KAZ MINERALS : AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2019

KAZ MINERALS PLC

6TH FLOOR CARDINAL PLACE

100 VICTORIA STREET LONDON SW1E 5JL

Tel: +44 (0) 20 7901 7800

20 F ebruary 2020

KAZ MINERALS PLC AUDITED RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2019

FINANCIAL HIGHLIGHTS

• Revenues elevated by 5% to $2,266 million (2018: $2,162 million) as increased manufacturing and gross sales offset decrease copper costs
• • Full 12 months copper gross sales volumes of 317 kt (2018: 296 kt) and gold gross sales of 225 koz (2018: 169 koz)
  • Common LME copper worth in 2019 lowered by 8% to $6,000/t (2018: $6,526/t)
• EBITDA1 of $1,355 million at an EBITDA margin of 60% (2018: $1,310 million)
• • Working revenue elevated by 8% to $923 million (2018: $851 million)
• Trade main web money value1 of 77 USc/lb (2018: 85 USc/lb)
• • Gross money prices1 lowered to 140 USc/lb (2018: 144 USc/lb) pushed by elevated contribution from Aktogay and value efficiencies on the East Area
  • Gold by-product revenues rose by 50% to $318 million (2018: $212 million) pushed by 10% improve in manufacturing, 10% increased common LBMA gold worth and the sale of stock
  • Structural elements of economies of scale, aggressive vitality and transport prices, and low strip ratios proceed to help the Group’s low value place
• Web debt1 $2,759 million (2018: $1,986 million)
• • 2019 investments embrace $436 million money consideration for the Baimskaya acquisition and $718 million of expansionary capital expenditure (2018: $530 million)
  • Gross liquid funds1 of $541 million at 31 December 2019 (2018: $1,467 million)
  • $1.Zero billion of dedicated services undrawn as at 28 January 2020, following modification of PXF
• Remaining dividend of Eight US cents per peculiar share really useful
• • Complete 2019 dividend of 12 US cents per peculiar share, together with the interim dividend of Four US cents per peculiar share paid on 25 October 2019

OPERATIONAL HIGHLIGHTS

• Copper manufacturing2 of 311 kt and gold manufacturing3 of 201 koz (+6% and +10% in contrast with 2018)
• • 2020 copper manufacturing2 guided at 280-300 kt as grades are anticipated to say no at Aktogay whereas East Area output is proscribed by low grades and difficult geological circumstances

POSITIONED FOR GROWTH

• Sturdy efficiency from producing property helps funding in close to and long run development
• • Aktogay enlargement on observe for completion in 2021, $1.2 billion venture funds unchanged
  • Baimskaya feasibility research ongoing, anticipated to be accomplished later within the first half of 2020

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1. Various Efficiency Measures (“APMs”) are used to evaluate the efficiency of the Group and should not outlined or specified underneath IFRS. For additional data on APMs, together with justification for his or her use, please consult with the APMs part on web page 54.
2. Payable metallic in focus and copper cathode from Aktogay oxide ore.
3. Payable metallic in focus.

Andrew Southam, Chief Government Officer, mentioned: “In 2019 KAZ Minerals has continued to construct on its operational observe file, delivering additional development in copper manufacturing and sustaining its business main value place. Our giant scale operations in Kazakhstan achieved file ranges of manufacturing and our confirmed, low value asset base offers a powerful platform for funding into value-accretive development tasks. The Aktogay enlargement venture is on funds and on observe to start manufacturing in 2021. We look ahead to releasing additional particulars of our plans for Baimskaya when the bankable feasibility research is accomplished.”

For additional data please contact:

KAZ Minerals PLC

REGISTERED OFFICE

sixth Flooring, Cardinal Place, 100 Victoria Road, London SW1E 5JL, United Kingdom.

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NOTES TO EDITORS

KAZ Minerals PLC (“KAZ Minerals” or “the Group”) is a excessive development copper firm targeted on giant scale, low value, open pit mining in Kazakhstan, Russia and Kyrgyzstan. It operates the Aktogay and Bozshakol open pit copper mines within the East Area and Pavlodar area of Kazakhstan, three underground mines and related concentrators within the East Area of Kazakhstan and the Bozymchak copper-gold mine in Kyrgyzstan. In 2019, complete copper manufacturing was 311 kt with by-products of 201 koz of gold, 3,382 koz of silver and 38 kt of zinc in focus. The Group acquired the Baimskaya venture within the Chukotka area of Russia in January 2019, one of many world’s most important undeveloped copper property, with the potential to change into a big scale, low value, open pit copper mine.

The Group’s new operations at Aktogay and Bozshakol have delivered business main manufacturing development and remodeled KAZ Minerals into an organization dominated by world class, open pit copper mines.

Aktogay is a big scale, open pit mine just like Bozshakol, with a remaining mine lifetime of round 25 years (together with the enlargement venture) at a median copper grade of 0.35% (oxide) and 0.33% (sulphide). Aktogay commenced manufacturing of copper cathode from oxide ore in December 2015 and copper in focus from sulphide ore in February 2017. The working sulphide concentrator has an annual ore processing capability of 25 million tonnes and the sulphide processing capability might be doubled to 50 million tonnes with the addition of a second concentrator by the tip of 2021. Aktogay is competitively positioned on the worldwide value curve and can produce a median of 100 kt of copper per 12 months from sulphide ore till 2021, rising to 170 kt per 12 months from 2022 to 2027, after the second concentrator commences operations. Copper manufacturing from oxide ore might be within the area of 20 kt each year till 2024.

Bozshakol is a primary quartile asset on the worldwide value curve with an annual ore processing capability of 30 million tonnes and a remaining mine lifetime of c.40 years at a median copper grade of 0.36%. The mine and processing services commenced output in 2016 and can produce a median of 100 kt of copper cathode equal and 120 koz of gold in focus per 12 months over the primary 10 years of operations.

The Peschanka deposit throughout the Baimskaya licence space in Russia has JORC sources of 9.5 Mt of copper at a median grade of 0.43% and 16.5 Moz of gold at a median grade of 0.23 g/t. Common annual manufacturing over the primary ten years of operations is predicted to be 250 kt copper and 400 koz gold, or 330 kt Copper Equal Manufacturing, with a mine life of roughly 25 years and first quartile working prices. The venture is positioned in a area recognized by the Russian Authorities as strategically essential for financial improvement and can profit from the development of state-funded energy and transport infrastructure and the availability of tax incentives. The estimated capital funds for development is $5.5 billion. The parameters of the venture might be confirmed on completion of the feasibility research. The Group expects the venture to generate a major NPV uplift and a sexy IRR at analyst consensus copper costs. The event of Baimskaya will allow the Group to proceed its excessive development trajectory, including a big scale, lengthy life asset to the Group’s portfolio.

KAZ Minerals is listed on the London Inventory Trade and the Kazakhstan Inventory Trade and employs round 16,00Zero individuals, principally in Kazakhstan.

CAUTIONARY NOTICE CONCERNING FORWARD-LOOKING STATEMENTS

These outcomes embrace sure forward-looking statements. All statements apart from historic info are forward- trying statements. Examples of forward-looking statements embrace these relating to the enterprise, technique and plans of KAZ Minerals and its present objectives, assumptions and expectations regarding its future monetary situation, efficiency and outcomes, commodity demand and traits in commodity costs, development alternatives and any assumptions underlying or regarding any of the foregoing. Ahead-looking statements are typically however not all the time recognized by phrases comparable to “goal”, “intend”, “anticipate”, “estimate”, “plan”, “imagine”, “anticipate”, “could”, “ought to” or in every case their detrimental and comparable expressions. By their nature, forward-looking statements contain identified and unknown dangers, assumptions and uncertainties and different elements that are unpredictable as they relate to occasions and rely on circumstances, that may happen sooner or later, which can trigger precise outcomes, efficiency or achievements of KAZ Minerals to be materially totally different from these expressed or implied in these forward-looking statements. Principal danger elements that might trigger KAZ Minerals’ precise outcomes, efficiency or achievements to vary materially from these within the forward-looking statements embrace (with out limitation) well being and security, neighborhood and labour relations, workers, environmental compliance, enterprise interruption, new tasks and commissioning, reserves and sources, political danger, authorized and regulatory compliance, commodity costs, overseas alternate and inflation, publicity to China, acquisitions and divestments, liquidity, and such different danger elements disclosed in KAZ Minerals’ most up-to-date Annual Report and Accounts. Ahead-looking statements ought to due to this fact be construed in gentle of such danger elements. These forward-looking statements shouldn’t be construed as a revenue forecast.

No a part of these outcomes constitutes, or shall be taken to represent, an invite or inducement to spend money on KAZ Minerals PLC, or every other entity, and shareholders are cautioned to not place undue reliance on the forward-looking statements. Besides as required by the Itemizing Guidelines and relevant regulation, rule or regulation, KAZ Minerals doesn’t

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undertake any obligation to publicly replace or change any forward-looking statements, to replicate occasions or new data occurring after the date of those outcomes.

SHAREHOLDER INFORMATION

The Firm declares dividends in US {dollars}. The default forex for cost of dividends is US {dollars}, though shareholders can elect to obtain their dividends in UK kilos sterling. These shareholders who want to obtain their dividend in UK kilos sterling ought to contact the Firm’s registrar to request a forex election kind.

For these shareholders who’ve elected to obtain their dividends in UK kilos sterling, the forex conversion fee to transform the dividend into UK kilos sterling might be £0.7692 to the US greenback. The conversion fee relies on the common alternate fee for the 5 enterprise days ending two days earlier than the date of the annual outcomes announcement.

Topic to the approval of shareholders on the Annual Basic Assembly on 30 April 2020, the ultimate dividend in US {dollars} and UK kilos sterling might be paid on Friday 22 Could 2020 to shareholders on the register on the shut of enterprise within the UK on the file date, Friday 24 April 2020. The ex-dividend date is Thursday 23 April 2020.

ANNUAL GENERAL MEETING

The 2020 Annual Basic Assembly might be held at 12.15pm on Thursday 30 April 2020 at Linklaters LLP, One Silk Road, London EC2Y 8HQ, United Kingdom.

The 2019 Annual Report and Accounts and particulars of the enterprise to be carried out on the Annual Basic Assembly might be mailed to shareholders and displayed on the Firm’s web site (www.kazminerals.com) in late March 2020.

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CHAIR’S STATEMENT

Since its formation in 2014, KAZ Minerals has targeted on the development of huge scale copper mining tasks within the CIS area. Now we have efficiently utilized trendy expertise to develop copper deposits, constructing a portfolio of extremely worthwhile mines with low working prices.

Our determination to spend money on copper development tasks relies on a optimistic long run view of the copper market. Tens of millions of tonnes of extra copper manufacturing are required to supply the world with the copper it wants to switch depletion of present mines, to boost residing requirements in creating economies, to transition away from vitality methods reliant on fossil fuels and to enhance vitality effectivity.

In 2019, the Group’s working property in Kazakhstan carried out effectively, with each Bozshakol and Aktogay delivering quarterly manufacturing data through the 12 months. We additionally took steps in direction of establishing the following section of development for the Group, progressing the enlargement venture at our Aktogay mine in Kazakhstan and finishing the acquisition of the Baimskaya copper venture in Chukotka, Russia. The Aktogay enlargement venture will add to our present world class asset base and supply a powerful platform to help our funding within the Baimskaya venture, which is likely one of the world’s largest undeveloped copper deposits.

The acquisition of Baimskaya is aligned with our excessive development, low value technique and the Group has a confirmed observe file for the profitable supply of huge scale mining tasks. Baimskaya has the potential to roughly double the Group’s copper manufacturing and triple gold output when it commences processing of ore from round 2026. The feasibility research for this venture is progressing and the main points are anticipated to be printed later within the first half of 2020.

Copper and local weather change

Concentrate on the problem of local weather change has elevated and buyers and the broader public are demanding motion from firms, governments and people. We recognise the importance {that a} transition to a decrease carbon economic system may have for the copper market and securing extra provides of copper might be important for facilitating a discount in international CO2 emissions. Renewable vitality era is many occasions extra copper intensive than energy generated from typical vitality sources. Further provides of copper may also be required to help the rising adoption of electrical automobiles, which require extra copper than inner combustion automobiles.

Our values and objective

KAZ Minerals’ company objective is to speculate sustainably in rising its copper manufacturing. This has clear advantages for society because of the wide selection of functions for copper in our on a regular basis lives and the significance of copper for future vitality and transportation applied sciences. While rising our enterprise, we search to minimise the influence of our operations on the surroundings and we help nationwide and native social tasks which profit host communities. We conduct our enterprise in step with 5 company values which we use to information our determination making: Security, Lengthy Time period Effectivity, Teamwork, Skilled Growth and Integrity. By adhering to those values we can ship sustainable development which advantages all stakeholders.

Well being and security

It’s with remorse that I report two worker fatalities occurred at our operations throughout 2019, and one in January 2020. Any fatality is unacceptable to us and as a Group we now have invested vital time, effort and funding to enhance our security efficiency. While we now have achieved a long run discount within the quantity and frequency of fatalities over the previous couple of years, we’ll proceed to commit our sources to eradicate fatalities and accidents at our operations.

Session and variety

KAZ Minerals strongly believes in the advantages of standard session with its workers. Every year I host a ‘Direct Line’ discussion board to take questions from workers. Through the years we now have made many enhancements from performing upon suggestions gained from these occasions, in addition to by regular administration reporting channels. Our Deputy Chair, Michael Lynch-Bell additionally meets with worker and labour union representatives and offers additional suggestions to the Board.

KAZ Minerals has amongst the very best feminine illustration in its workforce of any of its mining peer group, at 22%. This degree of feminine illustration is constant throughout all ranges of workers and administration. Excluding roles that are restricted by regulation in Kazakhstan from being carried out by feminine staff, the proportion of feminine staff is 39%.

Our workforce advantages from a broad range of nationalities and ethnic backgrounds. In Kazakhstan and Kyrgyzstan we prioritise recruitment and coaching for native staff and round 98% of our workers are nationals of these nations. Our expatriate workers deliver mining expertise to the Group from all around the world.

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Dividends

The Group’s dividend coverage, established on the time of Itemizing, is for the Board to contemplate the money era and financing necessities of the enterprise earlier than recommending an acceptable dividend. This maintains flexibility, which is suitable given the underlying cyclicality of a commodity enterprise and the Group’s development ambitions.

The Group’s largest property in Kazakhstan, Aktogay and Bozshakol, are extremely money generative and have contributed to additional development in manufacturing and earnings within the 12 months. The Group has additionally continued to spend money on its development pipeline, with $436 million paid in respect of the Baimskaya acquisition and $111 million incurred on feasibility research and pioneer works. Additional capital investments of $607 million have been made, primarily within the Aktogay enlargement venture.

Making an allowance for the efficiency of the Group’s producing property in 2019 and the outlook for 2020, the Board has really useful a ultimate dividend of 8.Zero US cents per share. Mixed with the interim dividend of 4.Zero US cents per share, the dividend in respect of the 2019 monetary 12 months is 12.Zero US cents per share.

The long run financing necessities of the Baimskaya venture might be introduced with the outcomes of the bankable feasibility research, following which the Board will additional assessment the Group’s allocation of capital.

Board adjustments

After practically 9 years as a Director, Charles Watson will retire from the Board throughout 2020. We’re very grateful for Charles’ contribution over his time with us, which has been a interval of great change for the Group. Additional particulars of Charles’ departure might be introduced on the applicable time.

Efficiency and prospects

At KAZ Minerals, we now have demonstrated our means to make long-term funding selections: to assemble and function giant scale greenfield copper tasks that are right now producing vital money flows and are amongst the bottom value copper mining property globally.

We are going to proceed to concentrate on long-term worth creation for the good thing about all stakeholders. The investments we make right now at Aktogay and Baimskaya will allow us to ship increased returns sooner or later. There are few comparable firms with an identical current historical past of success in development, a development pipeline of world class tasks and a confirmed producing asset base, consisting solely of low value copper mines. KAZ Minerals has constructed a powerful observe file of feat up to now and I look ahead to continued success within the years to come back.

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CHIEF EXECUTIVE OFFICER’S REVIEW

Delivering development and worth

Throughout 2019 KAZ Minerals continued to construct on its operational observe file, delivering additional development in copper manufacturing and sustaining its business main value place. The Group’s giant scale property in Kazakhstan achieved file ranges of copper and gold manufacturing, serving to the Group to ship the very best revenues and EBITDA for the reason that creation of KAZ Minerals in 2014. Our confirmed, low value asset base offers a powerful platform for funding into high-return brownfield and greenfield copper tasks. Within the close to time period, manufacturing development is predicted from the Aktogay enlargement venture beginning in 2021, while the Baimskaya deposit in Chukotka, Russia, affords long run development potential and is presently at feasibility research stage.

Well being and security

We place the very best precedence on enhancing our well being and security efficiency. I’m saddened to report that there have been two fatalities in our underground mines within the East Area of Kazakhstan through the 12 months and one in January 2020. We imagine that every one fatalities are avoidable and we’ll proceed to implement the mandatory cultural and procedural adjustments to attain this consequence. The open pit mines at Aktogay, Bozshakol and Bozymchak have all operated with none deadly incidents since they commenced manufacturing. The variety of fatalities within the Group’s operations has been on a long run downward pattern following focused investments and initiatives to enhance efficiency on this vital space over a number of years.

