TIDMKAZ
RNS Number : 5642N
KAZ Minerals PLC
27 October 2016
KAZ MINERALS
PLC
6(TH) FLOOR
CARDINAL PLACE
100 VICTORIA
STREET
LONDON SW1E 5JL
Tel: +44 (0)
20 7901 7800
==================
27 October 2016
KAZ MINERALS GROUP Production Report for nine months and THE
third QUARTER Ended 30 september 2016 and interim management
statement
l Copper cathode equivalent production(1) in Q3 of 44.5 kt (Q2:
31.1 kt)
-- Production growth continues as Bozshakol and Aktogay oxide
ramp up
-- Group guidance for 2016 maintained at 135-145 kt copper
cathode equivalent (FY 2015: 81.1 kt)
l Bozshakol more than doubles copper output in Q3 to 16.9 kt
(Q2: 7.5 kt)
-- Ore throughput has steadily increased in Q3
-- Concentrator has now operated at ore throughput levels above
60% for three months, declared commercial today
l Aktogay oxide increases copper cathode output by 69% to 6.6 kt
in Q3 (Q2: 3.9 kt)
-- Oxide production benefited from seasonally warmer conditions
in the third quarter
-- On track to produce around 15 kt in 2016, in line with
guidance
l By-product output on track to achieve full year guidance
ranges
-- Strong Q3 gold output of 40.9 koz supported by Bozymchak
operating consistently at design capacity and a temporarily high
grade at Bozshakol
-- Silver bar output 806 koz in Q3 (Q2: 679 koz) assisted by a
release of work in progress
-- Full year silver production expected to exceed top end of
2,500-2,750 koz guidance due to lower than expected grade decline
in the East Region in 2016
-- Zinc in concentrate output of 16.6 kt in Q3, 56.2 kt in the
period to 30 September 2016, on track for full year guidance of
70-75 kt
l Net debt of $2,590 million at 30 September 2016
-- Gross liquid funds of $872 million
(1) The Group's finished goods "equivalent" production includes
both finished metals produced and the finished metal equivalent of
concentrate sold in the period.
Oleg Novachuk, Chief Executive, said: "KAZ Minerals continues to
deliver sector-leading production growth, with our copper output
growing by 66% in the first nine months of this year. Given the
progress made in ramping up Bozshakol, our first major growth
project, we have declared it a commercially producing asset from
today. We are also making good progress on the construction of the
Aktogay sulphide project, which will deliver the next phase of our
production growth in 2017."
For further information please contact:
KAZ Minerals
PLC
==================== ========================== =================
Chris Bucknall Investor Relations, Tel: +44 20 7901
London 7882
Investor Relations, Tel: +44 20 7901
Anna Mallere London 7814
Maksut Zhapabayev Corporate Communications, Tel: +7 727 244
Almaty 03 53
==================== ========================== =================
Instinctif Partners
==================== ========================== =================
Tel: +44 20 7457
David Simonson 2020
==================== ========================== =================
REGISTERED OFFICE
6th Floor, Cardinal Place, 100 Victoria Street, London SW1E 5JL,
United Kingdom.
NOTES TO EDITORS
KAZ Minerals PLC ("KAZ Minerals" or "the Group") is a high
growth copper company focused on large scale, low cost, open pit
mining in Kazakhstan. It operates four mines and three
concentrators in the East Region of Kazakhstan, the Bozymchak
copper-gold mine in Kyrgyzstan, the Bozshakol open pit copper mine
in the Pavlodar region of Kazakhstan and the SX/EW plant at
Aktogay. In 2015, total copper cathode output from the East Region
and Bozymchak was 81 kt with by-products of 94 kt of zinc in
concentrate, 3,135 koz of silver and 35 koz of gold bar.
The Group's major growth projects at Bozshakol and Aktogay are
expected to deliver one of the highest growth rates in the industry
and transform KAZ Minerals into a company dominated by world class,
open pit copper mines.
Bozshakol is a first quartile asset on the global cost curve and
will have an annual ore processing capacity of 30 million tonnes
when fully ramped up, with a mine life of 40 years at a copper
grade of 0.36%. The mine and processing facilities will produce 100
kt of copper cathode equivalent and 120 koz of gold in concentrate
per year over the first 10 years of operations.
The Aktogay project is a large scale, open pit development
similar to Bozshakol, with a mine life of more than 50 years and
average copper grades of 0.37% (oxide) and 0.33% (sulphide).
Aktogay commenced production of copper cathode from oxide ore in
December 2015, and the production of copper in concentrate from
sulphide ore is expected to begin in the first half of 2017. The
sulphide concentrator will have an annual ore processing capacity
of 25 million tonnes when fully ramped up. Aktogay is competitively
positioned on the global cost curve and will produce an average of
90 kt of copper cathode equivalent from sulphide ore and 15 kt of
copper cathode from oxide ore per year over the first 10 years of
operations.
KAZ Minerals is listed on the London Stock Exchange, the
Kazakhstan Stock Exchange and the Hong Kong Stock Exchange and
employs around 12,000 people, principally in Kazakhstan.
