INVESTOR PRESENTATION
July 2020
IMPORTANT NOTICE
DISCLAIMER
Certain statements included in this presentation contain forward-looking information concerning the strategy of KAZ Minerals PLC ('KAZ Minerals') and its business, operations, financial performance or condition, outlook, growth opportunities and circumstances in the countries, sectors or markets in which it operates. Although KAZ Minerals believes that the expectations reflected in such forward-looking statements are reasonable and are made in good faith, no assurance can be given that such expectations will prove to be correct. By their nature, forward-looking statements involve known and unknown risks, assumptions and uncertainties and other factors which are unpredictable as they relate to events and depend on circumstances that will occur in the future which may cause actual results, performance or achievements of KAZ Minerals to be materially different from those expressed or implied in these forward- looking statements.
Principal risk factors that could cause KAZ Minerals' actual results, performance or achievements to differ materially from those in the forward-looking statements include (without limitation) health and safety, community and labour relations, employees, environmental compliance, business interruption, new projects and commissioning, reserves and resources, political risk, legal and regulatory compliance, commodity prices, foreign exchange and inflation, exposure to China, acquisitions and divestments, liquidity and such other risk factors as are disclosed in KAZ Minerals' most recent Annual Report and Accounts. Forward-looking statements should therefore be construed in light of such risk factors. These forward-looking statements should not be construed as a profit forecast.
No part of this presentation constitutes, or shall be taken to constitute, an invitation or inducement to invest in KAZ Minerals, or any other entity, and shareholders are cautioned not to place undue reliance on the forward-looking statements. Except as required by the Listing Rules of the UK Listing Authority and applicable law, rule or regulation, KAZ Minerals undertakes no obligation to update or revise any forward-looking statements, to reflect new information, future events, or otherwise.
Neither this presentation, which includes the question and answer session, nor any part thereof may be recorded, transcribed, distributed, published or reproduced in any form, except as permitted by KAZ Minerals. By attending this presentation, whether in person, by webcast, or call you confirm your agreement to the foregoing and that, upon request, you will promptly return any records or transcript of the presentation without retaining any copies.
All relevant financial definitions can be found in the glossary to the Full Year Results 2019 press release.
1
1. Introduction to
KAZ Minerals
LOW COST COPPER PRODUCER
- Large scale automated processing
RUSSIA
✓
✓
✓
✓
CHINA ✓
Low strip ratios
Low power costs
Water availability
Skilled labour
Transport infrastructure - rail access to China via land border
3
OPERATING ASSETS OVERVIEW
Copper1
kt, 2019
Gold2
koz, 2019
Net cash cost3
USc/lb, 2019
EBITDA4
$ million, 2019
Aktogay | Bozshakol | East Region & | Group |
Bozymchak | |||
146 | 110 | 55 | 311 |
2 | 145 | 54 | 201 |
98 | 31 | 104 | 77 |
564 | 585 | 230 | 1,355 |
Notes: | 4 |
1. Copper production, defined as payable metal in concentrate and copper cathode from Aktogay oxide ore. | |
- Gold production, defined as payable metal in concentrate.
- Cash operating costs, plus TC/RC on concentrate sales, less by-product revenues, divided by copper sales volume.
- Excluding MET, royalties and special items.
PRODUCTS AND MARKETS
1
2019 revenues by product
3% 3% | |
14% | Copper |
Gold
Silver
Zinc
80%
2019 revenues by destination
2 | 7% |
China
17%
Europe
Central
Asia
2
76%
Notes:
1. Contains by-products of gold and silver in concentrate.5
2. Copper cathode, gold bar and silver bar are produced under a tolling agreement with the Balkhash smelter.
AKTOGAY
Large scale, low cost open copper pit mine in East
Region, Kazakhstan
25 Mtpa sulphide ore processing capacity, doubling to 50 Mtpa in 2021
2019 production1 146 kt of copper (including 23 kt from oxide)
2019 net cash cost 98 USc/lb (2018: 103 USc/lb)
Mine life of around 25 years
2019 revenues $863 million (2018: $775 million), | Aktogay open pit |
EBITDA $564 million (2018: $530 million) |
Notes:
1. Payable metal in concentrate and copper cathode from Aktogay oxide ore. | 6 |
BOZSHAKOL
Large scale, low cost open pit copper mine in
Pavlodar region, Kazakhstan
30 Mtpa ore processing capacity
2019 production1 110 kt of copper and 145 koz of gold
2019 net cash cost 31 USc/lb (2018: 58 USc/lb)
Mine life of c.40 years
2019 revenues $851 million (2018: $756 million),
EBITDA $585 million (2018: $520 million)
Bozshakol sulphide concentrator
Notes:
1. Payable metal in concentrate. | 7 |
EAST REGION AND BOZYMCHAK
Three underground mines in East Region of
Kazakhstan and one open pit copper-gold mine in
Kyrgyzstan
4 Mtpa processed in 3 concentrators
2019 production 55 kt of copper1, 54 koz of gold1, 2,024 of koz silver1, 38 kt of zinc2
2019 net cash cost 104 USc/lb (2018: 94 USc/lb)
Mine lives c.5-15 years
2019 revenues $552 million (2018: $631 million),
EBITDA $230 million (2018: $284 million) | East Region, Artemyevsy underground mine |
Notes:
1. | Payable metal in concentrate. | 8 |
2. | Zinc in concentrate. |
INDUSTRY LEADING COST POSITION
Net cash cost
USc/lb
KAZ Minerals | 174 | ||
Copper peer | |||
Diversified peer | 148 | ||
144 | |||
131 | 132 | 135 | |
122 | |||
118 | |||
110 |
77
67
Notes:
84
First quartile: 98 USc/lb1
Size of circle indicates annual copper production volumes. | 9 |
Source: Company data, most recently reported financial period. | |
1. Source: Wood Mackenzie. First quartile net cash cost cut-off was 98 USc/lb at 31 December 2019. |
TRACK RECORD OF DELIVERING GROWTH
Copper production1
kt
CAGR c.40% | 311 |
Aktogay | 295 | |
Bozshakol | ||
259 | ||
East Region and | ||
Bozymchak |
144
85
2015 | 2016 | 2017 | 2018 | 2019 |
Since its formation in 2014, KAZ Minerals has focused on the construction of large scale copper mining projects in the CIS region
The Group seeks to invest in value-accretive growth projects with low capital intensity and a high rate of return on investment
East Region
The completion and ramp up of the Bozshakol and Aktogay projects has delivered a c.40% CAGR in copper production over the period 2015-19
Successfully applied modern technology to develop copper deposits, building a portfolio of highly profitable mines with low operating costs
Notes:
1. Payable metal in concentrate and copper cathode from Aktogay oxide ore. | 10 |
NEAR AND LONG TERM GROWTH
East Region & Bozymchak | Bozshakol | |
Aktogay II - low | ||
Bozshakol and | risk project, | |
Aktogay | delivers +80 | |
delivered | ktpa 2022-2027 | |
c.40% CAGR, | ||
2015-19 |
Aktogay I (sulphide and oxide) | Aktogay II | Baimskaya | |
Strong platform
supports
Baimskaya construction
-
Strong NPV and attractive
IRR - Favourable long term copper fundamentals
2015 | 2018 | 2021 | 2024 | 2027 | 2030 | 2033 | 2036 |
Notes:
Indicative production schedule, not to scale. Assumes 100% ownership, first production from Baimskaya in 2026 and ramp up from 2027. Actual construction timetable and production profile to 11 be determined during feasibility study.
