Kazatomprom 1H23 Financial Results
AIX: KAP, KAP.Y (GDR)
LSE: KAP (GDR)
Currency: KZT (₸), unless otherwise noted
25 August 2023, Astana, Kazakhstan
Kazatomprom 1H23 Financial Results
JSC National Atomic Company "Kazatomprom" ("Kazatomprom", "KAP" or "the Company") announces its consolidated financial results for the first half-year ended 30 June 2023, prepared in accordance with International Financial Reporting Standards (IFRS). The Company also discloses changes in its Management.
"The Company demonstrated strong financial results for the first half of 2023, which reflects a significant improvement in the situation on the uranium market over the past year. Revenue increased by 25% compared to the first half of 2022 and amounted to almost 619 billion tenge, which led to an increase in operating profit by 46%, and a near 33% increase in net profit to 222 billion tenge. This is mainly to due to an increase in uranium prices as well as in the sales volume associated with changes in the timing of customer requests for supply and corresponding differences in delivery schedules in the first half of 2023 and 2022. As for operational indicators, production volumes in the first half of 2023 were nearly at the same level as in the same period of 2022. As it was announced earlier all 2023 guidance metrics, except for production volumes, were revised using the updated spot prices estimates, exchange rates and sales portfolio expansion" - said Yerzhan Mukanov, Kazatomprom's Chairman of the Board. "We have repeatedly stated that we will closely monitor the market situation to determine the need to increase the production volumes to 100% level in accordance with subsoil use contracts. Given the steady improvement in the dynamics of supply and demand, Kazatomprom as before plans to increase production volumes in 2024 in accordance with market fundamentals and expansion of the contract portfolio."
"Kazatomprom will continue to take an active part in the cycle of mid- and long-term contract activity against anticipated growing demand for nuclear fuel, backed by our now-proven commitment to creating long-term value for our stakeholders by maintaining flexibility and discipline in production and sales," - said Dastan Kosherbayev, Chief Commercial Officer.
Corporate Update
Management changes
Ruslan Beketayev, Chief Financial Officer of Kazatomprom, decided to leave his role effective 25 August 2023 at and pursue other opportunities. Mr. Beketayev has held the Chief Financial Officer position since 11 January 2023.
Starting from 28 August 2023, Sultan Temirbayev will be appointed as CFO of Kazatomprom. Previously, for three years Mr. Sultan Temirbayev held the position of deputy CFO at JV Inkai LLP, a joint venture of Kazatomprom (60% equity share) and Cameco Corporation. Sultan Temirbayev graduated from the University of Durham (UK) in 2008 with a Bachelor's degree in Economics and has a PMP (Project Management Professional) certificate. This appointment corresponds to the approved succession plan of the Company.
Mr. Sultan Temirbayev is expected to be appointed to the Management Board, subject to internal and Board of Directors approvals, as per corporate governance procedures.
Key financial metrics
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|
|
|
|
Six months |
|
|
|
|
|
|
|
|
ended 30 June |
|
|
|
(KZT billion unless noted) |
|
|
|
|
2023 |
2022 |
Change |
|
Group's consolidated revenue |
|
|
|
|
618,7 |
493,7 |
25% |
|
Operating profit |
|
|
|
|
252,5 |
172,8 |
46% |
|
Net profit |
|
|
|
|
222,3 |
167,4 |
33% |
|
Earnings per share attributable to owners (basic and diluted), KZT/share1 |
695 |
467 |
49% |
||||
|
Adjusted EBITDA2 |
|
|
|
|
331,2 |
224,5 |
48% |
|
Attributable EBITDA3 |
|
|
|
|
278,3 |
182,8 |
52% |
|
Operating cash flow4 |
|
|
|
|
419,8 |
256,2 |
64% |
1 Calculated as: Profit for the period attributable to owners of the Company divided by total share capital, rounded to the nearest KZT.
2 Adjusted EBITDA is calculated by excluding from EBITDA items not related to the main business and having a one-time effect.
