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Kazakhmys PLC (KAZ)

  Print      Mail a friend       Annual reports

Tuesday 30 January, 2007

Kazakhmys PLC

Q4 Production Results

Kazakhmys PLC
30 January 2007



                                                               30th January 2007


Kazakhmys PLC Production Summary for the full year and the fourth quarter ended
                                31 December 2006


   • For the year ended 31 December 2006, copper cathode production, excluding
     copper produced through tolling arrangements, grew by 5 per cent and copper
     in concentrate production increased by 9 per cent, compared to 2005. Copper
     cathode produced from own concentrate increased by 9 per cent over the same
     period as a result of higher production from the recently commissioned
     Artemyevskoe, Zhomart (formerly called Zhaman-Aybat) and Kosmurun mines.

   • Zinc metal production was 17 per cent higher compared to 2005, despite
     some technical issues associated with the coolers at the Balkhash zinc plant
     that are still being rectified. Zinc in concentrate production rose by 36
     per cent due to an increased contribution from high grade zinc ores from the
     Artemyevskoe mine (East Region).

   • Own gold and silver production increased by 6 and 5 per cent,
     respectively, compared to 2005 levels.


Copper

Kazakhmys Group Copper Production
                               Q1 2006   Q2 2006   Q3 2006   Q4 2006   FY 2006   FY 2005
----------------------------------------------------------------------------------------
Ore extraction         '000 t    9,838    10,289    10,128     8,985    39,240    39,446
Average copper grade   %          1.07      1.13      1.16      1.32      1.17      1.03
Average zinc grade*    %          3.98      4.03      4.75      4.47      4.28      3.28

Copper in Concentrate  '000 t     95.0     107.6     111.4     119.5     433.5     397.6
 own concentrate       '000 t     84.7      98.7     100.1      99.7     383.2     345.7
 purchased concentrate '000 t     10.3       8.9      11.3      19.8      50.3      51.9

Copper Cathodes**      '000 t     89.1      98.8     107.3     111.8     407.0     396.6
 own concentrate       '000 t     76.8      92.2      96.5     103.0     368.4     338.2
 purchased concentrate '000 t     11.6       5.9      10.6       8.7      36.8      48.3
 tolling concentrate   '000 t      0.7       0.7       0.3       0.1       1.8      10.1
Copper Rod             '000 t      5.3       9.0       8.1       6.1      28.5       8.7
----------------------------------------------------------------------------------------

*  Complex ores only

** Includes copper used to produce copper rod


In the fourth quarter of 2006, the Group produced 111.8 thousand tonnes of
copper cathode (of which 6.1 thousand tonnes were used to produce copper rods),
a 4 per cent increase compared to the third quarter of 2006. Copper cathode
production from own concentrate increased by 7 per cent compared to the third
quarter, and amounted to 103.0 thousand tonnes. Production through tolling
arrangements decreased from 0.3 to 0.1 thousand tonnes.

The increased production volume was primarily the result of improved copper
grades, which increased from 1.16 to 1.32 per cent compared to the third quarter
of 2006, as well as higher production from new mines (Zhomart, Artemyevskoe and
Kosmurun).

The overall 2006 copper cathode production volume increase of 5 per cent on
2005, was primarily driven by the increase of copper production from own
concentrate (9 per cent increase compared to 2005), in line with guidance issued
during 2006 and our expressed intention to reduce copper production from
purchased concentrate.


By-products

Kazakhmys Group By-products Production

                               Q1 2006   Q2 2006   Q3 2006   Q4 2006   FY 2006   FY 2005
----------------------------------------------------------------------------------------
Zinc in Concentrate '000 t        39.2      31.3      36.6      22.0     129.1      95.1
Zinc Metal          '000 t        18.2      15.6      12.1      13.6      59.5      50.9

Silver              '000 oz      5,249     5,443     5,301     5,577    21,570    20,606
 own production     '000 oz      5,226     5,433     5,295     5,576    21,530    20,517
 tolling            '000 oz         23        10         6         1        40        90

Gold                '000 oz       35.1      42.7      42.9      44.8     165.5     145.3
 own production     '000 oz       23.2      30.4      25.6      27.7     106.9     100.5
 tolling            '000 oz       11.9      12.3      17.3      17.2      58.6      44.8
----------------------------------------------------------------------------------------


Zinc metal production in the fourth quarter of 2006 was 13.6 thousand tonnes, a
12 per cent increase against the 12.1 thousand tonnes produced in the third
quarter of 2006. This increase was achieved following lower temperatures
experienced during the fourth quarter, which aided performance. Technical issues
associated with the Balkhash zinc plant coolers remain, but the programme to
redesign the cooling system is continuing and is expected to be completed during
2007. Zinc in concentrate production volumes were down from 36.6 thousand tonnes
to 22.0 thousand tonnes in the fourth quarter of 2006, as sizeable ore volumes
were held in inventory at the period end ready for processing by third parties
at the beginning of 2007.

