2017 Full Year Results

KAZ MINERALS PLC AUDITED RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2017

 

FINANCIAL HIGHLIGHTS

  • Gross Revenues double to $1,938 million (2016: $969 million) as the Group delivers production growth into stronger commodity markets
    • 2017 full year copper sales volumes of 256 kt (2016: 141 kt)
    • Revenues in income statement of $1,663 million (2016: $766 million), excluding $275 million of pre-commercial revenues
  • Gross EBITDA of $1,235 million (2016: $492 million) driven by low cost volume growth
    • Gross EBITDA margin of 64% (2016: 51%)
    • EBITDA of $1,038 million (2016: $351 million), excludes $197 million of pre-commercial earnings
    • Operating profit increased by over three times to $715 million (2016: $218 million)
  • Highly competitive net cash cost of 66 USc/lb (2016: 59 USc/lb), all operations in the first quartile of the cost curve in FY 2017
    • Bozshakol gross cash cost of 121 USc/lb (2016: 106 USc/lb) at lower end of guidance range of 115-135 USc/lb and competitive net cash cost of 54 USc/lb (2016: 27 USc/lb), supported by strong gold production3
    • Aktogay net cash cost of 98 USc/lb (2016: 114 USc/lb). Gross cash cost of 100 USc/lb (2016: 114 USc/lb) was below guidance of 110-130 USc/lb due to higher average copper grade, lower maintenance expenditure and muted inflationary pressure
    • East Region and Bozymchak net cash cost of 42 USc/lb (2016: 68 USc/lb), due to gross cash costs of 208 USc/lb (2016: 191 USc/lb) at bottom of guidance range (205-225 USc/lb) and higher by-product credits
  • Free Cash Flow of $452 million (2016: $(60) million)
    • Driven by growth in operating cash flows and low sustaining capital expenditure requirements
    • Cash flow from operations of $752 million (2016: $(98) million)

OPERATIONAL HIGHLIGHTS

  • Copper production2 increased by 80% and gold production3 40% higher compared to prior year
    • Bozshakol and Aktogay contribute 192 kt of the Group’s copper production2 of 259 kt in 2017 as sulphide concentrators ramp up
    • 179 koz of gold production3 was at upper end of the Group’s increased guidance range of 160-180 koz

2018 GROWTH OUTLOOK

  • Group copper production2 guidance set at 270-300 kt, as higher throughput is expected to be offset by slightly lower average copper grades in FY 2018
    • Bozshakol expected to produce 95-105 kt with an average sulphide ore processed grade of 0.44%
    • Aktogay sulphide to ramp up to 90-105 kt and oxide 20-25 kt
    • East Region and Bozymchak copper production2 expected to remain stable in 2018 at around 65 kt
    • Gross cash cost guidance of 130-150 USc/lb at Bozshakol and 110-130 USc/lb at Aktogay, due to expected reduction in grades and as normal maintenance schedules are established
    • East Region and Bozymchak gross cash cost guidance of 230-250 USc/lb, reflecting lower sales volumes and local inflation, with by-product credits expected to deliver a first quartile net cash cost.

 

$ million (unless otherwise stated)

2017

2016

Gross Revenues1,4

1,938

969

Gross EBITDA1,5,8

1,235

492

 

 

 

Revenues

1,663

766

EBITDA (excluding special items)1,8

1,038

351

Operating profit

715

218

Profit before taxation

580 

220

Underlying Profit1

476

180

EPS – basic and diluted ($)

1.00

(0.40)

EPS – based on Underlying Profit/(Loss) ($)1,6

1.07

(0.40)

 

 

 

Cash flow from operations

752

(98)

Free Cash Flow1,7

452

 (60)

 

 

 

Gross cash cost (USc/lb)1

138

156

Net cash cost (USc/lb)1

66

59

 

 

 

Net debt1

2,056

2,669

1  Definitions of non-IFRS financial metrics used throughout the press release are included in the Glossary.
2  Payable metal in concentrate and copper cathode from Aktogay oxide ore.
3  Payable metal in concentrate.
4  Includes revenues from pre-commercial operations.
5  Includes EBITDA from pre-commercial operations.
6  Reconciliation of EPS based on Underlying Profit is found in note 9 in the financial information.
7  Net cash flow from operating activities before capital expenditure and non-current VAT associated with expansionary and new projects, less sustaining capital expenditure.
8  Reconciliation to operating profit provided in note 4(a)(i) in the financial information

 

Andrew Southam, Chief Executive Officer, said: “The Group has delivered high production growth and low operating costs in 2017. Following the successful ramp up to date of Bozshakol and Aktogay our asset base is now dominated by large scale, low cost, modern copper mines which are set to generate significant cash flows in the future. We have established a strong platform to deliver further growth in 2018 and from the expansion of Aktogay, which leaves us well positioned to benefit from the expected tightness in the copper market, as declining global supply coincides with continued growth in demand.”

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