3 Attributable EBITDA (previously "Adjusted Attributable EBITDA") is calculated as Adjusted EBITDA less the share of the results in the net profit in JVs and associates, plus the share of Adjusted EBITDA of JVs and associates engaged in the uranium segment (except JV Budenovskoye LLP's EBITDA due to minor effect it has during each reporting period), less non-controlling share of adjusted EBITDA of Appak LLP, JV Inkai LLP, Baiken-U LLP, MC Ortalyk LLP and JV Khorasan-U LLP, less any changes in the unrealized gain in the Group.
4 Includes income tax and interest paid.
Operating and Financial Review and Financial Statements
The Operating and Financial Review, and Consolidated Financial Statements (unaudited, reviewed) provide detailed explanations of Kazatomprom's results for the first half-year ended 30 June 2023 with guidance for 2023. This press release should be read alongside these documents, all of which are available at www.kazatomprom.kz.
Changes in the Group structure
In the first half of 2023 the Group completed the following transactions:
· According to the plans for the sale of non-core assets as presented in the Company's 2018 IPO Prospectus, a contract for the purchase and sale of 40% of the shares of Caustic JSC was signed on 30 December 2021 between Kazatomprom and United Chemical Technologies Trading house LLP. On March 28, 2023, United Chemical Technologies Trading House LLP made full payment according to the purchase and sale agreement. On April 07, 2023, Central Securities Depository JSC transferred shares from Kazatomprom's account. To date, the transaction has been completed in full.
· Kazatomprom received a certificate of state registration of a new entity Taiqonyr Qyshqyl Zauyty LLP, aimed to implement a project for the construction of a sulfuric acid plant in the Sozak district of Turkestan region. The participants of Taiqonyr Qyshqyl Zauyty LLP: Kazatomprom (49%), RU-6 LLP (25%), Kazatomprom-SaUran LLP (26%).
Revenue, net profit, EBITDA
During the first half of 2023 the Group's consolidated revenue was KZT 618,744 million, an increase of 25% compared to the same period of 2022 (KZT 493,716 million in the first half of 2022). The increase was mainly due to:
· growth in the average realized price associated with an increase in the market spot price for U3O8;
· an increase in sales volume in the first half of 2023 in comparison to the same period of 2022 mainly related to the changes in the timing of customer requirements and the resulting differences in the timing of deliveries for first half of 2023 and 2022;
· increase in revenue from uranium products (fuel pellets), and UMP segment rare metal products.
Operating profit in the first half of 2023 was KZT 252,497 million, an increase of 46% compared to the same period of 2022 (KZT 172,818 million in the first half of 2022). The increase was mainly due to higher revenues in 2023 as indicated above.
Net profit in the first half of 2023 was KZT 222,333 million, an increase of 33% compared to the same period of 2022 (KZT 167,374 million in the first half of 2022). The increase was mainly due to higher operating profit in the first half of 2023 as indicated above. There were no significant adjusting one-time effects during the first halves of 2023 and 2022. Profit for the period attributable to non-controlling interest decreased during the first half of 2023 compared to the same period of 2022, was influenced by the compensation to the Government from MC Ortalyk LLP.
Adjusted EBITDA totalled KZT 331,248 million in the first half of 2023, an increase of 48% compared to the same period of 2022 (KZT 224,457 million in the first half of 2022), while attributable EBITDA was KZT 278,257 million in the first half of 2023, an increase of 52% compared to the same period of 2022 (KZT 182,825 million in the first half of 2022). These changes were mainly driven by a higher operating profit on consolidated level and a higher EBITDA of JVs and associates mostly affected by the growth in the average realized price associated with an increase in the market spot price for U3O8.
Cost of sales
Cost of sales totalled KZT 320,543 million in the first half of 2023, an increase of 10% compared to the same period of 2022 (totalled KZT 291,532 million in the first half of 2022) mainly due to higher sales volume of U3O8 in the first half of 2023.
