(Alliance News) - KAZ Minerals PLC on Thursday said its Aktogay expansion project in Kazakhstan is still set to complete in 2021 as planned but production will not start until later that year due to Covid-19 restrictions.
The copper miner said it has reviewed both construction progress at Aktogay so far, as well as "the near-term impact of Covid-19 restrictions", and while the project will complete on time production will not start until "late 2021".
"Measures taken to control the spread of Covid-19, both in Kazakhstan and internationally, have negatively impacted the supply chain, reduced the availability of local contractors and prevented vendor representatives from entering the country to support equipment installations," KAZ explained.
KAZ intends to reduce its capital expenditure in 2020 to between around USD300 million to USD350 million, below the previously guided figure of USD400 million. The project budget will not change however, instead "the balance of the unchanged USD1.2 billion project budget will be incurred in 2021".
Chair Oleg Novachuk said: "Our first priority is to keep our employees and contractors safe during this difficult time. We are also working hard to meet the challenges posed by Covid-19 and to maintain progress at the Aktogay expansion project. Whilst we still expect to deliver the project within our guided timeframe, we now anticipate that production from the new Aktogay concentrator will commence towards the end of 2021 and capital expenditure in 2020 will be lower than previously indicated."
Shares in the FTSE 250-listed company were down 4.9% at 413.60 pence in London on Thursday morning.
Separately, KAZ announced that its copper production in the three months ended March 31 rose 7% to 74,900 tonnes from 70,000 tonnes the year before, but was down from the fourth quarter of 2019's 80,900 copper production figure.
KAZ said it is on track to meet its 2020 guidance for production of between 280,000 and 300,000 tonnes of copper.
Aktogay is on track to hit its 2020 production guidance for between 120,000 and 130,000 tonnes of Copper, with lower sulphite grades expected in the rest of the year.
Gold production for the quarter increased to 55,400 tonnes from 43,400 tonnes year-on-year and from 55,300 tonnes in the fourth quarter of 2019.
Chief Executive Andrew Southam said: "Our first priority is to keep our employees and communities safe and I am proud that the group and our contractors have worked tirelessly to achieve that whilst maintaining operations. We have adapted working practices to extend shifts, restrict access to sites and to monitor the health of staff. The measures we have taken have enabled us to deliver a strong quarter of production, with copper and gold output respectively 7% and 28% higher versus the prior year period, and to maintain our full year guidance."
By Anna Farley; annafarley@alliancenews.com
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