COVID-19 RESPONSE
Ensuring the safety, health and wellbeing of employees and contractors is the Group's first priority
Comprehensive measures taken to protect staff, no material disruption to operations or sales in H1 2020
Provided support to local communities and increased stocking of critical spares and consumables
Bozshakol and Aktogay shifts extended through overtime from 22 March until the end of May, testing and isolation procedure for all new arrivals
Kazakhstan imposed a second phase of quarantine measures from 5 July 2020, reflecting heightened risk in the country and to the Group's operations for the second half of the year
Ongoing restrictions on the movement of staff and contractors and deferred maintenance may impact production and unit costs in H2 2020
12
2. Review of operations
HEALTH AND SAFETY
Two fatalities in 2019
- No fatality is acceptable, target is zero
- Zero fatalities occurred in open pit operations
Improving our performance
Goal Zero programme launched
New ground control risk assessment initiative for underground mines
Occupational health - invested in wellbeing projects for staff at remote sites, including mental health services
Total recordable injury frequency rate1
1.74
1.38
2018 | 2019 |
Notes:
1. Total Recordable Injury Frequency Rate or TRIFR is the number of Recordable Injuries occurring per million hours worked. | 14 |
SUSTAINABILITY
CO2 emissions per unit of ore processed
(kt)
2019 0.047
2018 0.049
2017 0.051
2016 | 0.094 |
2015 | 0.200 |
Water withdrawal per unit of copper produced
(megalitres/kt)
2019 | 96.0 | |||
2018 | 145.6 | |||
2017 | 190.4 | |||
2016 | 212.4 | |||
2015 | 180.7 | |||
Ramp up of modern, efficient facilities continues to reduce environmental impacts
Water consumption significantly reduced in 2019 due to increase in water recycling at Bozshakol
Baimskaya copper project in Russia to draw power from low carbon energy sources and further reduce the Group's CO2 intensity
Gained entry to FTSE4Good Index Series
15
AKTOGAY
FY 2019:
-
Copper production1 145.7 kt (2018: 131.4 kt),
including 22.7 kt from oxide (2018: 25.7 kt)
Q2 2020:
-
6,280 kt sulphide ore processed (Q1 2020: 6,064
kt), copper grade 0.55% (Q1 2020: 0.57%) - Copper production1 increased by 3% to 34.3 kt (Q1 2020: 33.3 kt), including oxide 5.4 kt (Q1 2020: 6.1 kt)
Oxide production focused on the re-irrigation of previously extracted material, oxide ore mining temporarily suspended in Q2 2020
Covid-19 restrictions are limiting access to site for contractors and international staff
On target to deliver full year copper production1 guidance of 120-130 kt2
Copper (kt)1 | 2020 full year guidance |
120 -130 | |
68 |
33 | 34 | |||
Q1 | Q2 | H2 | ||
Silver (koz)1 | 246 | Full year guidance | ||
c.500 | ||||
118 | 128 | |||
Q1 | Q2 | H2 |
Sulphide ore throughput and grade
Throughput (Mt) | Grade (%) | ||||
12.7 Mt | 12.3 Mt | ||||
0.58% | 0.56% | ||||
H1 2019 | H1 2020 |
Notes:
1. | Payable metal in concentrate and copper cathode from Aktogay oxide ore. | 16 |
2. | Range includes c.20 kt of cathode production from oxide ore. |
BOZSHAKOL
FY 2019:
- Copper production1 110.2 kt (2018: 101.6 kt)
- Gold production1 144.8 koz (2018: 127.8 koz) Q2 2020:
- 7,595 kt ore processed (Q1 2020: 8,040 kt),
copper grade 0.53% (Q1 2020: 0.48%) - Scheduled maintenance deferred, now weighted towards the second half of the year
- Copper production1 30.6 kt (Q1 2020: 29.8 kt), benefitted from higher copper grade
- Gold production1 41.0 koz (Q1 2020: 42.3 koz), due to lower processing volumes
Covid-19 restrictions are limiting access to site for contractors and international staff, testing of new arrivals has resulted in a shortage of mining staff
Full year guidance maintained at 110-120 kt copper1 and 140-150 koz gold1
Copper (kt)1 | 2020 full year |
guidance | |
110 - 120 | |
60 |
30 | 31 | ||||
Q1 | Q2 | H2 | |||
Gold (koz)1 | Full year guidance | ||||
83 | 140 -150 | ||||
42 | 41 | ||||
Q1 | Q2 | H2 | |||
Silver (koz)1 | Full year guidance | ||||
465 | c.700 | ||||
232 | 233 | ||||
Q1 | Q2 | H2 |
Notes:
1. Payable metal in concentrate. | 17 |
EAST REGION AND BOZYMCHAK
FY 2019:
- Copper production1 55.5 kt (2018: 61.7 kt)
- Gold and silver production1 exceeded guidance
- Zinc in concentrate production of 38.3 kt (FY 2018: 49.7 kt)
Q2 2020:
-