GROUP PRODUCTION SUMMARY
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
======================================= ======= ====== ======= ======= ======
Ore extraction kt 35,764 6,497 13,665 11,494 4,019
=========================== =========== ======= ====== ======= ======= ======
Average copper
grade % 0.66 1.38 0.67 0.66 0.97
============================= ========= ======= ====== ======= ======= ======
Copper in
ore mined kt 235.6 89.6 91.0 75.9 39.0
============================== ======== ======= ====== ======= ======= ======
Copper in concentrate kt 90.5 66.5 37.2 30.9 23.2
=============================== ======= ======= ====== ======= ======= ======
Copper cathode kt 70.0 58.4 26.1 23.6 21.7
================================ ====== ======= ====== ======= ======= ======
Copper cathode
equivalent (1) kt 97.1 58.4 44.5 31.1 21.7
================================ ====== ======= ====== ======= ======= ======
Zinc in concentrate kt 56.2 73.3 16.6 19.7 23.3
================================ ====== ======= ====== ======= ======= ======
Gold bar equivalent(1) koz 80.0 28.2 40.9 26.1 12.1
================================ ====== ======= ====== ======= ======= ======
Silver bar equivalent(1) koz 2,236 2,450 806 679 788
================================ ====== ======= ====== ======= ======= ======
(1) Includes finished metals produced and the finished metal
equivalent of concentrate sold in the period.
The recently launched projects, Bozshakol and Aktogay oxide,
continued to ramp up output resulting in copper cathode equivalent
production in the third quarter increasing by 43% to 44.5 kt
compared to 31.1 kt in Q2 2016. Copper cathode equivalent
production was 97.1 kt in the nine months to 30 September 2016, 66%
above the comparative period in the prior year. Bozshakol
contributed 16.9 kt of copper cathode equivalent in the quarter,
more than double its 7.5 kt contribution in Q2 2016 reflecting
higher volumes of ore throughput at the concentrator. Aktogay oxide
output totalled 6.6 kt of copper cathode, achieving a production
rate of over 70 t per day in the warmer third quarter, 69% higher
than the 3.9 kt produced in Q2 2016.
The East Region and Bozymchak delivered copper cathode
equivalent production of 21.0 kt, a 7% increase compared to Q2
2016, supported by a release of work in progress from the Balkhash
smelter.
Mining at Bozshakol and Aktogay drove a 2,171 kt or 19% increase
in Group ore output in the quarter compared to Q2 2016 with the
mines now accounting for over 90% of Group ore output. Copper metal
in ore extracted rose by 163% to 235.6 kt for first nine months of
2016 with the change in mix of ore extracted also leading to a
reduction in the Group's average copper grade to 0.66% in the nine
months to 30 September 2016, compared to 1.38% in the prior year
period. The Group's copper cathode equivalent production remains on
track to achieve the existing full year guidance range of 135-145
kt.
By-product output in the first nine months of the year has been
strong with all by-products on track to achieve their guidance.
Gold output has benefited from the consistent operation of
Bozymchak at 100% of its design capacity and a high short-term gold
grade at Bozshakol. Silver bar production is now expected to exceed
the top end of the 2016 guidance range due to a lower than expected
reduction in silver grades in the East Region mines.
BOZSHAKOL
Mining
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
==== ============================= ======= ====== ====== ====== ======
Ore extraction kt 19,482 1,029 8,466 6,007 1,029
============================ ===== ======= ====== ====== ====== ======
Average copper
grade % 0.58 0.67 0.62 0.56 0.67
============================ ===== ======= ====== ====== ====== ======
Copper in
ore mined kt 113.6 6.9 52.1 33.7 6.9
========================== ======= ======= ====== ====== ====== ======
Average gold
grade g/t 0.30 0.22 0.32 0.28 0.22
=========================== ====== ======= ====== ====== ====== ======
Gold in ore mined koz 188.6 7.2 88.1 54.8 7.2
=========================== ====== ======= ====== ====== ====== ======
Average silver
grade g/t 1.6 2.7 1.5 1.6 2.7
=========================== ====== ======= ====== ====== ====== ======
Silver in ore
mined koz 973 88 405 313 88
=========================== ====== ======= ====== ====== ====== ======
Average molybdenum
grade(1) % 0.005 - 0.005 0.006 -
=========================== ====== ======= ====== ====== ====== ======
Molybdenum in
ore mined(1) t 468 - 210 178 -
=========================== ====== ======= ====== ====== ====== ======
(1) Molybdenum mined in sulphide ore. Production of molybdenum
concentrate has not yet commenced.
Ore mined at Bozshakol increased by 41% in Q3 2016 versus the
previous quarter, to 8,466 kt, as higher volumes were extracted to
support the ongoing ramp up of the sulphide concentrator. Sulphide
ore output in Q3 2016 increased by 43% to 4,325 kt with a copper
grade of 0.55% (Q2 2016: 3,015 kt, grade 0.57%).
Clay ore output increased by 38% to 4,141 kt with a copper grade
of 0.68% (Q2 2016: 2,992 kt, grade 0.55%). The clay material
extracted has been stockpiled ahead of processing at the separate
clay plant where commissioning works commenced on 29 September
2016. As at 30 September 2016, 17,156 kt of clay ore with an
average copper grade of 0.64% and 0.29 g/t of gold has been
extracted and stockpiled to be processed at the clay plant.
