Kazakhmys Plc decline 5.4% in Q1 output on lower ore grades while retaining full year estimates.

The company produced 74,200 tonnes of copper cathode a finished form of the metal compared with 78,400 tonnes a year earlier. Output of copper in concentrate slid 13% to 72,000 tonnes as average grades fell to 0.99% from 1.15%.

Mr Amos Fletcher analyst at JPMorgan Cazenove said that Kazakhmys reported solid Q1 production. The company fell 2% to 1,305 pence in London valuing it at USD 11.5 billion.

Kazakhmys, which expects to produce 300,000 tonnes of copper this year is developing the Bozshakol and Aktogay mines to lift annual output by two thirds in 2015 and benefit from increasing demand and prices for the metal. The company sold its copper at an average price of USD 9,823 per tonne in the Q1 compared with USD 7,037 a year earlier.

Mr Oleg Novachuk CEO of Kazakhmys said that “We have had a solid start to the year with copper cathode production on track to meet our full-year target. Production of zinc in concentrate, an intermediate product shipped to refineries fell 8.4% to 36,200 tonnes on weaker grades and ore production. Net debt shrank to USD 295 million by the end of March from USD 350 million at the end of December on rising copper prices.”

Mr Novachuk said recently that Kazakhmys plans to sell a stake of about 2% through a Hong Kong listing and is studying options for its 26% holding in Eurasian Natural Resources Corporation including swapping the shares for other assets. We see the potential sale of the ENRC stake and the Hong Kong listing over the course of 2011 as likely to assist in delivering a rerating of Kazakhmys shares.

(Sourced from Bloomberg.net)