Harm charges lowered in 2019, with the Group recording a TRIFR of 1.38 (2018: 1.74). In the course of the 12 months we launched a brand new flagship well being and security programme entitled ‘Aim Zero’. The programme seeks to unite workers, contractors, supervisors, administration and the Board, behind the frequent goal of lowering well being, security and environmental incidents to zero.

Our individuals

I want to thank all of my colleagues for his or her contribution to KAZ Minerals’ efficiency in 2019. We proceed to spend money on the coaching of our workforce in Kazakhstan and our trendy, giant scale property present thrilling skilled improvement alternatives. Round 250 native recruits began their apprenticeships at purpose-built services at Aktogay through the 12 months and we’re proud to be transferring expertise to the following era of miners. The development of the enlargement venture at Aktogay will generate additional employment and profession improvement alternatives sooner or later. KAZ Minerals has one of many highest ranges of feminine illustration in its workforce amongst its mining friends and we’re searching for to extend gender range by equality of alternative.

Evaluation of operations

The primary sulphide concentrators at each Aktogay and Bozshakol operated at design ore throughput capability over the 12 months. Following improve works within the first half, the Bozshakol clay plant processed over Three Mt of ore within the second half of the 12 months, which on an annualised foundation exceeded the plant’s design capability throughput of 5 Mtpa.

Group copper manufacturing of 311 kt (2018: 295 kt) exceeded steerage of c.300 kt resulting from a powerful efficiency from Aktogay, the place a excessive common sulphide copper grade of 0.58% and good restoration charges have been the primary drivers of copper manufacturing of 146 kt in 2019. Group gold manufacturing of 201 koz (2018: 183 koz) additionally exceeded steerage set firstly of the 12 months of 170-185 koz, as indicated within the third quarter manufacturing report, primarily resulting from outperformance at Bozshakol and the Bozymchak mine in Kyrgyzstan. Silver manufacturing of three,382 koz was 13% forward of steerage while zinc in focus output decreased to 38 kt, barely beneath revised steerage of 40-45 kt, resulting from difficult geological circumstances on the two largest mines within the East Area.

Manufacturing steerage

With all the Group’s concentrators now totally ramped up and working at design capability, future output ranges will primarily be decided by common grades and restoration charges, till the start-up of the brand new concentrator at Aktogay in 2021. Copper manufacturing for the Group in 2020 is predicted to be 280-300 kt. Aktogay copper manufacturing is about at 120-130 kt (2019: 146 kt), as grades will decline from their beforehand elevated ranges, while increased common copper grades at Bozshakol are anticipated to lead to copper manufacturing rising to 110-120 kt in 2020 (2019: 110 kt). Within the East Area and Bozymchak, copper manufacturing is guided to cut back to round 50 kt (2019: 55 kt) as grades and processing volumes stay low at Artemyevsky, through the transition to the second ore physique, and as mining takes place at deeper horizons and in tougher geological circumstances at Orlovsky. Gold manufacturing steerage is about at 180-200 koz as Bozshakol maintains the excessive output ranges achieved in 2019 however grades decline at Bozymchak, in step with the mine plan. Silver and zinc in focus manufacturing are anticipated to stay broadly in step with 2019, at c.3,00Zero koz and c.40 kt, respectively.

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Progress tasks

Baimskaya

KAZ Minerals accomplished the acquisition of the Baimskaya copper venture in January 2019. The licence space comprises the Peschanka deposit, one of many world’s most important undeveloped copper property with JORC sources of 9.5 Mt of copper at a median grade of 0.43% and 16.5 Moz of gold at a median grade of 0.23 g/t.

The Group is presently progressing a bankable feasibility research of the Baimskaya venture and the outcomes of the research are anticipated later within the first half of 2020.

The Board accredited $80 million of capital expenditure in 2019 for pioneer works on the camp, gasoline storage, airfield and web site energy infrastructure and for the supply of development gear. The pioneer works and deliveries proceeded in accordance with schedule. Complete capital expenditure throughout 2019 on the feasibility research and pioneer works was $111 million.

Aktogay enlargement

The Group’s enlargement venture at Aktogay progressed effectively throughout 2019, with the primary areas of the concentrator constructing totally enclosed and mill set up underway. The Group took supply of the primary of its new fleet of bigger mining automobiles through the 12 months, which contributed to a 32% improve in ore extraction at Aktogay to 55,134 kt (2018: 41,911 kt), as mine improvement works have been undertaken previous to the beginning of processing on the new concentrator. The venture’s $1.2 billion funds and timetable are each unchanged with the brand new concentrator anticipated to start operations in 2021.

Koksay

NFC’s funding of $70 million for the event of Koksay and its acquisition of a 19.4% stake within the venture was accomplished on Three July 2019. A feasibility research has commenced, the outcomes of which might be reviewed by the Board earlier than assessing how and when to proceed with the venture. Expenditure on research work and drilling throughout 2019 was $5 million.

Monetary efficiency

Revenues elevated to $2,266 million (2018: $2,162 million), regardless of decrease common copper costs through the 12 months, because of the sturdy manufacturing efficiency with copper and gold gross sales respectively 7% and 33% increased than 2018. Copper gross sales of 317 kt (2018: 296 kt) exceeded copper manufacturing of 311 kt (2018: 295 kt) because of the sale of completed items stock. The typical LME copper worth in 2019 was $6,000/t, 8% beneath the common for 2018 of $6,526/t.

The Group maintained its aggressive place on the business value curve and recorded EBITDA of $1,355 million (2018: $1,310 million), representing an EBITDA margin of 60% (2018: 61%). Working revenue elevated by 8% to $923 million (2018: $851 million), representing an working margin of 41% (2018: 39%). Free Money Movement lowered by 30% to $411 million (2018: $585 million) and money stream from operations was $512 million (2018: $673 million).

Unit prices

Larger manufacturing volumes from Aktogay and Bozshakol, a weaker tenge to US greenback alternate fee and profitable value discount initiatives undertaken within the East Area resulted in a Group gross money value of 140 USc/lb (2018: 144 USc/lb) and an business main web money value of 77 USc/lb (2018: 85 USc/lb). KAZ Minerals continues to ship amongst the bottom unit prices of any pure play copper producer, or copper division of a significant diversified miner.

The gross money value at Aktogay lowered to 102 US c/lb (2018: 106 USc/lb) with a web money value of 98 USc/lb (2018: 103 USc/lb). The discount in unit prices was primarily pushed by increased copper manufacturing volumes, which elevated by 11% to 146 kt, from 131 kt in 2018.

Bozshakol’s gross money value elevated to 137 USc/lb (2018: 129 USc/lb), primarily because of the sale of 26 koz of gold bar stock within the first half of 2019 that was introduced ahead from 2018 to the Nationwide Financial institution of Kazakhstan. The manufacturing prices related to the sale of this materials elevated gross money prices by round 5 USc/lb to 137 USc/lb (2018: 129 USc/lb) and benefited web money prices by 9 USc/lb, contributing to a extremely aggressive web money value for Bozshakol of 31 USc/lb (2018: 58 USc/lb).

Within the East Area and Bozymchak, gross money prices decreased to 234 USc/lb (2018: 244 USc/lb), because the weaker tenge alternate fee and management-led value discount measures, together with the rationalisation of shift schedules and transportation routes, greater than offset decrease manufacturing volumes and native market inflation within the worth of uncooked supplies and labour. The web money value within the East Area and Bozymchak elevated to 104 USc/lb from 94 USc/lb in 2018, because the discount in gross money value was offset by decrease zinc output.

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Stability sheet

Web debt elevated to $2,759 million (2018: $1,986 million) because the Group invested within the acquisition and improvement of its copper development venture pipeline. The Baimskaya licence space in Russia was acquired in January 2019, with the $436 million money part of the consideration paid through the first half. Expansionary capital expenditure of $718 million was invested throughout 2019, primarily at Aktogay.

The Group made a complete of $545 million of scheduled debt repayments and drew $387 million from new services through the 12 months, leading to gross borrowings of $3,300 million at 31 December 2019 (31 December 2018: $3,453 million). New debt services have been signed with the Growth Financial institution of Kazakhstan for $600 million in June 2019 and Caterpillar Monetary Providers Company for $100 million in November 2019. Mixed with the current $1.Zero billion PXF refinancing introduced on 28 January 2020, the Group has raised a complete of $1.7 billion of debt services over the past 9 months to switch amortising services and supply extra flexibility.

Monetary steerage

At Aktogay, gross money value steerage for 2020 is about at 110-130 USc/lb, increased than the 102 USc/lb recorded in 2019, as copper output is guided to cut back to 120-130 kt from 146 kt within the prior 12 months. At Bozshakol, grades and copper manufacturing volumes are forecast to extend, offsetting basic inflation in native wages and vitality costs. Gross money value steerage is maintained at 130-150 USc/lb, in step with the vary set at first of 2019. On the East Area and Bozymchak, 2020 gross money prices are anticipated to be between 260 and 280 USc/lb (2019: 234 USc/lb) as gross sales volumes fall from 62 kt in 2019 to roughly 50 kt, in step with manufacturing steerage.

Sustaining capital expenditure at Bozshakol and Aktogay is predicted to extend to $60 million for every mine, together with development works regarding tailings capability. Sustaining capital expenditure of $50 million is predicted within the East Area and Bozymchak in 2020.

Excluding the Baimskaya copper venture, expansionary capital expenditure in 2020 is predicted to be round $495 million. This includes $400 million on the Aktogay enlargement venture, $60 million on ongoing mine improvement works at Artemyevsky within the East Area, $15 million to start improvement of the underground section at Bozymchak and $20 million on Koksay venture research and different smaller objects.

Capital expenditure of $150 million has been accredited at Baimskaya in 2020 to finish the bankable feasibility research and proceed pioneer works. The Group is evaluating whether or not to make extra gear deliveries to Pevek within the 2020 delivery window and should think about approving extra capital expenditure later within the 12 months.

Outlook

As hopes for an enchancment in worldwide commerce relations elevated within the fourth quarter, the value of copper recovered from its lows in 2019 however was impacted in January 2020 by an outbreak of the Covid-19 coronavirus. Within the brief time period, the influence of an infection management measures taken in China in opposition to the virus and information of progress on commerce negotiations are more likely to be key drivers of the copper market.

The Group maintains its optimistic view on the medium to long run outlook for copper, as declining provide from present mines will must be changed by output from new tasks in progressively tougher areas and with decrease common copper grades. A fabric deficit within the copper market is forecast by many analysts to emerge over this decade, to coincide with the ramp up of output from the Group’s new copper development tasks at Aktogay and Baimskaya.

KAZ Minerals continues to supply a sexy mixture to buyers of rising output from its world class producing property, along with amongst the bottom unit value place of any pure play copper firm globally. Now we have a powerful platform from which to proceed our observe file of profitable funding in copper development tasks.

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grades are forecast to cut back in direction of the lifetime of mine grade over the primary ten years of operations and the common grade anticipated through the interval 2019-2021 inclusive is c.0.50%. Copper manufacturing for 2020 is guided at 120-130 kt, together with roughly 20 kt from oxide ore. As well as, Aktogay is predicted to supply round 500 koz of silver in 2020.

Monetary abstract

Revenues

Revenues elevated by 11% to $863 million throughout 2019, ensuing from elevated gross sales volumes following the sturdy operational efficiency within the 12 months. The 18 kt improve in copper gross sales throughout 2019 had a $102 million useful influence on copper revenues, partially offset by an $18 million opposed influence from decrease realised copper costs. The typical LME copper worth decreased by 8% from $6,526/t in 2018 to $6,000/t in 2019, and copper gross sales have been weighted in direction of the second half of the 12 months when costs have been decrease. Gross sales included 65 kt of cathode materials, comprising 23 kt produced on the Group’s SX/EW plant and 42 kt from copper focus processed on the Balkhash smelter. The upper quantity of fabric allotted to smelting in 2019 in contrast with 2018 positively impacts revenues as toll processed metallic is recorded as income excluding TC/RCs. Aktogay additionally recorded $14 million of by-product revenues, primarily from commercially payable portions of silver and gold.

EBITDA

Aktogay’s EBITDA elevated to $564 million in 2019, benefiting from the elevated revenues within the 12 months. The EBITDA margin remained extremely aggressive at 65%.

The gross money value is expressed on a unit of copper gross sales foundation, after adjustment for the copper payable and TC/RCs. Gross money prices at Aktogay have been 102 USc/lb in 2019, marginally beneath market steerage of 105-125 USc/lb. Gross money prices lowered in contrast with 2018, because the operations benefited from economies of scale from increased output in addition to a weaker tenge, which traded at a median of 383 KZT/USD in contrast with 345 KZT/USD within the earlier 12 months. As well as, the deferral of scheduled mill upkeep from December 2019 to January 2020 had the impact of lowering 2019 prices and rising throughput. This greater than offset the influence of value will increase for sure inputs together with salaries, gasoline and consumables. Money working prices embrace social expenditure of $10 million which has been excluded from gross money prices as it isn’t thought of straight attributable to mining and processing at Aktogay and advantages the broader Group.

The gross money value in 2020 is forecast to be 110-130 USc/lb. The rise in contrast with 2019 largely displays the anticipated discount in output arising from decrease grades. Prices are additionally anticipated to extend marginally because of the influence of basic inflation, in addition to elevated upkeep ensuing from the mill shutdown being deferred into January 2020.

Working revenue

Working revenue elevated by $31 million to $381 million throughout 2019, reflecting the sturdy manufacturing and value efficiency of the mine within the 12 months. The $34 million improve in EBITDA was partially offset by increased MET expenses as a better quantity of ore was mined in preparation for the Aktogay enlargement venture.

Capital expenditure

Sustaining capital expenditure at Aktogay was $44 million, in step with market steerage of $50 million. The rise from the prior 12 months displays elevated upkeep because the operation matures, in addition to development works to extend the capability of the tailings storage facility. Roughly $20 million was incurred on the tailings development in 2019 to supply interim capability. The tailings development will proceed throughout 2020 and 2021 to make sure adequate capability prematurely of the Aktogay enlargement. Complete sustaining capital expenditure of $60 million, together with tailings, is predicted in 2020.

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The full expansionary capital expenditure at Aktogay of $509 million contains $459 million regarding the Aktogay enlargement venture which is progressing in step with expectations. Expenditure within the 12 months included round $210 million on gear for the sulphide concentrator, for which procurement is essentially dedicated. Building actions continued, incurring c.$175 million of expenditure within the 12 months. As well as, roughly $45 million was incurred to improve the mine fleet. In 2020, expenditure of round $400 million on the Aktogay enlargement venture is forecast. The full capital funds for the venture is unchanged at $1.2 billion and first manufacturing from the plant is predicted in 2021 as beforehand guided.

Expansionary capital expenditure in 2019 contains $50 million in respect of the unique Aktogay venture, incurred on ultimate retention funds to contractors and development of the second stage of heap leach cells for oxide operations. Work on the primary Aktogay venture has been largely concluded, with restricted spend anticipated within the first half of 2020 to finalise and fee the brand new heap leach cells.

BOZSHAKOL

Bozshakol is a primary quartile asset on the worldwide value curve with an annual ore processing capability of 30 million tonnes and a remaining mine lifetime of round 40 years at a median copper grade of 0.36%. The mine and processing services commenced output in 2016 and can produce a median of 100 kt of copper cathode equal and 120 koz of gold in focus per 12 months over the primary 10 years of operations.

Manufacturing abstract

Ore extracted at Bozshakol elevated by 16% to 35,693 kt as increased volumes of clay ore have been extracted with the intention to entry additional sulphide ore. From 2020 it’s anticipated that the quantity of clay ore processed from stockpiles will exceed mined volumes.

Processing volumes of 29,470 kt have been 4% increased than within the earlier 12 months (2018: 28,454 kt) and barely beneath the design ore capability for Bozshakol of 30 Mtpa. The primary sulphide concentrator operated at full design capability for the 12 months. Within the first half of 2019 operations on the clay plant have been suspended for round three months throughout a programme of upgrades to the water system to extend recycling charges and cut back the consumption of recent water, following which it carried out effectively, processing over Three Mt of fabric within the second half.

The typical copper grade processed was 0.48%, in step with market steerage and the prior 12 months. The typical restoration fee improved to 81% (2018: 79%), and mixed with the upper ranges of ore processed within the second half of the 12 months, resulted in a rise in complete copper manufacturing to 110.2 kt in contrast with 101.6 kt in 2018. Copper manufacturing was due to this fact on the mid-point of steerage of 105-115 kt.

Gold manufacturing of 144.Eight koz rose by 13% in contrast with 2018, supported by increased common gold grades and improved restoration charges. Gold manufacturing was in extra of steerage of 130-140 koz. Silver manufacturing additionally elevated from 666 koz in 2018 to 803 koz in 2019, forward of steerage of roughly 700 koz, resulting from increased processed grades.

Nearly all of copper manufacturing was dispatched as focus to clients in China, with 13.6 kt of copper in focus despatched for toll processing on the Balkhash smelter in Kazakhstan, the place spare capability on enticing phrases was out there.

Copper manufacturing in 2020 is predicted to be 110-120 kt with by-products of gold and silver guided at 140-150 koz and 700 koz respectively. Each the sulphide and clay vegetation are deliberate to function at full design capability, with a slight improve in copper grade forecast.

