Q4 Production Report

30 January 2014

KAZAKHMYS PLC PRODUCTION REPORT FOR 12 MONTHS AND THE FOURTH QUARTER ENDED 31 DECEMBER 2013

l Copper cathode equivalent output at top end of guidance

§ Production of 294 kt, supported by an increase in ore extraction and grades

l All major by-product output above full year targets

§ Silver output of 14 Moz, benefiting from a significant release of work in progress

§ Zinc in concentrate production of 134 kt for the year

§ Total gold output of 108 koz

l Kazakhmys Power

§ Sale of Ekibastuz GRES-1 approved by Kazakhmys shareholders on 7 January 2014

§ Net power generated by captive power stations increased by 3% to 5,723 GWh, with a 13% increase in external sales to 2,366 GWh

l Bozymchak project

§ Concentrator to enter commissioning phase during Q1 2014

Oleg Novachuk, Chief Executive Officer, said: "Whilst 2013 was a challenging year, it was the sixth consecutive year in which we met our annual production targets. Copper production was at the top end of the range set at the start of the year, as part of our drive to focus on copper units and mitigate cost pressures. For the first time we are reporting ore output from Bozymchak, as pre-production mining has commenced and we move towards commissioning the concentrator. We have made considerable progress over the year on divesting our non-core assets, refocusing the group on our core copper operations and growth projects. I look forward to giving a full update on our financial results and the outlook for 2014 on 27 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, 8 concentrators and a copper smelter. Kazakhmys Mining's operations are fully integrated from mining ore through to the production of finished copper cathode and rod. Total copper cathode equivalent output from own ore was 294 kt in 2013. 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 2013, it produced 134 kt of zinc in concentrate. The Group is amongst the largest global silver producers with output of 14 Moz in 2013.

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

The Group is listed on the London Stock Exchange, the Kazakhstan Stock Exchange (KASE) and the Hong Kong Stock Exchange (HKSE). It had revenues from continuing operations of $3.4 billion in 2012 and a Group EBITDA of $1.9 billion. The Group employs around 58,000 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

1 Includes copper cathode converted into rod, excluding tolling.

2 Copper cathode equivalent of copper in concentrate sold.

Ore output rose by 4% in 2013 to 39,191 kt, led by an increase in the Central Region with the ramp up of output from Konyrat and Nurkazgan mines, which together contributed an additional 2,531 kt of ore. The increase more than offset a reduction in ore output in the Zhezkazgan Region, where activity was reduced in high cost areas and as production ceased at some sections of Annensky mine due to depletion in 2012.

The average copper grade of 0.99% achieved in 2013 was above the comparative period as activity moved to higher grade sections, particularly in the Zhezkazgan Region, in order to raise metal output. The combination of higher ore volume and grade led to an 8% increase in copper in ore mined compared to the prior year.

The average copper grade achieved in Q4 2013 was 1.03%, above the previous quarter and reflecting the continued focus on higher grade sections in order to maintain copper output and mitigate cost pressures.

In 2013, the output of copper in concentrate from own material increased by 4% from the prior year to 314.6 kt. The higher level of copper in ore mined was partially offset by an increase in stockpiles during the year and a lower contribution from the reprocessing of waste material.

During the year, 640 kt of ore extracted from Akbastau mine was stockpiled, containing approximately 8 kt of copper (2012: 6 kt), which is unlikely to be processed in the near future.

Copper in concentrate output from own material was 78.1 kt in Q4 2013, in line with the previous quarter, benefiting from an increase in recovery rates due to the processing of higher grade material during the quarter.

With the suspension of the smelter and refinery in Zhezkazgan, material is now sold to third parties in the form of concentrate. The copper cathode equivalent and related by-product, principally silver, arising from this material is only recognised 'as produced' when the concentrate is transferred to the customer. Copper and silver granule equivalents are recognised at recovery rates of 96.5% and 90% respectively. In 2014, it is likely that concentrate sales will account for around 40% of total copper output.

Copper Summary

In 2013, 31.5 kt of copper cathode equivalent was sold as concentrate, following the suspension of the Zhezkazgan smelter in Q3 2013.

In 2013, copper cathode equivalent production from own concentrate of 294.0 kt was at the top end of market guidance and in line with the prior year. The higher level of copper in concentrate produced in 2013 was offset by a greater release of work in progress in 2012. Copper cathode output in 2013 also benefited from a 7.7 kt release of work in progress at the Zhezkazgan smelter, due to its suspension in Q3 2013.

