Kazatomprom 1H21 Financial Results

26 August
Kazatomprom 1H21 Financial Results

Conference call 1H2021 Results

 

JSC National Atomic Company “Kazatomprom” (“Kazatomprom”, “KAP” or “the Company”) announces its consolidated financial results for the first half-year ended 30 June 2021, prepared in accordance with International Financial Reporting Standards (IFRS).

“Our operational and financial results for the first-half of the year were strong,” said Galymzhan Pirmatov, Kazatomprom’s Chief Executive Officer. “Revenue increased 54% compared to the same time last year, driving a near 30% increase in operating profit and more than a 30% increase in adjusted net profit. Our operations continued to perform well and safely delivered production volumes that were similar to the first half of 2020.

“The impact of COVID continued to be felt across the industry, and though near term supply continued to  decrease, market sentiment has remained cautious. Accordingly, after the end of the second quarter, we announced that we are extending the 20% reduction of our production against subsoil use agreements for an additional year, through 2023. This means that for yet another year, global primary production is expected to be over 5,000 tU lower than was previously anticipated.  However, in a world that is expanding its use of nuclear power, we would much rather be seeing a market that is demanding more uranium supply.

“The social and environmental issues that have generated much concern and debate, have only become more pronounced, and one of the areas that is perhaps needing the most attention right now, is in relation to climate change. With the deepening impact of detrimental events like droughts, forest fires, floods and hurricanes, it is obvious that the time for idle discussion and counterproductive debate has past, and we must take action. Thankfully, we are starting to hear more thoughtful conversations about nuclear power, with knowledgeable experts being given a voice to increase both formal and informal public discussions about nuclear’s role in addressing the climate challenges.

“Kazatomprom is working to support broader acceptance of nuclear power as a key component of greener international strategies, and while doing so, we remain committed to prioritizing long-term value and continuing to exercise discipline in our market activities. We are confident that as the market transitions, we, as a low-cost producer with substantial long-term reserves, will be well positioned to deliver value to our stakeholders.”

Key financial metrics

 

Six months

 

 

ended 30 June

 

(KZT billion unless noted)

2021

2020

Change

Group’s consolidated revenue

235.5

 153.1

54%

Operating profit

61.3

 47.5

29%

Net profit

58.1

 66.0

(12%)

    Net result from sale of investment in joint venture (one-time effect)1

-

  22.1 

(100%)

Adjusted net profit

58.1

 43.9

32%

    Earnings per share attributable to owners (basic and diluted), KZT/share2

184

 225

(18%)

Adjusted EBITDA3

99.4

 81.0

23%

Attributable EBITDA4

96.7

 84.0

15%

Operating cash flow5

80.8

 38.2

111%

1 Net result from sale of investment in joint venture Uranium Enrichment Center JSC.
2 Calculated as: Profit for the period attributable to owners of the Company divided by total share capital, rounded to the nearest KZT.
3 Adjusted EBITDA is calculated by excluding from EBITDA items not related to the main business and having a one-time effect.
4 Attributable EBITDA (previously “Adjusted Attributable EBITDA”) is calculated as Adjusted EBITDA less the share of the results in the net profit in JVs and associates, plus the share of Adjusted EBITDA of JVs and associates engaged in the uranium segment (except JV “Budenovskoye” LLP’s EBITDA due to minor effect it has during each reporting period), less non-controlling share of adjusted EBITDA of “Appak” LLP, JV “Inkai” LLP, “Baiken-U” LLP and JV “Khorasan-U” LLP, less any changes in the unrealized gain in the Group.
5 Includes income tax and interest paid.

Operating and Financial Review and Financial Statements

The Operating and Financial Review, and Consolidated Financial Statements (unaudited, reviewed) provide detailed explanations of Kazatomprom’s results for the first half-year ended 30 June 2021, as compared to the same period in 2020, with adjusted guidance for 2021. This press release should be read alongside these documents, all of which are available at www.kazatomprom.kz.

Changes in the Group structure

There were no significant changes in group structure impacting the first half of 2021. In the first half of 2020, the Group completed the sale of its 50% stake (minus one share) in the Uranium Enrichment Centre JSC to its partner in this joint venture, TVEL JSC (TVEL), which had a significant impact on 2020 reported results. The sale price amounted to Russian rubles 6,253 million (Euro 90 million), fixed at an exchange rate as of 31 December 2019. Actual cash consideration of Euro 90 million (KZT 43,858 million equivalent) was received. In total, the number of the Group’s subsidiaries, JVs, JOs, associates and other equity investments as at 30 June 2021 was 38 (compared to 39 as at 2020 year-end).