The gold grade in both sulphide and clay ore has been sustained
at high levels during the first nine months of 2016 at 0.30 g/t
compared to the measured and indicated resource grade of 0.14 g/t,
which has benefited gold production in the year to date.
Processing
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
================================== ====== ====== ====== ====== ======
Copper in concentrate kt 28.1 - 17.5 9.5 -
=========================== ====== ====== ====== ====== ====== ======
Copper cathode
equivalent(1) kt 24.7 - 16.9 7.5 -
=========================== ====== ====== ====== ====== ====== ======
Silver in concentrate koz 175.7 - 110.8 56.8 -
=========================== ====== ====== ====== ====== ====== ======
Silver bar equivalent(1) koz 146.5 - 102.6 41.7 -
=========================== ====== ====== ====== ====== ====== ======
Gold in concentrate koz 39.6 - 26.6 11.7 -
=========================== ====== ====== ====== ====== ====== ======
Gold bar equivalent(1) koz 34.0 - 24.9 8.8 -
============================ ===== ====== ====== ====== ====== ======
(1) The finished metal equivalent of concentrate sold in the
period.
The Bozshakol concentrator produced 17.5 kt of copper in
concentrate during the third quarter, an increase of 84% from Q2
2016. The average throughput level at the concentrator has
continued to progress in Q3 and in line with the Group's accounting
policy, following three consecutive months of operations at or
above 60% of design throughput levels, the project has been
declared commercial. In October 2016 there was a planned 36 hour
shutdown for commissioning works and in November there will be a
shutdown of up to five days for the replacement of the SAG mill
lining.
On 29 September 2016 commissioning works commenced at the
Bozshakol clay plant and initial production of saleable copper
concentrate from clay ore is expected late in the fourth quarter as
the new facility ramps up.
With further improvements in throughput at the sulphide
concentrator expected in the fourth quarter, copper production
guidance for Bozshakol in 2016 remains unchanged at 45-55 kt of
cathode equivalent.
Gold bar equivalent output in the first nine months of 2016 has
benefited from the high grade of gold in ore mined. Gold production
at Bozshakol remains on track to achieve the 2016 guidance range of
50-60 koz.
AKTOGAY
Mining and processing
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
====================== ========= ======= ====== ====== ====== ======
Ore extraction kt 12,742 2,125 4,063 4,319 1,874
===================== ========== ======= ====== ====== ====== ======
Copper grade % 0.40 0.37 0.38 0.44 0.38
===================== ========== ======= ====== ====== ====== ======
Copper in ore mined kt 51.2 7.8 15.5 19.1 7.0
======================= ======== ======= ====== ====== ====== ======
Copper cathode kt 12.0 - 6.6 3.9 -
======================= ======== ======= ====== ====== ====== ======
Ore extraction at Aktogay decreased in Q3 compared to Q2 2016,
by 256 kt or 6% to 4,063 kt, as sufficient ore had been placed on
heap leach pads in the first half of the year. The grade of oxide
ore mined reduced from 0.44% in Q2 to 0.38% in Q3 2016 as
anticipated in the mine plan. Areas of sulphide ore have been
exposed ready to supply the start up of the sulphide concentrator
but no sulphide ore has yet been mined.
Copper cathode production at the Aktogay SX/EW facility
increased to 6.6 kt in Q3, a rise of 69% compared to Q2 2016.
Operational efficiency at the SX/EW facility has been improved and
production volumes in Q3 2016 benefited from the warmer ambient
temperature. The performance of the heap leaching pads and SX/EW
facility will be subject to seasonal variations. Aktogay oxide
remains on track to achieve the full year guidance of production of
around 15 kt.
EAST REGION & BOZYMCHAK
Copper mining
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
=============================== ====== ====== ====== ====== ======
Ore extraction kt 3,540 3,343 1,136 1,168 1,116
========================== ==== ====== ====== ====== ====== ======
Orlovsky kt 973 1,062 294 337 358
========================== ==== ====== ====== ====== ====== ======
% 3.61 3.53 3.87 3.50 3.61
=============================== ====== ====== ====== ====== ======
Artemyevsky kt 986 973 340 327 324
========================== ==== ====== ====== ====== ====== ======
% 1.53 1.69 1.47 1.50 1.63
=============================== ====== ====== ====== ====== ======
Irtyshsky kt 473 489 157 157 162
========================== ==== ====== ====== ====== ====== ======
% 1.55 1.68 1.59 1.50 1.64
=============================== ====== ====== ====== ====== ======
Yubileyno-Snegirikhinsky kt 392 483 129 131 160
========================== ==== ====== ====== ====== ====== ======
% 1.82 1.97 2.05 1.66 1.96
=============================== ====== ====== ====== ====== ======
Bozymchak kt 716 336 216 216 112
========================== ==== ====== ====== ====== ====== ======
% 0.86 0.97 0.87 0.88 0.92
=============================== ====== ====== ====== ====== ======
Average grade % 2.00 2.24 2.06 1.98 2.24
Copper in ore
mined kt 70.8 74.9 23.4 23.1 25.1
========================== ==== ====== ====== ====== ====== ======
Ore extraction in the East Region and at Bozymchak increased by
6% in the nine months to 30 September 2016 compared to the prior
year period as the fully ramped up Bozymchak mine offset lower
output from the East Region mines. In Q3, ore output reduced
slightly by 3% to 1,136 kt compared to Q2 2016, due to lower output
from Orlovsky.
