Kazakhmys PLC Production Summary for the half year and second quarter ended 30 June 2007

/Kazakhmys PLC, July 31, 07/ - Total copper cathode production reached 190,428* tonnes for the first six months of 2007, 2% higher than the same period of 2006. During the second quarter of 2007, output was lowered to 91,342* tonnes following maintenance work at the Balkhash and Zhezkazgan smelters. Zinc in concentrate production was 71,219 tonnes over the first six months an increase of 1% compared to the first six months of 2006. Q2 2007 zinc in concentrate production was 4% higher than the corresponding period in 2006 Gold and silver production from own concentrate declined by 4% and 5%, respectively, compared to the first six months of 2006. Q2 gold and silver production from own material was 6% higher and 6% lower compared to the corresponding period in 2006. Gold production benefited from the processing of stockpiled material. Oleg Novachuk, Chief Executive Officer, said "Copper production was maintained at a steady level over the past six months, through hard work and careful management, in spite of some challenging operational conditions. I am confident that, as set out in our full year results, we remain on target to deliver slightly higher copper production in 2007 compared to last year". Excludes tolled material KAZAKHMYS GROUP COPPER PRODUCTION ------------------------------------------------------------------ 6m 6m Q2 Q1 Q2 2007 2006 2007 2007 2006 --------------------- ----- ------ ------ ----- ----- ------ Ore extraction 000 t 17,994 20,127 9,063 8,931 10,287 Average copper grade % 1.21 1.10 1.18 1.25 1.14 Average zinc grade1 % 3.69 4.00 3.67 3.71 4.03 Copper in Concentrate 000 t 201.5 202.6 96.8 104.7 107.6 own concentrate 000 t 182.8 183.4 89.3 93.5 98.7 purchased concentrate 000 t 18.7 19.2 7.5 11.2 8.9 Copper Cathodes2 000 t 191.2 187.9 91.5 99.7 98.8 own concentrate 000 t 163.5 169.0 79.7 83.8 92.2 purchased concentrate 000 t 26.9 17.5 11.6 15.3 5.9 tolling concentrate 000 t 0.8 1.4 0.2 0.6 0.7 Copper Rod 000 t 18.0 14.3 9.0 9.0 9.0 ------------------------------------------------------------------ 1Complex ores only 2Includes copper used to produce copper rod Ore extraction in Q2 2007 was slightly higher than in the previous quarter, though below the levels of 2006. This was principally due to the lack of output from the Kounrad mine, in the Balkhash region, due to planned stripping works and anticipated lower production at Annenskoe mine, in the Zhezkazgan region. Output in the Karaganda and East regions was stable over the quarter, with Karaganda maintaining its strong improvement over the half year compared to 2006. The availability of machinery, mentioned in the Q1 production report, and partly a consequence of high global mining and infrastructure activity, had an impact at several operations. The required equipment, including trucks and excavators, is arriving and should be brought into operation over the second half of the year. The majority of the Zhezkazgan mines are at or nearing a mature stage and as a result, considerable work is required, in efficiencies and expansions, to maintain current output levels. In the medium term this will be balanced by an increase in production volumes at the East region mines. Lower ore output was largely offset by better ore grades, with the continuing benefit of new higher grade mines, such as Zhomart, in Zhezkazgan, Artemyevskoe, in the East, and Kosmurun, in Karaganda. This is reflected in the relatively stable output of copper in concentrate from own material, compared to the same period of 2006. This has now reached a steady state and these new mines are unlikely to show a continuing impact on the Group's average copper grade going forwards. Production of copper cathode in the first six months of 2007 was 2% higher than the same period of 2006, though Q1 2006 was affected by severe weather conditions. Cathode output in Q2 2007, at 91,342 tones (excluding tolled material), was reduced by maintenance shutdowns at both the Zhezkazgan and Balkhash smelters. Both smelters are now fully operational, though there may be a further 10 day maintenance shutdown during the second half at the smelter in Zhezkazgan. Kazakhmys Group By-products Production ---------------------------------------------------------------- 6m 6m Q2 Q1 Q2 2007 2006 2007 2007 2006 ------------------- ------ ------ ------ ----- ----- ----- Zinc in Concentrate 000 t 71.2 70.6 32.6 38.6 31.3 Zinc Metal 000 t 27.4 33.8 12.5 14.9 15.6 Silver 000 oz 10,111 10,692 5,089 5,022 5,443 own production 000 oz 10,104 10,660 5,087 5,017 5,433 tolling 000 oz 7 32 2 5 10 Gold 000 oz 70.6 77.7 