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Monetary abstract

Revenues

Revenues elevated by $95 million to $851 million in 2019 and benefited from increased gross sales volumes for all merchandise in contrast with 2018, in addition to increased realised gold and silver costs. Copper revenues have been broadly in step with the prior 12 months, because the optimistic influence of elevated gross sales volumes was offset by a decrease realised worth. Copper gross sales embrace 10 kt of copper cathode produced from focus processed on the Balkhash smelter. Gold gross sales volumes of 165 koz have been considerably increased than manufacturing, benefiting from the sale of 25.6 koz of gold bar stock gathered on the finish of 2018. Gold revenues elevated by 62% to $234 million because of the increased gross sales volumes mixed with a rise within the common LBMA worth of gold from $1,268/ouncesin 2018 to $1,393/ouncesin 2019.

EBITDA

Bozshakol contributed $585 million of EBITDA, a rise of $65 million in contrast with 2018 as increased revenues have been partially offset by an increase in working prices. The mine generated a powerful EBITDA margin of 69%, in step with 2018.

Bozshakol’s gross money value of 137 USc/lb elevated from 129 USc/lb in 2018. The reported determine of 137 USc/lb contains expenses related to the sale of 25.6 koz of gold bar stock introduced ahead from 2018. The manufacturing prices related to the sale of this materials elevated gross money prices by round 5 USc/lb. The 2019 gross money value was in direction of the decrease finish of the steerage vary of 130-150 USc/lb, resulting from a discount within the consumption of consumables and a weaker KZT/USD alternate fee. These useful elements have been partially offset by increased mill relining bills and a few value inflation, which included native salaries.

The web money value at Bozshakol, after deducting by-product credit, was 31 USc/lb. This money value incorporates the sale of gold bar stock introduced ahead from 2018 which benefited web money prices by 9 USc/lb. This represents an enchancment on the prior 12 months, a results of beneficial gold costs and powerful gold manufacturing in 2019.

The gross money value for 2020 is forecast to be 130-150 USc/lb, in step with the steerage for 2019, as the good thing about elevated forecast grades and manufacturing is offset by increased prices related to the maturing mine, together with a deeper pit, longer haulage distances and additional upkeep prices.

Working revenue

Working revenue rose by $66 million to $427 million throughout 2019, in step with the rise in EBITDA.

Capital expenditure

Sustaining capital expenditure was $55 million throughout 2019, a rise compared to 2018 when the upkeep necessities have been decrease because of the earlier stage of the operations. Expenditure through the 12 months was primarily related to the acquisition and overhaul of mining gear in addition to development work to extend the storage capability of the tailings services. In 2020 sustaining capital expenditure is predicted to be roughly $60 million, reflecting the upper ranges of upkeep required because the operations mature and additional tailings work. Going ahead common annual sustaining capital expenditure is predicted to be within the area of $50 million each year, incorporating periodic works to extend tailings storage capability.

Expansionary capital expenditure of $37 million was incurred through the first half of the 12 months, totally on ultimate retention funds made to contractors for work carried out in earlier durations.

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EAST REGION AND BOZYMCHAK

The Group owns and operates three polymetallic underground mines and related concentrators within the East Area of Kazakhstan and Bozymchak, a copper and gold open pit mine in Kyrgyzstan.

Manufacturing abstract

Copper

Copper manufacturing within the East Area and Bozymchak of 55.5 kt was in step with market steerage of round 55 kt, and represents a 6.2 kt (10%) discount from the prior 12 months. The quantity of ore processed was in step with ore extraction, however decreased by 6% to three,791 kt because the prior 12 months benefited from the processing of stockpiles. Common copper grades processed in 2019 lowered to 1.71%, primarily a results of decrease grades at Orlovsky the place troublesome geological circumstances prevented entry to increased grade zones. The Bozymchak concentrator operated at full capability all year long, contributing 7.Zero kt of copper manufacturing.

Following a strategic assessment, the Belousovsky concentrator was closed on 25 October 2019 to enhance operational effectivity. Ore extracted from the Irtyshsky mine was subsequently transported to the Nikolayevsky concentrator for processing, making use of obtainable capability. The Belousovsky concentrator has since been disposed of.

At Artemyevsky, grades and processing volumes will stay at round present ranges, till extraction commences from the second ore physique, which is predicted from 2022. Manufacturing from Orlovsky over the remaining lifetime of the mine is predicted to be at or beneath present output, as mining takes place in deeper horizons and tougher geological circumstances. Copper manufacturing from the East Area and Bozymchak is due to this fact anticipated to lower to roughly 50 kt in 2020.

By-products

Manufacturing ranges for all by-products on the East Area and Bozymchak lowered in 2019. Zinc in focus output of 38.Three kt was beneath the steerage of 40-45 kt, impacted by decrease than anticipated grades. The biggest discount was on the Orlovsky mine, which produced 11.6 kt in 2019 in contrast with 24.Eight kt within the earlier 12 months. Zinc in focus output is equally impacted by the elements affecting copper manufacturing at Orlovsky and Artemyevsky.

Full 12 months gold manufacturing of 53.7 koz was in extra of the market steerage vary of 45-50 koz and was marginally beneath the prior 12 months. This was the results of a powerful efficiency from the Bozymchak mine, which contributes nearly all of gold manufacturing (40.Eight koz, 2018: 39.7 koz) and the place grades have been increased than anticipated.

Silver manufacturing of two,024 koz was 12% forward of market steerage of 1,800 koz. 2019 output lowered by 332 koz in contrast with the prior 12 months because of a discount in silver grades processed, primarily at Orlovsky.

East Area and Bozymchak is forecast to supply 40-50 koz of gold and roughly 1,800 koz of silver in 2020, beneath the degrees achieved in 2019 however in step with the discount in copper volumes. Zinc in focus manufacturing is predicted to be round 40 kt.

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Monetary abstract

Revenues

Revenues in East Area and Bozymchak decreased by 13% in 2019 because of lowered gross sales of all merchandise other than gold, and decrease common realised costs of copper and zinc. Copper gross sales volumes of 62 kt included the sale of completed items stock from the prior 12 months and have been above manufacturing of 55.5 kt. Nevertheless, copper revenues have been $43 million beneath 2018, primarily resulting from decrease realised costs. Zinc revenues fell by $43 million resulting from a discount in gross sales volumes and a decrease market worth for zinc. A rise in gold costs, mixed with sale of stockpiled materials, resulted in increased gold income of $80 million.

EBITDA

EBITDA in 2019 was $230 million, a $54 million lower in contrast with 2018 which displays the decrease revenues, partially offset by a discount in working prices. Money working prices lowered by $25 million to $322 million, because of decrease manufacturing volumes in addition to beneficial value efficiency. Administration took motion to manage prices through the 12 months, together with a rationalisation of concentrator capability ensuing within the closure of the Belousovsky concentrator, optimisation of shift schedules and transport routes, and a discount in warehousing prices. Moreover, working prices within the East Area have the next publicity to the tenge, which weakened by 11% (2019: common 383 KZT/USD, 2018: 345 KZT/USD). These useful elements greater than offset native inflation on salaries and sure enter prices. Gross money value efficiency was aided by the sale of seven kt of completed items copper stock. In consequence, the gross money value of copper for East Area and Bozymchak was 234 USc/lb, beneath the prior 12 months and in direction of the underside finish of market steerage of 230-250 USc/lb.

Web money prices rose to 104 USc/lb, regardless of the discount in gross money prices, because of the vital lower in zinc revenues.

Gross money prices for 2020 are estimated to extend to 260-280 USc/lb as gross sales volumes fall from 62 kt in 2019 to roughly 50 kt, a degree in step with deliberate manufacturing in 2020.

Working revenue

Working revenue of $140 million was $25 million decrease than the prior 12 months because of the discount in EBITDA and the popularity of a $20 million impairment at Bozymchak in 2018.

Capital expenditure

Sustaining capital expenditure of $42 million was in step with the prior 12 months and associated primarily to mine improvement works within the underground mines, the enlargement of tailings services and the acquisition and overhaul of mining gear. In 2020, the deliberate sustaining capital expenditure for East Area and Bozymchak is roughly $50 million, together with some works deferred from 2019. This expenditure contains development of a brand new in-pit tailings storage facility near the Nikolayevsky concentrator which is able to cut back the Group’s tailings footprint.

Expansionary capital expenditure of $56 million in 2019 was beneath the steerage of $70 million, as spend on the Artemyevsky extension and Bozymchak underground mine was partially deferred into 2020. 2019 expenditure was

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targeted on the Artemyevsky improvement, the place preliminary works on the air flow shaft continued and floor followers have been put in.

Roughly $75 million is predicted to be incurred on expansionary capital expenditure in 2020. As beforehand guided, the Artemyevsky venture is predicted to require $60 million of expenditure each year from 2020 to 2023, with restricted spend thereafter. Preliminary works on the venture in 2020 will embrace sinking shafts, commencing underground development and capital mining works. Over the interval from 2020 to 2024 an additional $15 million each year might be required for the event of the underground section at Bozymchak, which is able to prolong the mine life.

Baimskaya

Throughout 2019 the Group progressed the bankable feasibility research for the Baimskaya copper venture and commenced pioneer works on the web site, incurring $111 million of capital expenditure through the 12 months in opposition to steerage of $150 million. The bankable feasibility research is scheduled for completion within the first half of 2020. Capital expenditure of $150 million has been accredited at Baimskaya in 2020 to finish the bankable feasibility research and proceed pioneer works. The Group is evaluating whether or not to make extra gear deliveries to Pevek within the 2020 delivery window and should think about approving extra capital expenditure later within the 12 months.

Different tasks

Following the $70 million funding within the Koksay venture by NFC, research works started within the second half of 2019 with $5 million of capital expenditure incurred through the 12 months. A feasibility research to find out the detailed design for mining and processing operations and the related capital funds might be carried out in 2020. This might be reviewed by the Board earlier than assessing how and when to proceed with the venture. Roughly $20 million might be spent on Koksay and different minor tasks through the 12 months.

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FINANCIAL REVIEW

Foundation of preparation

The monetary data has been ready in accordance with IFRSs, as adopted by the EU, utilizing accounting insurance policies in step with these adopted within the condensed consolidated monetary statements for the 12 months ended 31 December 2019, together with the applying of IFRS 16 ‘Leases‘ and ‘Borrowing Prices Eligible for Capitalisation (Amendments to IAS 23)‘ which have been relevant from 1 January 2019. Because the influence of IFRS 16 was not materials to the Group, it was utilized with out the restatement of comparative data and there was no influence on retained earnings at 1 January 2019. The modification to IAS 23 was utilized prospectively from 1 January 2019. Additional particulars are offered within the notes to the condensed consolidated monetary statements on web page 33.

Revenue assertion

An evaluation of the consolidated revenue assertion is proven beneath:

1 APMs are used to evaluate the efficiency of the Group and should not outlined or specified underneath IFRS. For additional data on APMs, together with justification for his or her use, please consult with the APMs part on web page 54.

Revenues

Revenues for 2019 have been $2,266 million, a rise of $104 million from the prior 12 months, principally resulting from increased copper and gold volumes which greater than offset decrease copper costs. The rise in copper gross sales volumes of 21 kt, primarily from sturdy manufacturing at Aktogay, contributed extra revenues of $118 million. Incremental by-product volumes added revenues of $53 million, as elevated gold gross sales from increased manufacturing and the sale of gold bar stock introduced ahead from 2018 at Bozshakol was partially offset by decrease zinc volumes.

The rise in gross sales volumes greater than offset the detrimental influence of decrease realised copper costs (-$71 million) as the common LME worth fell from $6,526/t in 2018 to $6,000/t in 2019. By-product costs benefited revenues by $Four million, as the common market worth for gold (+10%) was offset by decrease zinc costs (-13%).

$ million

1. Change in gross sales volumes at present 12 months realised costs.
2. Change in realised costs utilized to prior 12 months gross sales volumes.

Additional data on revenues by working section might be discovered within the Working assessment. Further data on revenues and associated credit score danger administration insurance policies might be present in notice 4(b) to the condensed consolidated monetary statements.

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Working revenue and EBITDA

Working revenue for 2019 was $923 million, a rise of $72 million versus the prior 12 months, benefiting from the upper gross sales volumes. The Group’s working revenue margin, measured as working revenue divided by revenues, elevated to 41% from 39% in 2018 because of the absence of remarkable impairment expenses within the present 12 months and as working prices benefited from the weaker common tenge alternate fee, offsetting the influence of decrease commodity costs and better administrative bills. The tenge traded at a median of 383 KZT/$ in 2019, while recording a median of 345 KZT/$ within the prior 12 months.

EBITDA for the Group of $1,355 million was $45 million above the prior 12 months, with elevated copper and by-product volumes contributing $79 million and $53 million respectively. The beneficial influence of upper volumes was partially offset by decrease copper costs, which lowered revenues by $71 million. As well as, there was a $20 million discount in EBITDA resulting from increased money working prices, largely attributable to Aktogay and Bozshakol which had beforehand benefited from decrease upkeep prices within the early years of operations, and extra social expenditure prices. The Group’s EBITDA margin decreased barely from 61% in 2018 to 60% in 2019.

$ million

1. Change in gross sales volumes at present 12 months margin.
2. Web change in money prices per tonne.
3. Change in realised costs utilized to prior 12 months gross sales volumes.

Please consult with the Working assessment for an in depth evaluation of EBITDA by working section.

Objects excluded from EBITDA

The MET and royalties cost within the revenue assertion was $196 million in 2019, beneath the $200 million recorded in 2018 resulting from decrease commodity costs which offset increased ranges of extraction. The full MET and royalties incurred was $214 million (2018: $207 million), which moreover contains MET in unsold inventories on the stability sheet.

Depreciation, depletion and amortisation in 2019 of $236 million was decrease than the $239 million incurred in 2018. The extra depreciation related to the rise in property, plant and gear was offset by the influence of the weaker common tenge through the 12 months.

The prior 12 months included a $20 million impairment in respect of Bozymchak arising from the non-recovery of VAT incurred throughout development of the plant, which was expensed as a particular merchandise.

Web finance prices

Web finance prices embrace:

Web finance prices of $197 million have been $12 million decrease than the prior 12 months. Complete curiosity incurred of $226 million lowered by $14 million as the common degree of debt through the 12 months lowered following scheduled repayments. This was partially offset by the influence of upper US greenback LIBOR charges.

Capitalised curiosity of $37 million in 2019 associated to financing prices incurred on the DBK-Aktogay enlargement facility and using the Group’s basic borrowings to fund the Aktogay enlargement and Baimskaya capital tasks and different qualifying property (see notice Eight on web page 44).

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Included inside different finance prices are web alternate losses of $20 million (2018: web alternate positive factors of $Three million), which arose from a year-on-year appreciation of the tenge at 31 December 2019 in contrast with 31 December 2018, regardless of the tenge being on common weaker throughout 2019 than the prior 12 months. This resulted in a non-cash overseas alternate loss on tenge denominated intercompany balances which was largely offset by translation positive factors recognised inside fairness.

Taxation

The desk beneath reveals the Group’s efficient tax fee in addition to the all-in efficient tax fee which takes into consideration the influence of MET and removes the impact of particular objects (as relevant) on the Group’s tax cost.

1 The all-in efficient tax fee is calculated because the revenue tax expense plus MET and royalties much less the tax impact of particular objects and different non-recurring objects, divided by revenue earlier than taxation which is adjusted for MET and royalties and particular objects. The all-in efficient tax fee is taken into account to be a extra consultant tax fee on the recurring income of the Group.

The efficient tax fee in 2019 was 21%, in step with the prior 12 months. The all-in efficient tax fee decreased marginally to 38% versus the prior 12 months primarily resulting from a decrease MET and royalties cost. As MET is set independently of the profitability of operations, in durations of upper profitability the all-in efficient tax fee decreases because the influence of MET and royalties is decrease. Conversely, during times of decrease profitability, the MET and royalties influence on the all-in efficient tax fee is elevated.

Revenue attributable to fairness holders of the Firm and Underlying Revenue

A reconciliation of Underlying Revenue and revenue attributable to fairness holders of the Firm to EPS and EPS based mostly on Underlying Revenue is about out beneath:

1 APMs are used to evaluate the efficiency of the Group and should not outlined or specified underneath IFRS. For additional data on APMs, together with justification for his or her use, please consult with the APMs part on web page 54.

The Group’s revenue attributable to fairness holders of the Firm was $571 million in 2019 in contrast with $510 million within the prior 12 months, largely attributable to the rise within the Group’s gross sales volumes.

EPS and EPS based mostly on Underlying Revenue

Primary EPS of $1.21 elevated from $1.14 in 2018 because of the improve in earnings, partially offset by the rise within the weighted common variety of peculiar shares in situation following the acquisition of the Baimskaya copper venture in January 2019, which was partly settled with new peculiar shares (see notice 5(a) on web page 43). Diluted EPS of $1.17 reported within the present 12 months takes into consideration the peculiar shares anticipated to be issued to settle the Deferred Consideration arising on the acquisition of the Baimskaya copper venture (see notice 10 on web page 46), which have been weighted over the interval they have been excellent, from acquisition on 22 January 2019 to 31 December 2019. Underlying Revenue of $571 million was $41 million increased than the prior 12 months and no particular objects have been included inside working revenue (2018: $20 million).

