Kazatomprom Consolidated Financial Statements and Corporate Update

19 November 2021
Kazatomprom Consolidated Financial Statements and Corporate Update

JSC National Atomic Company “Kazatomprom” (“Kazatomprom” or “the Company”) announces that its unaudited, reviewed, consolidated financial statements for the three-month and nine-month periods ended 30 September 2021, prepared in accordance with International Financial Reporting Standards (IFRS), are now available in the Investors section of the Company’s website, under Reports and Results.

Interim three-month and nine-month financial reporting is not a London Stock Exchange (“LSE”) or Astana International Exchange (“AIX”) listing requirement for Kazatomprom. However, the Company must prepare financial statements each quarter to fulfil certain obligations for its debt securities listed on the Kazakhstan Stock Exchange (“KASE”), under existing loan covenants, and to meet regulatory requirements under local laws in Kazakhstan. Once the financial statements are filed with the local regulatory bodies, they become publicly available and are therefore part of the Company’s disclosure record. Preparation of an accompanying Operating and Financial Review (“OFR”) is not necessary to meet these interim reporting obligations.

With respect to formal periodic reporting to the investment community in 2022, Kazatomprom expects to:

  • provide stakeholders with a quarterly operations and trading update approximately one month after the end of each fiscal quarter, in which quarterly non-financial results, and annual operational and sales guidance metrics will be disclosed and/or updated; and
  • release a full financial report biannually, including audited full-year financial statements with an OFR, and unaudited, reviewed, half-year financial statements with an OFR, both within the timelines prescribed by AIX and LSE regulations.

The Company expects to release its 4Q21 Operations and Trading Update by 01 February 2022, and its audited financial statements for the year ending 31 December 2021 with an accompanying OFR, by mid-March 2022.  

Company Developments

JV Budenovskoye Commercial Production Contract

Kazatomprom’s Board of Directors has approved a Life of Mine plan that JV Budenovskoye LLP (“JV Budenovskoye” or “the JV”) intends to submit to the Ministry of Energy of the Republic of Kazakhstan (“MoE”) for review and consideration. If approved by the MoE, an amendment to JV Budenovskoye’s Subsoil Use Agreement will be signed to allow commercial production. The proposed 25-year plan (2021 – 2045) would provide for the future development of Budenovskoye Blocks 6 and 7 after the completion of its ongoing pilot production program, with a commercial ramp-up of up to 2,500 tU beginning no earlier than 2024, and the potential for a maximum annual production capacity of up to 6,000 tU no earlier than 2026. The timing of commissioning plans and future production rates remain subject to annual review and may be adjusted based on Kazatomprom’s ongoing assessment of market conditions. Under an agreement signed by the JV partners, the JV’s anticipated production from 2024 – 2026 is fully committed for supplying the needs of the Russian civil nuclear energy industry, under an offtake contract at market-related terms. Established in 2016, JV Budenovskoye is owned 51% by Kazatomprom and 49% by Stepnogorsk Mining and Chemical Plant LLP (“SMCC”).

“We have advanced the exploration program at Budenovskoye to the point of applying for future commercial production,” said Mazhit Sharipov, Chief Executive Officer of Kazatomprom. “As we move through this decade and beyond, uranium demand and the overall support for nuclear power is on the rise, and our internal view agrees with third-party forecasts that show both primary capacity and secondary supply sources trending down and falling well short of nuclear industry requirements by 2030. It is becoming increasingly clear that more primary production capacity will eventually be required to maintain a balanced and healthy market.

“Like other existing and potential producers, we need time to prepare assets for the future to meet our commitments, and advancing the contract amendment process to allow commercial production from JV Budenovskoye will allow Kazatomprom to quickly respond to long-term market demand. We remain committed to a strategy that balances supply with demand to prioritize value over volume and importantly, maintain our low-cost production advantage. The eventual addition of low-cost volumes from JV Budenovskoye is expected to help maintain Kazatomprom’s key competitive cost advantage and offset future inflationary pressure.”

As per the Competent Persons Report on the Mineral Assets of Joint Stock Company National Atomic Company Kazatomprom, Republic Of Kazakhstan, included in the 2018 IPO Prospectus, Budenovskoye 6 and 7 is an advanced stage exploration project that had an exploration contract issued by the Ministry of Energy of the Republic of Kazakhstan, valid for up to six years and set to expire in 2021. Prior to the completion of the exploration phase at an advanced prospect, a decision must be taken to return the subsoil rights to the government, or to advance through to pilot mining and commercial production. As disclosed in Kazatomprom’s 3Q20 Operations and Trading Update, JV Budenovskoye obtained a production contract in October 2020, allowing for pilot production of 321 tU over a maximum four-year period.