The Orlovsky mine has implemented a six day working week to
allow maintenance to be carried out on a ventilation shaft, which
will continue for approximately two years. As a result, ore output
from the mine declined by 43 kt or 13% to 294 kt in Q3 compared to
Q2 2016.
Ore output at Yubileyno-Snegirikhinsky in the first nine months
of 2016 was 19% below the prior year period as the mine approaches
the end of its operational life, with closure expected at the end
of 2016 or in early 2017. Whilst ore output in Q3 2016 was stable
compared to Q2 2016, repair works being carried out on the road
between Yubileyno-Snegirikhinsky mine and the Nikolayevsky
concentrator prevented the movement of some material from the mine
to the concentrator and this temporary disruption to ore deliveries
is expected to continue in Q4. The ore is being stockpiled at the
mine and will be processed in 2017.
At the Bozymchak mine in Kyrgyzstan, ore output was unchanged
from Q2 into Q3 2016, but grew by 113% in the first nine months of
2016 compared to the prior year period reflecting the achievement
of design capacity at the processing plant in December 2015.
The average copper grade across the East Region and Bozymchak
reduced to 2.00% from 2.24% in the first 9 months of 2016 compared
to the prior year period. Average grades were impacted by an
expected 11% decrease in the average Bozymchak copper grade to
0.86% (9m 2015: 0.97%) as well as lower grades across most of the
East Region mines.
In Q3 2016 the average copper grade increased by 4% to 2.06%,
benefiting from higher copper grades at all the East Region mines
except Artemyevsky.
Copper processing
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
==== =========================================== ====== ====== ====== ====== ======
Copper in concentrate kt 62.4 66.5 19.7 21.4 23.2
==================================== =========== ====== ====== ====== ====== ======
Orlovsky concentrator kt 31.3 33.7 9.9 10.7 11.5
==================================== =========== ====== ====== ====== ====== ======
Nikolayevsky concentrator kt 18.3 23.2 5.6 6.5 8.5
==================================== =========== ====== ====== ====== ====== ======
Belousovsky concentrator kt 6.5 7.5 2.1 2.1 2.3
==================================== =========== ====== ====== ====== ====== ======
Bozymchak concentrator kt 6.3 2.1 2.1 2.1 0.9
==================================== =========== ====== ====== ====== ====== ======
Copper cathode equivalent(1) kt 60.4 58.4 21.0 19.7 21.7
===================================== ========== ====== ====== ====== ====== ======
(1) Includes finished metal produced and the finished metal
equivalent of concentrate sold in the period.
Copper in concentrate output declined by 6% to 62.4 kt in the
first nine months of 2016 compared to the prior year period, and by
8% in Q3 compared to Q2 2016. The reduction in Q3 2016 was partly
driven by expected lower output at Orlovsky which moved to a six
day week and by lower output from the Nikolayevsky concentrator
where ore deliveries from the Yubileyno-Snegirikhinsky mine have
been interrupted by road repairs. Lower output in the East Region
in the first nine months was partially offset by a tripling of
copper in concentrate production at Bozymchak to 6.3 kt compared to
2.1 kt in the first nine months of 2015 when the mine was ramping
up.
Copper cathode equivalent output in the first nine months of
2016 increased by 2.0 kt or 3% compared to the prior year period
even though copper concentrate output decreased by 6%. Copper
cathode equivalent production was supported by 0.9 kt of output
recognised following the sale of copper concentrate from Bozymchak
that was produced in 2015 to a third party processor in Q1 2016,
whilst cathode output in the first nine months of 2015 was impacted
by a build up of work in progress.
In Q3 2016, despite the 8% or 1.7 kt decrease in copper in
concentrate production compared to Q2 2016, output of copper
cathode equivalent increased by 7%. The 21.0 kt of copper cathode
equivalent output in Q3 was supported by a release of work in
progress at the smelter and includes 1.5 kt of material that was
sold as copper concentrate from the East Region to a third party
processor in China.
Copper cathode equivalent production in Q4 2016 is expected to
be lower than Q3 due to continuing maintenance work at Orlovsky and
the ore transport restrictions at Yubileyno-Snegirikhinsky.
However, due to a strong operational performance in the year to
date, the East Region and Bozymchak are on track to slightly exceed
their 2016 copper cathode equivalent production guidance of around
75 kt.