Revenue, net profit, EBITDA

During the first half of 2021 the Group’s consolidated revenue was KZT 235,501 million, an increase of 54% compared to the same period of 2020. The increase is mainly due to:

  • a significant increase in sales volume in the first half of 2021 in comparison to the same period of 2020 mainly related to the timing of customer requirements and the resulting differences in the timing of deliveries for the first halves of 2021 and 2020;
  • growth in the average realized price associated with an increase in the market spot price for U3O8; and
  • weakening of the KZT against the USD in the first half of 2021.

Operating profit in the first half of 2021 was KZT 61,315 million, an increase of 29% compared to same period of 2020. The increase was mainly due to higher revenues in 2021 as previously explained.

Net profit in the first half of 2021 was KZT 58,086 million, a decrease of 12% compared to the same period of 2020. In the first half of 2020, net profit included the gain from the sale of the investment in the joint venture Uranium Enrichment Center JSC of KZT 22,063 million. Adjusted net profit for the first half of 2021 of KZT 58,086 million represented an increase of 32% compared to the same period of 2020 mainly due to the increase in operating profit in 2021 as described above.

Adjusted EBITDA totalled KZT 99,395 million in the first half of 2021, an increase of 23% compared to the same period of 2020, while attributable EBITDA was KZT 96,694 million in the first half of 2021, an increase of 15% compared to the same period of 2020. The changes were mainly driven by higher operating profit.

Operating cash flows for the first half of 2021 totalled KZT 80,833 million, an increase of 111% compared to KZT 38,220 million during the same period of 2020 mainly due to:

  • a KZT 24,270 million decrease in payments for accounts payable to suppliers during the first half of 2021 due to change in timing of the purchases schedule for 2020-2021;
  • other receipts in the amount KZT 8,683 million in the first half of 2021, which represent the mutual settlements of the parties with the JO remaining after intra-group elimination. In accordance with IFRS 11, each JO party must recognize its share of the cash flows from the joint operations. Since transactions between the JO and each of the parties do not occur simultaneously, the consolidated cash flows may include amounts paid / received from a second JO participant. In subsequent periods, such amounts will be similarly reflected in other receipts / other payments; and
  • a KZT 4,665 million increase in cash receipts from customers during the first half of 2021 compared to the same period of 2020, due to differences in the timing of the sales schedule for 2020-2021 and growth in the average realized price associated with an increase in the market spot price for U3O8.

Cost of sales

Cost of sales totalled KZT 154,045 million in the first half of 2021, an increase of 72% compared to the same period of 2020 mainly due to higher sales volume in the first half of 2021 and an increase in the share of U3O8 purchased from JV and associates and third parties.

Selling expenses

Selling expenses totalled KZT 3,642 million in the first half of 2021, a decrease of 26% compared to the same period of 2020. The decrease was mainly due to differences in the delivery destination points for uranium products.

General & administrative expenses (G&A)

The increase in G&A expenses was partly related to the reserve on liabilities for uranium products for KZT 2,932 million. G&A was also lower during the previous period due to the impact of optimisation and cost reduction in connection with the COVID-19 pandemic in the first half of 2020.

Liquidity

The Group’s liquidity requirements primarily relate to funding working capital, capital expenditures, service of debt, and payment of dividends. The Group has historically relied primarily upon cash flow from operating activities to fund its working capital and long-term capital requirements, and it expects to continue to do so, although it maintains the option to use external financial resources when required. The Company will consider entering into project financing arrangements to fund certain investment projects if deemed to be necessary.

(KZT million)

As of June 30, 2021

As of December 31, 2020

As of June 30, 2020

Change for six months of 2021

Cash and cash equivalents

 151,762

 113,347

 65,041

34%

Current term deposit

  - 

  - 

 1

 -

Total cash

 151,762

 113,347

 65,042

34%

The Group’s cash and cash equivalents at 30 June 2021 were KZT 151,762 million increasing by 34% compared to KZT 113,347 million as of 31 December 2020 and higher in comparison to KZT 65,041 million as of 30 June 2020, mainly due to the accumulation of cash prior to the distribution of the 2020 dividend.

Debt leverage ratios

The following table summarises the key ratios used by the Company’s management to measure financial stability.