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Dividends

KAZ Minerals PLC, the dad or mum firm of the Group, is a non-trading funding holding firm and derives its income from dividends paid by subsidiary firms.

The Group’s dividend coverage, established on the time of Itemizing, is for the Board to contemplate the money era and financing necessities of the enterprise earlier than recommending an acceptable dividend. This maintains flexibility, which is suitable given the underlying cyclicality of a commodity enterprise and the Group’s development ambitions.

In October 2019, the Firm paid an interim dividend of 4.Zero US cents per share equating to an interim cost of $19 million. The Board has really useful a ultimate dividend for 2019 of 8.Zero US cents per share, equal to a cost of $38 million, recognising the Group’s sturdy operational and monetary efficiency and its continued funding in development at Aktogay and Baimskaya. Mixed with the interim dividend of 4.Zero US cents per share, the dividend in respect of the 2019 monetary 12 months is 12.Zero US cents per share.

The financing necessities of the Baimskaya copper venture might be assessed through the feasibility research, following which the Board will additional assessment the Group’s allocation of capital.

The ultimate dividend of $28 million in respect of the 12 months ended 31 December 2018 was paid on 17 Could 2019.

The distributable reserves of KAZ Minerals PLC at 31 December 2019 have been $1,367 million.

Money flows and motion in web debt

The abstract of money flows beneath is ready on a foundation in step with inner administration reporting.

1 APMs are used to evaluate the efficiency of the Group and should not outlined or specified underneath IFRS. For additional data on APMs, together with justification for his or her use, please consult with the APMs part on web page 54.

Abstract

Web debt elevated from $1,986 million at 31 December 2018 to $2,759 million at 31 December 2019 as Free Money Movement from operations was greater than offset by funding within the Group’s development tasks. Money consideration of $436 million was paid in respect of the Baimskaya copper venture acquisition. Expansionary capital expenditure of $718 million was incurred, a rise of $188 million over the prior 12 months, primarily on the Aktogay enlargement venture and the feasibility research and pioneer works at Baimskaya.

Free Money Movement of $411 million lowered by $174 million from the prior 12 months, as the rise in EBITDA was greater than offset by increased working capital (see working capital part beneath) and sustaining capital expenditure. The

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improve in sustaining capital represents a normalisation of expenditure, as Aktogay and Bozshakol had benefited from decrease upkeep necessities in prior years because the operations have been newer.

Working capital

The abstract of actions in working capital is printed beneath:

1. The $161 million improve in stock proven within the IFRS based mostly money stream assertion (see notice 17(a)) contains MET and depreciation, that are excluded from the money stream above as MET paid is mirrored individually and EBITDA is acknowledged earlier than depreciation and amortisation.
2. The $113 million improve in prepayments and different present property proven within the IFRS based mostly money stream assertion (see notice 17(a)) contains web VAT paid on the foremost development tasks. The money stream above comprises web VAT (paid)/acquired related to main development tasks as a separate line merchandise.
3. The distinction to commerce and different payables proven within the IFRS based mostly money stream assertion (see notice 17(a)) is the change in MET and royalties payable throughout 2019. The money stream above comprises MET and royalties paid as a separate line merchandise.

The money influence of stock adjustments in 2019 was $128 million (2018: $138 million), largely because of the acquisition of consumables and spare elements to help the Aktogay and Bozshakol operations. The Group’s precedence for 2019 was to make sure that the primary sulphide concentrators at these websites operated at full design capability all year long, therefore a conservative method to the stocking of such objects was taken. It’s anticipated that over time stock necessities will cut back because the Group develops higher information on consumption and put on charges, works with suppliers to shorten lead occasions and because the Group’s shared spares technique develops additional. An outflow of $44 million in respect of ore stockpiles and work-in-progress at Aktogay and Bozshakol was additionally included in change in inventories, primarily associated to the stockpiling of low grade sulphide ore at Aktogay (to entry excessive grade areas and in preparation for the Aktogay enlargement) and clay ore at Bozshakol. From 2020 it’s anticipated that the quantity of clay ore processed at Bozshakol from stockpiles will exceed mined volumes.

Prepayments and different present property rose by $72 million (2018: $30 million) primarily resulting from a rise in VAT receivable on the Aktogay, Bozshakol and East Area operations. There was additionally a rise in VAT receivable regarding main development tasks of $41 million (2018: lower of $Three million) which is proven individually within the desk above and excluded from Free Money Movement (see APMs part on web page 54). The rise in VAT receivable was partly resulting from increased capital expenditure however was primarily the results of a delay within the receipt of VAT refunds within the second half of 2019. VAT is being acquired in 2020 by a mixture of offset and refund.

Commerce and different receivables elevated by $51 million (2018: decreased by $Four million) which displays the timing of gross sales and money receipts. As well as, provisionally priced commerce receivables are marked to market at 12 months finish contributing a $19 million improve at 31 December 2019 in contrast with the prior 12 months resulting from increased ahead costs. The Group’s increased gross sales volumes in 2019 have additionally resulted in a rise within the regular degree of commerce receivables. Additional particulars regarding the character of Group’s clients are given in notice 4(b) to the condensed consolidated monetary statements.

Commerce and different payables and provisions decreased by $31 million (2018: $49 million improve) resulting from a discount in buyer receipts prematurely of product deliveries in comparison with 31 December 2018. On the finish of 2018, the Group had acquired advance cost for the dispatch of copper focus to European markets which was subsequently recognised as income in 2019.

Curiosity money flows

Curiosity paid of $230 million was in step with the prior 12 months. Curiosity paid is increased than complete curiosity incurred through the 12 months of $226 million, which led to a discount within the curiosity payable from $71 million at 31 December 2018 to $61 million at 31 December 2019.

Revenue taxes and MET

Revenue tax funds decreased to $92 million (2018: $95 million) regardless of the upper revenue earlier than tax generated, as $11 million of revenue tax funds due have been offset in opposition to VAT refunds within the second half of 2019. Revenue tax funds have been additionally beneath the revenue assertion cost of $155 million (2018: $132 million) resulting from capital allowances and utilisation of obtainable tax losses.

MET and royalties funds of $206 million have been in step with the prior 12 months (2018: $208 million). At 31 December 2019, MET and royalties payable was $56 million in contrast with $48 million at 31 December 2018 following the rise in complete MET and royalties incurred.

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Capital expenditure

Sustaining capital expenditure elevated to $142 million in 2019 from $85 million within the prior 12 months, primarily resulting from increased upkeep spend at Aktogay and Bozshakol.

Expansionary and new venture expenditure of $718 million in 2019 primarily pertains to the Aktogay enlargement venture ($459 million). The primary Aktogay and Bozshakol tasks additionally incurred expenditure of $50 million and $37 million respectively, primarily for ultimate retention funds, and the heap leach pad enlargement at Aktogay. Following the acquisition of Baimskaya, the Group invested $111 million within the feasibility research and preliminary pioneer works. As well as, there was capital funding at East Area and Bozymchak of $56 million, primarily regarding the Artemyevsky enlargement, and $5 million for the Koksay venture. Please consult with the Working assessment for an evaluation of the Group’s capital expenditure by working section.

Acquisition of the Baimskaya copper venture

On 22 January 2019, the Group introduced the Preliminary Completion of the acquisition of the Baimskaya copper venture within the Chukotka area of Russia. The consideration due at Preliminary Completion was $675 million made up of $436 million in money and 22.Three million new KAZ Minerals shares valued at $239 million, which have been allotted to the Vendor. The Preliminary Money Consideration of $436 million was settled through the first half of 2019, partly offset by $1 million of money and money equivalents on acquisition (see notice 5(a) on web page 43).

The 22.Three million shares are topic to a three-yearlock-up interval ending on the third anniversary of Preliminary Completion. Deferred Consideration of $225 million for the remaining curiosity is payable in 21.Zero million shares, topic to the achievement of sure Undertaking Supply Situations, together with a pre-determined degree of throughput and improvement of infrastructure by the Russian state. To the extent these circumstances should not met or waived by the Group and due to this fact not settled in shares, the Deferred Consideration will change into payable in money on 31 March 2029.

The Preliminary Consideration of 22.Three million KAZ Minerals PLC shares valued at $239 million has been recognised as a rise in share capital of round $6 million and share premium of $233 million. The Deferred Consideration of $225 million has additionally been included inside fairness (see notice 13(c)(iii) on web page 48), representing the Group’s means to settle this quantity by the problem of 21.Zero million shares.

The full consideration for the acquisition was $900 million, of which round $880 million has been mirrored as a mining licence inside mining property, $13 million in web deferred tax property and $7 million regarding different non-current property, revenue taxes pay as you go and money and money equivalents (see notice 5(a) on web page 43).

Different investments

In 2019, different investing money flows pertains to the receipt of the remaining $45 million consideration in respect of NFC’s fairness funding in Koksay for $70 million, as introduced in June 2018 (see notice 5(b) on web page 43). In 2018, different investing money flows included the receipt of $25 million advance consideration in respect of NFC’s fairness funding in Koksay and $15 million of advances paid to fund research on the Baimskaya copper venture.

Actions in fairness

Fairness attributable to homeowners of the Firm at 31 December 2019 was $2,115 million (2018: $1,050 million), with the rise of $1,065 million primarily resulting from Underlying Revenue in 2019 of $571 million, the shares issued and Deferred Consideration for the Baimskaya acquisition of $464 million (see notice 5(a) on web page 43), partly offset by dividends paid of $47 million throughout 2019. There was additionally a $65 million improve within the US greenback worth of the Group’s overseas forex operations following a 1% improve within the worth of the tenge from 31 December 2018 to 31 December 2019. The Group’s mining property are largely held inside Kazakhstan-based entities which keep the tenge as their purposeful forex. On the 12 months finish, non-monetary web property are consolidated and reported in US {dollars} on the closing alternate fee with the change in worth arising from actions within the tenge alternate fee mirrored in fairness and never by the revenue assertion. The Group’s exterior liabilities, principally financial institution debt, are primarily US greenback denominated and should not affected by actions within the KZT/$ alternate fee.

Actions in borrowings

On 14 June 2019, the Group signed a brand new $600 million credit score facility settlement with DBK regarding the Aktogay enlargement venture. The power accrues curiosity at US$ LIBOR plus 3.90%, with the primary reimbursement due in June 2022, adopted by semi-annual repayments in Could and November of every 12 months from November 2022 till the ultimate reimbursement in 2034. $315 million (web of association charges) was drawn by 31 December 2019. The power is assured by KAZ Minerals PLC.

On 15 November 2019, the Group signed a brand new credit score facility of as much as $100 million with CAT. The power accrues curiosity at a variable margin of between 3.00% and 4.50% above US$ LIBOR, depending on the ratio of web debt to EBITDA which might be examined semi-annually. It’s comprised of two sub-facilities of $40 million and $60 million secured

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in opposition to present and new Caterpillar gear. Quarterly repayments for the prevailing drawing will start in December 2020 till ultimate maturity in 2024. $72 million (web of association charges) was drawn by 31 December 2019. The power is assured by KAZ Minerals PLC.

At 31 December 2019, borrowings (web of unamortised charges) have been $3,300 million, a lower of $153 million from 31 December 2018 because of the actions set out within the desk beneath:

1. Drawings are proven web of association charges, that are netted off in opposition to borrowings in accordance with IFRS 9.
2. Different actions embrace non-cash amortisation of charges on borrowings and overseas alternate positive factors on the CDB-Aktogay CNY facility.

On 28 January 2020, the Group accomplished an modification and extension of the PXF which incorporates a rise in facility commitments to $1.Zero billion, an extension of the mortgage tenor and a discount within the facility margin. The modification represents a web improve of $700 million above the $300 million excellent underneath the prevailing facility and the maturity profile is prolonged by 3.5 years, from June 2021 till December 2024 with two annual extension choices which, if exercised, would prolong ultimate maturity of the ability to December 2025 or December 2026 respectively. The amended facility accrues curiosity at a variable margin of between 2.25% and three.50% above US$ LIBOR (beforehand between 3.00% and 4.50% above US$ LIBOR), depending on the ratio of web debt to EBITDA which might be examined semi-annually. Month-to-month repayments will start in January 2021, with a ultimate balloon reimbursement of one-third of the ability quantity ($333 million) in December 2024, which might be amortised throughout 2025 and 2026 if the extension choices are exercised. The Group expects to completely draw the ability within the first quarter of 2020.

Additional particulars of the phrases of the Group’s borrowings are included in notice 15 of the condensed consolidated monetary statements.

Going concern

The Group manages liquidity danger by sustaining ample dedicated borrowing services and dealing capital funds. The Board screens the web debt degree and liquidity place of the Group taking into account the anticipated outlook of the Group’s monetary place, money flows, future capital expenditure and debt service necessities.

The Board is happy that the Group’s forecasts, making an allowance for fairly attainable draw back eventualities, present that the Group has ample liquidity to proceed in operational existence for the foreseeable future. Accordingly, it’s applicable to undertake the going concern foundation of accounting within the preparation of those condensed consolidated monetary statements.

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PRINCIPAL RISKS

The Group’s principal dangers are set out beneath, along with mitigating actions. There could also be different dangers, unknown or presently thought of immaterial, which may change into materials. The dangers set out beneath should not so as of chance of incidence or materiality and ought to be seen, as with every forward-looking statements on this doc, with regard to the cautionary assertion on web page 3.

SUSTAINABILITY RISKS

Well being and security

Affect

Mining is a hazardous business. Well being and security incidents may lead to hurt to individuals, in addition to manufacturing disruption, monetary loss and reputational harm.

The Group is in a interval of development exercise, rising potential well being and security exposures.

Mitigation

The Group’s aim is for zero fatalities and to hunt to minimise well being and security incidents. Insurance policies and procedures are designed to determine and monitor dangers and supply a transparent framework for conducting enterprise. That is supported by common coaching and consciousness campaigns for workers and contractors.

In June 2019 the Group started its ‘Aim Zero’ initiative, which goals to supply protected working circumstances for all workers of the Group. ‘Aim Zero’ covers industrial security, occupational security and environmental safety.

The HSS Committee critiques and screens related dangers throughout the Group.

Group and labour relations

Affect

The Group operates in areas the place it’s a main employer, the place workers are represented by labour unions and the place it might present help to the local people. This may increasingly impose restrictions on the Group’s flexibility in taking sure working selections. Failure to determine and handle the issues and expectations of native communities and the labour pressure may have an effect on the Group’s popularity and social licence to function and will lead to manufacturing disruptions and will increase in working prices. Wage negotiations may very well be impacted by increased commodity costs, increased home inflation or the continued weak spot of the tenge.

Mitigation

The Group engages with neighborhood representatives, unions and workers and goals to deal with issues raised by totally different stakeholders. By accountable behaviour, performing transparently, selling dialogue and fulfilling its commitments, the Group minimises doubtlessly detrimental impacts. Aktogay and Bozshakol are in distant areas the place the neighborhood relations danger is lowered. As a part of the preliminary improvement of Baimskaya the Group has met with neighborhood representatives within the Chukotka area to know native points and start a dialogue.

Staff

Affect

The Group depends on its means to draw and retain extremely expert personnel. Failure to take action may have a detrimental influence on operations or the profitable implementation of development tasks and lead to increased working prices to recruit required workers. The distant location of some operations will increase this problem.

The Group might be getting into a interval of elevated recruitment to workers the operational section of the Aktogay enlargement, and regarding the potential improvement of Baimskaya.

Mitigation

The Group actively screens the labour market to stay aggressive within the hiring of workers and offers remuneration constructions and improvement alternatives to draw and retain key workers. Key positions are recognized in any respect areas, and coaching and succession plans developed. A management improvement programme is in place to supply a expertise pipeline of nationwide staff for key positions and help retention.

Worldwide staff with applicable experience help through the preliminary section of operations.

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Environmental

Affect

Mining operations contain using poisonous substances and require the storage of huge volumes of waste supplies in tailings dams, which may lead to spillages, lack of life and vital environmental harm. The Group is topic to environmental legal guidelines and laws that are frequently creating, together with these to deal with local weather change. Failure to adjust to relevant legal guidelines may result in the suspension of working licences, the imposition of monetary penalties or expensive compliance prices and reputational harm.

Environmental practices face extra scrutiny as societal expectations round accountable investing evolve. This might influence the Group’s operations or entry to capital.

Mitigation

Insurance policies and procedures are in place to set out required working requirements and to watch environmental impacts. The Group liaises with related governmental our bodies on environmental issues, together with laws adjustments.

Throughout 2019 the Group accomplished the closure of the Yubileyno-Snegirikhinsky mine and applied water conservation initiatives which resulted in a lower within the Group’s water depth per tonne of ore processed from

0.62 m3/t in 2018 to 0.38 m3/t in 2019. The Group’s CO2 per tonne of ore processed lowered by 4% in 2019 in contrast with 2018.

OPERATIONAL RISKS

Enterprise interruption

Affect

Operations are topic to numerous dangers not wholly throughout the Group’s management, together with: geological and technological challenges; climate, pandemic illness or different pure phenomena; harm to or failure of apparatus and infrastructure; data expertise and cyber dangers; loss or interruption to key inputs comparable to electrical energy and water; and the supply of key provides and companies, together with the Balkhash smelter.

