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Kazakhmys PLC (KAZ)

  Print      Mail a friend       Annual reports

Tuesday 31 July, 2007

Kazakhmys PLC

Q2 Production Summary

Kazakhmys PLC
31 July 2007

                                                                    31 July 2007

             Kazakhmys PLC Production Summary for the half year and
                        second quarter ended 30 June 2007

- Total copper cathode production reached 190,428* tonnes for the first
  six months of 2007, 2% higher than the same period of 2006.
- During the second quarter of 2007, output was lowered to 91,342*
  tonnes following maintenance work at the Balkhash and Zhezkazgan smelters.

- Zinc in concentrate production was 71,219 tonnes over the first six
  months, an increase of 1% compared to the first six months of 2006.
- Q2 2007 zinc in concentrate production was 4% higher than the
  corresponding period in 2006.

- Gold and silver production from own concentrate declined by 4% and
  5%, respectively, compared to the first six months of 2006.
- Q2 gold and silver production from own material was 6% higher and 6%
  lower, respectively, compared to the corresponding period in 2006. Gold 
  production benefited from the processing of stockpiled material.

Oleg Novachuk, Chief Executive Officer, said, "Copper production was maintained
at a steady level over the past six months, through hard work and careful
management, in spite of some challenging operational conditions. I am confident
that, as set out in our full year results, we remain on target to deliver
slightly higher copper production in 2007 compared to last year".

* Excludes tolled material

For further information please contact:

John Smelt, Head of Corporate Communications     Tel:+44 20 7901 7882
                                                 Tel:+44 787 964 2675
Sergei Stephantsov, Investor Relations Manager   Tel:+44 20 7901 7814
Kazakhmys PLC

Robin Walker
Zoe Watt
Finsbury                                         Tel:+44 20 7251 3801


Kazakhmys Group Copper Production
                                       6m        6m        Q2        Q1        Q2
                                     2007      2006      2007      2007      2006
Ore extraction          '000 t     17,994    20,127     9,063     8,931    10,287
Average copper grade    %            1.21      1.10      1.18      1.25      1.14
Average zinc grade*     %            3.69      4.00      3.67      3.71      4.03

Copper in Concentrate   '000 t      201.5     202.6      96.8     104.7     107.6
own concentrate         '000 t      182.8     183.4      89.3      93.5      98.7
purchased concentrate   '000 t       18.7      19.2       7.5      11.2       8.9

Copper Cathodes**       '000 t      191.2     187.9      91.5      99.7      98.8
own concentrate         '000 t      163.5     169.0      79.7      83.8      92.2
purchased concentrate   '000 t       26.9      17.5      11.6      15.3       5.9
tolling concentrate     '000 t        0.8       1.4       0.2       0.6       0.7
Copper Rod              '000 t       18.0      14.3       9.0       9.0       9.0

*  Complex ores only
** Includes copper used to produce copper rod

Ore extraction in Q2 2007 was slightly higher than in the previous quarter,
though below the levels of 2006. This was principally due to the lack of output
from the Kounrad mine in the Balkhash region, due to planned stripping works
and anticipated lower production at Annenskoe mine in the Zhezkazgan region.
Output in the Karaganda and East regions was stable over the quarter, with
Karaganda maintaining its strong improvement over the half year compared to
2006. The availability of machinery, mentioned in the Q1 production report, and
partly a consequence of high global mining and infrastructure activity, had an
impact at several operations. The required equipment, including trucks and
excavators, is arriving and should be brought into operation over the second
half of the year.

The majority of the Zhezkazgan mines are at or nearing a mature stage and as a
result, considerable work is required in efficiencies and expansions to
maintain current output levels. In the medium term this will be balanced by an
increase in production volumes at the East region mines.

Lower ore output was largely offset by better ore grades, with the continuing
benefit of new higher grade mines, such as Zhomart in Zhezkazgan, Artemyevskoe
in the East, and Kosmurun in Karaganda. This is reflected in the relatively
stable output of copper in concentrate from own material, compared to the same
period of 2006. This has now reached a steady state and these new mines are
unlikely to show a continuing impact on the Group's average copper grade going

Production of copper cathode in the first six months of 2007 was 2% higher than
the same period of 2006, though Q1 2006 was affected by severe weather
conditions. Cathode output in Q2 2007, at 91,342 tonnes (excluding tolled
material), was reduced by maintenance shutdowns at both the Zhezkazgan and
Balkhash smelters. Both smelters are now fully operational, though there may be
a further 10 day maintenance shutdown during the second half at the smelter in