977 kt ore processed (Q1 2020: 808 kt), copper
grade 1.70% (Q1 2020: 1.69%) - Copper production1 14.0 kt (Q1 2020: 11.8 kt)
- Nikolayevsky concentrator operated at full capacity following scheduled idling in January
- Strong by-product output driven by higher ore throughput and grades
Achieving full year guidance for all metals is subject to potential disruption from Covid-19 in the second half of the year
Copper (kt)1 | 2020 full year guidance |
26 | c.50 |
12 | 14 | |||
Q1 | Q2 | H2 | ||
Gold (koz)1 | Full year guidance | |||
26 | 40 - 50 | |||
12 | 13 | |||
Q1 | Q2 | H2 | ||
Silver (koz)1 | Full year guidance | |||
1,030 | c.1,800 | |||
443 | 587 | |||
Q1 | Q2 | H2 | ||
Zinc (kt)2 | 24 | Full year guidance | ||
c.40 | ||||
9 | 15 | |||
Q1 | Q2 | H2 |
Notes:
1. | Payable metal in concentrate. | 18 |
2. | Zinc in concentrate. |
2020 GROUP PRODUCTION GUIDANCE
Copper1
kt
Gold3,4
koz
Silver3
koz
Zinc5
kt
Aktogay | Bozshakol | East Region & | Group |
Bozymchak | |||
120 - 1302 | 110 - 120 | c.50 | 280 - 300 |
140 - 150 | 40 - 50 | 180 - 200 |
c.500 | c.700 | c.1,800 | c.3,000 |
c.40c.40
Notes: | 19 |
1. Payable metal in concentrate and copper cathode from Aktogay oxide ore. | |
- Range includes c.20 kt of cathode production from oxide ore.
- Payable metal in concentrate.
- Minimal volume of gold recovered from Aktogay material. Q1 2020 include 0.6 koz production.
- Zinc in concentrate.
3. 2019 Results
2019 RESULTS HIGHLIGHTS
Higher copper1 and gold production2 offset 8% lower copper prices in 2019
Industry leading net cash cost of 77 USc/lb3
Final dividend of 8.0 USc/share recommended (full year 12.0 USc/share)
Producing assets support growth investments:
- Aktogay expansion project on track
- Baimskaya feasibility study work ongoing, expected to be completed by the end of 2020
Production growth
kt | 2018 | 2019 |
+6% |
+10%
295311
183201
Copper¹ | Gold² |
Costs reduced
USc/lb
144 | -3% | 2018 | 2019 | -9% | ||
140 | ||||||
85 | 77 | |||||
Gross cash cost⁴ | Net cash cost³ |
Notes:
1. Payable metal in concentrate and copper cathode from Aktogay oxide. | 21 |
- Payable metal in concentrate.
- Cash operating costs, plus TC/RC on concentrate sales, less by-product revenues, divided by copper sales volume.
- Cash operating costs, plus TC/RC on concentrate sales, divided by copper sales volume.
2019 HIGHLIGHTS (CONT'D)
Revenues
USD million
+5% | |
2,162 | 2,266 |
2018 | 2019 |
EBITDA1
USD million
Earnings per share
Ordinary EPS - Basic, USD
+6%
1.21
1.14
20182019
Mineral resources
Contained metal in measured and indicated mineral resources
+3%
1,355 | ||||
1,310 | ||||
2018 | 2019 |
Copper (Mt)
19.1 | |
12.8 | |
2018 | 2019 |
Gold (Moz)
18.0 | |
6.3 | |
2018 | 2019 |
Notes:
1. Excluding MET, royalties and special items. | 22 |
DELIVERING AGAINST OUR TARGETS
Production | |
Copper1 | kt |
Gold2 | koz |
Silver2 | koz |
290310
311
c.194
201
c.3,000
3,382
Zinc3 | kt |
Gross cash cost4 USc/lb |
38
4045
Aktogay |
Bozshakol |
East Region and Bozymchak |
105 | 125 | ||
102 | |||
130 | 150 | ||
137 | |||
230 | 250 | ||
234 |
Notes:
1. Payable metal in concentrate and copper cathode from Aktogay oxide ore. | 23 |
- Payable metal in concentrate.
- Zinc in concentrate.
- Cash operating costs, plus TC/RC on concentrate sales, divided by copper sales volume.
FINANCIAL UPDATE
$m (unless otherwise stated) | 2019 | 2018 | Copper prices reduced by 8% to $6,000/t in 2019 |
Revenues | 2,266 | 2,162 | (2018: $6,526/t) |
EBITDA of $1,355 million, 60% margin | |||
EBITDA1 | 1,355 | 1,310 | |
Industry leading first quartile net cash cost2 of | |||
Margin | 60% | 61% | |
77 USc/lb (2018: 85 USc/lb) | |||
Net cash cost (USc/lb)2 | 77 | 85 | $1.7 billion of debt facilities signed: |
- $600 million DBK facility to finance Aktogay | |||
Free Cash Flow3 | 411 | 585 | |
expansion, June 2019 | |||
Ordinary EPS - basic ($) | 1.21 | 1.14 | - $100 million CAT facility, November 2019 |
- $1,000 million PXF, January 2020 | |||
Net Debt | (2,759) | (1,986) | |
Final dividend of 8.0 USc/share recommended | |||
(full year 12.0 USc/share) | |||
Net debt $2,796 million at 31 March 2020 (31 | |||
December 2019: $2,759 million) |
Notes:
1. Excluding MET, royalties and special items. | 24 |
- Cash operating costs, plus TC/RC on concentrate sales, less by-product revenues, divided by copper sales volume.