Copper cathode equivalent production from own concentrate in Q4 2013 was 12% above the prior quarter, impacted by copper in concentrate sales which were in transit at the end of Q3 2013 and recognised in Q4 2013. Production was also lifted by a release of work in progress in Q4 2013.

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 metal in ore decreased by 9% in 2013 reflecting lower zinc bearing ore output and grades, particularly at Artemyevsky mine, in the East Region. Zinc in concentrate output reduced by 12% to 134.1 kt, due to a corresponding 13% reduction in zinc processing at the concentrators. During 2013, zinc bearing ore was stockpiled at Akbastau containing approximately 11 kt of zinc metal (2012: 9 kt), which is unlikely to be processed in the near future.

In Q4 2013, the production of zinc in concentrate decreased by 5% compared to the previous quarter, impacted by lower zinc output from Artemyevsky mine.

Silver (by-product)

There was an underlying 3% decrease in silver in ore mined, mainly due to lower grades in the East Region. Silver output increased in 2013, benefiting from a reduction of work in progress, reversing an increase during 2012. Higher recovery rates were also achieved when processing silver material during the year.

In Q4 2013, silver output increased by 20% from the previous quarter. This increase reflects the recognition of silver in copper concentrate sales which were in transit at the end of Q3 2013 and a higher level of work in progress released in Q4 2013. Following the suspension of the Zhezkazgan smelter, mentioned earlier, copper in concentrate containing 1,391 koz (1,159 koz in Q4 2013) of silver granule equivalent was shipped to China in the second half of 2013.

Other Metals Summary

Gold (by-product)

In 2013, the output of gold in mined ore was 5% below the prior year, impacted by stripping work at Abyz mine, in the Central Region, which restarted mining at the end of Q3 2013, and lower output from Artemyevsky mentioned above. Gold by-product production decreased by 11% compared to the corresponding period in 2012, reflecting the decrease in gold in ore mined, a build-up of ore at the Karagaily concentrator and a slight increase in work in progress at the Balkhash smelter at the end of 2013.

The output of gold in Q4 2013 rose by 10% to 28.3 koz from the previous quarter due to an increase in gold in ore mined in the Central Region following the re-start of extraction at Abyz. The increase in gold in ore mined is not fully reflected in the gold in concentrate output due to some stockpiling of ore from Abyz during the quarter.

Kazakhmys Mining Review by Region

Ore extraction in 2013 was 3% below the comparative period. Activity was reduced in high cost areas to improve the Region's cash flow and some sections at Annensky mine were suspended in July 2012 due to depletion.

Ore output in Q4 2013 was 5% below the previous quarter. Output at North mine was 22% below the previous quarter as ore preparation work impacted ore production at the Itauz open pit. It is expected that output from the North mine will be constrained by stripping works during 2014 to access additional reserves. Output at South mine was limited by planned maintenance work in December.

The average copper grade rose to 0.81% in 2013, as mining activity moved to higher grade sections as part of the Group's focus on value in production, slightly offset by a reduction in grade at Zhomart mine.

The output of copper in concentrate increased by 5% to 145.0 kt in 2013, reflecting the higher level of metal in ore mined and processed.

The output of copper in concentrate in Q4 2013 was in line with the previous quarter.

Kazakhmys Mining Review by Region

Higher output from the Konyrat and Akbastau mines, both ramping up production during the year, increased ore extraction to 12,991 kt in 2013, 27% above the comparative period. Nurkazgan mine increased output by 19% to 3,167 kt in 2013, following the completion of major reconstruction work on the main conveyor in Q2 2013.

Ore extraction in Q4 2013 was in line with the previous quarter. Output in the quarter benefited from the recommencement of mining at Abyz at the end of Q3 2013, whilst mining at Konyrat was restricted pending work at the Balkhash concentrator to increase its processing capacity. Output from Akbastau was raised temporarily in Q3 2013, in order to create a "buffer" of stockpiled ore at the Karagaily concentrator for winter.

In 2013, the average copper grade declined to 0.81%, impacted by higher output from the relatively low grade Konyrat mine (0.30%). The increased output from Konyrat offset a rise in grade and output at Akbastau mine, where operations moved to more mineral rich areas.

Higher ore volumes led to a 22% increase in metal in ore mined in 2013 compared to the prior year. Production of copper in concentrate rose only by 5% to 82.8 kt during 2013. Output was impacted by stockpiling at the Karagaily concentrator and lower volumes of waste material reprocessed from the Balkhash furnaces and converters.

In 2013, 640 kt of ore extracted from Akbastau mine was stockpiled, containing approximately 8 kt of copper (2012: 6 kt), which is unlikely to be processed in the near future.