Kazakhmys Group By-products Production

                                       6m        6m        Q2        Q1        Q2
                                     2007      2006      2007      2007      2006
Zinc in Concentrate  '000 t          71.2      70.6      32.6      38.6      31.3
Zinc Metal           '000 t          27.4      33.8      12.5      14.9      15.6

Silver               '000 oz       10,111    10,692     5,089     5,022     5,443
own production       '000 oz       10,104    10,660     5,087     5,017     5,433
tolling              '000 oz            7        32         2         5        10

Gold                 '000 oz         70.6      77.7      36.6      34.0      42.7
own production       '000 oz         51.4      53.6      32.2      19.2      30.4
tolling              '000 oz         19.2      24.2       4.4      14.8      12.3

Zinc in concentrate production rose slightly over the first six months compared
to 2006. Production of 32,629 tonnes in Q2 was similar to the same period last
year, but below Q1 2007 due to lower volumes of zinc containing ores being
extracted in the East region.

Due to machinery shortages, which are now improving, the Orlovskoe mine operated
at reduced capacity. Orlovskoe is a rich zinc source with an average zinc grade
for the period of 4.23%. Part of the ore extracted at Kosmurun mine has been
stockpiled and will be processed in the second half of 2007, when the Karagaily
concentrator upgrade is completed. Zinc metal output is slightly below the
annualised capacity of 60,000 tonnes, which may be balanced by greater output in
the second half, though with the relative attractiveness of concentrate prices,
material is being sold as concentrate and not stockpiled.

In the second quarter of 2007, the Group produced 5.1 million ounces of silver
and 36,591 ounces of gold, an increase of 1% and 8%, respectively, compared to
first quarter of 2007. Of the 36,591 ounces of gold produced, 32,203 ounces were
produced from own concentrate, a 68% increase compared to the first quarter of
2007. This increased gold production was the result of processing concentrate
stockpiled from the Artemyevskoe mine, mentioned in the Q1 production report. Q2
2007 gold production was lower than in the corresponding period of 2006 as there
was no production at the Abyz mine, which has been closed for planned stripping
works since October 2006 and will remain in stripping at least through 2008 and
lower production from tolling. Of the 5.1 million ounces of refined silver, only
1,608 ounces were produced under tolling arrangements.

Review by region

Zhezkazgan Complex

                                       6m        6m        Q2        Q1        Q2
                                     2007      2006      2007      2007      2006
Ore extraction          '000 t     12,816    14,050     6,516     6,300     7,226
Average copper grade    %            0.81      0.82      0.80      0.83      0.82
Copper Concentrate      '000 t      247.2     280.1     126.4     120.8     140.7
Copper in Concentrate   '000 t       93.1     100.9      46.6      46.5      51.7
Copper Cathodes*        '000 t       93.8     105.8      43.9      49.9      54.1
of which tolling        '000 t         --       0.5        --        --       0.3
Copper Rod              '000 t       18.0      14.3       9.0       9.0       9.0

* Includes copper used to produce copper rod

Ore extraction at the Zhezkazgan complex in the first six months of 2007 was
lower than in the corresponding period of 2006, primarily due to reduced production
volumes at Annenskoe mine following the previously reported roof fall in late
2006. The issue of availability of mineshaft lifting equipment at the Stepnoy
mine in the first quarter of 2007 was resolved in the middle of March 2007,
contributing to the recovery seen in ore output in the second quarter. Cathode
production over the first six months of 2007 was slightly higher than concentrate
production, as 5,416 tonnes of copper in concentrate was produced by a third
party on a tolled basis for Kazakhmys.

Copper in concentrate production was marginally higher with 5% growth in the
second quarter of 2007 compared to the first quarter of 2007. Copper cathode
production was nearly 12% lower than in the first quarter of 2007, due to the 14
day maintenance shutdown of the Zhezkazgan copper smelter at the end of May 2007.

