Release Date: August 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kazatomprom has demonstrated strong financial performance in the first half of 2024, with a 27% increase in net profit year-on-year.
- The company has secured a new CFO, Marat Tulebaev, who brings extensive experience and knowledge of Kazatomprom.
- Kazatomprom has received production and exploration licenses for several key projects, which are strategic moves to address potential supply and demand imbalances.
- The company is actively building an exploration portfolio for rare metals at its Ulba plant, supported at the highest governmental level.
- Kazatomprom remains committed to fulfilling its 2025 sales commitments despite production plan adjustments, with a comfortable level of inventories to meet these commitments.
Negative Points
- The departure of the CFO, Sultan, may cause some transitional challenges.
- Kazatomprom faces bureaucratic delays in obtaining necessary licenses for the Budenovskoye project, impacting production timelines.
- The company is experiencing uncertainty around sulphuric acid supplies, which is crucial for uranium production.
- Kazatomprom's 2025 production is expected to be lower than initially planned due to delays in construction and sulphuric acid supply issues.
- The upcoming increase in the mineral extraction tax (MET) for uranium starting in 2025 will impact the company's cash cost metrics.
Q & A Highlights
Q: Can you provide more details on the current situation at Budenovskoye, including infrastructure construction and uranium shipping?
A: Currently, we are facing bureaucratic delays in obtaining necessary licenses and design documentation. We are utilizing Karatau's infrastructure for shipping uranium. (Dastan Kosherbaev, Chief Commercial Officer)
Q: Are you still expecting to deliver the full CPR production volumes from Budenovskoye despite lower production rates?
A: No, we will adjust the subsoil use agreement accordingly to reflect the new production schedule. (Dastan Kosherbaev, Chief Commercial Officer)
Q: How confident are you in achieving the new production guidance given the ongoing sulphuric acid supply issues?
A: We are confident but remain cautious. We will update the market if any issues arise, similar to our approach in January. (Dastan Kosherbaev, Chief Commercial Officer)
Q: How does management prioritize sulphuric acid allocation between current production and future growth projects?
A: Allocation depends on the geological and lifecycle stage of each mining block. We cannot store large quantities of acid, so it is used as it arrives. (Dastan Kosherbaev, Chief Commercial Officer)
Q: What is your outlook for sulphuric acid availability over the next few years, and where is the extra acid for 2025 coming from?
A: We are negotiating with local suppliers and expect our new plant to be operational by early 2027. (Dastan Kosherbaev, Chief Commercial Officer)
Q: Are there any costs or penalties when renegotiating subsoil agreements?
A: No significant penalties have been incurred. The sensitivity table reflects adjusted Budenovskoye volumes. (Dastan Kosherbaev, Chief Commercial Officer)
Q: Will the mineral extraction tax (MET) change impact production plans?
A: No, the MET change will not affect our production plans. We remain committed to our value-over-volume strategy. (Dastan Kosherbaev, Chief Commercial Officer)
Q: What is the status of the sulphuric acid plant construction?
A: The plant is in the early stages of construction, with design documentation still being approved. (Dastan Kosherbaev, Chief Commercial Officer)
Q: How do you plan to manage inventory levels given the recent decline?
A: Inventory levels fluctuate based on delivery schedules. We aim to maintain sufficient inventory to meet future obligations. (Vladislav Baiguzhin, Chief Commercial Officer)
Q: What is your strategy for securing sufficient sulphuric acid for 2025 and beyond?
A: We are negotiating with local suppliers and constructing a new sulphuric acid plant to meet future needs. (Ulan Khassanov, Managing Director on Economics)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
