Q4 and Full Year Production Report

31 January 2013

KAZAKHMYS PLC PRODUCTION REPORT FOR 12 MONTHS AND THE FOURTH QUARTER ENDED 31 DECEMBER 2012

l Copper cathode production in line with guidance for the year

§ 12% increase in ore extraction partly offset by anticipated decline in grade

§ Total cathode production of 294 kt for the full year

§ Production from own concentrate of 292 kt

l By-product output in line with full year targets for all metals

§ Zinc in concentrate production of 152 kt

§ Silver ahead of guidance at 12,643 koz, reflecting higher than anticipated grade

§ Total gold production of 129 koz

l Continued strong performance from Kazakhmys Power

§ 13% increase in net power generated at Ekibastuz GRES-1, supported by continuing growth in demand and increase in available capacity

§ Commissioning of sixth unit completed in Q4 2012, raising capacity by 20% to 3,000 MW

Oleg Novachuk, Chief Executive Officer, said: "We have met our production targets for the fifth consecutive year, and I would like to thank all of my colleagues for helping us to achieve this exceptional result. Copper production in 2013 should remain at a similar level to 2012 and annual sales contracts for the year have already been signed. I look forward to giving further updates on 2013 and in particular the progress on our major growth projects, Bozshakol and Aktogay, at our results on 28 February."

For further information please contact:

REGISTERED OFFICE

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

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

It is the largest copper producer in Kazakhstan and one of the top worldwide with 16 operating mines, 10 concentrators and 2 copper smelters. Kazakhmys Mining's operations are fully integrated from mining ore through to the production of finished copper cathode and rod. Total copper cathode equivalent produced in 2012 from own ore was 292 thousand tonnes. Production is backed by a captive power supply and significant rail infrastructure.

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

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

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) and Hong Kong Stock Exchange (HKSE). It had revenues from continuing operations of $3.6 billion in 2011 with an operating profit of $1.2 billion. The Group employs around 60,000 people, principally in Kazakhstan. The Group's strategic aim is to optimise its current operations, deliver its major growth projects and to participate in the development of the significant natural resource opportunities in Central Asia.

Copper Summary

1Includes copper cathode converted into rod.

Ore output increased by 12% in 2012 to 37,507 kt, with an increase in the Central Region due to the recommissioning of Konyrat mine in June 2012 and a full year of output from Akbastau mine, which was re-opened in the second half of 2011. Ore output in the Zhezkazgan and East Regions was broadly in line with the previous year.

Ore extraction declined by 8% in Q4 2012 to 9,608 kt, compared to the previous quarter. Output from Konyrat mine was reduced while upgrade work was carried out at Balkhash concentrator. The Zhezkazgan and East Regions were both affected by equipment availability.

The average copper grade declined in line with guidance, at 0.95% in 2012 from 1.01% in the previous year. This was due to the impact of the relatively low grade Konyrat mine and lower grade extraction from Orlovsky mine.

In Q4 2012 the average copper grade increased to 0.96%, as output from Konyrat mine was reduced.

Copper in mined ore increased by 6% in 2012 compared to 2011, as higher ore extraction volumes offset the lower grade. Own copper in concentrate production of 303.7 kt remained in line with the comparative period, with the current year impacted by reduced recovery rates due to the processing of lower grade material and an increase in the volume of stockpiled ore.

Own copper in concentrate production in Q4 2012 was in line with Q3 2012, as the higher grade broadly offset the lower ore volume and assisted recovery rates.

Copper cathode production from own concentrate of 292.2 kt in 2012 was 2% below the comparative year, which benefited from a release of work in progress. Own cathode production was in line with the annual target of between 285 kt and 295 kt. Sales will be below production due to a rebuild of inventory, which was low at the start of 2012, and an increase of goods in transit at the year end.

Other Metals Summary

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

2 Includes slimes from purchased concentrate.

Zinc (by-product)

Zinc in concentrate production in 2012 increased by 9% to 151.6 kt. There was a 25% increase in the output of zinc bearing ore, which offset the decline in zinc grade and led to a 17% increase in zinc in mined ore. During 2012, zinc bearing ore was stockpiled at Akbastau containing approximately 9 kt of zinc, which is unlikely to be processed in the near future pending further technical studies. In addition, ore from Artemyevsky mine was stockpiled ahead of the upgrade of the Nikolayevsky concentrator.