The cost of materials and supplies was KZT 194,574 million in the first half of 2023, a decrease of 4% compared to the same period of 2022 (KZT 202,194 million in the first half of 2022) due to decrease in the proportion of sales of uranium purchased from JVs and associates, as well as from third parties (when such uranium is sold, the cost of sales is predominantly represented by the cost of purchased materials and supplies at the prevailing spot price with certain applicable discounts). However, the purchase price of materials and supplies, including U3O8, increased as a result of inflationary pressure and an increase in the spot prices.
Selling expenses
Selling expenses totalled KZT 13,521 million in the first half of 2023 (KZT 10,592 million in the first half of 2022), a significant increase compared to the same period of 2022. The increase was due to an increase in transportation tariffs.
General & administrative expenses (G&A)
General and administrative expenses in the first half of 2023 amounted to 32,183 million tenge (18,774 million tenge in the same period of 2022).
The increase in G&A expenses includes amount of KZT 11,357 million payable to the government, which the entity is remitting to the Republic's budget for the unaccounted volume of extracted uranium by MC Ortalyk LLP. Additionally, the Company has accrued a provision for the payment of compensation to the second party of the entity, amounting to KZT 4,657 million as explained below.
Provision for compensation payment for unauthorised volume of uranium produced at Zhalpak field
Provision for payment of compensation for the unauthorised volume of uranium relates to MC Ortalyk LLP (hereinafter- Partnership). In October 2017, the Partnership obtained a Contract for uranium exploration at Zhalpak field for a period up to 31 May 2018. In May 2018, the Ministry of Energy of the Republic of Kazakhstan agreed to extend the exploration period under the Contract until 31 December 2022 for performing evaluation works. However, the approval process of the Project of Evaluation Works by the Ministry of Energy of the Republic of Kazakhstan was delayed. In May 2020, the Partnership stopped all work that was reported to the Ministry of Energy of the Republic of Kazakhstan by information letter. Test production was stopped in April 2020. In December 2021, the Company transferred subsoil use rights to the Partnership. The volume of unauthorised uranium at the Zhalpak field for the period from June 2018 to April 2020 amounted to 162.454 tons. In early 2023 the issue of paying compensation for the unauthorised volume of uranium began to be actively discussed with the government authorities. According to preliminary calculations, as of the reporting date, the amount of compensation to the Government is KZT 11,357 million.
On 15 August 2023 MC Ortalyk LLP paid a compensation of KZT 11,404 million to the Government for unauthorised volume of uranium including exchange rate difference at the date of payment.
Provision for compensation payment to the second participant of the subsidiary
According to the sale and purchase agreement of the 49% stake (hereinafter- Agreement) in the MC Ortalyk LLP, in the event of an obligation of the Partnership in respect of any unpaid amount in exceeding the threshold of 2,000,000 US dollars not accounted for as part of the sale and purchase of stake in the Partnership, and that occurred before the second participant joined the Partnership, the Company is obliged to reimburse 49% of the compensation amount to the second participant, except for the amount at the established threshold in accordance with the Agreement. Taking into account the obligation of the Partnership to pay compensation for the unsettled volume of uranium, the preliminary cost of which is KZT 11,357 million, the Company has accrued a provision for payment of compensation to the second participant of the Partnership in the amount of KZT 4,657 million.
Liquidity
The Group manages its liquidity requirements to ensure the continued availability of cash sufficient to meet its obligations on time, avoid unacceptable losses, and settle its financial obligations without jeopardizing its reputation.
|
(KZT million) |
As at June 30, 2023 |
As at December 31, 2022 |
As at June 30, 2022 |
Change for six months of 2023 |
|
Cash and cash equivalents |
268,467 |
169,536 |
380,394 |
58% |
|
Current term deposit |
18,947 |
930 |
8 |
>200% |
|
Total cash |
287,414 |
170,466 |
380,402 |
69% |
|
Undrawn borrowing facilities |
83,714 |
84,665 |
165,560 |
(1%) |
The Group's total cash and cash equivalents, including current term deposits at 30 June 2023 were KZT 287,414 million, increasing by 69% compared to KZT 170,466 million as at 31 December 2022, mainly due to the accumulation of cash prior to the distribution of the 2022 dividend. The Group's total cash and cash equivalents of KZT 287,414 million, including current term deposits at 30 June 2023 were lower in comparison to KZT 380,402 million as of 30 June 2022, mainly due to investments made during the first half of 2023 in short-term debt securities amounted to KZT 211,309 million.
