KAZ Minerals declared Aktogay sulphide plant commercial

Andrey KozhokaruOctober 02, 2017

KAZ Minerals reported attainment of commercial level of production at Aktogay sulphide plant and forecasted 2017 Aktogay production to reach the upper end of the guidance range.  

On 2 October KAZ Minerals announced that its Aktogay sulphide plant has reached the level of commercial production. Consequently, starting from October 2017, previously capitalized revenue and expenses of Aktogay sulphide plant will be recorded in the Company’s income statement. For 1H2017 KAZ Minerals produced 33k tons of copper, of which 23k tons from sulphide ore and 10k tons from oxide ore. Prospective production growth to the design capacity is expected from Aktogay sulphide plant.

The Company highlights that higher copper grades at the top of the ore body and successful ramp-up in production at sulphide plant provide for the production level that will reach or even exceed announced range of 70-85k tons of copper for 2017. Attainment of the design capacity at Bozshakol is expected in the current year, at Aktogay – in 2018.

Our opinion:

Achievement of commercial level of production at Aktogay sulphide plant corresponds to the Company’s operating guidance. On account of previous experience of setting production processes at Bozshakol KAZ Minerals implements operating plans at Aktogay at an accelerated pace. Attainment of commercial level of production at Aktogay sulphide plant and some increase in production guidance for 2017 do not materially change our current valuation of the Company. Considering current price of KAZ Minerals shares, we keep our Hold recommendation.