Kazakhmys says output is on track but stays mute on ENRC

Suzie Neuwirth
CENTRAL Asian miner Kazakhmys yesterday announced its first quarter production results, which were on track for full year targets.

Copper production came in the middle of analysts’ expectations at 73kt, up three per cent quarter-on-quarter and up 17 per cent year-on-year.

Kazakhmys currently holds a 26 per cent stake in fellow London-listed miner ENRC and some major shareholders have expressed an interest in taking ENRC private by making an offer for Kazakhmys’ stake.

However, a spokesperson from Kazakhmys told City A.M. that the company would not comment until an official offer had been made.

“If ENRC were to be bought out, it would give them a balance sheet buffer,” said Canaccord Genuity analyst Peter Mallin-Jones.

“My medium-term concern for Kazakhmys is the debt level on their balance sheet, which will rise in the next two years from capex on development projects.

“An ENRC stake sale would take a chunk of that debt out and make them less reliant on the copper price.”

Numis Securities said it expected Kazakhmys’ shares to remain volatile until the strategy review is completed and uncertainty regarding a takeover bid is resolved.