Balkhash Complex
                                       6m        6m        Q2        Q1        Q2
                                     2007      2006      2007      2007      2006
Ore extraction          '000 t      1,092     2,286       602       490     1,266
Average copper grade    %            1.15      0.82      1.08      1.25      0.81

Copper Concentrate*     '000 t       92.5     133.0      51.3      41.2      84.2
Copper in Concentrate   '000 t       15.9      24.3       8.3       7.6      14.9
Copper Cathodes         '000 t       97.5      82.1      47.6      49.9      44.7
of which tolling        '000 t        0.8       0.9       0.2       0.6       0.4
Copper Rod              '000 t         --        --        --        --        --

* Excludes concentrate processed by third parties

At the Balkhash complex 1.092 million tonnes of ore was extracted in the first
half of 2007 down from 2.286 million tonnes in the first half of 2006. This was
primarily due to the ongoing planned stripping works at Kounrad mine, mentioned
in the last production report. This mine produced 1.2 million tonnes of ore in
the first half of 2006. In June, alongside the stripping work, the mine produced
130,000 tonnes of ore, which assisted the modest recovery seen in the second
quarter. These stripping works will continue until the end of 2007, with
growing, though intermittent, ore extraction over the period. The issues
regarding drilling and underground loading and transportation equipment at Sayak
mine, mentioned in the Q1 production report, continued to impact output,
resulting in a 165,664 tonnes decrease in ore extraction volumes in the first
half of 2007 compared to the corresponding period of 2006.

Sayak and Kounrad mines have grades below the region's average, so their
reduced output raised the average copper grade for the period from 0.82% in the
first six months of 2006 to 1.15% in the same period of 2007.

Copper concentrate production at the Balkhash complex increased from 41,248
tonnes in the first quarter of 2007 to 51,272 tonnes in the second quarter
representing a 24% increase on a quarterly basis. Copper cathode production was
5% lower than in the first quarter of 2007 due to a 14 day maintenance shutdown
at one of the Balkhash smelter furnaces in June.

East Region
                                       6m        6m        Q2        Q1        Q2
                                     2007      2006      2007      2007      2006
Ore extraction          '000 t      2,173     2,318     1,027     1,146       957
Average copper grade    %            2.60      2.63      2.50      2.69      2.92

Copper Concentrate*     '000 t      231.4     259.5     105.2     126.2     127.4
Copper in Concentrate   '000 t       43.7      47.6      20.0      23.7      24.1
Copper Cathodes         '000 t         --        --        --        --        --
Copper Rod              '000 t         --        --        --        --        --

* Excludes concentrate processed by third parties

Ore extraction at the East region in the first six months of 2007 was lower than
the same period in 2006 although the new Artemyevskoe mine performed well
over the period, with ore extraction volumes increasing by 270,339 tonnes. The
increase at Artemyevskoe was offset by delays in obtaining mining and
transportation equipment at the Orlovskoe and Yubileyno-Snegirikhinskoe mines.
New equipment should start to be delivered at the beginning of Q3 2007. There
was a temporary stoppage of ore extraction at Belousovskoe mine in April 2007 as
stripping and ore preparation works were carried out.

In the second quarter of 2007, copper concentrate production at the East Region
was 17% lower compared to the first quarter of 2007 primarily due to lower ore
extraction volumes and lower copper grades, the latter principally being
affected by the reduced output at Orlovskoe mine.

Karaganda Region
                                       6m        6m        Q2        Q1        Q2
                                     2007      2006      2007      2007      2006
Ore extraction          '000 t      1,912     1,473       917       995       841
Average copper grade    %            2.36      1.83      2.46      2.27      2.30

Copper Concentrate      '000 t      158.7      71.2      79.5      79.2      43.2
Copper in Concentrate   '000 t       24.6       6.4      12.0      12.6       5.5
Copper Cathodes         '000 t         --        --        --        --        --
Copper Rod              '000 t         --        --        --        --        --

Ore production at Karaganda region increased from 1.473 million tonnes in the
first half of 2006, to 1.912 million tonnes in the corresponding period of 2007.
This was mainly due to higher production at the Kosmurun mine, which increased by
539,574 tonnes. The increase was only partly offset by the closure of Abyz mine
for planned stripping works, which had produced 183,812 tonnes of ore in the
first six months of 2006.

Average copper ore grades for the half year period 2007 were significantly
higher compared to the corresponding period of 2006 due to the increase in
production from Kosmurun mine with a copper grade of 4.00%. In the second
quarter of 2007 these higher grades allowed copper concentrate production to be
maintained at the same level as the first quarter, offsetting the 8% decrease in
ore extraction volumes.

950,000 tonnes of Nurkazgan ores were stockpiled over the first six months at
the Nurkazgan smelter until testing and commissioning works are complete. The
plant is scheduled to come into operation in the current quarter.

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
20 open pit and underground mines and two smelting and refining complexes in the
Republic of Kazakhstan. Kazakhmys also owns significant rail infrastructure in
Kazakhstan, MKM, a copper products fabrication company in Germany, and gold and
oil assets in Kazakhstan and Central Asia.

- ends -

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