(KZT million)

As at June 30, 2021

As at December 31, 2020

As at June 30, 2020

Change for six months of 2021

 Total debt (excluding guarantees)

 90,410

98,572

163,711

(8%)

 Total cash balances

 (151,762)

(113,347)

(65,042)

34%

 Net debt 

 (61,352)

(14,775)

98,669

315%

 Adjusted EBITDA*

 344,117

325,734

256,738

6%

 Net debt / Adjusted EBITDA (coefficient)

 (0.18)

(0.05)

0.38

260%

* For the purposes of Net debt/Adjusted EBITDA (coefficient) calculation Adjusted EBITDA for six months of 2021 and 2020 was calculated as for 12 months (the first half of the reporting period and the second half of the previous period). Adjusted EBITDA is calculated as Profit before tax + Net finance expense + Net FX loss + Depreciation and amortisation + Impairment losses +/- one-off or unusual transactions.

Uranium segment production and sales metrics

 

 

Six months

 

ended 30 June

 

 

2021

2020

Change

Production volume of U3O8 (100% basis)

tU

10,451

10,434

-

Production volume of U3O8 (attributable basis)1

tU

5,864

5,790

1%

U3O8 sales volume (consolidated)

tU

6,193

4,220

47%

    Including KAP U3O8 sales volume2, 3

tU

5,179

3,749

38%

Group inventory of finished goods (U3O8)

tU

8,864

11,110

(20%)

    Including KAP inventory of finished goods (U3O8)4

tU

6,773

9,094

(26%)

Group average realized price

KZT/kg

32,675

29,247

12%

Group average realized price

USD/lb

 29.63

 27.81

7%

KAP average realized price5

USD/lb

 29.63

 27.86

6%

Average weekly spot price6

USD/lb

 29.95

 28.66

5%

Average month-end spot price7

USD/lb

 30.18

 29.46

2%

1 The Production volumes of U3O8 (attributable basis) is not equal to the volumes purchased by Company and THK.
2 KAP U3O8 sales volume (incl. in Group): includes only the total external sales of KAP HQ and THK. Intercompany transactions between KAP HQ and THK are not included.
3 Group sales volume and KAP sales volume (incl. in Group) does not include approximately 100 tU equivalent sold as UF6 in 1Q20.
4 KAP inventory of finished goods (incl. in Group): includes the inventories of KAP HQ and THK.
5 KAP average realized price: the weighted average price per pound for the total external sales of KAP and THK. The pricing of intercompany transactions between KAP and THK are not included.
6 Source: UxC, TradeTech. Values provided represent the average of the uranium spot prices quoted at month end, and not the average of each weekly quoted spot price, as contract price terms generally refer to a month-end price.

In the first half of 2021 U3O8 production on both a 100% and attributable basis remained comparable to the same period of 2020.

Both Consolidated and KAP U3O8 sales volumes were significantly higher year-over-year due to the timing of customer requirements and the resulting differences in the timing of deliveries for the first halves 2020 and 2021.

Consolidated Group inventory of finished U3O8 products as at 30 June 2021 amounted to 8,864 tonnes, which was 20% lower than at 30 June 2020. At the Company level, inventory of finished U3O8 products was 6,773 tonnes, a decrease of 26% compared to June 2020. The decrease in inventory was mainly related to a higher sales volume in the first half of 2021, and a lower inventory level at the beginning of 2021. The Company continues to target an ongoing inventory level of approximately six to seven months of annual attributable production. However, inventory could fall below these levels in 2021 and 2022, due to COVID-19 related production shortfalls. As such, during the second quarter 2021, several transactions to purchase material in the spot market were carried out and the Company will continue to monitor market conditions for opportunities to optimise its inventory levels.

The Group’s average realized price in the first half of 2021 was KZT 32,675 per kg (29.63 USD/lb), an increase of 12% compared to the same period of 2020 due to a higher average spot price for uranium products, and the weakening of the KZT against the USD. The average sales prices at the KAP level were also higher and for the same reasons.

The Company’s current overall contract portfolio price is closely correlated to current uranium spot prices. However, in the first half of 2021, the increase in average realized price differed slightly from the increase in the spot market price for uranium, as some deliveries were based upon prices that were fixed prior to the increase in the market price, and some were indexed to spot prices, when the market price was lower.