- Net cash flow from operating activities before capital expenditure and VAT associated with major growth projects, less sustaining capital expenditure.
VOLUME GROWTH OFFSETS LOWER PRICES
($m)
Volumes1 | Commodity prices3 | ||||||||
53 | |||||||||
66 | 14 | 1,355 | |||||||
(20) | 4 | ||||||||
1,310 | (1) | ||||||||
(71) | |||||||||
Copper |
EBITDA | Aktogay | Bozshakol | East Region | By-product | Cost | Copper | By-product | EBITDA |
2018 | and | volumes | impact ² | prices | prices | 2019 |
Bozymchak
Notes:
1. Change in sales volumes at current year margin. | 25 |
- Net change in cash costs per tonne.
- Change in realised prices applied to prior year sales volumes.
COMPETITIVE UNIT COSTS
Copper sales volumes (kt) | Gross cash cost (USc/lb) | |
By-product credit (USc/lb) | ||
Net cash cost (USc/lb) | ||
Aktogay
2019 | |
148 | gross cash cost guidance |
105-125 USc/lb | |
130 |
106 | 102 | (4) | ||
98 | ||||
2018 | 2019 | 2018 | 2019 | 2019 |
Unit costs reduced mainly due to higher production volumes
Deferral of mill maintenance from December 2019 to January 2020 also reduced costs
Bozshakol
102 107
2018 2019
2019
gross cash cost guidance
130-150 USc/lb
129 | 137 | (106) |
31 | ||
2018 | 2019 | 2019 |
Gross cash cost of 137 USc/lb includes 5 USc/lb associated with 26 koz gold bar inventory sale in H1 2019
Inventory sale benefited net cash cost of 31 USc/lb by 9 USc/lb
26
COMPETITIVE UNIT COSTS (CONT'D)
Copper sales volumes (kt)
Gross cash cost (USc/lb)
By-product credit (USc/lb) Net cash cost (USc/lb)
East Region and Bozymchak
2019
gross cash cost guidance
230-250 USc/lb1
High sales volumes, cost control actions and weaker tenge offset local inflation
Gross and net cash cost benefited from sale of 7 kt
64 62
2018 2019
244 | 234 | (130) |
104 | ||
2018 | 2019 | 2019 |
of copper from inventory
Net cash cost increased to 104 USc/lb (2018: 94 USc/lb) due to reduction in zinc revenues
Group
317 | ||||
296 | ||||
144 | 140 | (63) | ||
77 | ||||
2018 | 2019 | 2018 | 2019 | 2019 |
Group net cash cost is amongst the lowest of pure- play copper producers globally at 77 USc/lb (2018: 85 USc/lb)
Notes:
1. Cost guidance lowered at H1 2019 from 260-280 USc/lb. | 27 |
MOVEMENT IN GROUP NET DEBT
($m) | Expansionary | FY 2019 | FY 2019 | ||||
capex | Actual Guidance | ||||||
Aktogay I & II | 509 | 570 | |||||
Bozshakol | 37 | 40 | 4 | ||||
East Region & Bozymchak 56 | 70 | ||||||
Baimskaya | 111 | 150 | (47) | (2,759) | |||
Other | 5 | 20 | |||||
Total | |||||||
1,355 | Sustaining | FY 2019 | FY 2019 | ||||
capex | Actual Guidance | ||||||
Aktogay | 44 | 50 | |||||
(1,986) | Bozshakol | 55 | 50 | ||||
East Region & Bozymchak 42 | 50 | ||||||
Corporate | 1 | - | |||||
Total | 142 | 150 | |||||
(92) | |||||||
(206) | |||||||
(282) | |||||||
718 850
(435)
(718)
(142)
(210)
Working capital
Inventories (consumables and ore stockpiling)
Prepayments (VAT receivable)
Receivables (timing of sales, provisional pricing)
Payables (customer advance receipts)
Total
(128)
(72)
(51)
(31)
(282)
Net debt¹ | EBITDA | Working | MET and | Income | Net | Sustaining | Expansionary | Acquisition of | Dividends | Other | Net debt¹ |
31 Dec 2018 | capital | royalties paid | tax paid | interest paid | capex | capex | Baimskaya² | paid | movements³ | 31 Dec 2019 |
Notes:
1. The excess of borrowings over cash and cash equivalents and current investments. | 28 |
- Net of $1 million cash acquired.
- Includes $45 million in respect of NFC's equity investment in Koksay, $41 million of net VAT paid associated with major growth projects, foreign exchange and other movements.
2020 FINANCIAL GUIDANCE
Gross cash cost
(USc/lb)
Aktogay
Bozshakol
East Region & Bozymchak
110-130
130-150
260-280
Sustaining capex
($m)
Aktogay | 60 |
Bozshakol | 60 |
East Region | 50 |
& Bozymchak |
Group170
Expansionary capex
($m)
Aktogay II1 | 300-350 |
East Region | 75 |
& Bozymchak2 | |
Baimskaya3 | 150 |
Other4 | 20 |
Group | 545-595 |
Notes:
1. Capital expenditure in 2020 forecast to be $300-350 million, which is lower than the previous guidance of $400 million. The balance of the unchanged $1.2 billion project budget will be 29 incurred in 2021.
- Includes Artemyevsky underground mine extension of $60 million and $15 million for Bozymchak underground extension.
