2016 Full Year Results 23 February 2017
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AGENDA 1. Review of 2016 Oleg Novachuk CEO 2. Operations review Oleg Novachuk CEO Bozshakol Aktogay East Region and Bozymchak 3. Financial update Andrew Southam CFO 4. Achieving our potential Oleg Novachuk CEO 2
1. Review of 2016 OLEG NOVACHUK CHIEF EXECUTIVE OFFICER
2016 HIGHLIGHTS 73% increase in full year copper output 1 to 140 kt Copper output 1 Net cash cost 2 (2015: 81 kt) 140 kt 59 USc/lb 59 USc/lb net cash costs 2 (2015: 109 USc/lb) FY 2016 FY 2016 Gross EBITDA 3 $492 million (2015: $208 million) – EBITDA 3 $351 million (2015: $202 million) 121 87 Major projects operational and ramping up – Bozshakol declared commercial in October 2016 99 – Aktogay sulphide commissioning began 78 December 2016, first copper February 2017 53 44 Improved liquidity position 37 48 – $350 million of new credit facilities obtained in December 2016 – $200 million capex reduction at Aktogay H1 H2 H1 H2 H1 H2 H1 H2 2015 2015 2016 2016 2015 2015 2016 2016 Notes: 4 1. Copper cathode equivalent production. 2. Includes operations for the full year, including the period prior to commercial production. Group net cash cost for 2015 reflects East Region and Bozymchak only. 3. EBITDA (excluding MET, royalties and special items). Gross EBITDA includes all operations for the full year, including the period prior to commercial production.
HEALTH AND SAFETY Four incidents resulted in six fatalities Total Recordable Injury Frequency Rate 1 (2015: 3 fatalities) Overall fatalities have significantly reduced since 2010 Zero fatalities at Bozshakol, Aktogay and Bozymchak operations since commencement of production 1.25 1.20 Total Recordable Injury Frequency Rate 1 reduced to 1.20 (2015: 1.25) Improving our performance Enhanced safety standards implementation 2015 2016 Occupational health improvements Target zero fatalities at operations and reduced injury rates Notes: 5 1. Total Recordable Injury Frequency Rate or TRIFR is the number of Recordable Injuries occurring per million hours worked.
DELIVERING AGAINST OUR TARGETS Production 135 145 140 Copper 1 kt 70 75 Zinc kt 95 115 120 Gold 1 koz 2,500 2,750 3,103 Silver 1 koz Gross Cash Cost 2 USc/lb 140 160 106 Bozshakol sulphide 110 130 114 Aktogay oxide 190 210 191 East Region and Bozymchak Notes: 6 1. Includes finished goods produced and payable metal in concentrate sold. 2. Includes operations for the full year, including the period prior to commercial production.
CONTINUED GROWTH AHEAD 2015-18 CAGR 55% c.300 kt in 2018 225-260 kt of copper in 2017 73% growth in copper output, Aktogay 2015-2016 Bozshakol East Region and Bozymchak 1 st quartile 2018 2017 2019 2016 7
LOW COST PRODUCER Net Cash Cost Curve 1 KAZ Minerals was one of the lowest cost copper producers globally in 2016 59 USc/lb 102 USc/lb $2,249 /t 1 st quartile 2 nd quartile 3 rd quartile 4 th quartile Notes: 8 1. Conceptual representation as at 31 December 2016, not to scale.
2. Operations review - Bozshakol
BOZSHAKOL SULPHIDE CONCENTRATOR RAMP UP First production in February 2016 Mill ore throughput 2016 % of design capacity – 45 kt copper cathode equivalent and 60 koz gold bar equivalent produced in 2016 76% – 286 koz of silver bar equivalent in 2016, payable grade achieved in ramp up 61% Ramp up on track, throughput level above 75% in Q4 2016 – Declared commercial on 27 October 2016 32% 5% Q1 2016 Q2 2016 Q3 2016 Q4 2016 10
BOZSHAKOL CLAY PLANT COMMISSIONING 5 Mt per year clay plant Produced 0.2 kt of copper in concentrate during initial testing in Q4 2016 The first saleable material has been shipped to customers in 2017 As at 31 December 2016, 21 Mt of clay ore with an average copper grade of 0.63% has been extracted and stockpiled Bozshakol clay plant 11
BOZSHAKOL 2017 GUIDANCE Bozshakol team focused on continuous operations and raising output to design capacity 95 – 110 kt Copper 1 Flotation process will be optimised in 2017 to increase recoveries and output 85 – 110 koz Gold 1 Full capacity is expected to be achieved in H2 2017 c.500 koz Silver 1 Gold grade in 2016 averaged 0.30 g/t but is expected to reduce in 2017 Notes: 12 1. Payable metal in concentrate and finished metal produced.
2. Operations review - Aktogay
AKTOGAY SULPHIDE CONCENTRATOR COMMISSIONING Commissioning started ahead of schedule in December 2016 First saleable copper concentrate produced in February 2017 Project budget was reduced by $200 million in 2016, to $2.1 billion – Release of contingency – Efficiency gains from Bozshakol construction process and local supplier strategy Aktogay sulphide concentrator 14
AKTOGAY SULPHIDE CONCENTRATOR RAMP UP Commissioning is progressing well Copper 2017 1 45 – 65 kt Ramp up to benefit from the experience gained at Bozshakol Expect to declare the project commercial in H2 2017 Commercial 2018 fully 2019 peak Initial ramp up production ramped up production to mill throughput capacity 2017 2018 2019 Notes: 15 1. Payable metal in concentrate and finished metal produced.
AKTOGAY OXIDE Commenced SX/EW production in December 2015, Copper 2017 1 c.20 kt declared commercial in July 2016 18 kt of copper cathode produced in 2016, ahead of guidance of 15 kt Oxide facilities now fully ramped up and expected to Daily cathode output (t) deliver around 20 kt copper cathode in 2017 80 In line with expectations, output will be lower in 60 winter (November – February) due to reduced temperatures 40 20 0 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Notes: 16 1. Copper cathode production.
2. Operations review - East Region and Bozymchak
EAST REGION AND BOZYMCHAK 2016 highlights Production guidance 2017 2016 copper and by-product output in line with or c. 65 kt Copper 1 ahead of guidance Orlovsky mine six-day week from H2 2016 Zinc in 70 – 75 kt concentrate Artemyevsky II initial mine development works in 2016, majority of expenditure from 2019 50 – 60 koz Gold 1 Yubileyno-Snegirikhinsky mine fully depleted, ceased operations in December 2016 2,250 – 2,500 Silver 1 koz Bozymchak fully ramped up Bozymchak production Copper (kt) Gold (koz) Operated at design capacity throughout 2016 Zero work-related fatalities since production 38.3 7.2 commenced 12.5 2.2 2015 2016 2015 2016 Notes: 18 1. Finished metal produced and payable metal in concentrate.
2017 GROUP PRODUCTION GUIDANCE SUMMARY East Region & Bozshakol Aktogay Group Bozymchak 65 2 – 85 2 kt Copper 1 c. 65 kt 95 – 110 kt 225 – 260 kt Zinc in 70 – 75 kt 70 – 75 kt concentrate Gold 1 50 – 60 koz 85 – 110 koz 135 – 170 koz Silver 1 2,250 – 2,500 koz c. 500 koz 2,750 – 3,000 koz Notes: 19 1. Payable metal in concentrate and finished metal produced. 2. Includes around 20 kt of cathode production from oxide ore.
3. Financial update ANDREW SOUTHAM CHIEF FINANCIAL OFFICER
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