Zinc
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
======================= ==== ====== ====== ====== ====== ======
Zinc bearing
ore mined kt 2,824 3,007 920 952 1,004
====================== ===== ====== ====== ====== ====== ======
Grade % 2.86 3.28 2.75 2.83 3.34
====================== ===== ====== ====== ====== ====== ======
Zinc in ore mined kt 80.7 98.6 25.3 27.0 33.5
====================== ===== ====== ====== ====== ====== ======
Zinc in concentrate kt 56.2 73.3 16.6 19.7 23.3
===================== ====== ====== ====== ====== ====== ======
Zinc in ore mined fell by 18% in the first nine months of 2016
compared to the prior year period as grades reduced from 3.28% to
2.86% and as zinc bearing ore output fell by 6% to 2,824 kt. In Q3
2016, zinc in ore mined reduced by 6% compared to Q2 2016, also as
a result of lower ore output and lower zinc grades.
The reduction in zinc output in the first nine months is in line
with expectations and primarily a result of lower zinc grades at
Artemyevsky, where mining is moving through a transitional zone
between two ore bodies with lower by-product grades, together with
reduced ore output at Orlovsky where operations have been reduced
to a six day week from the start of Q3 2016 in order to carry out
maintenance work. Zinc in ore mined at Irtyshsky and
Yubileyno-Snegirikhinsky also reduced due to lower ore output and
grades. Zinc in concentrate output in the third quarter was
impacted by reduced throughput at the Nikolayevsky concentrator due
to the temporary disruption of ore transport from the
Yubileyno-Snegirikhinsky mine.
Zinc output in Q4 is expected to be lower than Q3 2016 due to
ongoing maintenance work at Orlovsky and delays to the processing
of ore from Yubileyno-Snegirikhinsky. The East Region remains on
track to achieve the full year guidance range for zinc in
concentrate output of 70-75 kt.
Gold
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
========================= ===== ====== ====== ====== ====== ======
Gold bearing
ore mined kt 3,540 3,343 1,136 1,168 1,116
======================== ====== ====== ====== ====== ====== ======
Grade g/t 0.75 0.75 0.68 0.76 0.77
======================== ====== ====== ====== ====== ====== ======
Gold in ore mined koz 85.1 81.0 25.0 28.4 27.6
======================== ====== ====== ====== ====== ====== ======
Gold in concentrate koz 51.1 30.7 16.3 17.3 11.1
======================== ====== ====== ====== ====== ====== ======
Gold bar equivalent(1) koz 46.0 28.2 16.0 17.3 12.1
======================== ====== ====== ====== ====== ====== ======
(1) Includes finished metal produced and the finished metal
equivalent of concentrate sold in the period.
Gold in ore mined in the first nine months of 2016 increased by
5% compared to the prior year period whilst gold in concentrate
output increased by 66% to 51.1 koz, reflecting the operation of
the Bozymchak concentrator at 100% of design capacity in 2016
following the completion of optimisation works in December 2015.
From Q2 2016 to Q3 2016, gold in ore mined decreased by 12% and
gold in concentrate output decreased by 6% due to lower gold grades
in both the East Region and Bozymchak.
Higher production at Bozymchak in 2016 resulted in a 63%
increase of gold bar equivalent in the first nine months of 2016 to
46 koz. Gold bar equivalent output of 16.0 koz in Q3 2016 was
restricted somewhat by a decrease in the extraction volumes and
lower grades at the East Region and Bozymchak, offset by a release
of work in progress at the Balkhash smelter. The East Region and
Bozymchak are expected to reach the top end of the 45-55 koz
guidance range for gold bar equivalent production in 2016.
Silver
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
============================ ===== ====== ====== ====== ====== ======
Silver bearing
ore mined kt 3,540 3,343 1,136 1,168 1,116
=========================== ====== ====== ====== ====== ====== ======
Grade g/t 36.7 43.8 34.2 40.0 40.5
=========================== ====== ====== ====== ====== ====== ======
Silver in ore
mined koz 4,177 4,708 1,248 1,501 1,453
=========================== ====== ====== ====== ====== ====== ======
Silver in concentrate koz 2,302 2,429 680 854 762
========================== ======= ====== ====== ====== ====== ======
Silver bar equivalent(1) koz 2,089 2,450 703 637 788
=========================== ====== ====== ====== ====== ====== ======
(1) Includes finished metal produced and the finished metal
equivalent of concentrate sold in the period.
Silver in ore mined decreased by 11% in the first nine months of
2016 compared to the prior year period and by 17% in Q3 compared to
Q2 2016 as grades and ore output reduced in the East Region mines
as expected.
Silver in concentrate output also decreased in the first nine
months of 2016 and in Q3 compared to Q2 2016, reflecting the
reduction in silver in ore mined and the temporary disruption of
ore deliveries from Yubileyno-Snegirikhinsky to the Nikolayevsky
concentrator in Q3 2016.
However, silver bar equivalent output of 703 koz in Q3 2016
benefited from a release of work in progress and increased by 10%
compared to Q2 2016, when production was impacted by a build up of
work in progress.
Despite the reduced silver in concentrate output in Q3 2016 and
the lower production expected in Q4 2016 due to ongoing ventilation
maintenance works at Orlovsky and road repairs at
Yubileyno-Snegirikhinsky, grades have not declined as much as
expected in 2016 and the East Region and Bozymchak remain on track
to exceed the top end of the full year guidance range of
2,250-2,500 koz of silver bar equivalent.
