Miners' capital structures can often hit a point, just prior to production, when financing commitments vastly outweigh cash generation. KAZ Minerals (KAZ) may have just about passed that point after completing not one but two enormous growth projects in 2016; just as well, as year-end net debt stood at more than five times gross cash profit of $492m (£392m).
That gross figure is somewhat misleading, as it includes $141m of pre-commercial earnings, which were capitalised as part of the cost of construction, and not recognised in the statutory income statement. With both the Bozshakol sulphide and Aktogay oxide plants now up and running, the focus is now on profitability of production, which could hit 260,000 tonnes of copper concentrate in 2017 if both new plants leapfrog the 65kt of high-cost output expected from East Region and Bozymchak.
The gross cash costs of 106¢ per pound of copper seen at Bozshakol's start-up in 2016 are expected to increase to between 125¢ and 145¢ per pound this year, ditto Aktogay. Following that guidance, and against the current copper price of 266¢, Macquarie Capital expects adjusted EPS of 96¢ this year, rising to 114¢ in 2018.
KAZ MINERALS (KAZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 576p | MARKET VALUE: | £2.57bn | |
| TOUCH: | 575-576p | 12-MONTH HIGH: | 603p | LOW: 116p |
| DIVIDEND YIELD: | nil | PE RATIO: | 18 | |
| NET ASSET VALUE: | 119¢ | NET DEBT: | $2.67bn | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012* | 3.35 | 151 | 12.0 | 11.0 |
| 2013 | 0.93 | 138 | 18.0 | nil |
| 2014 | 0.85 | -169 | -52.0 | nil |
| 2015 | 0.67 | 12 | -3.0 | nil |
| 2016 | 0.77 | 220 | 40.0 | nil |
| % change | +15 | +1733 | - | - |
£1=$1.25 *Figures after 2012 reflect continuing operations following asset transfer to Cuprum | ||||
