OPERATIONAL HIGHLIGHTS
o Output of all metals in line with full year targets
Copper cathode output 7% higher at 144 kt for first half of the year
Raised full year silver production target to 12,000 koz
GROWTH PROJECTS
o Continued progress on growth projects
Major milling equipment delivered to Bozshakol during July
Earthworks and excavations commenced at Aktogay
FINANCIAL HIGHLIGHTS
o Impact of lower metal prices and cost pressures
Segmental EBITDA (excluding special items) of $438 million
o Gross unit cash cost below guidance - increased 5% on FY 2012
Assisted by additional sales from inventory and improved resource management
Net cash costs of 232 US cents per pound impacted by lower by-product pricing and volumes
FOCUS ON CORE COPPER BUSINESS
o Completed sale of MKM in May 2013 for €42 million
o Disposal of ENRC holding approved on 2 August
Anticipate completion by year end
Kazakhmys will receive net cash proceeds of $875 million and repurchase 77 million shares
OUTLOOK
o Medium-term outlook for copper remains sound
Continued customer demand and constrained global supply
o Proceeds from disposal of ENRC holding to strengthen balance sheet
o Major review of asset efficiency and costs underway
Focus on raising cash generation and profitability of core assets
First savings anticipated in H2 2013
Shareholder returns
Our dividend policy, established at the time of Listing, is to pay a dividend based on the underlying profitability and funding requirements of the business. Given the low level of Free Cash Flow currently generated by the core business, the capital expenditure on the major growth projects and the uncertain economic outlook, the Board believes it would be inappropriate to pay an interim dividend. The work currently being undertaken by management to improve cash flows is fundamental to raising shareholder returns.
Our repurchase of approximately 77 million shares, to be received as part of the disposal of our holding in ENRC, should be completed in the second half of the year and will reduce our voting share capital to approximately 447 million shares. The reduction in the total number of shares should increase future returns to shareholders. The repurchase will also raise our free float to over 50%, making Kazakhmys the first of the 'newly listed' mining companies in London to achieve a majority free float, and is in keeping with our desire to continue to improve our corporate governance.