Any disruption may influence manufacturing, could require the Group to incur unplanned expenditure and negatively influence money flows.

Mitigation

In-house and third-party specialists are utilised to determine and handle operational dangers and to suggest enhancements. Tools and services are maintained appropriately and often inspected. Property harm and enterprise interruption insurance coverage programmes present some safety from main incidents.

Ought to a major outage happen on the Balkhash smelter the Group believes it may promote focus on to different clients.

New tasks and commissioning

Affect

Initiatives could fail to attain the specified financial returns resulting from an lack of ability to recuperate mineral sources, design or development deficiencies, a failure to attain anticipated working parameters or due to capital or working prices being increased than anticipated. Failure to handle new tasks successfully or an absence of obtainable financing could forestall or delay completion of tasks.

There are numerous venture dangers related to the profitable improvement of the Baimskaya copper venture, together with its distant location, the supply of presidency help for infrastructure, acquiring sure tax incentives and the native climate circumstances.

Mitigation

New tasks are topic to rigorous evaluation previous to approval together with feasibility or technical research and capital appraisal. Specialists are utilised all through the life cycle of tasks. Undertaking administration and capital expenditure planning and monitoring procedures are in place to assessment efficiency in opposition to milestones and budgets. This contains the Initiatives Assurance Committee which studies to the Board.

In relation to the Baimskaya copper venture, a world commonplace pre-feasibility research has been carried out by Fluor and the mine plan relies on a JORC useful resource. The Group is progressing a full bankable feasibility research to find out the detailed design of the mine and the related capital value.

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Additional particulars of the foremost development tasks are included within the Working assessment.

Reserves and sources

Affect

The Group’s ore reserves are partly based mostly on an estimation methodology established by the previous Soviet Union. There are quite a few uncertainties inherent in estimating ore reserves, which if modified, may require the necessity to restate ore reserves and influence the financial viability of affected operations and improvement tasks.

Mitigation

The Group’s ore reserves and mineral sources are printed yearly in accordance with the standards of the JORC Code and reviewed by a Competent Particular person. This contains mine web site visits the place thought of applicable and the conversion from the previous Soviet Union estimation to that prescribed by the JORC Code. Drilling and exploration programmes are carried out to reinforce the understanding of geological data.

Political

Affect

The Group may very well be affected by political instability or social and financial adjustments within the nations by which it operates. This might embrace a change in authorities, the granting and renewal of permits and adjustments to overseas commerce or laws that might have an effect on the enterprise surroundings and negatively influence the Group’s enterprise, monetary efficiency and licence to function.

Additional worldwide sanctions on Russia may influence the event of Baimskaya, in addition to the provision of sure items and companies to the Group’s present operations.

Mitigation

A proactive dialogue is maintained with KAZ Minerals’ host governments throughout a spread of points. Developments are monitored carefully and lobbying is carried out the place applicable.

Kazakhstan stays probably the most politically secure and economically developed nations in Central Asia. Throughout 2019, Nursultan Nazarbayev was succeeded by Kassym-Jomart Tokayev as President of Kazakhstan. The Board continues to view the political, social and financial surroundings inside Kazakhstan favourably.

In Russia, the Group maintains an ongoing dialogue with the federal government and key stakeholders. The Baimskaya acquisition was structured with Deferred Consideration to incentivise the Vendor, as an area associate, to help within the supply of the venture.

Authorized and regulatory compliance

Affect

The Group is topic to numerous authorized and regulatory necessities throughout all of its jurisdictions together with subsoil utilization rights in Kazakhstan, Kyrgyzstan and Russia and UK governance guidelines together with associated get together transactions and anti- bribery and corruption. Laws and taxation could also be topic to vary and uncertainty of interpretation, utility and enforcement. In numerous jurisdictions world wide governments have been rising taxation on useful resource firms.

Non-compliance with laws may lead to regulatory challenges, fines, litigation and finally the lack of working licences. Substantial funds of tax may come up for the Group, or tax receivable balances is probably not recovered as anticipated.

Mitigation

Administration engages with the related regulatory authorities and seeks applicable recommendation to make sure compliance with all related laws and subsoil use contracts. A specialist division is tasked with monitoring compliance with the phrases of subsoil use contracts in Kazakhstan. Administration works carefully with the tax authorities within the assessment of proposed amendments to laws. Acceptable monitoring and disclosure procedures are in place for associated get together transactions. Social investments are made in accordance with a Board accredited coverage and are overseen by the Group’s Social Funding Committee. The Group’s company insurance policies are utilized in Russia the place a devoted staff is managing authorized and regulatory compliance.

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FINANCIAL RISKS

Commodity worth

Affect

The Group’s outcomes are closely depending on the commodity worth for copper and to a lesser extent, the costs of gold, silver and zinc. Commodity costs can fluctuate considerably and are depending on a number of elements, together with international provide and demand and investor sentiment.

The escalation of commerce tensions between the US and China negatively impacted copper costs in 2019 and, relying on developments, could proceed to take action.

The emergence of the Covid-19 coronavirus in China in December 2019, and the following improve in reported circumstances has raised issues over the financial outlook for China. As the biggest shopper of copper, a discount in China’s financial development may have a fabric opposed influence on the copper worth.

Mitigation

The Group often critiques its sensitivity to fluctuations in commodity costs. The Group is just not presently and doesn’t usually hedge commodity costs however could enter right into a hedge programme the place the Board determines it’s applicable to supply better certainty over future money flows.

Overseas alternate and inflation

Affect

Fluctuations in charges of alternate or inflation within the jurisdictions to which the Group is uncovered may lead to future elevated prices.

Because the purposeful forex of the Group’s working entities is their native forex, fluctuations in alternate charges may give rise to alternate positive factors and losses within the revenue assertion and volatility within the degree of web property recorded on the Group’s stability sheet.

Mitigation

The place attainable the Group conducts its enterprise and maintains its monetary property and liabilities in US {dollars}. The Group usually doesn’t hedge its publicity to overseas forex danger in respect of working bills.

Publicity to China

Affect

Gross sales are made to a restricted variety of clients in China, significantly in respect of copper focus output. Therapy and refining expenses are dependent upon Chinese language smelting capability and the extent of copper focus provide within the area.

China is a crucial supply of financing to the Group with long-term debt services of $2.Four billion at 31 December 2019. As well as, the Group makes use of contractors, companies and supplies from China.

The Chinese language economic system and its outlook have been negatively affected by international commerce tensions and the emergence of the Covid-19 coronavirus. Restrictions on the motion of products, individuals and companies may influence the Group’s operations and tasks, the supply of Chinese language credit score and its demand for commodities.

Mitigation

Aktogay and Bozshakol produce a copper focus that’s enticing to Chinese language smelters, being ‘clear’ and excessive in sulphur content material. The Group has established good relationships with strategic clients in China.

The Group maintains relationships with numerous worldwide lending banks, has services in place with the PXF syndicate, DBK and CAT Monetary, and has the pliability to contemplate different sources of capital if required.

Acquisitions and divestments

Affect

The Group could purchase or get rid of property and companies which fail to attain the anticipated profit or worth to the Group. Altering market circumstances, incorrect assumptions or deficiencies in due diligence may outcome within the improper selections being made and in acquisitions or disposals failing to ship anticipated advantages.

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The Restructuring was effected underneath the legal guidelines and laws of Kazakhstan that are topic to vary and open to interpretation, together with the authorized and tax features of the Restructuring, which may give rise to liabilities for KAZ Minerals.

Mitigation

A rigorous evaluation course of is undertaken to evaluate all potential acquisitions and divestments by specialist workers, supported by exterior advisers the place applicable. Due diligence processes are undertaken and materials transactions are topic to Board assessment and approval, together with making certain the transaction is aligned with the Group’s technique, consideration of the important thing assumptions being utilized and the dangers recognized.

Liquidity

Affect

The Group is uncovered to liquidity danger whether it is unable to fulfill cost obligations as they fall due or is unable to entry acceptable sources of finance. Non-compliance with monetary covenants may lead to borrowing services changing into uncommitted and repayable.

Baimskaya is a large-scale venture, the event of which would require extra financing which is able to improve the debt ranges of the Group.

Failure to handle liquidity danger may have a fabric influence on the Group’s money flows, earnings and monetary place.

Mitigation

Forecast money flows are carefully monitored and the financing technique is about by the Board. Satisfactory ranges of dedicated funds are maintained with $541 million money and money equivalents and $306 million of undrawn services at 31 December 2019. In January 2020, the Group added additional liquidity with a refinancing of its PXF debt facility, together with a rise in facility commitments to $1.Zero billion. The Group’s present operations are extremely money generative.

The Group has a profitable observe file of elevating finance for main tasks. In respect of Baimskaya, in parallel with the feasibility research, the Group is continuous discussions with banks on financing the development section and is evaluating the potential for partnering.

Additional particulars relating to going concern are included in notice 2 to the monetary statements.

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CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

Yr ended 31 December 2019

29

CONSOLIDATED BALANCE SHEET

At 31 December 2019

These condensed consolidated monetary statements have been accredited by the Board of Administrators on 19 February 2020.

30

CONSOLIDATED STATEMENT OF CASH FLOWS

Yr ended 31 December 2019

1 Advance consideration for funding in Koksay reclassified from investing actions, see notice 2(f).

31

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Yr ended 31 December 2019

1 See notice 13(c) for an evaluation of ‘Capital reserves’.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Yr ended 31 December 2019

1. Company data

KAZ Minerals PLC (the ‘Firm’) is a public restricted firm included in England and Wales. The Firm’s registered workplace is sixth Flooring, Cardinal Place, 100 Victoria Road, London SW1E 5JL, United Kingdom. The Group includes the Firm and its consolidated divisions as set out beneath.

The Group operates within the pure sources business by 5 divisions, the principal actions of which throughout

2019 have been:

1 East Area and Bozymchak are separate divisions however have been mixed for segmental reporting functions.

2. Foundation of preparation

The condensed consolidated monetary statements for the 12 months ended 31 December 2019 don’t represent statutory accounts as outlined in Sections 435(1) and (2) of the Corporations Act 2006. Statutory accounts for the 12 months ended 31 December 2018 have been delivered to the Registrar of Corporations and people for 2019 might be delivered following the Firm’s Annual Basic Assembly convened for Thursday 30 April 2020. The auditor has reported on these accounts; their studies have been unqualified, didn’t embrace a reference to any issues to which the auditor drew consideration by the use of emphasis of matter and didn’t comprise a press release underneath Sections 498(2) or (3) of the Corporations Act 2006.

1. Going concern

The Group manages liquidity danger by sustaining ample dedicated borrowing services and dealing capital funds. The Board screens the web debt degree and liquidity place of the Group taking into account the anticipated outlook of the Group’s monetary place, money flows, future capital expenditure and debt service necessities.

At 31 December 2019, the Group’s web debt was $2,759 million with gross debt of $3,300 million, gross liquid funds of $541 million and undrawn dedicated services of $306 million. The gross debt services encompass:

• $1,165 million of the CDB-Bozshakol and Bozymchak services, which amortise over the interval to 2025;
• $1,214 million of the CDB-Aktogay US greenback and Chinese language yuan services, which amortise over the interval to 2029;
• $300 million of the PXF facility, which amortises over the interval to June 2021;
• $234 million of the DBK-Aktogay I facility, which amortises over the interval to June 2025;
• $315 million of the DBK-Aktogay II facility, which amortises over the interval from November 2022 to 2034. The remaining $280 million of the dedicated facility is predicted to be drawn by the tip of 2020; and
• $72 million of the CAT facility, which amortises over the interval to 2024. The remaining $26 million of the dedicated facility is predicted to be drawn by the tip of the primary quarter of 2021.

On 28 January 2020, the Group introduced that it had accomplished an modification and extension of its PXF facility which incorporates a rise in facility commitments to $1.Zero billion. The maturity profile was amended such that the ability will amortise over the interval from January 2021 to December 2024, or to December 2026 if two annual extension choices are exercised.

The Board has thought of the Group’s money stream forecasts for the interval to 31 March 2021, together with the outlook for commodity costs, manufacturing ranges from the Group’s operations, its future capital necessities together with the finalisation of the Aktogay enlargement venture and preliminary research and pioneer works on the Baimskaya copper venture, and the principal repayments due underneath the Group’s debt services.

The Board is happy that the Group’s forecasts, making an allowance for fairly attainable draw back eventualities, present that the Group has ample liquidity to proceed in operational existence for the foreseeable future. Accordingly, it’s applicable to undertake the going concern foundation of accounting within the preparation of those condensed consolidated monetary statements.

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(b) Foundation of accounting

The condensed consolidated monetary statements have been ready on a historic value foundation, aside from metal- associated commerce receivables and spinoff monetary devices which have been measured at honest worth. The condensed consolidated monetary statements are introduced in US {dollars} (‘$’) and all monetary data has been rounded to the closest million {dollars} (‘$ million’), besides the place in any other case indicated.

All accounting insurance policies adopted within the preparation of the condensed consolidated monetary statements are in step with these adopted within the preparation of the Group’s annual consolidated monetary statements for the 12 months ended 31 December 2019.

Not one of the new requirements or amendments to requirements and interpretations relevant through the 12 months has had a fabric influence on the monetary place or efficiency of the Group. The Group has not early adopted any commonplace, interpretation or modification that was issued however is just not but efficient.

In making ready these condensed consolidated monetary statements, the Group has adopted all of the relevant extant accounting requirements issued by the IASB and all of the relevant extant interpretations issued by the IFRIC and as adopted by the EU.

The next accounting requirements, amendments and interpretations, which had no vital influence on these condensed consolidated monetary statements, turned efficient within the present reporting interval on adoption by the EU by the European Monetary Reporting Advisory Group (‘EFRAG’):

Leases

On 1 January 2019, the Group adopted IFRS 16 ‘Leases‘, changing IAS 17 ‘Leases‘. The brand new commonplace has been utilized utilizing the ‘modified retrospective method’, which didn’t lead to a classification or measurement adjustment to retained earnings on transition or a restatement of comparative data, and there was no influence on opening fairness at 1 January 2019. The usual adjustments the identification of leases and the way they are going to be recognised, measured and disclosed by lessees, requiring the popularity of a right-of-use asset and legal responsibility for the longer term lease funds on the stability sheet. The usual requires the right-of-use asset to be depreciated over the period of the lease time period and proven inside working revenue within the revenue assertion, with the curiosity value related to the financing of the asset included inside curiosity expense. In making use of the transition necessities and provisions of the brand new commonplace, the Group reviewed its lease contracts, which primarily associated to leased workplace buildings and funds for land, and the right-of-use asset and associated legal responsibility was discovered to be immaterial. The usual doesn’t apply to leases to probe for or use pure sources, comparable to mining licences and rights.

The Group has elected to not recognise right-of-use property and lease liabilities for leases which have low worth, or short-term leases with a period of 12 months or much less. The funds related to such leases are charged on to the revenue assertion on a straight-line foundation over the lease time period.

In assessing the applying of IFRS 16, the Group thought of the next sensible expedients:

• the earlier willpower of whether or not a contract is, or comprises, a lease pursuant to IAS 17 ‘Leases‘ and IFRIC 4 ‘Figuring out whether or not an Association Incorporates a Lease‘ has been maintained for present contracts;
• right-of-useproperty or lease liabilities for leases the place the lease time period ends inside 12 months of the date of preliminary utility haven’t been recognised;
• preliminary direct prices from right-of-use property have been excluded; and
• hindsight was used when assessing the lease time period.

Borrowing prices

On 1 January 2019, the Group adopted ‘Borrowing Prices Eligible for Capitalisation (Amendments to IAS 23)‘. The modification requires that venture particular borrowings are included as basic borrowings as soon as these property are working as supposed and due to this fact the related curiosity will change into out there for capitalisation on different ‘qualifying property’, being property that essentially take a considerable time period to prepare for his or her supposed use or sale. Within the 12 months ended 31 December 2019, this modification introduced the CDB-Bozshakoland Bozymchak, the CDB-Aktogay,and the primary DBK-Aktogaymortgage borrowed particularly for the development of the respective capital tasks into basic borrowings. The curiosity on these loans is due to this fact included within the capitalisation fee utilized to expenditures on qualifying capital tasks, such because the enlargement of Aktogay (see notice 8).

34

Revenue tax

On 1 January 2019, the Group adopted IFRIC 23 ‘Uncertainty over Revenue Tax Therapies‘. The interpretation clarifies that revenue tax and deferred tax property and liabilities ought to be measured reflecting the uncertainty of any positions adopted underneath IAS 12 ‘Revenue Taxes‘, the place acceptance of such place by the tax authorities is taken into account as lower than possible. The appliance of this interpretation had no materials influence on the quantities reported within the Group’s condensed consolidated monetary statements.

Different

The appliance of numerous minor amendments, together with these from the 2015-2017 annual enchancment cycle which turned efficient on 1 January 2019, had no influence on the Group’s condensed consolidated monetary statements because of the nature of its operations. This contains ‘Beforehand Held Pursuits in a Joint Operation (Amendments to IFRS Three and IFRS 11)‘, ‘Revenue Tax Penalties of Funds on Devices Labeled as Fairness (Amendments to IAS 12)‘, ‘Prepayment Options with Unfavourable Compensation (Amendments to IFRS 9)‘, ‘Lengthy-termPursuits in Associates and Joint Ventures (Amendments to IAS 28)‘, and ‘Plan Modification, Curtailment or Settlement (Amendments to IAS 19)‘.

