Kazakhmys PLC Kazakhstan govt to reduce some mineral extraction tax rates at some of company's mature assets; completes acquisition of Koksay
Confirms that it has completed the acquisition of Koksay, first announced on 27 February 2014. Koksay is the Group's third major growth project.
As previously announced, the purchase price is $260 million in cash, of which $65 million is deferred. Of the deferred consideration, $30 million is payable on 1 January 2015 and $35 million on 31 July 2015. The second instalment is subject to confirmation of reserves.
The Koksay deposit is in south eastern Kazakhstan around 234 kilometres from Almaty and is well located for existing infrastructure. The mine has a total resource of approximately 3.4 MT of copper, with an average grade of 0.48%. There are by-products of gold, silver and molybdenum. The project is at scoping stage and has an estimated mine life of over 20 years with average annual production of around 80 kt of copper cathode equivalent, 60 koz of gold, 400 koz of silver and 1 kt of molybdenum in concentrate.
Announces that the Government of Kazakhstan has agreed to reduce mineral extraction tax ('MET') rates at some of the Group's mature assets. Lower MET rates have been applied to the deposits in the Zhezkazgan Region, excluding Zhomart mine, and at Konyrat mine in the Central Region.
The assets benefiting from lower MET rates are all within the two regions which have been identified for potential disposal, as part of the proposed restructuring announced on 27 February 2014. These assets have been particularly affected by declining grade and low profitability.
The new MET rates are effective retrospectively from 1 January 2014 and are applicable for one year after which a further application can be made. The value of the reduction for a 12 month period, at current metals prices, is approximately $40 million.