Kazakh KAZ Minerals signs ammendments to debt facilities for copper mines development

Baku, Azerbaijan, Dec. 30

By Elena Kosolapova - Trend: KAZ Minerals PLC has signed an amendment to its existing $2.3 billion debt facilities with China Development Bank Corporation (CDB) and Kazakh Sovereign Wealth Fund Samruk-Kazyna obtained principally for the development of the Bozshakol and Bozymchak projects, the company reported Dec. 30.

The amendments envisage that the facilities will become bilateral between KAZ Minerals and China Development Bank Corporation. Interest rate was lowered from USD LIBOR plus 4.80 percent to USD LIBOR plus 4.50 percent.

KAZ Minerals will pay arrangement fee of 0.5 percent, including 60 percent payable in December 2014 and 40 percent payable in January 2016.

Moreover balance sheet covenants were aligned with those applicable to the $1.5 billion Aktogay project CDC facilities, which include adjustments to mitigate the translation impact of movements in the US dollar/tenge exchange rate.

As at 30 November 2014, the principal balance outstanding on the facilities was $2,086 million. Repayment of the previous facilities with Samruk-Kazyna and drawing of the new facilities directly from CDB is expected to occur during the first quarter of 2015.

All other material terms of the facilities, including the repayment schedule and final maturity, remain unchanged.

Bozshakol is the largest single mine development in the CIS region by both scope and volume of production. The mine will deliver transformational growth equivalent to more than doubling KAZ Minerals' current production levels. Bozshakol will have an average output of 75 kt of copper concentrate per year over a production life of 40 years (100,000 metric tons average in first 10 years) and will employ around 1,500 personnel. The ore body also contains highly valuable by-products of gold and molybdenum.

Commissioning of the project is expected in the second half of 2015, with copper in concentrate production ramp up during 2016. The capital cost for the project is in the region of $2.2 billion.

Bozymchak is copper and gold open pit mine in Kyrgyzstan commenced commissioning in March 2014. The mine produced at modest levels in 2014 before continuing to ramp up in 2015 to commercial levels of production. The mine's initial operation will be as an open pit with one million metric tons of ore extraction per year.
Bozymchak is expected to have an average annual output of 7,000 metric tons of copper in concentrate and 35,000 ounces of gold in concentrate over the life of the mine.
KAZ Minerals PLC ("KAZ Minerals") is a high growth copper company focused on large scale, low cost, open pit mining in Kazakhstan. It is a leading copper producer in Kazakhstan with five operating mines and four concentrators. Total copper cathode output in 2014 from continuing operations is expected to be between 80 kt and 85 kt.
The Group has two major copper projects under construction, Bozshakol and Aktogay, and a third, Koksay, at scoping stage. These projects are expected to deliver one of the highest growth rates in the industry and transform KAZ Minerals into a company dominated by world class open pit copper mines.

The CDB/Samruk-Kazyna debt facilities of $2.7 billion were secured by KAZ Minerals in December 2009 for the development of Bozshakol, Bozymchak and other growth projects. The facilities were fully drawn by January 2013. In January 2014, $400 million allocated to projects that were unlikely to proceed in the medium term was repaid early. As at 30 November 2014, the principal balance outstanding on the facilities was $2,086 million. The facilities have a final maturity of between 12 and 15 years from the date of first drawing with repayments commencing three years from the date of first drawdown.

The Aktogay CDB facilities of $1.5 billion are comprised of two bilateral agreements with CDB signed in December 2011. The first agreement is for up to $1.34 billion and the second agreement for up to 1 billion yuan (approximately $158 million at the date of signing). Both agreements are on similar terms and conditions. The facilities have a final maturity of 15 years from the date of first drawing with repayments commencing three years from the date of first drawdown. As at 30 November 2014, $1.3 billion of the Aktogay CDB facilities remained available for drawdown.

Edited by CN

Elena Kosolapova is Trend Agency's staff journalist, follow her on Twitter: @E_Kosolapova