36.6 34.0 42.7 own production 000 oz 51.4 53.6 32.2 19.2 30.4 tolling 000 oz 19.2 24.2 4.4 14.8 12.3 ---------------------------------------------------------------- Zinc in concentrate production rose slightly over the first six months compared to 2006. Production of 32,629 tonnes in Q2 was similar to the same period last year, but below Q1 2007 due to lower volumes of zinc containing ores being extracted in the East region. Due to machinery shortages, which are now improving, the Orlovskoe mine operated at reduced capacity. Orlovskoe is a rich zinc source with an average zinc grade for the period of 4.23%. Part of the ore extracted at Kosmurun mine has been stockpiled and will be processed in the second half of 2007, when the Karagaily concentrator upgrade is completed. Zinc metal output is slightly below the annualised capacity of 60,000 tonnes, which may be balanced by greater output in the second half, though with the relative attractiveness of concentrate prices, material is being sold as concentrate and not stockpiled. In the second quarter of 2007, the Group produced 5.1 million ounces of silver and 36,591 ounces of gold, an increase of 1% and 8%, respectively, compared to first quarter of 2007. Of the 36,591 ounces of gold produced, 32,203 ounces were produced from own concentrate, a 68% increase compared to the first quarter of 2007. This increased gold production was the result of processing concentrate stockpiled from the Artemyevskoe mine, mentioned in the Q1 production report. Q2 2007 gold production was lower than in the corresponding period of 2006 as there was no production at the Abyz mine, which has been closed for planned stripping works since October 2006 and will remain in stripping at least through 2008 and lower production from tolling. Of the 5.1 million ounces of refined silver, only 1,608 ounces were produced under tolling arrangements. Zhezkazgan Complex ----------------------------------------------------------------- 6m 6m Q2 Q1 Q2 2007 2006 2007 2007 2006 --------------------- ----- ------ ------ ----- ----- ----- Ore extraction 000 t 12,816 14,050 6,516 6,300 7,226 Average copper grade % 0.81 0.82 0.80 0.83 0.82 Copper Concentrate 000 t 247.2 280.1 126.4 120.8 140.7 Copper in Concentrate 000 t 93.1 100.9 46.6 46.5 51.7 Copper Cathodes1 000 t 93.8 105.8 43.9 49.9 54.1 of which tolling 000 t -- 0.5 - - 0.3 Copper Rod 000 t 18.0 14.3 9.0 9.0 9.0 ----------------------------------------------------------------- 1Includes copper used to produce copper rod Ore extraction at the Zhezkazgan complex in the first six months of 2007 was lower than in corresponding period of 2006, primarily due to reduced production volumes at Annenskoe mine following the previously reported roof fall in late 2006. The issue of availability of mineshaft lifting equipment at the Stepnoy mine in the first quarter of 2007 was resolved in the middle of March 2007, contributing to the recovery seen in ore output in the second quarter. Cathode production over the first six months of 2007 is slightly higher than concentrate production, as 5,416 tonnes of copper in concentrate was produced by a third party on a tolled basis for Kazakhmys. Copper in concentrate production was marginally higher with 5% growth in the second quarter of 2007 compared to the first quarter of 2007. Copper cathode production was nearly 12% lower than in the first quarter of 2007, due to the 14 day maintenance shutdown of the Zhezkazgan copper smelter at the end of May of 2007. Balkhash Complex ------------------------------------------------------------- 6m 6m Q2 Q1 Q2 2007 2006 2007 2007 2006 --------------------- ----- ----- ----- ---- ---- ----- Ore extraction 000 t 1,092 2,286 602 490 1,266 Average copper grade % 1.15 0.82 1.08 1.25 0.81 Copper Concentrate1 000 t 92.5 133.0 51.3 41.2 84.2 Copper in Concentrate 000 t 15.9 24.3 8.3 7.6 14.9 Copper Cathodes 000 t 97.5 82.1 47.6 49.9 44.7 of which tolling 000 t 0.8 0.9 0.2 0.6 0.4 Copper Rod 000 t - - - - - ------------------------------------------------------------- 1Excludes concentrate processed by third parties At the Balkhash complex 1.092 million tonnes of ore was extracted in the first half of 2007 down from 2.286 million tonnes in the first half of 2006. This was primarily due to the ongoing planned stripping works at Kounrad mine, mentioned in the last production report. This mine produced 1.2 million tonnes of ore in the first half of 2006. In June, alongside the stripping work, the mine produced 130,000 tonnes of ore, which assisted the modest recovery seen in the second quarter. These stripping works will continue until the end of 2007, with growing, though