In Q4 2012 the production of zinc in concentrate decreased by 4% compared to the previous quarter, as the processing of material, built up in Q3 2012, offset the 18% reduction in zinc in ore mined.

Silver (by-product)

Own production of silver during 2012 was 12,629 koz, 4% below the comparative period. The 6% increase in silver in ore mined in 2012, compared to 2011, was more than offset by a contribution from a significant release of work in progress in 2011. 

In Q4 2012 own production of silver increased by 8% to 3,637 koz, compared to Q3 2012, despite an 11% decrease in silver in ore mined. The decrease in silver in ore mined was more than offset by a temporary increase in recovery rates. A 20% increase in silver in concentrate output in Q4 2012 compared to Q3 2012 is not reflected in own silver production due to an increase in work in progress at the year end.

Other Metals Summary

Gold (by-product)

Gold output in 2012 decreased by 2% to 115.9 koz compared to the previous year. In 2012, there was a 15% increase in gold in ore mined. Output was impacted by the stockpiling of ore in 2012, compared to the processing of stockpiled ore in 2011, and changes to levels of work in progress at the precious metals refinery.

The increase in gold output in Q4 2012 to 37.0 koz, compared to the previous quarter, was due to a greater contribution from the release of work in progress, built up in the first half of the year.

Gold (primary production)

Gold (primary production) relates to the output from mines previously included within Kazakhmys Gold.

Gold output decreased to 13.1 koz, a reduction of 60% compared to the previous year. Extraction at Central Mukur mine stopped in June 2012 and mining operations at Mizek finished in November 2010. Output in the second half of 2012 was derived from the processing of previously mined ore and will continue to decline.

Kazakhmys Mining Review by Region

Ore extraction of 22,601 kt in 2012 was marginally below the previous year. There was a re-allocation of sections between East, West and Annensky mines, in order to improve operational efficiency. The combined output from the three mines fell by 764 kt in 2012, reflecting the depletion at Annensky, where some sections were permanently closed in July 2012, and the lack of availability of rolling stock at the start of the year. This decrease was partially offset by a 605 kt increase in output from North mine, where new operations commenced at Itauz open pit in October 2012.

Ore extraction in Q4 2012 was in line with Q3 2012, as the additional output from Itauz was offset by reduced output from several mines in the region.

The average copper grade achieved in Q4 2012 rose to 0.75% from 0.71% in Q3 2012. This increase was due to a move to higher grade sections at South mine and a relatively higher grade at Itauz open pit.

The average copper grade achieved over 2012 was in line with the previous year, although copper in concentrate production decreased by 4% to 138.2 kt due to lower recovery rates at the concentrators.

Copper in concentrate production in Q4 2012 was in line with Q3 2012. The decrease in recovery rates was offset by a higher volume of metal in ore mined and processed in the quarter compared to Q3 2012.

Kazakhmys Mining Review by Region

Ore extraction of 10,199 kt in 2012 was 74% above the previous year. The increase in output was due to the reopening of Konyrat mine in June 2012 and a full year's contribution from Akbastau mine, where operations recommenced in the second half of 2011.

Ore output in Q4 2012 decreased by 16% to 2,912 kt, compared to Q3 2012. Ore output was reduced at Konyrat, in order to avoid unnecessary stockpiling, while upgrades were carried out at Balkhash concentrator. Improved equipment availability at Nurkazgan mine allowed a 29% increase in output compared to Q3 2012.

The average copper grade in 2012 decreased to 0.84% from 0.99% in the previous year. The decline was due to higher output from the relatively low grade Konyrat mine (0.29%) and a decline in grade at Nurkazgan mine, where operations moved to less mineral rich areas. The decline was partially offset by increased extraction of ore from the higher grade Akbastau mine.

Higher ore volumes led to a 49% increase in metal in ore mined in 2012 compared to the prior year. Production of copper in concentrate rose by only 26%, as output was impacted by the stockpiling of ore and lower recovery rates due to the processing of lower grade material.

During 2012, 629 kt of ore mined at Akbastau was stockpiled, containing approximately 6 kt of copper and 9 kt of zinc, which is unlikely to be processed in the near future pending further technical studies.

Copper in concentrate production in Q4 2012 was in line with the previous quarter. An 8% decrease in metal in ore mined during the quarter, was offset by an increase in recovery rates due to higher grade material.

Kazakhmys Mining Review by Region

1Excludes concentrate processed by third parties.