1. Foundation of consolidation

The condensed consolidated monetary statements set out the Group’s monetary place as at 31 December 2019 and the Group’s monetary efficiency for the 12 months ended 31 December 2019.

Subsidiaries are these enterprises managed by the Group. Management exists when the Group has the ability, straight or not directly, to direct these actions of an enterprise that almost all considerably have an effect on the returns the Group earns from its involvement with the enterprise. Subsidiaries are consolidated from the date on which management is transferred to the Group and stop to be consolidated from the date on which management is transferred out of the Group. When the Group ceases to have management, any retained curiosity within the entity is remeasured to its honest worth, with the change in carrying quantity recognised within the revenue assertion. The honest worth is the preliminary carrying quantity for the needs of subsequently accounting for the retained curiosity as an affiliate, three way partnership or monetary asset. As well as, any quantities beforehand recognised in different complete revenue in respect of that entity are accounted for as if the Group had straight disposed of the associated property or liabilities. This therapy could imply that quantities beforehand recognised in different complete revenue are recycled by the revenue assertion. Joint operations are these preparations collectively managed by the Group and a number of events with rights to the property and obligations for the liabilities regarding the association. Joint operations are proportionally consolidated from the date on which the Group obtains joint management and stop to be proportionally consolidated from the date on which the Group now not has joint management.

The monetary statements of subsidiaries and joint operations are ready for a similar reporting 12 months because the Firm, utilizing constant accounting insurance policies. All intercompany balances and transactions, together with unrealised income arising from intragroup transactions, are eradicated in full. Unrealised losses are eradicated in the identical approach as unrealised positive factors besides that they’re solely eradicated to the extent that there isn’t a proof of impairment.

(d) Trade charges

The next overseas alternate charges in opposition to the US greenback have been used within the preparation of the condensed consolidated monetary statements:

Throughout 2019, the appreciation of the tenge on the spot fee resulted in a non-cash overseas alternate acquire of $64 million (2018: non-cash overseas alternate lack of $427 million) recognised straight inside reserves, arising from the interpretation on consolidation of the Group’s Kazakhstan based mostly subsidiaries whose purposeful forex is the tenge.

1. Assertion of compliance

The condensed consolidated monetary statements of the Firm, and monetary statements of all its subsidiaries and joint operations have been ready in accordance with IFRSs as issued by the IASB and interpretations issued by the IFRIC of the IASB, as adopted by the EU and in accordance with the provisions of the Corporations Act 2006.

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1. Comparative data

The place a change within the presentation format of the condensed consolidated monetary statements has been made through the 12 months, comparative figures have been restated accordingly.

Within the condensed consolidated assertion of money flows, the advance consideration arising on the half disposal of Koksay of $25 million in 2018 has been reclassified to financing actions (beforehand proven inside investing actions), being proceeds from adjustments in possession pursuits in subsidiaries that don’t lead to lack of management. This restatement elevated money flows from financing actions and decreased money flows from investing actions for the comparative interval by $25 million, and is solely for presentation functions.

3. Vital accounting judgements and key sources of estimation uncertainty

In the middle of making ready these condensed consolidated monetary statements, the Administrators make essential judgements, estimates and assumptions in regards to the carrying quantities of property and liabilities that aren’t readily obvious from different sources.

Judgements are based mostly on the Administrators’ finest information of the related info and circumstances having regard to prior expertise, however precise outcomes could differ from the quantities included within the condensed consolidated monetary statements.

Estimates and related assumptions are based mostly on historic expertise and different elements which are thought of to be related, however precise outcomes could differ from these estimates. The estimates and underlying assumptions utilized are reviewed on an ongoing foundation. Revisions to accounting estimates are recognised within the interval by which the estimate is revised if the revision impacts solely that interval, or within the interval of the revision and future durations if the revision impacts each present and future durations.

The next are the vital judgements, key assumptions and sources of estimation uncertainty regarding the future that come up primarily from the character of the Group’s mining operations and which the Administrators imagine are more likely to have the best impact on the quantities recognised within the condensed consolidated monetary statements. Nevertheless, the Administrators don’t anticipate a major danger of a fabric change to the Group’s carrying worth of the property and liabilities affected by these elements within the subsequent 12 months, inside a fairly attainable vary, except Bozymchak, as mentioned beneath.

The qualitative disclosures relating to these sources of estimation uncertainty are introduced as a result of the Administrators think about these to be related to the mining business and helpful in understanding the condensed consolidated monetary statements of the Group. These disclosures transcend the minimal necessities of IAS 1 ‘Presentation of Monetary Statements’ which solely requires disclosure of estimation uncertainty the place adjustments in estimates, inside a fairly attainable vary, may have a major danger of a fabric impact throughout the subsequent 12 months on the quantities recognised within the condensed consolidated monetary statements.

Impairment of property

Vital accounting judgements

The Administrators assessment the carrying worth of the Group’s property to find out whether or not there are any indicators of impairment such that the carrying values of the property is probably not recoverable. The evaluation of whether or not an indicator of impairment or reversal thereof has arisen requires appreciable judgement, taking account of things comparable to future operational and monetary plans, commodity costs and the aggressive surroundings.

For exploration and analysis property held by the Group, particularly Koksay and Baimskaya, earlier than the technical feasibility and industrial viability of extracting a mineral useful resource is demonstrable, indicators of impairment can embrace: (a) the appropriate to discover in a particular space has expired and isn’t anticipated to be renewed; (b) vital expenditure for additional exploration or analysis actions is just not being deliberate; (c) exploration and analysis of mineral sources haven’t led to the invention or affirmation of commercially viable useful resource; or (d) that adequate information exists to point that the carrying quantity of the asset is probably not recovered in full from improvement or sale.

The place such indicators exist, the carrying worth of the property of a money producing unit (‘CGU’) or exploration and analysis asset is in contrast with the recoverable quantity of these property, that’s, the upper of its honest worth much less prices to promote and worth in use, which is often decided on the premise of discounted future money flows. For the aim of assessing commodity costs as potential indicators of impairment, consideration was given to a spread of fairness analyst long-term copper costs with a median worth of round $6,700/t.

An evaluation of the important thing exterior and inner elements affecting the Group, its CGUs or exploration and analysis property at 31 December 2019 didn’t determine any indicators of impairment or reversal thereof at any of the Group’s CGUs or exploration and analysis property.

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In 2018, opposed courtroom rulings in Kyrgyzstan have been acquired for the restoration of historic VAT incurred on the development of the Bozymchak plant, amounting to $16 million and beforehand included inside non-current property. This was thought of to be an impairment indicator on the Bozymchak CGU and an impairment assessment was undertaken within the comparative interval (see notice 6).

Key sources of estimation uncertainty

The preparation of discounted future money flows used to evaluate the recoverable quantity of the Group’s CGUs, contains administration estimates of commodity costs, future working prices, financial and regulatory environments, capital expenditure necessities, long-term mine plans and different elements together with the low cost fee. Any subsequent revisions to money flows resulting from adjustments within the elements listed above, principally commodity costs, past what is taken into account as fairly attainable, may influence the recoverable quantity of the property. Adjustments to commodity costs inside a fairly attainable vary should not anticipated to considerably influence the carrying worth of the Group’s Kazakhstan based mostly CGUs. In respect of the Group’s Bozymchak CGU in Kyrgyzstan, which was beforehand impaired, a 5% discount within the forecast copper costs may outcome within the carrying worth exceeding its recoverable quantity by round $10 million. This can be a easy sensitivity on copper costs in isolation and doesn’t think about any actions which administration would take to mitigate the influence of a fall in commodity costs. Moreover, a 1% improve within the low cost fee may lead to an impairment of round $5 million.

Non-current inventories

Vital accounting judgements

Mining actions could outcome within the stockpiling of ore. Ore which isn’t anticipated to be processed inside 12 months of the stability sheet date and is taken into account to fall exterior of the conventional working cycle of the operation is assessed as

1. non-currentasset. The classification of stockpiled ore between non-current and present property relies on judgements as to the anticipated timing of processing and on future manufacturing plans.

Key sources of estimation uncertainty

Stockpiled ore is reported on the decrease of value or web realisable worth, with web realisable worth topic to estimates of additional processing, supply prices and future commodity costs. Commodity costs utilized in assessing the web realisable worth fall throughout the vary of fairness analyst commodity worth expectations. Adjustments to commodity costs within the subsequent 12 months inside a fairly attainable vary should not anticipated to considerably influence the carrying worth of non-current inventories.

Willpower of mineral reserves and helpful lives of property, plant and gear

Key sources of estimation uncertainty

Mineral reserves are estimates of the quantity of product that may be economically and legally extracted from the Group’s mining properties. With a view to estimate reserves, assumptions are required a few vary of geological, technical and financial elements, together with portions, grades, manufacturing strategies, restoration charges, manufacturing prices, transport prices, commodity demand, commodity costs and alternate charges. The Group estimates its mineral reserves and mineral sources based mostly on data compiled and reviewed by competent individuals as outlined in accordance with KAZRC/JORC.

In assessing the lifetime of a mine for accounting functions, mineral reserves are taken into consideration the place there’s a excessive diploma of confidence of financial extraction. Because the financial assumptions used to estimate reserves change from interval to interval, and as extra geological information is generated through the course of operations, estimates of reserves could change from interval to interval. Adjustments in reported reserves could have an effect on the Group’s monetary outcomes and monetary place in numerous methods, together with the next:

• asset recoverable quantities could also be affected resulting from adjustments in estimated future money flows;
• deferral of stripping prices that are decided utilizing a waste to ore stripping ratio;
• depreciation, depletion and amortisation charged within the revenue assertion could change the place such expenses are decided by the unit of manufacturing foundation, or the place the helpful financial lives of property change;
• decommissioning, web site restoration and environmental provisions could change the place adjustments in estimated reserves have an effect on expectations in regards to the timing or value of those actions; and
• the carrying worth of deferred tax property could change resulting from revisions in estimates of the doubtless restoration of tax advantages.

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There are quite a few uncertainties inherent in estimating mineral reserves and assumptions which are legitimate on the time of estimation which can change considerably when new data turns into out there. Adjustments within the forecast costs of commodities, alternate charges, manufacturing prices or restoration charges could change the financial standing of reserves and should finally lead to reserves being revised. The Administrators don’t anticipate vital adjustments within the carrying worth of the Group’s mining properties; property, plant and gear; closure liabilities and deferred taxes to come up from adjustments in mineral reserve estimates inside a fairly attainable vary within the subsequent 12 months. Revisions to mineral reserve estimates in 2019 didn’t lead to a fabric change to the carrying worth of those property and liabilities.

For property, plant and gear depreciated on a straight-line foundation over its helpful financial life, the appropriateness of the asset’s helpful financial life is reviewed at the very least yearly and adjustments may have an effect on potential depreciation charges and asset carrying values.

Decommissioning and web site restoration prices

Vital accounting judgements

The Administrators use judgement and expertise in figuring out the anticipated timing, closure and decommissioning strategies, which might differ in response to adjustments within the related authorized necessities or decommissioning applied sciences.

Key sources of estimation uncertainty

The final word value of decommissioning and rehabilitation is unsure and value estimates can differ in response to many elements together with the emergence of latest restoration strategies and prices of supplies and labour. Due to this fact, the Group periodically critiques the closure value estimate at every operation. The anticipated timing and extent of expenditure can even change in response to revisions in mineral reserve estimates, processing ranges and commodity costs while future prices are discounted utilizing forecast low cost charges. Because of the comparatively lengthy lifetime of the Group’s most important property, adjustments in estimates inside a fairly attainable vary within the subsequent 12 months should not anticipated to considerably influence the carrying worth of the Group’s provisions for decommissioning and web site restoration prices.

Taxes

Vital accounting judgements

The Administrators make judgements in relation to the popularity of assorted taxes levied on the Group, that are each payable and recoverable. Judgement applies significantly to company revenue taxes, switch pricing, VAT and outcomes of any tax disputes which might have an effect on the popularity of tax liabilities and deferred tax property. Judgement over recognition additionally applies to taxes that are recoverable by the Group, principally VAT paid, for which the recoverability and timing of restoration is assessed. In making judgements associated to taxes, the Administrators imagine that the tax positions it adopts are in step with the relevant laws and replicate the possible consequence. The tax obligations and receivables, upon audit by the tax authorities at a future date, could differ because of differing interpretations. These interpretations could influence the anticipated timing and quantum of taxes payable and recoverable and are mentioned additional in notice 19.

Key sources of estimation uncertainty

Estimates could also be made to find out the quantity of taxes recoverable, principally VAT and deferred tax property. The popularity of deferred tax property primarily pertains to tax losses which can be utilised sooner or later, giving consideration to future profitability, estimates of commodity costs, rate of interest and working prices and any statute of limitation interval. Adjustments in these estimates inside a fairly attainable vary within the subsequent 12 months should not anticipated to considerably alter the carrying worth of the Group’s taxes which are recoverable.

Joint operations

Vital accounting judgements

Joint preparations are categorized as joint operations the place the Group workouts joint management and the events have the rights to the property and obligations for the liabilities regarding the association. Judgement is required in figuring out the character of the joint association based mostly on the actual info and circumstances, the authorized kind and objective of the joint association. Industrial Building Group LLC (‘ICG’) is a joint association established to undertake the engineering and development of the extra sulphide processing facility at Aktogay. The Group holds 49% of voting rights in ICG however workouts joint management as selections require unanimous consent. Because the output of the joint association is the development of the extra processing services at Aktogay and thus advantages the Group, ICG is accounted for as a joint operation and is due to this fact proportionally consolidated.

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Acquisition of the Baimskaya copper venture

Vital accounting judgements

In assessing the accounting for the acquisition of Baimskaya, consideration was given as to if the copper venture consisted of an built-in set of inputs and processes (as outlined underneath IFRS 3 ‘Enterprise Combos’) that may very well be used to generate an output. Because the copper venture is within the exploration stage previous to feasibility, the work undertaken up to now was thought of to be an evaluation of its inputs slightly than the existence of inputs and processes able to producing an output. As such, the acquisition was judged to be an asset and never a enterprise as outlined underneath IFRS 3, with nearly all of the worth paid being proven as a mining licence inside mining property (see notice 5(a)).

4. Section data

Data offered to the Group’s Board of Administrators for the needs of useful resource allocation and the evaluation of segmental efficiency is ready in accordance with the administration and operational construction of the Group. For administration and operational functions, the Group is organised into numerous companies as proven beneath, in accordance with the character of their operations, end-products and companies rendered. Every of those enterprise models represents an working section in accordance with IFRS 8 ‘Working Segments‘. The East Area and Bozymchak segments are introduced on a mixed foundation.

The Group’s working segments are:

Aktogay

The Aktogay open pit, sulphide concentrator and oxide plant positioned within the east of Kazakhstan and the related worldwide gross sales and advertising actions managed out of the UK. The sulphide concentrator was commissioned within the ultimate quarter of 2016 with some focus toll processed on the Balkhash smelter (a associated get together) and the cathode output bought to 3rd events. The smaller oxide plant was commissioned within the fourth quarter of 2015 and produces copper cathode. The oxide plant is included within the Aktogay working section because of the sharing of infrastructure, its comparatively small measurement and to replicate the Group’s administration construction. An enlargement of the sulphide processing services at Aktogay was introduced in December 2017, which is predicted to double its sulphide ore processing capability by the tip of 2021.

Bozshakol

The Bozshakol open pit, sulphide concentrator and clay plant positioned within the Pavlodar area of Kazakhstan and the related worldwide gross sales and advertising actions managed out of the UK. The sulphide and clay concentrators have been commissioned in February 2016 and within the fourth quarter of 2016 respectively. Some focus from each vegetation can be toll processed on the Balkhash smelter with the output of copper, gold and silver bought to 3rd events. The clay plant is included within the Bozshakol working section because of the sharing of infrastructure and mining pit, its comparatively small measurement and to replicate the Group’s administration construction.

East Area and Bozymchak

The East Area and Bozymchak operations are proven as one working section consisting of Vostoktsvetmet LLC (‘East Area’), whose principal exercise is the mining and processing of copper and different metals that are produced as by-products from three underground mines and the related concentrators positioned within the japanese area of Kazakhstan; and KAZ Minerals Bozymchak LLC (‘Bozymchak’) a copper-gold open pit mine and concentrator positioned in western Kyrgyzstan and the related worldwide gross sales and advertising actions managed out of the UK. Bozymchak is mixed with the East Area operations, given the similarity of their financial traits and focus manufacturing processes; and as their mixed output is toll processed on the Balkhash smelter and subsequently bought to the Group’s clients.

Mining Initiatives

The Group’s mining tasks encompass firms that are liable for the evaluation and improvement of greenfield metallic deposits. The section contains the Koksay deposit in Kazakhstan and the Baimskaya licence space within the Chukotka area of Russia. Each of those tasks are on the feasibility research stage.

Managing and measuring working segments

The important thing efficiency measure which the Administrators use internally to evaluate the efficiency of the working segments is EBITDA. Seek advice from the APMs part on web page 54 for additional particulars.

The Treasury division manages the Group’s borrowings and screens finance revenue and finance prices on the Group degree on a web foundation, slightly than by working section.

