Kazakhmys plans split to focus on high-grade copper mines

LONDON. KAZINFORM - Kazakhmys (Plc), Kazakhstan's biggest copper producer, plans to reorganize into a slimmed-down company focused on its highest-grade and lowest-cost mines, reducing its size by two-thirds. The stock surged by the most on record.

The streamlined entity will remain listed and have annual copper production of 80,000 to 90,000 metric tons, Chief Executive Officer Oleg Novachuk said on a conference call today. Its workforce will drop to 12,000 from 56,000 now under the plan that will be put to shareholders once it gains board approval, he said. The goal is complete the reorganization this year. Kazakhmys has been disposing of some assets as it pursues a lower-cost and more profitable operation. The London-based company today reported a second consecutive full-year loss after a slump in global commodities prices. Its older, lower-margin operations will be spun off to former Chairman Vladimir Kim, Novachuk said. "Game-changing restructuring proposal outshines solid 2013 financials," Fraser Jamieson, an analyst at JPMorgan Securities Plc inLondon, wrote in a note to investors today as he upgraded Kazakhmys to overweight. "If delivered, we estimate a group net present value of 587 pence a share, more than 160 percent above the current share price." Kazakhmys surged as much as 33 percent to 297.4 pence in London, the biggest intraday gain since it was listed in 2005, and was at 268.5 pence at 9:06 a.m. The volume of shares traded was more than three times the daily average for the last 90 days, Kazinform cites Bloomberg. Read more