In total during 2006, 59.5 thousand tonnes of zinc metal were produced, a 17
per cent increase compared to 2005. Over the same period, zinc in concentrate
production was 36 per cent higher, primarily due to the first year of full
production at the Artemyevskoe mine within the East Region.

In the fourth quarter of 2006, the Group also produced 5.6 million ounces of
silver and 44.8 thousand ounces of gold, an increase of 5 and 4 per cent,
respectively, compared to the third quarter of 2006, driven by increased
contributions from the Kosmurun mine and higher by-products within purchased
concentrate. Of the 44.8 thousand ounces of gold produced, 27.7 thousand ounces
represented own production (an 8 per cent increase compared to the third quarter
of 2006). There were no ore extraction activities at the Abyz mine but this was
fully offset by increased production at the Kosmurun and Artemyevskoe mines. Of
the 5.6 million ounces of refined silver, production under tolling arrangements
represented only 1 thousand ounces.



Review by region

Zhezkazgan Complex

                               Q1 2006   Q2 2006   Q3 2006   Q4 2006   FY 2006   FY 2005
----------------------------------------------------------------------------------------
Ore extraction         '000 t    6,824     7,226     7,071     6,555    27,676    28,046
Average copper grade   %          0.82      0.82      0.79      0.84      0.82      0.87
Copper Concentrate     '000 t    139.5     140.7     132.1     128.8     541.1     598.2
Copper in Concentrate  '000 t     49.2      51.7      48.7      49.6     199.3     214.7
Copper Cathodes*       '000 t     51.7      54.1      59.8      56.2     221.8     235.3
 of which tolling      '000 t      0.2       0.3       0.2        --       0.7       0.1
Copper Rod             '000 t      5.3       9.0       8.0       6.2      28.5       8.7
----------------------------------------------------------------------------------------

*Includes copper used to produce copper rod


In the fourth quarter of 2006, ore extracted at the Zhezkazgan complex decreased
by 7 per cent compared to the third quarter, primarily due to reduced mining
activity at the Annensky and East mines caused by the roof fall at the end of
the third quarter. The loss in production from these two mines was partially
offset by stronger performance from the Zhomart mine, the new mining operation
within the Zhezkazgan complex. The greater ore contribution from this mine also
allowed a higher average copper grade to be achieved in the fourth quarter
rising from 0.79 per cent to 0.84 per cent compared to the third quarter of
2006. In the fourth quarter of 2006, copper in concentrate production was 2 per
cent higher than in the third quarter, driven by higher copper ore grades. At
the same time, the Zhezkazgan complex produced 6 per cent less copper cathode
than in the previous quarter, as some of the concentrate delivered from the East
Region mines was stockpiled to be processed in the first quarter of 2007.

For the whole of 2006, extracted ore volumes remained at approximately the same
levels as in 2005 with the average copper grade decreasing slightly from 0.87
per cent in 2005 to 0.82 per cent in 2006 as the majority of mining operations
at the Zhezkazgan complex are becoming more mature. Copper cathode production
decreased by 6 per cent from 235.3 thousand tonnes in 2005 to 221.8 thousand
tonnes in 2006.

Although copper rod production in the fourth quarter of 2006 decreased to 6.2
thousand tonnes from 8.0 thousand tonnes produced in the third quarter, it
remained at historically high levels due to continued strong demand from China.
Overall in 2006, copper rod production more than tripled compared to 2005
levels, increasing from 8.7 thousand tonnes to 28.5 thousand tonnes, to meet
stronger market demand from China.


Balkhash Complex
                               Q1 2006   Q2 2006   Q3 2006   Q4 2006   FY 2006   FY 2005
----------------------------------------------------------------------------------------
Ore extraction         '000 t    1,021     1,266     1,252       833     4,371     5,626
Average copper grade   %          0.82      0.81      0.72      0.93      0.81      0.71

Copper Concentrate*    '000 t     48.9      84.2      72.1      52.0     257.1     180.9
Copper in Concentrate  '000 t      9.4      14.9      10.3       9.0      43.5      32.9
Copper Cathodes        '000 t     37.4      44.7      47.5      55.6     185.2     161.3
 of which tolling      '000 t      0.4       0.4       0.1       0.2       1.1      10.0
Copper Rod             '000 t       --        --        --        --        --        --
----------------------------------------------------------------------------------------

* Excludes concentrate processed by third parties


At the Balkhash complex, ore extraction volumes in the fourth quarter of 2006
decreased by 33 per cent compared to the third quarter, adversely impacted by
the breakage of one of the excavators at the Kounrad mine late in September 2006
and some technical problems with mining and drilling equipment at the Sayak mine
in October 2006. In both instances, the technical difficulties have been
rectified. Lower ore extraction volumes were partially offset by an increase in
the average ore grade from 0.72 per cent to 0.93 per cent in the fourth quarter
of 2006 compared to the third quarter of 2006, driven by lower production
volumes at lower copper grade mines, in particular the Kounrad mine. As a result
of lower ore extraction volumes, copper in concentrate production in the fourth
quarter of 2006 was 13 per cent lower than in the third quarter. Copper cathode
production in the fourth quarter was 17 per cent higher than in the third
quarter due to processing larger volumes of copper concentrate originating from
the East and Karaganda regions.