Uranium segment costs and capital expenditures

 

 

Six months

 

ended 30 June

(KZT million unless noted)

 

2021

2020

Change

C1 Cash cost (attributable basis)

USD/lb

 8.99

 9.79

(8%)

All-in sustaining cash cost (attributable C1 + capital cost)

USD/lb

 12.58

 11.65

8%

Capital expenditures of mining companies (100% basis)1

 

 33,444

 16,112

108%

1 Excludes liquidation funds and closure costs and includes expansion investments.

C1 Cash cost (attributable) decreased by 8% and All-in-sustaining cash costs (“AISC”) (attributable C1 + capital cost) increased by 8% in USD equivalent for the first half of 2021, compared to the same period of 2020. The decrease in C1 Cash cost was primarily due to the weakening of the KZT against the USD in the first half of 2021 as well as a decrease in production costs on an attributable basis. AISC increased due to an overall increase in capital expenditures of mining companies. The Company partially shifted wellfield development activities from 2020 to 2021 due to the four-month suspension of wellfield development activity, as a result of the COVID-19 pandemic in 2020, and that shift resulted in a higher level of capital expenditures in the first half of 2021.

In the first half of 2021 capital expenditures of mining companies (100% basis) totalled KZT 33,444 million, a significant increase compared to the same period of 2020, primarily due to a shift in wellfield development activities as described above, as well as higher purchase prices for materials, supplies, equipment and cost of drilling.

ESG at Kazatomprom

The nuclear industry and its supply chain are strongly aligned with the ESG principles that are currently being highlighted by stakeholders. Companies, including Kazatomprom, are now moving to do more in publicizing and reiterating the opportunity for nuclear energy to play a role in addressing climate change, managing pollution and waste in the atmosphere, on land and in waterways, and improving and deploying clean technology. There is an urgent need for a paradigm shift: to achieve the necessary targets set forth by the Paris Agreement, the deployment of safe, baseload, carbon-free sources of energy must be accelerated, including broader acceptance of nuclear power as a key part of a greener international strategy.

With an increasing focus on “green” priorities, Kazatomprom’s ongoing improvement of its sustainable development practices is a dominant factor ensuring the long-term stability and competitiveness of the Company, as well as its ability to create incremental benefits for all stakeholders, resulting in a positive contribution to the development of the country, society in general, and the uranium industry.

Throughout 2021, the Company is taking steps to bolster its ongoing transition to a risk-based approach in sustainability management to meet the demands of transparent ESG reporting, which involves:

  • Identifying and assessing risks that have a direct impact on the Group's long-term financial performance and implementing measures for effective management of those risks;
  • Enhancing sustainability risk management practices and developing a risk culture to identify new opportunities to improve performance and gain significant competitive advantages;
  • Adapting intra-company reporting processes to provide reliable and accurate ESG-related metrics for future disclosure, allowing for improved assessment and evaluation by external parties;
  • Advancing the Company’s ESG reporting and sustainability processes to meet accepted global standards, allowing recognized third-party providers to apply a corporate ESG rating to Kazatomprom.

Health, safety and environment (HSE) results

The Company conducts its production activities in compliance with both Kazakh and international requirements for labour protection and industrial safety, implementing comprehensive measures to prevent incidents and accidents. Health and safety management systems that meet international standards (ISO 45001) have been implemented and the Company carries out systematic work to improve the safety culture among employees and managers at all levels.

The measures undertaken in first half of 2021 to enhance the focus on safety awareness helped to prevent major industrial accidents (including uncontrolled explosions, emissions of dangerous substances or destruction of buildings) at the Company's enterprises. The table below reflects safety results of the first half of 2020-2021:

 

 

Six months

ended 30 June

 

Indicator

2021

2020

Change

Industrial accidents1

-

-

-

LTIFR (per million man-hours)2

0.71

0.40

78%

Unsafe conditions, unsafe actions, near-miss reporting

19 023

16 602

15%

Number of accidents3

5

6

(17%)

Fatalities

-

1

(100%)

1 Defined as uncontrolled explosions, emissions of dangerous substances, or destruction of buildings.
2 Lost-Time Injury Frequency Rate (LTIFR) per million hours.
3 Defined as impact on the employee of a harmful and (or) dangerous production factor in performance of his work (job) duties or tasks of the employer, which resulted in an industrial accident, sudden deterioration of health, or poisoning of the employee that led to temporary or persistent disability, or death.

The Group maintains a strong focus on improving workplace health and safety. There were no fatal accidents in the first half of 2021, but while the number of accidents decreased compared to 2020, there was an increase in the number of employees that sustained serious injuries, due to two accidents in which multiple employees were injured (three and five people, respectively).

