Kaz Minerals to double processing capacity at Aktogay copper mine

Kaz Minerals has confirmed plans to double capacity to 50m tonnes per year at its Aktogay copper project in east Kazakhstan by 2021.

The FTSE 250 company's board has given the green light to the $1.2bn addition of a second sulphide concentrator at Aktogay, where an initial 25m tonnes-per-year processor began commercial production in October.

The second processor, which is expected to come on stream in the second half of 2021 and ramping up the year after, comes as Kaz eyes an increase in Aktogay's annual copper production from sulphide ore to 170,000 tonnes from 2022 to 2027 and 130kt thereafter.

Net cash cost guidance through to 2027 is expected to be kept at the current $1-1.20 per lb, as efficiency gains are anticipated from larger scale mining operations to offset an accelerated decline in mining grades. The mining fleet will be upgraded to support the higher ore throughput.

Directors said the expansion would generate a return in excess of the current consensus forecasts for Kaz's cost of capital.

Construction will be managed in-house and sub-contracts tendered next year, with a $200m of the capital budget invested in 2018. The remaining expenditure will be incurred from 2019 to 2021, with sustaining capital expenditure from 2022 increasing to $50-$60m a year from $30-$40m.

Copper production from sulphide ore at Aktogay will increase by 80kt to an average of around 170kt per year from 2022 to 2027, supported by expected higher copper grades, with Aktogay's annual production predicted to be around 130k a year over the remaining life of the mine.

Due to higher processing volumes the life of the sulphide ore body will reduce from over 50 years to approximately 28 years. Copper cathode production from oxide ore at Aktogay will be unchanged at the current level of around 20kt per annum for the remaining eight year life of the oxide deposit.

Oleg Novachuk, chief executive, said: "This expansion represents an opportunity for our proven project team to deliver a strong return on investment from an asset we know well by replicating the existing sulphide plant. Our outlook for copper remains positive and this development will help us to continue to grow in a tightening market. The capital expenditure over the period to 2021 for the expansion will be supported by strong cash flows from our new, low cost operations at Bozshakol and Aktogay."