Undrawn borrowing facilities are the credit lines available to the Group and considered as an additional liquidity source payable within 12 months, primarily used to temporarily cover cash deficits related to uneven receipts of trade receivables. As at 30 June 2023, the Group's available limit of revolving credit lines comprised a total of KZT 106,340 million (USD 235 million), of which KZT 83,714 million (USD 185 million) were available for use, while as at 31 December 2022 the Group's available limit of revolving credit lines comprised a total of KZT 108,723 million (USD 235 million) of which KZT 84,665 million (USD 183 million) were available for use; as at 30 June 2022, the Group's available limit of revolving credit lines available in full comprised a total of KZT 165 560 million (USD 352 million). The decrease in undrawn borrowing facilities balance as at December 31, 2022 in comparison to June 30, 2022 was primarily related to the closure of unused credit lines.
Debt leverage ratios
The following table summarises the key ratios used by the Company's management to measure financial stability. Management targets a net debt to adjusted EBITDA of less than 1.0.
|
(KZT million) |
As at June 30, 2023 |
As at December 31, 2022 |
As at June 30, 2022 |
Change for six months of 2023 |
|
Total debt (excluding guarantees) |
110,682 |
138,444 |
97,971 |
(20%) |
|
Total cash balances (see Section 7.1) |
(287,414) |
(170,466) |
(380,402) |
69% |
|
Net debt |
(176,732) |
(32,022) |
(282,431) |
>200% |
|
Adjusted EBITDA* |
737,689 |
630,898 |
475,356 |
17% |
|
Net debt / Adjusted EBITDA (coefficient) |
(0.24) |
(0.05) |
(0.59) |
>200% |
* For the purposes of "Net debt/Adjusted EBITDA (coefficient)" calculation Adjusted EBITDA for the six months 2023 and 2022 was calculated for 12 months (the first half of the reporting period and the second half of the previous period). Adjusted EBITDA is calculated as Profit before tax - finance income + finance expense +/- Net FX loss/(gain) + Depreciation and amortisation + Impairment losses - reversal of impairment +/- one-off or unusual transactions.
Uranium segment production and sales metrics
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Six months |
|
||
|
ended 30 June |
|||||||
|
|
|
|
|
|
2023 |
2022 |
Change |
|
Production volume of U3O8 (100% basis) |
tU |
|
|
10,225 |
10,070 |
2% |
|
|
Production volume of U3O8 (attributable basis)1 |
tU |
|
|
5,411 |
5,414 |
0% |
|
|
U3O8 sales volume (consolidated)2 |
|
tU |
|
|
9,527 |
9,017 |
6% |
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Including KAP U3O8 sales volume2 |
tU |
|
|
8,565 |
8,032 |
7% |
|
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Group inventory of finished goods (U3O8) |
tU |
|
|
7,644 |
9,276 |
(18%) |
|
|
Including KAP inventory of finished goods (U3O8)3 |
tU |
|
|
6,031 |
7,156 |
(16%) |
|
|
Group average realized price |
|
KZT/kg |
|
55,257 |
47,807 |
16% |
|
|
Group average realized price |
|
USD/lb |
|
47.04 |
40.88 |
15% |
|
|
KAP average realized price4 |
|
USD/lb |
|
46.63 |
39.70 |
17% |
|
|
Average weekly spot price |
|
USD/lb |
|
52.16 |
50.31 |
4% |
|
|
Average month-end spot price5 |
|
USD/lb |
|
52.60 |
50.09 |
5% |
|
1 The Production volumes of U3O8 (attributable basis) are not equal to the volumes purchased by KAP headquarters (HQ) in the Section 4.8 Transactions with subsidiaries, JVs, JOs and associates.