The incidents causing the injuries included: a fall from height, electro thermal burn, mechanical impact of equipment, chemical burn, and road traffic accident.

Following each incident, a thorough investigation was completed, the main causes were identified, preventative measures were developed and procedures were changed to prevent similar incidents in the future. The investigation results were reported to other Group entities to ensure all operations could learn from the event and adjust their processes accordingly.

The company employs reliable systems for monitoring the environment and radiation safety at all of its uranium mines and production facilities (ISO 14001 compliant). In the first half of 2021 there were no environmental or radiation-related incidents. All activities were completed in compliance with environmental legislation, regulatory requirements and guidance on nuclear and radiation safety.

Radiation exposure and nuclear safety remained stable in the first half of 2021 with no abnormal radiation levels recorded, and no nuclear or radiation accidents. All work was carried out in accordance with the requirements of regulatory legal acts and internal documentation on radiation and nuclear safety.

COVID-19 Update

As of the date of the issuance of this press release, the COVID-19 situation is still developing. There has been no significant effect on the Group's revenues and deliveries and the Group met all of its sales commitments in the reporting period.

With Delta-variant COVID-19 cases rising in July forcing red-zone centres, including Nur-Sultan, Almaty and Shymkent back into government-mandated lockdowns/restrictions in August, the Company continues to rigorously monitor the COVID-19 situation to ensure current protocols remain effective. When a case of COVID-19 is detected, the Company and its subsidiaries implement preventative measures to contain the spread, with the health of the individuals being constantly monitored and assistance provided as necessary.

Vaccination status is being monitored on a daily basis, with the Company’s vaccination level far exceeding that of the country (about 27% of Kazakhstan’s population has received a first dose as at 23 August 2021). As of 23 August 2021, 87% of employees at the Group’s uranium mining entities have first-dose immunization coverage, with more than 74% being fully vaccinated with two doses. Taken as a whole, including the corporate headquarters and all Group entities, about 81% (15,758) of employees have received a first vaccine dose, with over 69% now being fully vaccinated with two doses.

Kazatomprom’s Adjusted 2021 Guidance

(exchange rate 430 KZT/1USD)

2021

Production volume U3O8 (tU) (100% basis)1

22,500 – 22,8002

Production volume U3O8 (tU) (attributable basis)3,4

12,100 – 12,4002

Group sales volume (tU) (consolidated)5

15,500 – 16,000

Incl. KAP sales volume (incl. in Group) (tU)6

13,500 – 14,000

Revenue - consolidated (KZT billions)7

620 – 640

     Revenue from Group U3O8 sales, (KZT billions)7

540 – 560

C1 cash cost (attributable basis) (USD/lb)4,*

$9.00 – $10.00

All-in sustaining cash cost (attributable C1 + capital cost) (USD/lb) 4,*

$13.00 – $14.00

Total capital expenditures of mining entities (KZT billions) (100% basis)8

90 – 100

1 Production volume (100% basis): Amounts represent the entirety of production of an entity in which the Company has an interest; it disregards that some portion of production may be attributable to the Group’s JV partners or other third-party shareholders.
2 The duration and full impact of the COVID-19 pandemic is not yet known. Annual production volumes could therefore vary from our expectations.
3 Production volume (attributable basis): Amounts represent the portion of production of an entity in which the Company has an interest, corresponding only to the size of such interest; it excludes the portion attributable to the JV partners or other third-party shareholders, except for JV “Inkai” LLP, where the annual share of production is determined as per Implementation Agreement as disclosed in IPO Prospectus. Actual drummed production volumes remain subject to converter adjustments and adjustments for in-process material.
4 Includes the change in attributable share of production & all-in sustaining cash cost related to the sale of a 49% share in “Ortalyk” LLP to to CGNM UK Limited (a CGNPC subsidiary) .
5 Group sales volume: includes Kazatomprom’s sales and those of its consolidated subsidiaries.
6 KAP sales volume: includes only the total external sales of KAP HQ and THK. Intercompany transactions between KAP HQ and THK are not included.
7 Revenue expectations are based on uranium prices taken at a single point in time from third-party sources. The prices used do not reflect any internal estimate from Kazatomprom, and 2021 revenue could be materially impacted by how actual uranium prices and exchange rates vary from the third-party estimates.
8 Total capital expenditures (100% basis): includes only capital expenditures of the mining entities.
* Note that the conversion of kgU to pounds U3O8 is 2.5998.