INTERIM MANAGEMENT STATEMENT
Financial performance
Sales Volumes
The following table sets out the sales volumes of the Group's
major products and includes pre-commercial sales volumes from the
Bozshakol and Aktogay oxide projects. Net revenues prior to the
achievement of commercial production from new projects are
recognised as a deduction from fixed assets.
9m 9m
2016 2015
==================================== ====== ======
Copper cathode equivalent(1) kt 95.3 57.9
============================== ===== ====== ======
Zinc in concentrate kt 56.3 74.9
============================== ===== ====== ======
Gold bar(1) koz 80.0 28.1
============================== ===== ====== ======
Silver bar(1) koz 2,322 2,393
============================== ===== ====== ======
(1) Includes copper, gold and silver payable metal in
concentrate sold.
Copper cathode equivalent sales totalled 95.3 kt in the nine
months to 30 September 2016, an increase of 37.4 kt over the prior
period due to the ramp up of production and sales from Bozshakol,
Aktogay oxide and Bozymchak. In the nine months to 30 September
2016, Bozshakol and Aktogay oxide contributed 24.7 kt and 6.8 kt of
copper cathode equivalent sales respectively. Copper cathode
equivalent sales from the East Region and Bozymchak were 5.9 kt
higher than the prior period due to increased throughput at
Bozymchak where the concentrator achieved design capacity at the
end of 2015. Cathode equivalent production exceeded sales volumes
in the nine month period by 1.8 kt, reflecting a small increase in
goods in transit.
Sales of zinc in concentrate of 56.3 kt in the nine months to 30
September 2016 were 18.6 kt below the prior period reflecting the
expected lower production.
Gold sales of 80.0 koz in the nine months to 30 September 2016
represent an increase of 51.9 koz from the prior year period due to
the ramp up of Bozshakol and increased output from Bozymchak.
Silver sales of 2,322 koz in the nine months to 30 September
2016 were 86 koz above production mainly due to a release of work
in progress in the East Region. Sales in the first nine months of
the year were 71 koz lower compared to the prior period due to
reduced production from the East Region, partly offset by the ramp
up of Bozshakol production.
The Aktogay oxide plant was declared commercial on 1 July 2016
with sales volumes to 30 June 2016 of 3.3 kt deducted from fixed
assets and not reflected in the income statement. Bozshakol's
copper, gold and silver in concentrate sales volumes to 30
September 2016 of 24.7 kt, 34.0 koz 146.5 koz respectively, are
pre-commercial and deducted from fixed assets. The Bozshakol
sulphide plant has been declared commercial effective from 27
October 2016, from which date all revenues and operating costs will
be recorded in the income statement.
Financial performance
Commodity Prices
The following table sets out the average realised prices for the
Group's major products including pre-commercial sales from the
Bozshakol and Aktogay oxide projects:
9m 9m
2016 2015
================================= ====== ======
Copper cathode $/tonne 4,743 5,707
======================= ========= ====== ======
Copper in concentrate $/tonne 4,095 -
======================= ========= ====== ======
Zinc in concentrate $/tonne 1,131 1,162
======================= ========= ====== ======
Gold bar $/tr.oz 1,271 1,205
======================= ========= ====== ======
Gold in concentrate $/tr.oz 1,313 -
======================= ========= ====== ======
Silver bar $/tr.oz 17 16
======================= ========= ====== ======
Silver in concentrate $/tr.oz 19 -
======================= ========= ====== ======
The following table sets out the average LME/LBMA prices:
9m 9m
2016 2015
================== ====== ======
Copper $/tonne 4,725 5,699
======== ========= ====== ======
Zinc $/tonne 1,955 2,035
======== ========= ====== ======
Gold $/tr.oz 1,260 1,178
======== ========= ====== ======
Silver $/tr.oz 17 16
======== ========= ====== ======
The realised prices for the finished products sold will differ
from the average LME/LBMA prices during the period due to sales not
being made evenly over the period and due to the impact of
quotational period pricing. Premiums or discounts to metal exchange
prices negotiated with customers also impact average realised
prices.
The copper and zinc in concentrate realised prices are below
their respective LME average price for the finished product due to
the deduction of treatment and refining charges. The average
realised price for metal in concentrate is also impacted by
quotational period pricing. The average realised gold and silver in
concentrate prices are higher than their respective average LBMA
prices for the nine month period in 2016 due to the increased sales
volumes in the third quarter, when prices were above the nine month
average.
Commodity Hedging
At 30 September 2016 there were no commodity hedges in
place.
Exchange Rates
The KZT/$ exchange rate at 30 September 2016 was KZT/$ 334.93
compared to KZT/$ 339.47 at 31 December 2015. The average exchange
rate for first nine months of 2016 was KZT/$ 344.57, compared to an
average rate of KZT/$ 195.57 for the same period last year. The
significant reduction in the value of the tenge against the US
dollar arose from the Central Bank of Kazakhstan's ending its
management of the currency in August 2015.
Net debt and cash position
Net debt increased to $2,590 million at 30 September 2016 from
$2,531 million at 30 June 2016. The increase arose from interest
payments on debt of $89 million and modest capital spend on the
major growth projects, partly offset by cash flows generated from
operations. Mineral extraction tax of $27 million of which $9
million related to Bozshakol and income tax of $10 million was paid
in the three months ending 30 September 2016.