2 KAP U3O8 sales volume (incl. in Group): includes only the total external sales of KAP HQ and THK. Intercompany transactions between KAP HQ and THK are not included. Yet, some part of Group U3O8 production goes to the production of EUP, fuel pellets and fuel assemblies (FA) at Ulba-FA LLP.
3 KAP inventory of finished goods (incl. in Group): includes the inventories of KAP HQ and THK.
4 KAP average realized price: the weighted average price per pound for the total external sales of KAP and THK. The pricing of intercompany transactions between KAP and THK are not included.
5 Source: UxC, TradeTech. Values provided represent the average of the uranium spot prices quoted at month end, and not the average of each weekly quoted spot price, as contract price terms generally refer to a month-end price.
Production (on both a 100% basis and an attributable basis) in the first half of 2023 were nearly on the same level compared to the same period in 2022.
In the first half of 2023, both Group and KAP sales volumes were higher compared to the same period in 2022, primarily due to timing of customer-scheduled deliveries, decreasing the inventory volumes on both consolidated (i.e., Group) and at the level of Kazatomprom HQ and THK (see footnote below the table above). Sales volumes may vary substantially each period based on timing of customer delivery requests during the year and terms of physical delivery activity.
Consolidated Group inventory of finished U3O8 products as at 30 June 2023 amounted to 7,644 tonnes, which was 18% lower than as at 30 June 2022 (as at 30 June 2022 amounted to 9,276 tonnes). At the level of Kazatomprom HQ and THK the inventory of finished U3O8 products was 6,031 tonnes, a decrease of 16% compared to 30 June 2022 (as at 30 June 2022 amounted to 7,156 tonnes). Overall, the decrease in inventory is attributed to the increased sales.
Average realized price for the first half of 2023 was higher compared to the same period in 2022 due to higher uranium spot price. The Company's current overall contract portfolio pricing correlates to uranium spot prices. However deliveries under some long-term contracts in the first half of 2023 incorporated a proportion of fixed pricing that was negotiated during a lower price environment.
In the uranium market, the trends in quarterly metrics and interim results are rarely representative of annual expectations; for annual expectations, please see the Company's guidance metrics for 2023 below, and the price sensitivity table from Section 10.0 "Guidance for 2023" and subsection 10.1 Uranium sales price sensitivity analysis, respectively, in the Company's Operating and Financial Review for the six months ended June 30, 2023.
Uranium segment costs and capital expenditures
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Six months |
|
||
|
ended 30 June |
|||||||
|
(KZT million unless noted) |
|
|
|
|
2023 |
2022 |
Change |
|
C1 Cash cost (attributable basis) |
USD/lb |
12.18 |
9.97 |
22% |
|||
|
Capital cost (attributable basis) |
USD/lb |
7.22 |
5.33 |
35% |
|||
|
All-in sustaining cash cost (attributable C1 + capital cost)1 |
USD/lb |
19.40 |
15.30 |
27% |
|||
|
Capital expenditures of mining companies (100% basis)2 |
|
|
76,845 |
56,293 |
37% |
||
1 For the first half 2023 year the all-in sustaining cash cost excluding the expenditures for the expansion is 18.80 USD/lb. In the first half of 2022 significant CAPEX for expansion projects are excluded.
2 Excludes liquidation funds and closure costs. Note that in Section 6.0 CAPITAL EXPENDITURES REVIEW total results include liquidation funds and closure cost.
ESG Update at Kazatomprom
In December 2022, the international rating agency S&P Global Ratings ("the Agency") assigned Kazatomprom its first independent ESG rating at a score of 51 (the global average score for the mining sector is 50). Of note, the current global maximum ESG evaluation score among Metal & Mining sector companies is 68 (of 100) with a global Metal & Mining sector average of 50 (of 100). The Agency's assessment was based upon an in-depth analysis of Kazatomprom's exposure to mining, environmental and social risks. In 2023, Kazatomprom continued its efforts to improve its sustainability performance. Based on the assessment of the Agency and the world's best practices, 2023-2024 Roadmap for ESG practices advancement at Kazatomprom has been developed and approved by the Board of Directors.
