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Bishkek (AKIpress) - Kazakhmys PLC Wednesday unveiled an agreement to dispose of certain of its mature mining assets in the Zhezkazgan and Central Regions of Kazakhstan, as it looks to restructure, strengthen its financial position, and focus on production from a small group of large-scale, low-cost open-pit mines, reports Alliance News.
Kazakhmys also said it wants to rename itself as KAZ Minerals PLC following the disposals, which will leave it as the owner of the mining and producing assets in the East Region and the Bozymchak mine in Kyrgyzstan.
Kazakhmys shares Wednesday jumped 6.3% to 338.90 pence in the wake of the news, which comes after the company in February said it was considering a broader restructuring programme.
In a statement, Kazakhmys said that it has agreed to transfer the companies owning the disposal assets to Cuprum Holding, which is owned by board members Vladimir Kim and Eduard Ogay. Ogay will step down from the Kazakhmys board as he will become the chief executive of Cuprum, though Kim, a former Kazakhmys chairman, will remain on the board.
As part of the deal, Kazakhmys will make a working capital payment comprising of USD150.0 million in cash, about USD80.0 million representing the unspent amount of sustaining capital expenditure budget of the assets for the first seven months of 2014, and about USD10.0 million in tax refunds to be received from the government of Kazakhstan.
Chief Executive Oleg Novachuk, who will not be a shareholder in or have any management responsibility at Cuprum, said that the transaction provides a sustainable future for the assets. Novachuk said that although the assets are of limited economic value to the group, they remain extremely important within their local communities, where they are major employers.
"Transferring these assets to a private entity allows Kazakhmys to move forward with operations more suited to the demands and financial returns of a listed company," Novachuk said in a statement.
"I am confident in the future prospects of Kazakhmys and in the fundamentals of the copper industry," the CEO added.
The transaction required shareholder approval.