KAZ Minerals (KAZ) will be looking to the second half after Covid-19 smashed the copper price and dropped its earnings in the first half. This was despite higher copper and gold production for the Kazakhstan-focused miner and 15 per cent lower net cash costs.
Copper has recovered since dropping to $2.10 (£1.59p) per pound (lb), or around $4,600 per tonne (t) in March, so KAZ’s operational performance should see it catch up in the second half. Cash profits for the six months to 30 June were $559m, a 10 per cent drop on the first half of 2019.
The Bozshakol mine provided the production uptick, while the Aktogay mine that is the focus of expansion work saw a 9 per cent drop year on year and higher costs.
Bozshakol is also where the lion’s share of KAZ’s gold production comes from, which made its net cash cost a tiny 12¢/lb. Miners often account for byproduct sales (gold and silver in this case) by calculating a lower net cost rather than adding them on to revenue.
While the Aktogay mine expansion will up throughput significantly, KAZ’s major growth option is the Baimskaya project across the border in Russia.
It is working on a feasibility study that should be ready by the end of 2020. This is a $7bn project, with the study itself requiring $74m in spending in the first half and another $116m by the end of the year.
KAZ maintained its half-year dividend at 4¢.
Consensus forecasts compiled by FactSet see adjusted earnings per share for the full year at 97¢, at 17 per cent drop on 2019.
| KAZ MINERALS (KAZ) | ||||
| ORD PRICE: | 571p | MARKET VALUE: | £2.7bn | |
| TOUCH: | 571-572p | 12-MONTH HIGH: | 600p | LOW: 256p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 438¢ | NET DEBT: | 131% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 1.05 | 289 | 48 | 4.0 |
| 2020 | 0.99 | 249 | 42 | 4.0 |
| % change | -6 | -14 | -13 | - |
| Ex-div: | 1 Oct | |||
| Payment: | 23 Oct | |||
| £1=$1.32 | ||||