Adhering to global priorities and following the national strategy, Kazatomprom also strives to contribute to the fight against climate change. In the reporting period, the Company included climate risks in the risk register. In order to implement the Decarbonization and Carbon Neutrality Strategy until 2060, approved by the Board of Directorsin December 2022, the Comprehensive Action Plan for Decarbonization and Carbon Neutrality of Kazatomprom until 2040 was developed and approved. In addition, for the first time the Company completed and submitted the CDP (Carbon Disclosure Project) questionnaire on climate change to obtain an international climate rating.
Kazatomprom recognizes its responsibility for the impact on the environment, health, safety and quality of life of people. Since the beginning of the year, the Company has been working on the development of a Water Resources Management Strategy and a Radioactive Waste Management Program.
The Company continued to improve the practice of disclosing non-financial information. The Integrated Annual Report of Kazatomprom for 2022 has been prepared in accordance with GRI, SASB and TCFD standards. Also, in the current period, Kazatomprom, for the first time, has prepared a Progress Report for the UN Global Compact, in which the Company has been a party since March last year.
Health, safety and environment (HSE) results
Active measures continued to be undertaken in the first half of 2023 to focus on safety awareness, which helped to prevent major industrial accidents (including uncontrolled explosions, emissions of dangerous substances or destruction of buildings) and production injuries at the Company's enterprises.
The following table reflects safety results of the first half of 2022-2023:
|
|
|
|
|
Six months ended 30 June |
|
|
|
Indicator |
|
|
|
2023 |
2022 |
Change |
|
Industrial accidents1 |
|
|
|
- |
- |
- |
|
LTIFR (per million man-hours)2 |
|
|
|
0.31 |
- |
- |
|
Unsafe conditions, unsafe actions, near-miss reporting |
|
|
18,422 |
18,049 |
2% |
|
|
Number of accidents3 |
|
|
|
4 |
- |
- |
|
Fatalities |
|
|
|
- |
- |
- |
1 Defined as uncontrolled explosions, emissions of dangerous substances, or destruction of buildings.
2 Lost-Time Injury Frequency Rate (LTIFR) per million hours.
3 Defined as impact on the employee of a harmful and (or) dangerous production factor in performance of his work (job) duties or tasks of the employer, which resulted in an industrial accident, sudden deterioration of health, or poisoning of the employee that led to temporary or persistent disability, or death.
The Group continues to pay significant attention to improving health and safety in the workplace. However, despite the comprehensive measures taken during the first half of 2023, there were four (4) accidents in which five (5) employees were injured. After each accident, thorough special and internal investigations were conducted, identifying the root causes, developing preventive measures, and modifying procedures to prevent the recurrence of similar incidents in the future. The investigation results were communicated to all Group entities so that each one could learn from the events and appropriately adjust their processes. The Company will continue its efforts to enhance employee engagement and awareness in matters of ensuring production safety.
Kazatomprom's 2023 Guidance
|
|
2023 |
|||||||
|
previous exchange rate USD / KZT 470 |
revised exchange rate USD / KZT 460 |
|||||||
|
Production volume U3O8 (tU) (100% basis)1 |
|
|
20,500 - 21,5002 |
20,500 - 21,5002 |
||||
|
Production volume U3O8 (tU) (attributable basis)3 |
|
|
10,600 - 11,2002 |
10,600 - 11,2002 |
||||
|
Group U3O8 sales volume (tU) (consolidated)4 |
|
|
15,400 - 15,900 |
17,500 - 18,000 |
||||
|
Incl. KAP U3O8 sales volume (incl. in Group) (tU)5 |
|
|
12,100 - 12,600 |
14,500 - 15,000 |
||||
|
Revenue - consolidated (KZT billions)6 |
|
|
1,080 - 1,090 |
1,270 - 1,310 |
||||
|
Revenue from Group U3O8 sales, (KZT billions)6 |
|
|
820 - 840 |
1,020 - 1,060 |
||||
|
C1 cash cost (attributable basis) (USD/lb)* |
|
|
$12.00 - $13.50 |
$13.00 - $14.50 |
||||
|
All-in sustaining cash cost (attributable C1 + capital cost) (USD/lb)7* |
|
$20.00 - $21.50 |
$21.00 - $22.50 |
|||||
|
Total capital expenditures of mining entities (KZT billions) (100% basis)8 |
|
240 - 250 |
220 - 230 |
|||||
1 Production volume U3O8 (tU) (100% basis): Amounts represent the entirety of production of an entity in which the Company has an interest; it disregards that some portion of production may be attributable to the Group's JV partners or other third-party shareholders. Actual drummed production volumes remain subject to converter adjustments and adjustments for in-process material.