All 2021 guidance remains fundamentally unchanged at this time, except for adjustments in the attributable share of U3O8 production and All-in sustaining cash cost (AISC) to account for the sale of a 49% share in “Ortalyk” LLP to CGNM UK Limited (CGNPC subsidiary) in July 2021. Revenue, C1 cash cost (attributable basis) and All-in Sustaining cash cost (attributable C1 + capital cost) may vary from the ranges shown, to the extent that the KZT-to-USD exchange rate and uranium spot price differ from the assumptions shown in the footnotes.

Kazatomprom’s efforts to prevent the spread of COVID-19 and protect the health and well-being of employees and local communities has been successful in maintaining continuity of operations and production capacity thusfar in 2021. However, in 2020, the introduction of a state of emergency in the Republic of Kazakhstan and the Company’s four-month suspension of certain activities at its operations, impacted exploration and development activities, which led to a shift in the commissioning schedule for new wellfields. As a result of the shift, uranium production volumes through the first-half of 2021 fell short of internal expectations. As previously noted, in addition to the delayed exploration and development work, COVID-19 disrupted the overall production supply chain, resulting in a shortage of certain production materials, such as piping, which also had a negative impact on first-half production results. Despite these challenges, the Group is maintaining its 2021 production plan and making every effort to achieve it, though final year-end volumes may fall short if the wellfield development and supply chain issues continue throughout the second-half of the year.

Note that the Company only intends to update annual guidance in relation to operational factors and internal changes that are within its control. Key assumptions used for external metrics, such as exchange rates and uranium prices, are established using third party sources during the Company’s annual budget process; such assumptions will only be updated on an interim basis in exceptional circumstances.

The Company continues to target an ongoing inventory level of approximately six to seven months of annual attributable production. However, inventory could fall below these levels in 2021 and 2022, due to COVID related production shortfall. As such, during the second quarter, several transactions to purchase material in the spot market were carried out, and the Company may buy additional material in the spot market during the second half of the year in order to keep its inventories within the targeted range and to meet sales commitments for the rest of 2021.

Conference Call Reminder - 2021 Half-Year Operating and Financial Review

Kazatomprom has scheduled a conference call to discuss the 2021 half-year operating and financial results later today, 26 August 2021. The call will begin at 17:00 (AST) / 12:00 (BST) / 07:00 (EST). Following management remarks, an interactive English Q&A session will be held with investors.

For the English live webcast (participants on the webcast can also submit questions during the event), conference call dial-in details and for information on how to participate in the Q&A, please visit:

https://www.lsegissuerservices.com/spark/JSCNationalAtomicCoKazatomprom/events/60374fce-8f3b-4615-be0f-105a2e5fe35e

For the Russian live webcast (listen-only, no Q&A) and corresponding dial-in details, please visit:

https://www.lsegissuerservices.com/spark/JSCNationalAtomicCoKazatomprom/events/2c98a3b7-47f7-42ae-8b88-86b45f655b87

A recording of the webcast will also be available at www.kazatomprom.kz shortly after it concludes.

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. The Group 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 environment standards.

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

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

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.

well and safely delivered production volumes that were similar to the first half of 2020.

“The impact of COVID continued to be felt across the industry, and though near term supply continued to  decrease, market sentiment has remained cautious. Accordingly, after the end of the second quarter, we announced that we are extending the 20% reduction of our production against subsoil use agreements for an additional year, through 2023. This means that for yet another year, global primary production is expected to be over 5,000 tU lower than was previously anticipated.  However, in a world that is expanding its use of nuclear power, we would much rather be seeing a market that is demanding more uranium supply.

“The social and environmental issues that have generated much concern and debate, have only become more pronounced, and one of the areas that is perhaps needing the most attention right now, is in relation to climate change. With the deepening impact of detrimental events like droughts, forest fires, floods and hurricanes, it is obvious that the time for idle discussion and counterproductive debate has past, and we must take action. Thankfully, we are starting to hear more thoughtful conversations about nuclear power, with knowledgeable experts being given a voice to increase both formal and informal public discussions about nuclear’s role in addressing the climate challenges.

“Kazatomprom is working to support broader acceptance of nuclear power as a key component of greener international strategies, and while doing so, we remain committed to prioritizing long-term value and continuing to exercise discipline in our market activities. We are confident that as the market transitions, we, as a low-cost producer with substantial long-term reserves, will be well positioned to deliver value to our stakeholders.”

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