Oct 25, 2012 (Dow Jones) LONDON--Kazakhstan's largest copper miner, U.K.-listed Kazakhmys PLC (KAZ.LN), expects copper sales in 2013 to remain more weighted towards China than Europe although its still in negotiations with customers over next year's sales, the company's head of corporate communications said Thursday.
"I think we will probably see a similar split to this year at around 80-20," John Smelt told Dow Jones Newswires in an interview, referring to this year's expectations that 80% of its copper output will be sold to China and the rest to Europe.
Kazakhmys traditionally splits it sales more or less equally between China and Europe but has the capacity to swing its sales in either direction depending on demand. The European debt crisis has taken its toll on copper demand within the EU but demand in the north and west of China, Kazakhmys' traditional markets, remain robust, Mr. Smelt said.
The FTSE-100-listed miner plans to produce between 285,000 and 295,000 metric tons of copper cathode from its own production annually between 2012 and 2014, rising to up to 330,000 tons in 2015 when its first of two major copper projects are due to start commercial production.
Mr. Smelt said that if fourth quarter copper output turns out on par with the third quarter, Kazakhmys should achieve the middle of its output guidance range for this year. Copper-cathode-equivalent production from its own material called concentrate rose 6.2% on year to 78,500 tons in the third quarter. He added that contract sales for next year are due to be completed by the end of the year.
In terms of balance sheet, net debt rose to $462 million at the end of September from $418 million at the end of June as it continues to invest in its two growth projects. The company is progressing according to plan on the construction of its $1.8 billion Bozshakol copper project and aims to finalize its feasibility study for the $1.5 billion Aktogay project in the fourth quarter, Mr. Smelt said.
He added that net debt will continue to rise and reach its peak in 2014 but the figure is subject to change since it's contingent upon copper prices and the amount of cashflow the company generates from its sales.
Equity analyst Cailey Barker of Numis Securities said Kazakhmys beat his expectations across all commodities including gold, silver, zinc and electricity.
"The stock remains cheap but with limited news catalysts to drive the shares and a relatively subdued copper market we remain cautious," he said.
At 0745 GMT, Kazakhmys' shares were up 1.3% or 10 pence at 760 pence a share, resulting in a market capitalization of GBP3.93 billion.