2 The duration and full impact of the Russian-Ukrainian conflict is not yet known. Annual production volumes could therefore vary from internal expectations.
3 Production volume U3O8 (tU) (attributable basis): Amounts represent the portion of production of an entity in which the Company has an interest, corresponding only to the size of such interest; it excludes the portion attributable to the JV partners or other third-party shareholders, except for JV "Inkai" LLP, where the annual share of production is determined as per Implementation Agreement as disclosed in IPO Prospectus. Actual drummed production volumes remain subject to converter adjustments and adjustments for in-process material.
4 Group sales volume: includes the sales of U3O8 by Kazatomprom's sales and those of its consolidated subsidiaries (companies that KAP controls by having (i) the power to direct their relevant activities that significantly affect their returns, (ii) exposure, or rights, to variable returns from its involvement with these entities, and (iii) the ability to use its power over these entities to affect the amount of the Group's returns. The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing whether KAP has power to control another entity). For consistency, Group U3O8 sales volumes do not include other forms of uranium products (including, but not limited to, the sales of fuel pellets and EUP). Yet, some part of Group U3O8 production goes to the production of EUP, fuel pellets and fuel assemblies (FA) at Ulba-FA LLP.
5 KAP sales volume: includes only the total external sales of U3O8 of KAP HQ and THK. Intercompany transactions between KAP HQ and THK are not included.
6 Revenue estimates have only been updated to account for a change in expectations for uranium price and exchange rate for the Kazakhstani Tenge. Revenue expectations are based on uranium prices taken at a single point in time using third-party sources and on an internal exchange rate assumption of KZT/USD 460. 2023 revenue could be materially impacted by how actual uranium prices and exchange rates vary from the described assumptions.
7 Excluding capital expenditure for expansion, the project range will be $20.5 - $22.00 USD/lb.
8 Total capital expenditures (100% basis): includes only capital expenditures of the mining entities, includes significant CAPEX for investment and expansion projects. Excludes liquidation funds and closure costs. For 2023 includes new well construction and mine development costs of JV Budenovskoye LLP and JV KATCO LLP (South Tortkuduk) for a total amount of approximately KZT 50 billion. Excluding capital expenditure for expansion, the projected range will be KZT 200 - 210 billion.
* Please note that the conversion of kgU to pounds U3O8 is 2.5998
As was previously disclosed in Kazatomprom 2Q2023 Operations and Trading Update, available on the corporate website, www.kazatomprom.kz all 2023 guidance metrics except for production volumes on both 100% and attributable basis were revised using the updated spot prices estimates, exchange rates and sales portfolio expansion. The Company expects an increase in sales volume compared to previous guidance indicators due to customer requests to flex up their annual deliveries under existing contracts, the conclusion of new long-term contracts with the delivery in 2023, as well as Yellow Cake plc.'s execution of its annual option to purchase uranium from KAP.
At this time, all 2023 guidance metrics remain unchanged from previously disclosed expectations set out in Kazatomprom 2Q2023 Operations and Trading Update.
Revenue, C1 cash cost (attributable basis) and All-in Sustaining Cash Cost (attributable C1 + capital cost) may vary from the ranges shown, depending on the extent that the USD / KZT exchange rate and uranium spot price differ from the Company's assumptions.