In 2006, the total concentrate production volume was 28 per cent lower and
copper in concentrate production was 13 per cent lower compared to 2005 levels
due to technical issues at the Kounrad and Sayak mines. Copper cathode
production was 17 per cent higher than in 2005 due to the larger volume of
concentrate coming from Karaganda Region mines.


East Region
                               Q1 2006   Q2 2006   Q3 2006   Q4 2006   FY 2006   FY 2005
----------------------------------------------------------------------------------------
Ore extraction         '000 t    1,361       957     1,075     1,048     4,441     5,082
Average copper grade   %          2.42      2.92      3.09      3.00      2.83      2.33

Copper Concentrate*    '000 t    132.1     127.4     139.9     135.2     534.6     476.8
Copper in Concentrate  '000 t     23.5      24.1      26.5      24.6      98.7      87.4
Copper Cathodes        '000 t       --        --        --        --        --        --
Copper Rod             '000 t       --        --        --        --        --        --
----------------------------------------------------------------------------------------

* Excludes concentrate processed by third parties


In the fourth quarter of 2006, ore extraction volumes in the East Region were
similar to levels seen in the third quarter. Copper concentrate production was 3
per cent lower and copper in concentrate production was 7 per cent lower
compared to the third quarter of 2006. This was primarily due to lower
production volumes at the Nikolaevskoe mine, where mining was switched from open
pit to underground operations, and due to some technical problems associated
with the lifting equipment at the underground Orlovskoe mine, which have now
been rectified.

For 2006, total concentrate production volume was 12 per cent higher and copper
in concentrate production was 13 per cent higher compared to 2005 levels, driven
by the rich copper ores of the Artemyevskoe and Orlovskoe mines. The average
copper grade in the East Region increased from 2.23 per cent in 2005 to 2.83 per
cent in 2006.


Karaganda Region
                               Q1 2006   Q2 2006   Q3 2006   Q4 2006   FY 2006   FY 2005
----------------------------------------------------------------------------------------
Ore extraction         '000 t      633       841       730       549     2,753       692
Average copper grade   %          1.23      2.28      2.72      4.46      2.59      0.83

Copper Concentrate     '000 t     28.1      43.2      65.7      93.8      230.8    115.5
Copper in Concentrate  '000 t      0.9       5.5      11.6      15.7       33.7      3.3
Copper Cathodes        '000 t       --        --        --        --         --       --
Copper Rod             '000 t       --        --        --        --         --       --
----------------------------------------------------------------------------------------


Ore extraction at the Karaganda Region in the fourth quarter of 2006 was 25 per
cent lower than in the third quarter of 2006, primarily due to continued
scheduled stripping works at the Abyz mine with no ore extraction taking place
from October 2006. These stripping works are expected to continue throughout
2007. However, due to a larger contribution from the high copper grade ores of
the Kosmurun and Nurkazgan mines, the average copper grade in the fourth quarter
increased to 4.46 per cent from 2.72 per cent in the third quarter, resulting in
a 43 per cent increase in copper concentrate and a 35 per cent increase in
copper in concentrate production.

Overall in 2006, Karaganda Region ore extraction has exceeded 2005 levels, as a
result of increasing production volumes at the Nurkazgan mine, and a stronger
contribution from the Kosmurun mine, which commenced operations in May 2006 and
is expected to ramp up to full capacity in 2007. For 2006 as a whole, average
copper grades were also significantly higher, increasing from 0.83 per cent to
2.59 per cent compared to 2005 as both the Kosmurun and Nurkazgan mines have
achieved high copper grades ores (5.53% and 1.17% respectively).


For further information please contact:


Jinsoo Yang, Head of Investor Relations
Sergei Stephantsov, Deputy Head of
Investor Relations
Kazakhmys PLC                                  Tel:+44 20 7901 7800

Robin Walker
Andrew Mitchell
Finsbury                                       Tel:+44 20 7251 3801


- ends -


Notes to Editors

The principal business of Kazakhmys plc ("the Group") is the mining, processing,
smelting, refining of copper and copper products, including copper cathode and
copper rod. The Group's operations are vertically integrated. Kazakhmys operates
19 open pit and underground mines and two smelting and refining complexes in the
Republic of Kazakhstan. Kazakhmys also owns significant rail infrastructure in
Kazakhstan and MKM, a copper products fabrication company in Germany.



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