Ore extraction in the East Region during 2012 was in line with the previous year. Production rose at Artemyevsky mine following an improvement in backfilling equipment and at Yubileyno-Snegirikhinsky mine due to improved availability of equipment. Both mines benefited from the transfer of equipment and personnel from Nikolayevsky mine, where operations ceased in Q3 2012 as the mine became uneconomic.

Ore output in Q4 2012 declined by 9% to 1,054 kt compared to Q3 2012, mainly due to mining equipment downtime at Orlovsky and Artemyevsky mines, which has now been resolved.

The average copper grade in 2012 was 2.33%, compared to 2.44% in 2011. This decrease was mainly due to lower grades at Orlovsky mine, partially offset by the suspension of output from Nikolayevsky, which was mining at a grade of 0.83% over the year.

The average copper grade in Q4 2012 of 2.46% was above the previous quarter, benefiting from temporarily mining at higher grade sections at Orlovsky and Artemyevsky mines.

Copper in concentrate output during 2012 was 9% below the comparative period following a 7% reduction of metal in ore processed. This reduction reflects a 4% decrease in metal in ore mined in the Region. Also in 2012, around 3.2 kt of ore from Artemyevsky mine was stockpiled, which will be processed at Nikolayevsky concentrator during 2013, as the plant is undergoing an upgrade to enable it to process higher quantities of complex polymetallic ore at higher recovery rates.

Production of copper in concentrate in Q4 2012 was 2% below the previous quarter, with a 3% decrease in metal in ore mined.

Kazakhmys Power Review

1Results shown are for 100% of the business.

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

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

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

Ekibastuz GRES-1

Net power generated at Ekibastuz GRES-1 during 2012 increased by 13% compared to 2011. The increase in output was driven by strong demand in the domestic market.

In Q4 2012, net power generated increased by 18% compared to the previous quarter. This increase was mainly due to higher seasonal demand and the commissioning of Unit 8, which increased the capacity of the power station from 2,500 MW to 3,000 MW.

The weighted average realised tariff for electricity at Ekibastuz GRES-1 in 2012 was 6.01 KZT/kWh, an increase of 12% compared to the previous year. This increase reflects the strong level of domestic demand and the higher ceiling tariff of 6.50 KZT/kWh, approved from April 2012, compared to a ceiling tariff of 5.60 KZT/kWH for 2011 and the first quarter of 2012. The average realised tariff was slightly below the average ceiling tariff for Kazakhstan, as 5% of net electricity generated during 2012 was sold to Russia at a lower tariff. In 2011, 10% of net electricity generated was exported to Russia.

The weighted average realised tariff for electricity in Q4 2012 was 6.15 KTZ/kwh, a reduction of 2% compared to Q3 2012. The decrease in realised tariff reflects a change in sales mix, with an increase in sales to Russia at a lower tariff.

Net dependable capacity achieved during 2012 increased by 88 MW to 2,287 MW. The increase was due to the commissioning of an electrostatic precipitator at Unit 6 and the commissioning of Unit 8 during Q4 2012. The commissioning of Unit 8 lifted net dependable capacity in Q4 2012 by 18% to 2,551 MW, compared to 2,153 MW in Q3 2012.

Kazakhmys Power Review

Captive power stations

Net power generated at the captive stations for 2012 was in line with the previous year. Generation levels remain close to capacity. Net power generation in Q4 2012 increased by 22% compared to Q3 2012 with the completion of maintenance work at the end of October 2012 and the commencement of the heating season.

Internal consumption in 2012 increased by 8% compared to 2011 at the expense of external sales. This increase was mainly driven by higher demand from operations in the East Region, which decreased purchases from third party power stations as internal tariffs were more favourable.

The increase in internal sales in Q4 2012 by 18% compared to Q3 2012 was driven by a seasonal increase in internal consumption, supported by higher generation capacity following the completion of the maintenance period.

In April 2012, the ceiling tariff for electricity sold by the captive power stations to external customers was raised to 4.55 KZT/kWh. The weighted average realised tariff during the 12 months of 2012 was 4.23 KZT/kWh, an increase of 21% compared to 2011.

The weighted average realised tariff for electricity in Q4 2012 was consistent with Q3 2012 and was at the level of the approved ceiling tariff.

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

1 Includes slimes from purchased concentrate.

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

Kazakhmys Mining Production Appendix

1 Includes slimes from purchased concentrate.