The Company only intends to update annual guidance in relation to operational factors and internal changes that are within its control. Key assumptions used for external metrics, such as exchange rates and uranium prices, are established using third-party sources during the Company's annual budget process in the previous year or adjustments made due to high volatility in the current year; such assumptions will only be updated on an interim basis in exceptional circumstances.
Conference Call Notification - 2023 Half-Year Operating and Financial Review (25 August 2023)
Kazatomprom has scheduled a conference call to discuss the 2023 half-year operating and financial results, after they are released on 25 August 2023. The call will begin at 17:00 (AST) / 12:00 (BST) / 07:00 (ET). Following management remarks, an interactive English Q&A session will be held with investors.
For the English live webcast (participants on the webcast can also submit questions during the event), conference call dial-in details and for information on how to participate in the Q&A, please visit:
For the Russian live webcast (listen-only, no Q&A) and corresponding dial-in details, please visit:
A recording of the webcast will also be available at www.kazatomprom.kz shortly after it concludes.
For further information, please contact:
Kazatomprom Investor Relations Inquiries
Yerlan Magzumov, Director of Investor Relations
Tel: +7 (8) 7172 45 81 80
Email: ir@kazatomprom.kz
Kazatomprom Public Relations and Media Inquiries
Sabina Kumurbekova, Director of PR Department
Gazhaiyp Kumisbek, Chief Expert of PR Department
Tel: +7 (8) 7172 45 80 63
Email: pr@kazatomprom.kz
About Kazatomprom
Kazatomprom is the world's largest producer of uranium, with the Company's attributable production representing approximately 22% of global primary uranium production in 2022. The Group benefits from the largest reserve base in the industry and operates, through its subsidiaries, JVs and Associates, 26 deposits grouped into 14 mining assets. All of the Company's mining operations are located in Kazakhstan and extract uranium using ISR technology with a focus on maintaining industry-leading health, safety and environmental standards (ISO 45001 and ISO 14001 compliant).
Kazatomprom securities are listed on the London Stock Exchange, Astana International Exchange, and Kazakhstan Stock Exchange. As the national atomic company in the Republic of Kazakhstan, the Group's primary customers are operators of nuclear generation capacity, and the principal export markets for the Group's products are China, South and Eastern Asia, Europe and North America. The Group sells uranium and uranium products under long-term contracts, short-term contracts, towards the second shareholders of jointly owned subsidiaries, as well as in the spot market, directly from its headquarters in Astana, Kazakhstan, and through its Switzerland-based trading subsidiary, Trade House KazakAtom AG (THK).
For more information, please see the Company website at www.kazatomprom.kz
Forward-looking statements
All statements other than statements of historical fact included in this communication or document are forward-looking statements. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as "target", "believe", "expect", "aim", "intend", "may", "anticipate", "estimate", "plan", "project", "will", "can have", "likely", "should", "would", "could" and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the Company's actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which it will operate in the future.
THE INFORMATION WITH RESPECT TO ANY PROJECTIONS PRESENTED HEREIN IS BASED ON A NUMBER OF ASSUMPTIONS ABOUT FUTURE EVENTS AND IS SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTY AND OTHER CONTINGENCIES, NONE OF WHICH CAN BE PREDICTED WITH ANY CERTAINTY AND SOME OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCES THAT THE PROJECTIONS WILL BE REALISED, AND ACTUAL RESULTS MAY BE HIGHER OR LOWER THAN THOSE INDICATED. NONE OF THE COMPANY NOR ITS SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, ADVISORS OR AFFILIATES, OR ANY REPRESENTATIVES OR AFFILIATES OF THE FOREGOING, ASSUMES RESPONSIBILITY FOR THE ACCURACY OF THE PROJECTIONS PRESENTED HEREIN.
The information contained in this communication or document, including but not limited to forward-looking statements, applies only as of the date hereof and is not intended to give any assurances as to future results. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to such information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change in the Company's expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date hereof.
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