Copper in concentrate production in Q4 2013 was 7% below the previous quarter reflecting the decrease in metal in ore mined and stockpiling. 

Kazakhmys Mining Review by Region

1 Excludes concentrate processed by third parties.

Ore extraction in 2013 was affected by the suspension of operations at Nikolayevsky mine in Q3 2012 due to poor economic returns. Output at Artemyevsky mine was impacted by delays with backfilling during 2013 and equipment maintenance.

The average copper grade achieved in 2013 was at 2.41%. The increase from 2012 was due to the suspension of the relatively low grade Nikolayevsky mine in the second half of 2012. There was also an increase in grade at Orlovsky mine, where operations were moved to higher grade sections, although this was partly offset by lower grades at Artemyevsky and at the mature Yubileyno-Snegirikhinsky mine. It is expected that mining will cease at Yubileyno-Snegirikhinsky in the next two years due to depletion.

The average copper grade in Q4 2013 was higher than the previous quarter due to mining higher grade sections at Artemyevsky and Yubileyno-Snegirikhinsky mines.

Copper in concentrate output in 2013 decreased by 2% to 79.5 kt compared to the prior year, reflecting the 4% reduction of metal in ore. The decrease was partially offset by improved recovery rates across most of the Region's concentrators including Nikolayevsky, which is nearing the completion of a modernisation programme.

In December 2013, the Berezovsky concentrator, which processes ore from Irtyshsky mine was suspended. The ore is now sent to Belousovsky concentrator, raising utilisation levels.

Output of copper in concentrate in Q4 2013 was in line with the previous quarter, reflecting similar volumes of metal mined and processed.

Bozymchak project (Kyrgyzstan)

Pre-production mining commenced at Bozymchak mine in Kyrgyzstan during 2013. At the end of 2013, there were stockpiles of 471 kt of ore, containing approximately 4.9 kt of copper and 32 koz of gold. Extraction will ramp up during the year and the on-site concentrator will enter commissioning during Q1 2014. Future production will be reported within the East Region.

Kazakhmys Power Review

1 Results shown are for 100% of the business for the full 12 months.

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

3 The 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.

4 External sales only.

Ekibastuz GRES-1

On 9 December 2013 Kazakhmys announced that it had entered into an agreement to sell to Samruk-Energo the Group's remaining 50% interest in Ekibastuz GRES-1. The transaction was approved by shareholders on 7 January 2014. It is expected that Kazakhmys will receive net proceeds of $1,249 million following the completion of the transaction in the first half of 2014, subject to customary regulatory approvals.

Equity accounting of Ekibastuz GRES-1 earnings in the Group's consolidated financial statements ceased from 5 December 2013.

Net power generated at Ekibastuz GRES-1 in 2013 was 11% below the prior year. The decrease in output was driven by lower domestic commercial demand and by competing domestic power stations seeking to maintain volumes and selling at relatively low tariffs. Domestic sales fell by 3,262 GWh, partially offset by a 1,680 GWh increase in sales to Russia.

In Q4 2013, net power generated was 13% above the previous quarter reflecting a seasonal increase in demand.

The ceiling tariff for 2013 set by the Ministry of Industry and New Technologies was 7.30 KZT/kWh, compared to a ceiling tariff of 5.60 KZT/kWh for Q1 2012 and 6.50 KZT/kWh for the remainder of 2012. The weighted average realised tariff achieved by GRES-1 in 2013 was 6.44 KZT/kWh, an increase of 7% compared to the prior year.

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

Kazakhmys Power Review

Net dependable capacity increased by 321 MW in 2013 compared to the prior year, due to the commissioning of Unit 8 in Q4 2012.

In Q4 2013, net dependable capacity increased by 121 MW compared to Q3 2013 due to a decrease in seasonal limitations and the installation of electrostatic precipitators at two units.

Captive power stations

In 2013, net generation increased by 3% compared to 2012 mainly due to improved equipment performance and an increase in availability following a major maintenance programme completed in 2012.

The 10% increase in generation in Q4 2013 compared to the previous quarter reflects seasonal factors, including the completion of the annual maintenance programme in October 2013.

The suspension of the Zhezkazgan smelter and Satpaev concentrator in Q3 2013 led to a decrease in internal consumption. This decrease and the availability of additional capacity allowed the captive power stations to increase external sales in 2013 by 13%, to 2,366 GWh.

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

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

1 Copper cathode equivalent of copper in concentrate sold.

Kazakhmys Mining Production Appendix

Kazakhmys Mining Production Appendix

1 Includes slimes from purchased concentrate.

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

Kazakhmys Mining Production Appendix

1 Includes slimes from purchased concentrate.