At 30 September 2016, gross debt (before amortised fees) was
$3,502 million compared to $3,629 million at 30 June 2016,
reflecting principal repayments under the China Development Bank
("CDB") Bozshakol and Bozymchak facility of $92 million; the
pre-export finance ("PXF") facility of $29 million and the CDB
Aktogay CNY facility of $6 million. Of the gross debt (before
amortised fees) at 30 September 2016, $1,722 million related to the
CDB Bozshakol/Bozymchak facilities, $1,478 million related to the
CDB Aktogay facilities, $262 million related to the PXF facility
and $40 million to the revolving credit facility with Caterpillar
Financial Services (UK) Limited ("CAT"). At 30 September 2016, $10
million remains available for drawing under the CAT facility.
Total cash and cash equivalents at 30 September 2016 amounted to
$872 million, compared to $1,056 million at 30 June 2016. Of these
funds, $249 million is reserved for the development of Aktogay
under the CDB Aktogay facilities.
APPIX - GROUP PRODUCTION SUMMARY
Copper processing
9m 9m Q3 Q2 Q3
East Region 2016 2015 2016 2016 2015
=================================== ======= ====== ====== ====== ======
Copper concentrate kt 280.1 324.0 84.5 93.2 110.1
============================= ==== ======= ====== ====== ====== ======
Copper in concentrate kt 56.1 64.4 17.6 19.3 22.3
============================= ==== ======= ====== ====== ====== ======
Bozymchak
=================================== ======= ====== ====== ====== ======
Copper concentrate kt 25.7 9.4 9.0 8.5 3.7
============================= ==== ======= ====== ====== ====== ======
Copper in concentrate kt 6.3 2.1 2.2 2.1 0.9
============================= ==== ======= ====== ====== ====== ======
Bozshakol
=================================== ======= ====== ====== ====== ======
Copper concentrate kt 117.3 - 72.1 38.6 -
============================= ==== ======= ====== ====== ====== ======
Copper in concentrate kt 28.1 - 17.5 9.5 -
============================= ==== ======= ====== ====== ====== ======
Total copper concentrate kt 423.1 333.4 165.6 140.3 113.8
============================= ==== ======= ====== ====== ====== ======
Total copper in concentrate kt 90.5 66.5 37.2 30.9 23.2
============================= ==== ======= ====== ====== ====== ======
Aktogay
=================================== ======= ====== ====== ====== ======
Ore to leach pads kt 12,742 2,125 4,063 4,319 1,874
============================= ==== ======= ====== ====== ====== ======
Grade % 0.40 0.37 0.38 0.44 0.38
============================= ==== ======= ====== ====== ====== ======
Copper cathode kt 70.0 58.4 26.1 23.6 21.7
============================= ==== ======= ====== ====== ====== ======
Copper cathode equivalent kt 97.1 58.4 44.5 31.1 21.7
============================= ==== ======= ====== ====== ====== ======
East Region(1) kt 54.5 56.7 18.9 17.5 20.9
============================= ==== ======= ====== ====== ====== ======
Bozymchak(1) kt 5.9 1.7 2.1 2.2 0.8
============================= ==== ======= ====== ====== ====== ======
Aktogay oxide kt 12.0 - 6.6 3.9 -
============================= ==== ======= ====== ====== ====== ======
Bozshakol(1) kt 24.7 - 16.9 7.5 -
============================= ==== ======= ====== ====== ====== ======
(1) Includes finished metal produced and the finished metal
equivalent of concentrate sold in the period.
Zinc
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
================================== ====== ====== ====== ====== ======
Zinc bearing ore
mined kt 2,824 3,007 920 952 1,004
========================== ======= ====== ====== ====== ====== ======
grade
Orlovsky (%) 4.38 4.35 4.18 4.12 4.92
========================== ======= ====== ====== ====== ====== ======
grade
Artemyevsky (%) 2.05 3.24 1.84 2.30 3.04
========================== ======= ====== ====== ====== ====== ======
grade
Irtyshsky (%) 3.03 3.15 3.33 2.80 3.05
========================== ======= ====== ====== ====== ====== ======
grade
Yubileyno-Snegirikhinsky (%) 0.91 1.14 1.22 0.85 0.72
========================== ======= ====== ====== ====== ====== ======
grade
Average (%) 2.86 3.28 2.75 2.83 3.34
========================== ======= ====== ====== ====== ====== ======
Zinc in ore mined kt 80.7 98.6 25.3 27.0 33.5
========================== ======= ====== ====== ====== ====== ======
Zinc in concentrate kt 56.2 73.3 16.6 19.7 23.3
========================== ======= ====== ====== ====== ====== ======
Gold
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
=============================== =============== ======= ====== ====== ====== ======
Gold bearing ore
mined kt 23,022 4,372 9,602 7,175 2,145
============================== ================ ======= ====== ====== ====== ======
Orlovsky grade (g/t) 1.07 1.19 1.05 1.07 1.24
========================== ==================== ======= ====== ====== ====== ======
Artemyevsky grade (g/t) 0.32 0.39 0.27 0.40 0.40
========================== ==================== ======= ====== ====== ====== ======
Irtyshsky grade (g/t) 0.28 0.28 0.29 0.27 0.25
========================== ==================== ======= ====== ====== ====== ======