Segmental data can be offered in respect of revenues, by vacation spot and by product.

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1. Working segments

1. Revenue assertion data

1. Depreciation, depletion and amortisation and MET and royalties exclude the prices related to inventories on the stability sheet.
2. MET and royalties have been excluded from the important thing monetary indicator of EBITDA. The Administrators imagine that MET and royalties are an alternative to a tax on income, therefore their exclusion offers an knowledgeable measure of the operational efficiency of the Group.

1. Stability sheet data

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(b) Data in respect of revenues Revenues by product to 3rd events are as follows:

A lot of the Group’s gross sales agreements are based mostly on provisional pricing with the ultimate pricing normally decided by the common market worth of the respective metallic within the month (for gold and silver bar), the month following (for copper cathode and zinc focus) or the second month following (for copper focus together with by-products) dispatch to the shopper. At 31 December, the Group’s provisionally priced volumes and their respective common provisional worth have been as follows:

1 Payable metallic in focus. Sometimes priced after deduction of a processing cost.

The ultimate costs for the provisionally priced volumes proven above might be decided through the quarter after the 12 months finish. At 31 December 2019, gross sales contracts which had not been lastly priced have been marked to market to replicate the anticipated settlement worth based mostly on the suitable ahead metallic worth (usually one month for copper cathode and zinc focus and two months for copper focus together with by-products). This adjustment elevated income by $12 million (2018: $7 million lower). The cumulative commodity pricing changes recorded throughout 2019 between the ultimate worth and the ahead worth on the anticipated settlement date, on the time of the sale, resulted in a $26 million improve (2018: $17 million discount) which is included inside income.

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Revenues by vacation spot from gross sales to 3rd events are as follows:

The Group’s copper focus gross sales and sure copper cathode and zinc gross sales have been contracted to Advaita Commerce Personal Restricted and its subsidiaries (‘Advaita’). Advaita is a metals buying and selling group with vital expertise in advertising metals the Group produces into China and Europe. Gross sales from all of the Group’s segments to Advaita comprise 87% ($1,971 million) of revenues (2018: 83% or $1,788 million).

5. Acquisition of the Baimskaya copper venture and half disposal of Koksay

1. Baimskaya copper venture

On 22 January 2019, the Group introduced the Preliminary Completion of the acquisition of the Baimskaya copper venture within the Chukotka area of Russia. The consideration due at Preliminary Completion was $675 million made up of $436 million in money and 22.Three million new KAZ Minerals shares valued at $239 million, which have been allotted to the Vendor. The 22.Three million shares are topic to a three-yearlock-up interval ending on the third anniversary of Preliminary Completion. Deferred Consideration of $225 million for the remaining curiosity is payable in 21.Zero million shares, topic to the achievement of sure Undertaking Supply Situations, together with a pre-determined degree of throughput and improvement of infrastructure by the Russian state. To the extent these circumstances should not met or waived by the Group and due to this fact not settled in shares, the Deferred Consideration will change into payable in money on 31 March 2029.

As a part of the consideration is settled in shares, the transaction falls throughout the scope of IFRS 2 ‘Share-basedFee‘. The Preliminary Consideration of 22.Three million KAZ Minerals PLC shares valued at $239 million has been recognised as a rise in share capital of round $6 million and share premium of $233 million. The Deferred Consideration of $225 million has additionally been included inside fairness (see notice 13(c)(iii)), representing the Group’s means to settle this quantity by the problem of 21.Zero million shares. The Group obtained a 75% fairness stake within the venture on Preliminary Completion, nonetheless no non-controlling curiosity is recognised because the remaining 25% might be bought by Deferred Consideration.

The full consideration for the acquisition was $900 million, of which round $880 million has been mirrored as a mining licence inside mining property, $13 million in web deferred tax property and $7 million regarding different non-current property, revenue taxes pay as you go and money and money equivalents ($1 million). Different long-term advances of $15 million, regarding quantities transferred to the Baimskaya copper venture for research prices, forward of Preliminary Completion, have been additionally reclassified to mining property (see notice 12).

(b) Koksay

On Eight June 2018, KAZ Minerals introduced an settlement for NFC to speculate $70 million for a 19.4% fairness stake within the Group’s Koksay venture. In July 2019, the Group transferred a 19.4% fairness stake in KAZ Minerals Koksay B.V., the dad or mum firm of the entity which holds the Koksay mining licence in Kazakhstan, to NFC following completion of the transaction. The $70 million money consideration (together with $25 million acquired in December 2018) was mirrored as a present legal responsibility pending completion of the transaction (see notice 16(a)). Following completion, NFC’s curiosity in KAZ Minerals Koksay B.V. was mirrored as a non-controlling curiosity of $59 million, being its share of Koksay’s web property, with the remaining quantity recognised straight inside fairness and attributed to the Group’s shareholders. The $70 million invested by NFC might be used solely for the event of Koksay, together with a feasibility research, which is able to decide the detailed design for mining and processing operations and the related capital funds. The Board will assessment the outcomes of the feasibility research to evaluate how and when to proceed with the venture.

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6. Impairment losses

1 In 2018, impairment expenses in opposition to property, plant and gear ($16 million) and mining property ($Four million) have been thought of to be particular objects for the needs of figuring out the Group’s key monetary indicators of EBITDA and Underlying Revenue (see notice 10).

An evaluation of the important thing exterior and inner elements affecting the Group and its CGUs at 31 December 2019 didn’t determine any indicators of impairment or reversal thereof at any of the Group’s CGUs (see notice 3). The impairments famous within the desk above for 2019 relate to particularly recognized property which are now not anticipated to be utilised and due to this fact have been impaired to their estimated recoverable quantity.

In 2018, the Bozymchak CGU was topic to an impairment assessment following the identification of an impairment indicator, being opposed courtroom rulings regarding the restoration of VAT incurred on the development of the plant. The Bozymchak operation is mirrored throughout the East Area and Bozymchak section. A complete impairment of $20 million was recognised, with $16 million recorded in opposition to property, plant and gear and $Four million in opposition to mining property. The impairment cost lowered the carrying worth of the Bozymchak operation to its estimated recoverable quantity of $84 million at 31 December 2018, which was decided as its honest worth much less value to promote on a reduced money stream foundation. The danger adjusted money stream forecasts have been discounted at a submit tax nominal low cost fee of 12%.

The important thing assumptions and estimates made in figuring out the money flows have been the longer term costs of copper and gold and the low cost fee. The value estimates used have been in step with these utilized by the Administrators in contemplating whether or not commodity costs have been an indicator of impairment, just about a long-term copper worth of $6,700/t (see notice 3). The honest worth much less value to promote estimate is a good worth measure that’s categorised inside Degree Three of the honest worth hierarchy.

7. Particular objects

Particular objects are these objects that are non-recurring or variable in nature and which don’t influence the underlying buying and selling efficiency of the enterprise.

8. Finance prices

1 In 2019, the Group capitalised to the price of the Aktogay enlargement venture $6 million of borrowing prices from the DBK-Aktogay enlargement facility at a median fee of curiosity of 5.98%. The Group additionally capitalised to the price of the Aktogay enlargement and the Baimskaya copper venture and different qualifying property $31 million of borrowing prices at a median fee of curiosity of 6.97% from all different borrowings excellent through the 12 months, that are thought to be basic borrowings for Group reporting functions. This follows the adoption on 1 January 2019 of ‘Borrowing Prices Eligible for Capitalisation (Amendments to IAS 23)‘, whereby venture particular borrowings are included as basic borrowings as soon as these property are working as supposed and due to this fact the related curiosity will change into out there for capitalisation on different qualifying property (see notice 2(b)). In 2018, the Group capitalised to the price of the Aktogay enlargement venture $Four million of basic borrowing prices from the PXF facility solely, at a median fee of curiosity of 4.97%. The curiosity value on borrowings capitalised to qualifying property is deductible for tax functions in opposition to revenue within the present 12 months.

Additional data regarding finance prices is within the Monetary assessment on web page 18.

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9. Revenue tax expense

Main parts of revenue tax expense are:

A reconciliation of the revenue tax expense relevant to the accounting revenue earlier than tax on the statutory revenue tax fee, to the revenue tax expense on the efficient revenue tax fee, is as follows:

Company revenue tax (‘CIT’) is calculated at 19.0% (2018: 19.0%) of the assessable revenue for the 12 months for the

Firm and its UK subsidiaries and 20.0% for the working subsidiaries in Kazakhstan (2018: 20.0%) and Russia. In Kyrgyzstan, adjustments to laws relevant from November 2017 have lowered CIT to 0%, changed by a tax on gold revenues, which is mirrored as royalties inside promoting bills.

Historic tax years relating to numerous firms throughout the Group stay open for tax audits. The tax authorities in Kazakhstan are capable of elevate extra tax assessments for 5 years after the tip of the related tax interval. In Kyrgyzstan, tax authorities are capable of elevate extra tax assessments for a interval of six years after the tip of the related tax interval. In Russia, the tax authorities are capable of elevate extra tax assessments for a interval of three years previous to the 12 months of assessment. In all three jurisdictions, underneath sure circumstances, historic tax years could stay open for inspection for longer durations.

Efficient tax fee

The efficient tax fee was 21% (2018: 21%). Tax expenses are affected by the combo of income and tax jurisdictions by which the Group operates. The influence of unrecognised tax losses and non-deductible objects will increase the Group’s total efficient tax fee.

The next elements impacted the efficient tax fee for the 12 months ended 31 December 2019:

Different non-deductible bills

The 2019 non-deductible objects are primarily comprised of sure social accountability prices, fines and penalties, and different non-deductible bills. The 2018 non-deductible objects are primarily comprised of impairment of VAT receivable on the East Area operations and prices regarding the acquisition of the Baimskaya copper venture.

Additional data regarding revenue taxes and the change within the efficient tax fee is within the Monetary assessment on web page 19.

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10. Earnings per share

The next displays the revenue and share information used within the EPS computations:

1 Various Efficiency Measures (APMs) are used to evaluate the efficiency of the Group and should not outlined or specified underneath IFRS. For additional data on APMs, together with justification for his or her use, please consult with the APMs part on web page 54.

Primary EPS (each Extraordinary EPS and EPS based mostly on Underlying Revenue) is calculated by dividing web revenue or Underlying Revenue for the interval attributable to fairness holders of the Firm by the weighted common variety of peculiar shares of 20 pence every excellent through the 12 months. Purchases of the Firm’s shares by the Worker Profit Belief and by the Firm underneath any share buy-back programmes are held in treasury and handled as personal shares.

For the needs of calculating diluted EPS, it’s assumed that the $225 million Deferred Consideration arising on the acquisition of the Baimskaya copper venture (see notice 5(a)) might be settled in 21.Zero million shares, reflecting the Group’s means to waive the Undertaking Supply Situations that aren’t met and settle in shares.

The ensuing 21,009,973 potential peculiar shares have been weighted over the interval they have been excellent, from acquisition on 22 January 2019 to 31 December 2019, offering an extra 19,801,180 shares included within the calculation of diluted EPS. To the extent these circumstances should not met or waived by the Group and due to this fact not settled in shares, the Deferred Consideration will change into payable in money on 31 March 2029.

Additional data regarding EPS based mostly on Underlying Revenue is within the Monetary assessment on web page 19.

The interim dividend of $19 million in respect of the 12 months ended 31 December 2019 and the ultimate dividend of $28 million in respect of the 12 months ended 31 December 2018 was paid to shareholders on the register which included the brand new shares issued in January 2019 as half settlement of the acquisition of the Baimskaya copper venture.

(b) Dividends declared after the stability sheet date

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12. Different non-current property

1. Non-currentinventories comprise ore stockpiles which are anticipated to be processed in extra of 12 months from the stability sheet date and relate primarily to clay ore at Bozshakol and low grade sulphide ore at Aktogay.
2. Contains VAT incurred at Bozymchak which is topic to audit and different administrative procedures previous to refund, with anticipated refund dates in extra of 12 months from the stability sheet date.
3. Lengthy-termfinancial institution deposits are monies positioned in escrow accounts with monetary establishments in Kazakhstan and Kyrgyzstan as required by the Group’s web site restoration obligations.
4. Different long-term advances of $15 million at 31 December 2018 associated to quantities transferred to the Baimskaya copper venture for research prices which have been reclassified to mining property on Preliminary Completion of the Baimskaya copper venture (see notice 5(a)).

On 22 January 2019, the Firm issued 22,344,944 KAZ Minerals PLC shares allotted as a part of the Preliminary Consideration for the Baimskaya copper venture (see notice 5(a)). The issued share capital was totally paid.

In the course of the 12 months, 1,859,786 (2018: 1,396,856) treasury shares have been used to fulfill awards underneath the Firm’s Save As You Earn (‘SAYE’), Lengthy Time period Incentive Plans (‘LTIP’) and Deferred Share Bonus Plan (‘DSBP’) schemes. At 31 December 2019, the Firm holds 8,287,104 (2018: 10,146,890) peculiar shares in treasury and the issued share capital of the Firm which carries voting rights of 1 vote per share, comprised 472,436,873 (2018: 448,232,143) peculiar shares (excluding treasury shares).

1. Personal shares bought underneath the Group’s share-based cost plans

The availability of shares to the Group’s share-based cost plans is facilitated by an Worker Profit Belief (the ‘Belief’). The price of shares bought by the Belief is charged in opposition to retained earnings as treasury shares. The Belief has waived the appropriate to obtain dividends on these shares. The Firm made no purchases by the Belief in 2019 or 2018. No shares (2018: 14,565) have been transferred out of the Belief in settlement of share awards granted to workers that have been exercised through the 12 months. Following approval from shareholders, shares held in treasury might be used to settle future awards.

At 31 December 2019, the Group, by the Belief, owned 5,162 shares within the Firm (2018: 5,162) with a

market worth of $36 thousand and a value of $79 thousand (2018: $35 thousand and $79 thousand respectively). The

shares held by the Belief represented lower than 0.01% (2018: 0.01%) of the issued share capital at 31 December 2019.

(c) Capital reserves

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1. Forex translation reserve

The overseas forex translation reserve is used to file alternate variations arising from the interpretation of the monetary statements of subsidiaries whose purposeful forex is just not the US greenback into the Group’s presentation forex. The rise within the US greenback worth of the Group’s overseas forex operations of $65 million (2018: lower of $428 million) follows a 1% improve within the worth of the tenge from 31 December 2018 to 31 December 2019.

1. Capital redemption reserve

On account of the share buy-back programme undertaken in 2008 and the repurchase of Firm shares in 2013, transfers have been made out of share capital to the capital redemption reserve based mostly on the nominal worth of the shares cancelled.

(iii) Deferred Consideration reserve

On 22 January 2019, the Group introduced the Preliminary Completion of the acquisition of the Baimskaya copper venture within the Chukotka area of Russia (see notice 5(a)). The Deferred Consideration of $225 million represents the acquisition worth for the remaining curiosity in Baimskaya and is payable in 21.Zero million shares, topic to the achievement of sure Undertaking Supply Situations, together with a pre-determined degree of throughput and improvement of infrastructure by the Russian state. To the extent these circumstances should not met or waived by the Group and due to this fact not settled in shares, the Deferred Consideration will change into payable in money on 31 March 2029.

The Deferred Consideration has been included inside fairness as a separate share-based cost reserve, representing the Group’s means to settle this quantity by the problem of 21.Zero million shares, measured in accordance with the honest worth of the asset acquired on Preliminary Completion. If the Group decides to not waive any excellent circumstances and settle the Deferred Consideration in money, the money cost might be accounted for because the repurchase of an fairness curiosity.

14. Non-controlling pursuits

Non-controlling pursuits which are materials to the Group are mirrored within the desk beneath, regarding the switch of a 19.4% fairness stake in KAZ Minerals Koksay B.V., the dad or mum firm of the entity which holds the Koksay mining licence in Kazakhstan, to NFC in July 2019. The principal operations of KAZ Minerals Koksay B.V. relate to the Koksay exploration licence positioned in Kazakhstan.

Summarised monetary data on a 100% foundation for Koksay is as follows:

1 Present property comprise money and money equivalents of $64 million (2018: $25 million) that are for use solely for the funding into the Koksay venture (see notice 5(b)).

As well as, non-controlling pursuits that weren’t materials to the Group have been $Four million at 31 December 2018.

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15. Borrowings

CDB-Bozshakol and Bozymchak services

At 31 December 2019, $1.2 billion (2018: $1.Three billion) was drawn underneath the ability agreements. The services accrue curiosity at US$ LIBOR plus 4.50% and association charges with an amortised value at 31 December 2019 of $9 million (2018: $12 million) have been netted off in opposition to these borrowings in accordance with IFRS 9 ‘Monetary Devices‘. Throughout 2019, $183 million of the borrowing was repaid, with $180 million resulting from be repaid inside 12 months of the stability sheet date (together with $Three million of unamortised debt prices). The power is repayable in semi-annual instalments in January and July with ultimate maturity in 2025. KAZ Minerals PLC acts as guarantor of the services.

CDB-Aktogay services

The CDB-Aktogay services encompass a CNY 1.Zero billion facility and a $1.Three billion US greenback facility.