intermittent, ore extraction over the period. The issues regarding drilling and underground loading and transportation equipment at Sayak mine, mentioned in the Q1 production report, continued to impact output, resulting in a 165,664 tonnes decrease in ore extraction volumes in the first half of 2007 compared to the corresponding period of 2006. Sayak and Kounrad mines have grades below the region' s average, so that their reduced output raised the average copper grade for the period from 0.82% in the first six months of 2006 to 1.15% in the same period of 2007. Copper concentrate production at the Balkhash complex increased from 41,248 tonnes in the first quarter of 2007 to 51,272 tonnes in the second quarter representing a 24% increase on a quarterly basis. Copper cathode production was 5% lower than in the first quarter of 2007 due to a 14 day maintenance shutdown at one of the Balkhash smelter furnaces in June. East Region --------------------------------------------------------------- 6m 6m Q2 Q1 Q2 2007 2006 2007 2007 2006 --------------------- ----- ----- ----- ----- ----- ----- Ore extraction 000 t 2,173 2,318 1,027 1,146 957 Average copper grade % 2.60 2.63 2.50 2.69 2.92 Copper Concentrate1 000 t 231.4 259.5 105.2 126.2 127.4 Copper in Concentrate 000 t 43.7 47.6 20.0 23.7 24.1 Copper Cathodes 000 t - - - - - Copper Rod 000 t - - - - - --------------------------------------------------------------- 1Excludes concentrate processed by third parties Ore extraction at the East region in the first six months of 2007 was lower than in the same period of 2006 although the new Artemyevskoe mine performed well over the period, with ore extraction volumes increasing by 270,339 tonnes. The increase at Artemyevskoe was offset by delays in obtaining mining and transportation equipment at the Orlovskoe and Yubileyno-Snegirikhinskoe mines. New equipment should start to be delivered at the beginning of Q3 2007. There was a temporary stoppage of ore extraction at Belousovskoe mine in April 2007 as stripping and ore preparation works were carried out. In the second quarter of 2007, copper concentrate production at the East Region was 17% lower compared to the first quarter of 2007 primarily due to lower ore extraction volumes and lower copper grades, the latter principally being affected by the reduced output at Orlovskoe mine. Karaganda region ------------------------------------------------------------ 6m 6m Q2 Q1 Q2 2007 2006 2007 2007 2006 --------------------- ----- ----- ----- ---- ---- ---- Ore extraction 000 t 1,912 1,473 917 995 841 Average copper grade % 2.36 1.83 2.46 2.27 2.30 Copper Concentrate 000 t 158.7 71.2 79.5 79.2 43.2 Copper in Concentrate 000 t 24.6 6.4 12.0 12.6 5.5 Copper Cathodes 000 t - - - - - Copper Rod 000 t - - - - - ------------------------------------------------------------ Ore production at Karaganda region increased from 1.473 million tonnes in, the first half of 2006, to 1.912 million tonnes in the corresponding period of 2007. This was mainly due to higher production at Kosmurun mine, which increased by 539,574 tonnes. The increase was only partly offset by the closure of Abyz mine, for planned stripping works, which had produced 183,812 tonnes of ore in the first six months of 2006. Average copper ore grades for the half year period 2007 were significantly higher compared to the corresponding period of 2006 due to the increase in production from Kosmurun mine with a copper grade of 4.00%. In the second quarter 2007 these higher grades allowed copper concentrate production to be maintained at the same level as the first quarter, offsetting the 8% decrease in ore extraction volumes. 950,000 tonnes of Nurkazgan ores were stockpiled over the first six months at the Nurkazgan smelter, until testing and commissioning works are complete. The plant is scheduled to come into operation in the current quarter. For further information please contact: John Smelt, Head of Corporate Communications Tel:+44 20 7901 7882 Tel: +44 787 964 2675 Sergei Stephantsov, Investor Relations Manager Tel:+44 20 7901 7814 Kazakhmys PLC Robin Walker Finsbury Tel:+44 20 7251 3801 The principal business of Kazakhmys plc ("the Group") is the mining, processing, smelting, refining of copper and copper products, including copper cathode and copper rod. The Group's operations are vertically integrated. Kazakhmys operates 20 open pit and underground mines and two smelting and refining complexes in the Republic of Kazakhstan. Kazakhmys also owns significant rail infrastructure in Kazakhstan, MKM, a copper products fabrication company in Germany, and gold and oil assets in Kazakhstan and Central Asia. [2007-07-31]