- Capital expenditure of $150 million approved in 2020 to complete feasibility study and continue pioneer works. Evaluating potential for additional equipment deliveries in 2020 shipping window.
- Including Koksay.
4. Aktogay expansion project
AKTOGAY II - LOW-RISK NEAR TERM GROWTH
$1.2 billion project approved in December 2017 to double sulphide ore capacity from 25 to 50 Mtpa by 2021
Low-risk execution due to existing site infrastructure and identical concentrator design to Aktogay I and Bozshakol
Adds c.80 kt of annual copper production from 2022- 27 and c.60 kt from 2028 onwards
Net cash cost 100-120 USc/lb1
Remaining mine life of around 25 years
Copper processing grade guidance2
Life of mine sulphide | ||
2019-21 | 2022-27 | resource grade |
c.0.50% | c.0.40% | c.0.33% |
Copper production guidance3
2022-272028+
+80 ktpa | +60 ktpa |
Notes:
1. | Net cash cost guidance in USc/lb for the period 2022-27 in 2016 US dollar terms. | 31 |
2. | Combined guidance for Aktogay I and II sulphide grades. | |
3. | Incremental production guidance for Aktogay II only. |
PROJECT SCHEDULE AND PROGRESS
2019 H2 key milestones | Completed |
Main concentrator building areas enclosed
Ball Mill #1 and SAG Mill shell and heads installation
Towers for 220 and 35 kV power lines Water supply pumphouses enclosed
Ongoing
Primary crusher and conveyor
Tailings thickeners
Site railway extension to load out area
Mine maintenance facilities Permanent camp upgrade
✓
✓
✓
✓
Mill installation works, January 2020
Schedule
Complete mill installations First ore processed
2021 end of 2021
32
Ball Mill #1 installation
Overland conveyor
and crusher
5. Baimskaya copper
project
BAIMSKAYA PROJECT OVERVIEW
Baimskaya is one of the world's largest undeveloped copper resources, with the potential to be a large scale, low cost open pit copper mine
The Group acquired the Baimskaya copper project for $900 million in cash and shares in January 2019
- $675 million Initial Consideration plus Deferred Consideration of $225 million
Estimated capex budget of around $7 billion1, with c.10% expected to be incurred after first production
70 Mtpa ore processing capacity
Potential for resource expansion in c.1,300 sq. km licence area
Baimskaya
Baimka mineral trend and licence area
Licence area Mineral trend
Peschanka deposit
10 km
Notes: | 36 |
1. In nominal terms based on 100% share of development capital expenditure, subject to confirmation in further study work. | |
GLOBALLY SIGNIFICANT COPPER RESOURCE
Mineral Resources | Possible project | ||||||||||||||||||||
(Mt copper)1 | Under construction | ||||||||||||||||||||
42.2 | |||||||||||||||||||||
37.0 | 27.3 | 26.7 | 24.1 | KAZ Minerals asset | |||||||||||||||||
22.0 | |||||||||||||||||||||
15.2 | 15.0 | 13.6 | 13.4 | 13.0 | 10.8 | ||||||||||||||||
9.5 | |||||||||||||||||||||
7.7 | 7.2 | 7.1 | 6.9 | ||||||||||||||||||
5.5 | |||||||||||||||||||||
4.6 | |||||||||||||||||||||
Kamoa Kakula | Pebble | Resolution | Udokan | Reko Diq | La Granja | Tampakan | El Pachon | Quellaveco | Los Azules | Taca Taca | Cascabel | Baimskaya (Peschanka) | Vizcachitas | Michiquillay | Rio Blanco | Aktogay | Galore Creek | Bozshakol | |||
The Peschanka deposit in the Baimskaya licence area ranks in the top 10 undeveloped greenfield copper projects globally
Notes: | 37 |
1. Source: Company data. Mineral Resources include Measured and Indicated Resources (bottom bar) and Inferred Resources (top bar). |
BAIMSKAYA UPDATE
Bankable feasibility study expected to be completed by the end of 2020
Latest project parameters, based on feasibility study work completed to date:
- Drilling results indicate a potential increase in Mineral Resources which would lead to an extension of the mine life
- Ore processing capacity increased from 60 Mtpa to 70 Mtpa
- Two lines to be ramped up in consecutive phases 12 to 18 months apart, reducing peak funding
requirement compared to simultaneous startup | Peschanka ore samples, 2019 |
- Capital budget of around $7 billion2, with c.10% expected to be incurred after first production
Notes: | 38 | |
1. | See page 57 for further details of Mineral Resources. | |
2. | In nominal terms based on 100% share of development capital expenditure, subject to confirmation in further study work. |
INFRASTRUCTURE OVERVIEW
Power
Government funded 110 kV power line from Bilibino to Baimskaya
Pevek
Floating nuclear facility 'Akademik Lomonosov' installed in Pevek in Q4 2019
Bilibino
110 kV power
220 kV power line to Magadan for production phase
Road
Construction of government financed all-seasonOmolon-Anadyr highway progressing
Shipping
2024 cargo target for Northern Sea Route set at 80 Mt
Baimskaya