At 31 December 2019, the drawn US greenback equal quantity underneath the CNY facility was $97 million (2018: $110 million). The power accrues curiosity on the relevant benchmark lending fee printed by the Folks’s Financial institution of China. This facility is repayable in semi-annual instalments in March and September of every 12 months till ultimate maturity in 2028. $12 million was repaid in 2019, whereas $12 million is because of be repaid inside 12 months of the stability sheet date. To guard the Group from forex dangers arising on the CNY denominated debt, the Group has entered into CNY/US$ cross forex swaps for a portion of the publicity. This spinoff instrument offers a hedge in opposition to actions within the CNY alternate fee in opposition to the US greenback and in addition swaps the curiosity foundation from a CNY rate of interest right into a US$ LIBOR curiosity foundation. The honest worth of the swaps at 31 December 2019, included inside payables, is $12 million (2018: $12 million).

The US greenback facility accrues curiosity at US$ LIBOR plus 4.20%. At 31 December 2019, $1.1 billion (2018: $1.2

billion) was excellent underneath the ability. Association charges with an amortised value of $9 million (2018: $11 million) have been netted off in opposition to these borrowings in accordance with IFRS 9. The power is repayable in semi-annual instalments in March and September till ultimate maturity in 2029. Throughout 2019, $107 million was repaid, with $105 million resulting from be repaid inside 12 months of the stability sheet date (together with $2 million of unamortised debt prices). KAZ Minerals PLC acts as guarantor of each services.

PXF facility

At 31 December 2019, $300 million (2018: $500 million) was drawn underneath the PXF facility. The power accrued curiosity utilizing a variable margin of between 3.00% and 4.50% above US$ LIBOR, depending on the ratio of web debt to EBITDA examined semi-annually. Principal repayments commenced in July 2018 and have been to proceed in equal month-to-month instalments over a three-year interval till ultimate maturity in June 2021. Throughout 2019, $200 million of the borrowing was repaid. At 31 December 2019, $200 million was resulting from be repaid inside subsequent 12 months. KAZ Minerals PLC, Vostoktsvetmet LLC and KAZ Minerals Gross sales Restricted act as guarantors of the ability.

On 28 January 2020, the Group accomplished an modification and extension of the PXF which incorporates a rise in facility commitments to $1.Zero billion, an extension of the mortgage tenor and a discount within the facility margin (see notice 21(a)).

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DBK-Aktogay services

On 14 June 2019, the Group entered right into a $600 million credit score facility settlement with DBK regarding the Aktogay enlargement venture. The Group additionally has an present $300 million facility with DBK regarding the unique Aktogay venture. KAZ Minerals PLC acts as guarantor of those services.

The $600 million facility might be drawn in accordance with capital expenditure incurred on sure contracts dedicated for the Aktogay enlargement venture, with $320 million drawn at 31 December 2019. Association charges with an amortised value of $5 million have been netted off in opposition to these borrowings in accordance with IFRS 9. The power extends for a time period of 15 years and accrues curiosity at a fee of US$ LIBOR plus 3.90%. The power is repayable in instalments with the primary reimbursement due in June 2022, adopted by semi-annual repayments in Could and November of every 12 months from November 2022 till the ultimate reimbursement in 2034.

The $300 million facility with DBK was entered into in December 2016 and was totally drawn at 31 December 2016. The power extends for a time period of eight and a half years and accrues curiosity at US$ LIBOR plus 4.50%. The power is repayable in semi-annual instalments in Could and November with a ultimate reimbursement in 2025. At 31 December 2019, $235 million (2018: $277 million) was drawn underneath the ability. Association charges with an amortised value of $1 million (2018: $1 million) have been netted off in opposition to these borrowings in accordance with IFRS 9. Throughout 2019, $43 million of the borrowing was repaid, with $43 million resulting from be repaid inside 12 months of the stability sheet date.

CAT facility

On 15 November 2019, the Group entered right into a credit score facility of as much as $100 million with Caterpillar Monetary Providers (UK) Restricted (‘CAT’). At 31 December 2019, $74 million was drawn underneath the ability. Association charges with an amortised value of $2 million have been netted off in opposition to these borrowings in accordance with IFRS 9. The power accrues curiosity with a variable margin of between 3.00% and 4.50% above US$ LIBOR, depending on the ratio of web debt to EBITDA which might be examined semi-annually. It’s comprised of two sub-facilities of $40 million and $60 million secured in opposition to present and new Caterpillar gear, which might be drawn between December 2019 and March 2021. Quarterly repayments for the prevailing drawing will start in December 2020 till ultimate maturity in 2024. KAZ Minerals PLC acts as guarantor of the ability.

Undrawn services

At 31 December 2019, $280 million remained to be drawn underneath the DBK-Aktogay enlargement facility and $26 million remained to be drawn underneath the CAT facility. All different debt services have been totally drawn at 31 December 2019 and 2018.

16. Different liabilities

1. Advance consideration

In June 2019, the Group acquired the remaining $45 million advance consideration from NFC in respect of the settlement for NFC to speculate $70 million for a 19.4% fairness stake in KAZ Minerals Koksay B.V., the dad or mum firm of the entity which holds the Koksay mining licence in Kazakhstan, as introduced in June 2018. Following completion of the transaction in July 2019, the advance consideration was reclassified to fairness, with NFC’s curiosity in KAZ Minerals Koksay B.V. mirrored as a non-controlling curiosity of $59 million, being its share of Koksay’s web property, and the remaining quantity recognised straight inside fairness and attributed to the Group’s shareholders (see notice 5(b)).

(b) Funds for licences for mining property

In accordance with its contracts for subsoil use, the Group is liable to repay the prices of geological data offered by the Authorities of Kazakhstan for licenced deposits. A few of these obligations are payable in tenge whereas others are payable in US {dollars}, relying on the phrases of every subsoil use contract. The full quantity payable by the Group is discounted to its current worth utilizing a reduction fee of seven.6% for tenge (2018: 7.6%) and 4.0% for US greenback (2018: 4.0%) obligations. Below the subsoil use agreements, the historic value funds amortise over a 10-year interval and start with first manufacturing.

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1. Payables to NFC

The Group beforehand reached an settlement with its principal development contractor at Aktogay, NFC, to defer cost of $300 million, of which $281 million was settled in 2018 and the ultimate $19 million was settled in 2019. The prolonged credit score phrases had been discounted utilizing a fee of US$ LIBOR plus 4.20% on the estimated value of companies carried out.

17. Consolidated money stream evaluation

1. Reconciliation of revenue earlier than tax to web money influx from working actions

(b) Money and money equivalents

1. Excludes time period deposits with unique maturity of better than three months categorized inside present investments. Included inside money and money equivalents is $64 million (2018: $25 million) which is for use solely for the funding into the Koksay venture (see notice 5(b)).
2. At 31 December 2018, money at financial institution of $2 million was restricted by authorized or contractual preparations and was excluded from the Group’s measure of web debt (see notice 17(c)).

1. Motion in web debt

1. The money flows on borrowings in 2019 replicate repayments on present services of $545 million (2018: $424 million) and drawings of $387 million (2018: $nil), web of
   association charges (see notice 15). Different actions embrace non-cash amortisation of charges on borrowings of $6 million (2018: $6 million) and overseas alternate positive factors
   on the CDB-Aktogay CNY facility of $1 million (2018: $6 million).
2. APMs are used to evaluate the efficiency of the Group and should not outlined or specified underneath IFRS. For additional data on APMs, together with justification for his or her use, please consult with the APMs part on web page 54.

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18. Monetary devices

The carrying quantities of monetary property and liabilities by classes are as follows:

1. Commerce receivables topic to provisional pricing embrace a $12 million beneficial adjustment (2018: $7 million opposed) arising from the marked to market valuation on provisionally priced contracts on the 12 months finish. These are measured in accordance with quoted ahead costs in a market that’s not thought of energetic, which is a degree 2 valuation methodology throughout the honest worth hierarchy.
2. The honest worth of borrowings approximates its carrying worth and is measured by discounting future money flows utilizing presently out there rates of interest for debt of comparable maturities, which is a degree Three valuation methodology throughout the honest worth hierarchy.
3. Excludes funds acquired prematurely from clients, different taxes payable and MET and royalties payable that aren’t thought to be monetary devices.
4. By-product monetary devices, representing a cross forex and rate of interest swap, are measured in accordance with inputs apart from quoted costs which are observable for the spinoff monetary instrument, both straight or not directly, which is a degree 2 valuation methodology throughout the honest worth hierarchy.

The honest values of every class of monetary asset and legal responsibility should not materially totally different from their carrying values as introduced.

19. Commitments and contingencies

1. Authorized claims

Within the peculiar course of enterprise, the Group is topic to authorized actions and complaints. The Administrators imagine that the final word legal responsibility, if any, arising from such actions or complaints is not going to have a materially opposed impact on the monetary situation or outcomes of operations of the Group. As of 31 December 2019 and 2018, the Group was not concerned in any vital authorized proceedings, together with arbitration, which can crystallise a fabric monetary loss for the Group.

(b) Capital expenditure commitments

The Group has capital expenditure commitments for the acquisition of property, plant and gear in addition to commitments underneath its mining subsoil agreements. The full commitments for property, plant and gear at 31 December 2019 amounted to $537 million (2018: $724 million). These quantities relate primarily to the Aktogay enlargement, the Artemyevsky enlargement and the Baimskaya copper venture, which replicate contractual commitments, not the minimal value which might be incurred within the occasion of delay or cancellation.

1. Tax audits

Historic tax years relating to numerous firms throughout the Group stay open for inspection throughout a tax audit. The tax authorities in Kazakhstan are capable of elevate extra tax assessments for 5 years after the tip of the related tax interval in respect of all taxes. In Kyrgyzstan, tax authorities are capable of elevate extra tax assessments for a interval of six years after the tip of the related tax interval. In Russia, the tax authorities are capable of elevate extra tax assessments for a interval of three years previous to the 12 months of assessment. In all three jurisdictions, underneath sure circumstances, historic tax years could stay open for inspection for longer durations. Plenty of the Group’s working subsidiaries in Kazakhstan are presently present process or anticipated to endure routine tax audits which may give rise to substantial tax assessments. As such, extra tax funds may come up for the Group.

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20. Associated get together disclosures

1. Transactions with associated events

Transactions between the Firm and its subsidiaries, that are associated events of the Firm, have been eradicated on consolidation and should not disclosed on this notice. Particulars of transactions between the Group and different associated events, together with Kazakhmys Holding Group, are disclosed beneath.

The next desk offers the overall quantity of transactions which have been entered into with associated events for the related monetary 12 months:

1 No provision is held in opposition to the quantities owed by associated events at 31 December 2019 and 2018.

Kazakhmys Holding Group

The associated get together transactions and balances with firms that are a part of the Kazakhmys Holding Group (an organization owned by Vladimir Kim, a Director of the Firm, and Eduard Ogay, a former Director of the Firm) are offered underneath two Framework Service Agreements and in accordance with the Relationship Agreements. These embrace the availability of smelting and refining of the Group’s copper focus on the Balkhash smelter, electrical energy provide and sure upkeep capabilities. Moreover, throughout 2019 the Group bought the Belousovsky concentrator and the related web site restoration obligation to a subsidiary of the Kazakhmys Holding Group for proceeds of lower than $1 million, which resulted in no materials acquire or loss on disposal.

At 31 December 2019, the Group’s joint operation, ICG, held money and money equivalents of $Three million (2018: $nil) with Financial institution RBK JSC (an organization majority owned by Vladimir Kim, a Director of the Firm). Joint operations are proportionally consolidated such that the Group’s share of its money and money equivalents are included throughout the consolidated monetary statements.

(b) Phrases and circumstances of transactions with associated events

Costs for associated get together transactions are decided by the events on an ongoing foundation relying on the character of the transaction.

21. Submit stability sheet occasions

1. PXF facility

On 28 January 2020, the Group accomplished an modification and extension of the PXF which incorporates a rise in facility commitments to $1.Zero billion, an extension of the mortgage tenor and a discount within the facility margin. The modification represents a web improve of $700 million above the $300 million excellent underneath the prevailing facility and the maturity profile is prolonged by 3.5 years, from June 2021 till December 2024 with two annual extension choices which, if exercised, would prolong ultimate maturity of the ability to December 2025 or December 2026 respectively. The amended facility accrues curiosity at a variable margin of between 2.25% and three.50% above US$ LIBOR (beforehand between 3.00% and 4.50% above US$ LIBOR), depending on the ratio of web debt to EBITDA which might be examined semi-annually. Month-to-month repayments will start in January 2021, with a ultimate balloon reimbursement of one-third of the ability quantity ($333 million) in December 2024, which might be amortised throughout 2025 and 2026 if the extension choices are exercised. The Group expects to completely draw the ability within the first quarter of 2020.

(b) Dividends

On 19 February 2020, the Administrators of the Firm really useful a ultimate dividend for the 12 months ended 31 December 2019 of 8.Zero USc per share. See notice 11(b).

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ALTERNATIVE PERFORMANCE MEASURES

Various Efficiency Measures (APMs) are measures of monetary efficiency, monetary place or money flows that aren’t outlined or specified underneath IFRS. APMs are utilized by the Administrators internally to evaluate the efficiency of the Group and help in offering related and helpful data to customers of the Annual Report and Accounts.

APMs should not uniformly outlined by all firms, together with these within the Group’s business. APMs utilized by the Group is probably not comparable with equally titled measures and disclosures made by different firms. APMs ought to be thought of along with and never as an alternative to measures of monetary efficiency, monetary place or money flows reported in accordance with IFRS.

The Group makes use of APMs to enhance the comparability of data between reporting durations and segments, both by adjusting for particular objects which influence upon IFRS measures or by aggregating or disaggregating IFRS measures, to help understanding of the Group’s efficiency. The definition and relevance of the APMs utilized by the Group is about out beneath, that are in step with the earlier reporting interval.

1. EBITDA

EBITDA is outlined as earnings earlier than curiosity, taxation, depreciation, depletion, amortisation, MET and royalties and particular objects1. EBITDA is a key non-IFRS measure that the Administrators use internally to evaluate the efficiency of the Group’s segments and is seen as related to capital intensive industries with lengthy life property. The Administrators imagine that the exclusion of MET and royalties offers an knowledgeable measure of the operational profitability given the character of the taxes, as additional defined within the ‘Taxation’ part on web page 19. Particular objects are excluded to reinforce the comparability of EBITDA and sure different APMs from interval to interval. This efficiency measure is likely one of the Group’s KPIs, the relevance of which is proven on web page 28 of KAZ Minerals’ 2018 Annual Report and Accounts. A reconciliation to working revenue is offered in notice 4(a)(i) to the condensed consolidated monetary statements.

(b) Underlying Revenue

Underlying Revenue is outlined as revenue/loss excluding particular objects1 and their ensuing tax and non-controlling curiosity results. This measure is taken into account to be helpful because it offers a sign of the revenue ensuing from the underlying buying and selling efficiency of the Group. Underlying Revenue is reconciled from web revenue attributable to fairness holders of the Firm on web page 19 and as set out in notice 10 to the condensed consolidated monetary statements.

1. EPS based mostly on Underlying Revenue

EPS based mostly on Underlying Revenue is revenue/loss excluding particular objects1 and their ensuing tax and non-controlling curiosity results, divided by the weighted common variety of peculiar shares in situation through the interval (see notice 10 to the condensed consolidated monetary statements). This is likely one of the Group’s KPIs for measuring monetary efficiency, the relevance of which is printed on web page 28 of KAZ Minerals’ 2018 Annual Report and Accounts. A calculation of EPS based mostly on Underlying Revenue is included inside notice 10 to the condensed consolidated monetary statements.

(d) Gross liquid funds

Gross liquid funds is outlined as the combination of money and money equivalents and present investments much less restricted money.

1. Web debt

Web debt is the surplus of present and non-current borrowings over gross liquid funds. The Board makes use of this measure for the needs of capital administration. A reconciliation of web debt is included on web page 20 and in notice 17(c) to the condensed consolidated monetary statements.

1 Particular objects are outlined as these objects that are non-recurring or variable in nature and don’t influence the underlying buying and selling efficiency of the Group. In 2019, there have been no particular objects (2018: $20 million). Particular objects are recognized in notice 7 within the condensed consolidated monetary statements.

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1. Free Money Movement

Free Money Movement is web money stream from working actions, as mirrored within the consolidated assertion of money flows on web page 20, earlier than capital expenditure and VAT related to main development tasks much less sustaining capital expenditure. This is likely one of the Group’s KPIs for measuring monetary efficiency, the relevance of which is printed on web page 28 of KAZ Minerals’ 2018 Annual Report and Accounts. A reconciliation from web money flows from working actions is offered beneath.

(g) Gross money prices

Gross money prices is outlined as money working prices, together with pre-commercial manufacturing prices, excluding bought cathode plus TC/RC on focus gross sales, divided by the quantity of personal copper gross sales. Money prices are a regular business measure utilized by most main copper mining firms. The Administrators use gross money prices to measure the efficiency of the Group in managing its prices. A reconciliation from revenues is proven beneath.

(h) Web money prices

Web money prices is outlined as gross money prices much less by-product revenues, divided by the quantity of personal copper gross sales. This is likely one of the Group’s KPIs for measuring value efficiency, the relevance of which is printed on web page 29 of KAZ Minerals’ 2018 Annual Report and Accounts. A reconciliation from gross money prices is proven beneath.

1. Upkeep spend per tonne of copper produced