The process of applying for amendments to subsoil use contracts involves discussions and negotiations between the JV and the MoE, as the competent authority. Such negotiations can continue over an extended period and for JV Budenovskoye, the proposed amendment for the right to commence commercial production is the required next step that must be completed prior to the end of the pilot production phase.

JV Budenovskoye, with a licence area covering approximately 151 square kilometres in Southern Kazakhstan, holds the subsoil use rights for Block 6 and Block 7 of the Budenovskoye deposit. The two Blocks are expected to be among the Company’s lowest cost production sources, hosting 122.1 million tonnes of uranium ore at an average grade of about 0.072%, for a total indicated mineral resource of approximately 88,100 tU (100% basis), representing 11.7% of Kazatomprom’s total mineral resources of 749,500 tU (100% basis). Please see the 2020 Mineral Resource and Ore Reserve Statements, available on the Company’s website.

A Competent Person’s Report that will include JV Budenovskoye’s potential commercial production is expected to be completed and available in 2022.

For further information, please contact:

Kazatomprom Investor Relations Inquiries

Cory Kos, Director of Investor Relations

Tel: +7 (8) 7172 45 81 80

Email: ir@kazatomprom.kz

Kazatomprom Public Relations and Media Inquiries

Torgyn Mukayeva, Chief Expert of GR & PR Department

Tel: +7 (8) 7172 45 80 63

Email: pr@kazatomprom.kz

About Kazatomprom

Kazatomprom is the world's largest producer of uranium, with the Company’s attributable production representing approximately 23% of global primary uranium production in 2020. Kazatomprom benefits from the largest reserve base in the industry and operates, through its subsidiaries, JVs and Associates, 26 deposits grouped into 14 mining assets. All of the Company’s mining operations are located in Kazakhstan and extract uranium using ISR technology with a focus on maintaining industry-leading health, safety and environmental standards (ISO 45001 and ISO 14001 certified).

Kazatomprom securities are listed on the London Stock Exchange and Astana International Exchange. As the national atomic company in the Republic of Kazakhstan, its primary customers are operators of nuclear generation facilities and the principal export markets for the Company’s products are China, South and Eastern Asia, Europe and North America. Kazatomprom sells uranium and uranium products under short- and long-term contracts directly from its headquarters in Nur-Sultan, Kazakhstan, and through its Switzerland-based trading subsidiary, Trade House KazakAtom AG (THK).

For more information, please visit the Company’s website at http://www.kazatomprom.kz

About Stepnogorsk Mining and Chemical Plant LLC (SMCC)

SMCC was established in September, 2004 as a successor of Tselinniy Mining Chemical Plant, established in 1964. Its activities include the production of copper-molybdenum float concentrate, as well as uranium oxide concentrate. The SMCC facility completes the final processing steps for specific Kazatomprom operations (certain deposits developed by Semizbai-U LLC, JV Zarechnoye JSC, and JV Khorassan-U LLP), providing jobs for 1,121 employees (573 related to uranium production) from the Akmola and northern regions of Kazakhstan.

Forward-looking statements

All statements other than statements of historical fact included in this communication or document are forward-looking statements. Forward-looking statements give the Company’s current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could cause the Company’s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which it will operate in the future. THE INFORMATION WITH RESPECT TO ANY PROJECTIONS PRESENTED HEREIN IS BASED ON A NUMBER OF ASSUMPTIONS ABOUT FUTURE EVENTS AND IS SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTY AND OTHER CONTINGENCIES, NONE OF WHICH CAN BE PREDICTED WITH ANY CERTAINTY AND SOME OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY. THERE CAN BE NO ASSURANCES THAT THE PROJECTIONS WILL BE REALISED, AND ACTUAL RESULTS MAY BE HIGHER OR LOWER THAN THOSE INDICATED. NONE OF THE COMPANY NOR ITS SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, ADVISORS OR AFFILIATES, OR ANY REPRESENTATIVES OR AFFILIATES OF THE FOREGOING, ASSUMES RESPONSIBILITY FOR THE ACCURACY OF THE PROJECTIONS PRESENTED HEREIN. The information contained in this communication or document, including but not limited to forward-looking statements, applies only as of the date hereof and is not intended to give any assurances as to future results. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to such information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change in the Company’s expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date hereof.

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