Neil Hume
Kaz Minerals was in focus on Friday after the copper producer brought in a Chinese partner to help develop a new deposit in Kazakhstan.
The FTSE 250 company said it had sold a 19.4 per cent stake in the 80,000 tonne a year Koksay project to China Nonferrous Metal, a state-backed miner it has worked with before, for $70m.
The cash, which will be ring-fenced, will be used to help fund a feasibility study for the project, which analysts reckon could cost as much as $1.5bn to develop.
“We are pleased to welcome China Nonferrous as a partner in the Koksay project. We worked successfully with China Nonferrous in the construction of Bozshakol and Aktogay and we are looking forward to developing our relationship further as we assess this opportunity in Kazakhstan,” said Oleg Novachuk, chairman.
Goldman Sachs said the deal suggested Kaz Minerals, the best performing mining stock in London over the past year, was likely to go ahead with Koksay and as a result the company would not buy the Baimskaya copper project from Russian businessman Roman Abramovich.
“The chances of the company going ahead with the acquisition [of Baimskaya] would appear relatively low as acquiring a new project plus spending [capital expenditures] on that would likely stretch the balance sheet, which is at odds with the current strategy of delivering the balance sheet,” said Goldman analyst Eugene King.
Shares in Kaz Minerals, up 125 per cent in the last 12 months, fell 7 per cent to 1,004p, hit by concerns about emerging market growth following recent sell-offs in Argentina and Brazil.