Kazakh metal miner Kazakhmys hailed progress with a shake-up designed to focus it on the lucrative copper market, but said 2014 gold production was likely to fall short of hopes.

Kazakhmys has sold three non-core businesses and announced a drive to focus on five cash-generating mines as part of a restructuring unveiled in February this year.

The group plans to sell relatively mature assets in the Zhezkazgan and Central regions, including mines, power plants and smelters to major shareholders and directors Vladimir Kim and Eduard Ogay.

"These mature assets do not currently generate sufficient free cash flow, they have a large labour force, a significant social footprint and do not meet our strategic objective of large scale, low cost, open pit mines," the company said.

It plans to focus on copper, which it said was a metal with the strongest commodity price outlook, driven by rising demand and constrained supply.

Ore extraction was 7% below the first half of 2013 as mining activity was reduced at higher cost zones in the Zhezkazgan region to protect profit margins.

The mining division's gold production is also expected to reach 100,000 ounces in 2014, below previous guidance of 120,000 ounces, due partly to suspension of the Abyz mine due to instability of an open pit. No further output is expected from the mine in 2014, with the option of developing an underground mine at the deposit being evaluated.

Kazakhmys also expects lower gold output from its Bozymchak mine in 2014 due to the slower than planned commissioning of equipment.

Chief executive Oleg Novachuk said: "There is further work required to complete the restructuring and we must ensure these changes take place without disrupting the ongoing business activities. I look forward to providing updates on our progress during the year."

PW

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