220 kV power
Magadan
Copper concentrate transported by sea to Asian markets
Power
Road
Shipping
39
110 kV power line
and transformer
August 2019
Completed bridge at Ilirney
August 2019
Floating nuclear power facility
'Akademik Lomonosov' Murmansk, August 2019
PEVEK | |||
Krasnoarmeisky | |||
Komsomolsky | |||
The Sakha Republic | |||
(Yakutia) | CHERSKY | ||
Mayskoye | |||
Polymetal | |||
Anuysk | |||
Karalveem | |||
BILIBINO | |||
Klen | Kekura | ||
Highland Gold | |||
Highland Gold | |||
Exploration & | |||
Exploration & development | |||
development | ILIRNEY | ||
Kupol | |||
Baimskaya | Kinross | ||
Kayen | |||
Highland Gold | |||
Exploration & | |||
development | |||
Gold mine | |||
OMOLON | Existing motor roads / winter roads | ||
with extended life | |||
Existing winter roads | |||
All-season"Magadan-Anadyr" | |||
Magadan Region | highway (under construction) | ||
All-season highway (completed) | |||
100 | 200 | ||
km |
Valunisty
Highland Gold
ANADYR
6. Positioned for growth
STRONG PLATFORM
World class open-pit copper mines, consistently achieving production targets
- 311 kt copper production
- 201 koz gold production
$1,355 million EBITDA at 60% margin
Industry leading 77 USc/lb net cash cost
$1.7 billion of debt facilities signed in last nine months
Proven project team with track record of delivery
45
POSITIONED FOR GROWTH
KAZ Minerals is a high growth, low cost copper producer generating significant cash flow
Copper market fundamentals forecast deficit in coming decade, without supply from new projects
Near term production growth from Aktogay expansion
Long term production growth from Baimskaya copper project, in the first quartile of the cost curve1
Generating value and volume over the long term, underpinned by structural demand growth for copper as the world transitions to a low carbon economy
Notes: | 46 |
1. The parameters of the project will be confirmed on completion of the feasibility study. | |
APPENDIX
SUMMARY INCOME STATEMENT
Key line items | 2019 revenues split by product | ||||||||
$m (unless otherwise stated) | 2019 | 2018 | |||||||
Revenues | 2,266 | 2,162 | 3% 3% | ||||||
14% | |||||||||
Cost of sales | (1,124) | (1,077) | Copper | ||||||
Gross profit | 1,142 | 1,085 | |||||||
Operating profit | 923 | 851 | Gold | ||||||
Net finance costs | (177) | (212) | Silver | ||||||
Net foreign exchange (loss)/gain | (20) | 3 | |||||||
Profit before tax | 726 | 642 | Zinc | ||||||
Income tax expense | (155) | (132) | |||||||
Profit for the year | 571 | 510 | 80% | ||||||
EPS based on Underlying Profit ($) - basic | 1.21 | 1.18 | |||||||
EPS based on Underlying Profit ($) - diluted | 1.17 | 1.18 | |||||||
Reconciliation of Underlying Profit | |||||||||
$m | 2019 | 2018 | |||||||
Profit attributable to equity holders of the Company | 571 | 510 | |||||||
Special items within operating profit, net of tax | - | 20 | |||||||
Underlying Profit | 571 | 530 | |||||||
48
REVENUES AND SALES VOLUMES
Revenues
$m | 2019 | 2018 |
Copper cathode | 828 | 690 |
Copper in concentrate | 996 | 1,087 |
Gold bar | 133 | 68 |
Gold in concentrate | 185 | 144 |
Silver bar | 40 | 40 |
Silver in concentrate | 19 | 15 |
Zinc in concentrate | 58 | 101 |
Other | 7 | 17 |
Total revenues | 2,266 | 2,162 |
Sales volumes
kt (unless otherwise stated) | 2019 | 2018 |
Copper cathode | 138 | 106 |
Copper in concentrate1 | 179 | 190 |
Gold bar (koz) | 97 | 54 |
Gold in concentrate (koz)1 | 128 | 115 |
Silver bar (koz) | 2,460 | 2,518 |
Silver in concentrate (koz)1 | 1,106 | 1,009 |
Zinc in concentrate | 38 | 50 |
Average realised prices
2019 | 2018 | |
Copper cathode ($/t) | 6,027 | 6,531 |
Copper in concentrate ($/t)2 | 5,551 | 5,709 |
Gold bar ($/oz) | 1,374 | 1,265 |
Gold in concentrate ($/oz)2 | 1,443 | 1,258 |
Silver bar ($/oz) | 16.2 | 15.7 |
Silver in concentrate ($/oz)2 | 16.7 | 15.3 |
Zinc in concentrate ($/t) | 1,548 | 2,015 |
Average LME and LBMA Prices
2019 | 2018 | |
Copper ($/t) | 6,000 | 6,526 |
Gold ($/oz) | 1,393 | 1,268 |
Silver ($/oz) | 16.2 | 15.7 |
Zinc ($/t) | 2,546 | 2,922 |
Notes:
1. Payable metal in concentrate. | 49 |
2. After the deduction of processing charges.
REVENUE RECONCILIATION
Volume growth offset decrease in commodity prices ($m)
Volumes1
Average LME |
FY 2019 vs FY 2018 |
Commodity prices2 |
10226
2,162
53
4 | 2,266 | (8)% |
(10)
By-products volume ($m)
Gold | 80 |
Silver | 1 |
Zinc | (19) |
Other | (9) |
(71) | (13)% | ||
Copper | Zinc |
Average LBMA
FY 2019 vs FY 2018
Revenues | Aktogay | Bozshakol East Region | By-product | Copper | By-product | Revenues | |
2018 | and | volumes | prices | prices | 2019 | ||
Bozymchak |
10% | 3% |
Gold | Silver |
Notes:
1. Change in sales volumes at current year realised prices. | 50 |
2. Change in realised prices applied to prior year sales volumes.
CASH FLOW
$m | 2019 | 2018 |
EBITDA1 | 1,355 | 1,310 |
Change in working capital | (282) | (115) |
Interest paid | (230) | (229) |
MET and royalties paid | (206) | (208) |
Income tax paid | (92) | (95) |
Foreign exchange and other movements | 8 | 7 |
Sustaining capital expenditure | (142) | (85) |
Free Cash Flow | 411 | 585 |
Expansionary and new project capital expenditure | (718) | (530) |
Acquisition of Baimskaya copper project, net of cash acquired | (435) | - |
Net VAT (paid)/received associated with major growth projects | (41) | 3 |
Interest received | 20 | 32 |
Dividends paid | (47) | (27) |
Other investments | 45 | 10 |
Other movements | (3) | (3) |
Cash flow movement in net debt | (768) | 70 |
Notes:
1. EBITDA excludes MET, royalties and special items. | 51 |
SUMMARY BALANCE SHEET
Assets
$m | 2019 | 2018 |
Non-current assets | 4,596 | 2,897 |
Cash and cash equivalents and current investments | 541 | 1,469 |
Other current assets | 929 | 674 |
Total | 6,066 | 5,040 |
Non-current assets
$m | 2019 | 2018 |
Intangible assets | 5 | 6 |
Property, plant and equipment | 2,756 | 2,130 |
Mining assets | 1,457 | 432 |
Other non-current assets | 338 | 301 |
Deferred tax asset | 40 | 28 |
Total | 4,596 | 2,897 |
Equity & liabilities
$m | 2019 | 2018 |
Equity | 2,174 | 1,054 |
Borrowings | 3,300 | 3,453 |
Other liabilities | 592 | 533 |
Total | 6,066 | 5,040 |
Net debt
$m | 2019 | 2018 |
Cash and cash equivalents and current investments | 541 | 1,469 |
Less: restricted cash | - | (2) |
Borrowings | (3,300) | (3,453) |
Short-term | (545) | (539) |
Long-term | (2,755) | (2,914) |
Total | (2,759) | (1,986) |
52
DEBT FACILITIES
Balance1 | Undrawn | Final | |||
Facility | $m, 31 Dec 19 | $m | maturity | Interest rate | Repayment details & covenants |
CDB Bozshakol/ | 1,174 | - | 2025 | $ LIBOR + 4.50% | Semi-annual principal and interest payments |
Bozymchak | Balance sheet covenant | ||||
CDB Aktogay | 1,223 | - | 2029 | $ LIBOR + 4.20% (USD | Semi-annual principal and interest payments2 |
facility) | Balance sheet covenant | ||||
PBoC 5 year (RMB facility) | |||||
DBK Aktogay I | 236 | - | 2025 | $ LIBOR + 4.50% | Semi-annual principal and interest payments |
Balance sheet covenant | |||||
DBK Aktogay II | 320 | 2803 | 2034 | $ LIBOR + 3.90% | Repayments commence from 2022 |
Semi-annual principal and interest payments | |||||
Balance sheet covenant | |||||
PXF | 3004 | -4 | 20245 | $ LIBOR + 2.50% | Monthly principal repayments commencing from |
Amended $1 billion | Variable range 2.25% to | January 2021 | |||
PXF signed on 28 | 3.50% | Monthly interest payments | |||
Jan 2020 | Initial final maturity in December 2024, with extension | ||||
options to December 2025 or December 2026 | |||||
Income statement covenant | |||||
CAT | 74 | 263 | 2023-26 | $ LIBOR + 3.00% | Quarterly principal repayments from December 2020, |
$100 million facility | Variable range 3.00% to | with final maturities between December 2023 and March | |||
signed on 15 Nov | 4.50% | 2026 | |||
2019 | Income statement covenant | ||||
Notes: | 53 |
1. Drawn amount excludes arrangement fees. |
- RMB facility interest payments are quarterly.
- Undrawn as at 31 December 2019.
- Amended $1 billion PXF facility was fully drawn down in Q1 2020.
- Extendable up to 2026.
ILLUSTRATIVE DEBT REPAYMENT PROFILE
Repayment Profile1
($m) 1000 900
800
700
600
500
400
300
200
100
0
CAT | PXF 2,3 | DBK Aktogay II | DBK Aktogay I | CDB Aktogay | CDB Bozshakol/Bozymchak | |||||
Extension Options3
provide for repayment of $333 million in 2025-26, subject to agreement of lenders
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030-344 |
Notes:
1. | Assumes all available debt facilities are fully drawn, for illustrative purposes only. Actual loan balance may vary. | 54 |
2. | New $1,000 million PXF facility was fully drawn in the first quarter of 2020. | |
3. | Extension Options are exercisable on the first and second anniversaries of signing. | |
4. | Average debt repayment per annum. |
GROUP CASH COST RECONCILIATION
$m (unless otherwise stated) | 2019 | 2018 | 20171 | H2 2019 | H1 2019 | H2 2018 | H1 2018 | H2 20171 | H1 20171 | |
Copper sales volumes (kt) | 317 | 296 | 256 | 173 | 144 | 155 | 141 | 141 | 115 | |
Revenues | 2,266 | 2,162 | 1,663 | 1,214 | 1,052 | 1,064 | 1,098 | 942 | 721 | |
EBITDA2 | (1,355) | (1,310) | (1,038) | (735) | (620) | (620) | (690) | (609) | (429) | |
Pre-commercial production3 | - | - | 78 | - | - | - | - | 38 | 40 | |
Corporate costs and other adjustments | (37) | (28) | (25) | (17) | (20) | (13) | (15) | (15) | (10) | |
TC/RCs on concentrate sales | 104 | 115 | 98 | 57 | 47 | 58 | 57 | 53 | 45 | |
Gross cash cost | 978 | 939 | 776 | 519 | 459 | 489 | 450 | 409 | 367 | |
Gross cash cost (USc/lb) | 140 | 144 | 138 | 136 | 144 | 143 | 145 | 132 | 144 | |
By-product credits | (442) | (381) | (406) | (239) | (203) | (187) | (194) | (201) | (205) | |
Net cash costs | 536 | 558 | 370 | 280 | 256 | 302 | 256 | 208 | 162 | |
Net cash cost (USc/lb) | 77 | 85 | 66 | 73 | 80 | 88 | 82 | 67 | 64 | |
Notes:
1. Includes the results of pre-commercial production. | 55 |
- EBITDA excludes MET, royalties and special items.
- Cash operating costs capitalised during pre-commercial production.