grade
Yubileyno-Snegirikhinsky (g/t) 0.25 0.31 0.25 0.27 0.26
============================ ================== ======= ====== ====== ====== ======
grade
Bozymchak (g/t) 1.48 1.76 1.37 1.46 1.81
============================ ================== ======= ====== ====== ====== ======
grade
Bozshakol (g/t) 0.30 0.22 0.32 0.28 0.22
============================ ================== ======= ====== ====== ====== ======
grade
Average (g/t) 0.37 0.63 0.37 0.36 0.51
============================ ================== ======= ====== ====== ====== ======
Gold metal in
ore mined koz 273.7 88.1 113.1 83.2 34.8
============================ ================== ======= ====== ====== ====== ======
East Region koz 51.0 61.9 15.4 18.3 21.1
=========================== =================== ======= ====== ====== ====== ======
Bozymchak koz 34.1 19.0 9.6 10.1 6.5
=========================== =================== ======= ====== ====== ====== ======
Bozshakol koz 188.6 7.2 88.1 54.8 7.2
=========================== =================== ======= ====== ====== ====== ======
Gold in concentrate koz 90.7 30.7 42.9 29.0 11.1
================================ ============== ======= ====== ====== ====== ======
East Region koz 15.9 18.5 4.4 5.9 5.7
================================ ============== ======= ====== ====== ====== ======
Bozymchak koz 35.2 12.2 11.9 11.4 5.4
================================ ============== ======= ====== ====== ====== ======
Bozshakol koz 39.6 - 26.6 11.7 -
================================ ============== ======= ====== ====== ====== ======
Gold bar equivalent koz 80.0 28.2 40.9 26.1 12.1
================================= ============= ======= ====== ====== ====== ======
East Region(1) koz 17.1 18.8 5.0 5.3 7.7
============================= ================= ======= ====== ====== ====== ======
Bozymchak(1) koz 28.9 9.4 11.0 12.0 4.3
============================= ================= ======= ====== ====== ====== ======
Bozshakol(1) koz 34.0 - 24.9 8.8 -
============================= ================= ======= ====== ====== ====== ======
(1) Includes finished metal produced and the finished metal
equivalent of concentrate sold in the period.
Silver
9m 9m Q3 Q2 Q3
2016 2015 2016 2016 2015
=============================== =============== ======= ====== ====== ====== ======
Silver bearing
ore mined kt 23,022 4,372 9,602 7,175 2,145
================================ ============== ======= ====== ====== ====== ======
Orlovsky grade (g/t) 61.6 65.1 61.9 59.3 63.1
========================== ==================== ======= ====== ====== ====== ======
Artemyevsky grade (g/t) 33.3 35.5 24.6 43.0 31.5
========================== ==================== ======= ====== ====== ====== ======
grade
Irtyshsky (g/t) 51.6 63.1 52.4 50.8 53.2
============================= ================= ======= ====== ====== ====== ======
grade
Yubileyno-Snegirikhinsky (g/t) 14.8 17.6 16.5 18.5 16.2
============================= ================= ======= ====== ====== ====== ======
grade
Bozymchak (g/t) 9.7 10.2 8.8 10.4 10.5
=============================== =============== ======= ====== ====== ====== ======
grade
Bozshakol (g/t) 1.6 2.7 1.5 1.6 2.7
=============================== =============== ======= ====== ====== ====== ======
grade
Average (g/t) 7.0 34.1 5.4 7.9 22.3
=============================== =============== ======= ====== ====== ====== ======
Silver in ore
mined koz 5,150 4,796 1,653 1,814 1,541
=============================== =============== ======= ====== ====== ====== ======
East Region koz 3,955 4,598 1,187 1,429 1,415
=========================== =================== ======= ====== ====== ====== ======
Bozymchak koz 222 110 61 72 38
============================== ================ ======= ====== ====== ====== ======
Bozshakol koz 973 88 405 313 88
============================== ================ ======= ====== ====== ====== ======
Silver in concentrate koz 2,478 2,429 791 911 762
============================== ================ ======= ====== ====== ====== ======
East Region koz 2,066 2,346 607 770 725
============================== ================ ======= ====== ====== ====== ======
Bozymchak koz 236 83 73 84 37
============================== ================ ======= ====== ====== ====== ======
Bozshakol koz 176 - 111 57 -
============================== ================ ======= ====== ====== ====== ======
Silver bar equivalent koz 2,236 2,450 806 679 788
================================= ============= ======= ====== ====== ====== ======
East Region(1) koz 1,897 2,388 629 558 758
============================ ================== ======= ====== ====== ====== ======
Bozymchak(1) koz 192 62 74 79 30
============================ ================== ======= ====== ====== ====== ======
Bozshakol(1) koz 147 - 103 42 -
============================ ================== ======= ====== ====== ====== ======
(1) Includes finished metal produced and the finished metal
equivalent of concentrate sold in the period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLLFSDILLRFIR
(END) Dow Jones Newswires
October 27, 2016 02:00 ET (06:00 GMT)
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