 |
5.38 |
5.18 |
|
Region average |
grade (g/t) |
0.67 |
1.27 |
1.03 |
0.40 |
1.18 |
|
Overall average |
grade (g/t) |
0.64 |
0.92 |
0.70 |
0.55 |
0.90 |
|
Gold in concentrate |
('000 oz) |
104.1 |
94.4 |
38.0 |
34.4 |
34.6 |
|
Own concentrate |
('000 oz) |
102.4 |
73.3 |
34.2 |
30.8 |
27.7 |
|
Own concentrate processed by 3rd party |
('000 oz) |
9.8 |
- |
2.1 |
3.6 |
- |
|
Purchased concentrate |
('000 oz) |
1.7 |
21.1 |
1.7 |
- |
6.9 |
|
Gold output |
('000 oz) |
104.1 |
92.1 |
36.2 |
38.9 |
29.4 |
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