MINERAL RESOURCES SUMMARY - 31 DEC 2019
Aktogay | Aktogay | Bozshakol | Bozshakol | Artemyevsky | Irtyshsky | Orlovsky | Bozymchak | ||
sulphide | oxide | sulphide | clay | ||||||
Resources1 (Mt) | 1,557.2 | 46.4 | 879.0 | 112.9 | 21.32 | 3.2 | 10.1 | 13.6 | |
Copper grade (%) | 0.33 | 0.35 | 0.36 | 0.43 | 1.96 | 2.25 | 2.88 | 0.78 | |
Contained copper (Mt) | 5.1 | 0.2 | 3.2 | 0.5 | 0.4 | 0.1 | 0.3 | 0.1 | |
Gold grade (g/t) | - | - | 0.14 | 0.19 | 0.90 | 0.38 | 0.79 | 1.30 | |
Contained gold (Moz) | - | - | 4.0 | 0.7 | 0.6 | - | 0.3 | 0.6 | |
Silver grade (g/t) | - | - | 1.1 | 1.3 | 81 | 90 | 41 | 7.9 | |
Zinc (%) | - | - | - | - | 4.03 | 5.27 | 4.43 | - | |
Molybdenum grade (%) | 0.008 | - | 0.008 | 0.006 | - | - | - | - | |
Type of mine | Open pit | Open pit | Underground | Underground | Underground | Open pit / | |||
underground | |||||||||
Concentrator | On-site | On-site | Nikolayevsky | On-site | On-site | ||||
Description | Large scale mine, located in East | Large scale mine, located in Pavlodar | Mine with | Irtyshsky has | Orlovsky is the | Bozymchak is | |||
Region of Kazakhstan. Commenced | Region of Kazakhstan. Commenced | polymetallic ore, | been operating | largest mine in | located in | ||||
production of copper cathode from | production of copper in concentrate from | operating since | since 2001 | East Region | Kyrgyzstan | ||||
oxide ore in December 2015 and | sulphide ore in February 2016 | 2005 | by copper | ||||||
copper in concentrate from sulphide | metal in ore | ||||||||
ore in February 2017 | extracted | ||||||||
Notes:
1. | Measured and indicated as at 31 December 2019. | 56 |
2. | Includes Artemyevsky II expansion. |
PESCHANKA DEPOSIT MINERAL RESOURCES
Measured | Indicated | Inferred | Total | |||
Mineral resources | Mt | 139 | 1,289 | 774 | 2,202 | |
Copper grade | % | 0.72 | 0.44 | 0.36 | 0.43 | |
Contained copper | Mt | 1.0 | 5.7 | 2.8 | 9.5 | |
Gold grade | g/t | 0.39 | 0.26 | 0.16 | 0.23 | |
Contained gold | Moz | 1.7 | 10.8 | 4.0 | 16.5 | |
Silver grade | g/t | 4.0 | 2.4 | 2.0 | 2.4 | |
Molybdenum grade | ppm | 140 | 120 | 90 | 110 | |
57 |
TAILINGS FACILITIES
Facility | Type | First | Expected | Status | |||
construction | closure date | ||||||
Bozshakol | Downstream | 2016 | 2058 | Active | |||
Aktogay | Downstream | 2017 | 2045 | Active | |||
Bozymchak | Dry stack | 2014 | 2032 | Active | |||
East Region | |||||||
Zhezkentsky | Upstream | 1989 | 2026 | Active | |||
Nikolayevsky1 | Upstream | 1980 | 20201 | Active | |||
Notes: | 58 | ||||||
1. Artemyevsky mine transitioning in 2020 to in-pit tailings disposal in the Nikolayevsky open pit. |
SENIOR MANAGEMENT
Oleg Novachuk, Chair | Eldar Mamedov, General Director, KMM LLP |
Joined the Company in 2001, former Chief Executive and was | Joined the Company in 1996, former Head of Legal and |
appointed Chair on 1 January 2018, with responsibility for | was appointed as General Director of the KMM LLP in |
strategy, government relations and business development. | 2014, with responsibility for government relations, |
legal, procurement and administration. | |
Andrew Southam, Chief Executive Officer | Madina Kaparova, Group Procurement Director | |
Joined the Company in 2006, former Chief Financial Officer | Joined the Company in 1998 and was appointed Group | |
and was appointed Chief Executive Officer on 1 January 2018, | Procurement Director in 2016, with responsibility for | |
with responsibility of executive management of the Group and | development and implementation of procurement strategy. | |
leading the senior management team in the day to day running | ||
of the business. | ||
John Hadfield, Chief Financial Officer | Sergey Leu, General Director, Bozshakol | |
Joined KAZ Minerals in November 2017 as Deputy Chief | Joined KAZ Minerals in August 2016 as General Director | |
Financial Officer and was appointed Chief Financial Officer on | of Bozshakol with responsibility for management of | |
1 January 2018. | Bozshakol operations. | |
Mian Khalil, General Director, Projects | Ilsur Dautov, General Director, East Region | |
Joined the Company in 2010, with responsibility for | Appointed General Director of the East Region in March | |
construction of major growth projects, Aktogay and Bozshakol | 2014. Responsible for the management of East Region | |
and is currently focused on the Aktogay expansion project and | operations. | |
Baimskaya (Peschanka) copper project in Chukotka, Russia. | ||
Philip Welten, General Director, Aktogay | Ilyas Tulekeev, General Director, Bozymchak | |
Joined KAZ Minerals in 2018 as General Director of Aktogay, | Joined KAZ Minerals in 2006 and was appointed General | |
with responsibility for management of Aktogay operations. | Director of Bozymchak in 2011, with responsibility for | |
management of Bozymchak operations. | ||
59 |
KAZ Minerals PLC
6th Floor, Cardinal Place 100 Victoria Street London
SW1E 5JL
UK
www.kazminerals.com
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KAZ Minerals plc published this content on 30 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2020 06:15:11 UTC