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KAZATOMPROM 27.08.2020

Kazatomprom is the world biggest uranium miner with a production of 11500 tons U/yr. (non corona panic). The uranium is mined by acid leaching ISR technology which happen to be a very cost-effective extraction method. I`m not aware about the impact of this type of mining on the environment but it seems that it would be challenging to get it permitted in Western Europe.  

The majority of KAZATOMPROM is owned by the governments "Sovereign Wealth Fund "Samruk-Kazyna" ("Samruk-Kazyna"). This share is reduced by a sell off on June 3rd. 2020 of 4.55%. It increased the free-float to 23.4% increases the liquidy of the share (14). 

This is not a recommendation or proposal to do anything. The data written in this article is not guarranteed. It is my private personal opinion. I own a position of KAZATOMPROM shares that`s why I`m not independing.  

Risks & Opportunities

Kazatomprom production guidance (attributable) is decreased to 10.600 tons/yr. for 2020.  Personal assumption...the motivation for this production cut seems more logic by the low uranium prices at the begin of 2020 rather than the corona panic.  The uranium price went up in the meantime to > 30$/lb. which is not bad for KAZATOMPROM. 

Companies/shares from Kazachstan are even less expensive than Russian companies. The risk is the political situation that everything as internal and external corruption, expropriation, asset stripping, arbitrary taxes might happen at any time. For an outsider it is not possible to evaluate the political risks for the company properly.  

The company is even with an extremly low uranium price profitable. The worldwide nuclear power generation and thus uranium consumption is on the other hand very stable, the uranium production is lower than consumption hence it seem obvious that the uranium price will increase sooner or later and thus the profits of the uranium mines will soar sooner or later. 

Due to the very low uranium prices the investment in existing and new mines decreased in the whole uranium business. Many mines were taken on care and maintenance or closed. The production of KAZATOMPROM did decrease as well slightly. It is planned to keep the production low till 2021 to align the production to the low demand. That means taking about 5600t from the market (8)

 

Some Numbers 2019

Exchange rate: 1$ = 419 KZT (aug 5th, 2020)

                                                                                2019         H1/20        2020 est.

Production volume (attributable basis) (tU)                 13291         5790         10500 - 10800

Group sales volume (tU)                                            14148         4220         14.000

Revenue - consolidated (USD bn.)                              1.300          0.365          1.41 

Net Profit (mio. US$)                                                 495             158* 

Net Profit/share (US c)                                              191              54

Operating Cash Flow (mio. US$)                                 416             91

Net debt (mio. US$)                                                  163             236

Average realized price (USD/lb)                                26.6             27.81

C1 cash cost (attributable basis) (USD/lb)                  9.28             9.79          10 - 11

All-in sustaining cash cost (USD/lb)                           11.94           11.65         13 - 14

Total capital expenditures (100% basis) (USD mio)    175               38                167

Inventory to                                                           9906           11110

Inconsistencies to other published numbers might result from the use of actual exchange rate at the time of publication of the numbers.

*1/3 from the net result results from sale of investment in joint venture Uranium Enrichment Center JSC

Historical Key performance indicators 

 

Indicators 2015 2016 2017 2018
Uranium mining, total,
tons
23 607 24 586 23 321 21 705
Uranium mining, by the share
of participation in all S&As,
tons
12 766 13 095 12 093 11 476

Other mined Minerals 2018

Output of niobium products (tonnes of Nb)       25.6

Output of beryllium products (tonnes of Be)    1711

Output of tantalum products (tonnes of Ta)     131.7

Electrical power output (million kWh)               117.8

(3)

Historic Key performance financial indicators (in millions of Kazakhstani Tenge )

Indicators 2017*
(restated)
2018* $
Revenue from sales of products and services provided 277 046** 436 632 1.16 bn$
Including revenue from sales of uranium products 207 788 368 325 0.98 bn$
Cost of sales
209 934 313 817 0.83bn$
Operating profit
32 602** 77 480 206 mio. $
Profit for the year
139 154 380 266 1 bn $
The comprehensive income attributable to the owners of Kazatomprom
138 837 365 664  
Cash and cash equivalents at the end of the year
239 936 128 819  
Loans and borrowings
121 284 199 690  
Dividends declared
65 849 161 661 431 mio.$

Cost Situation

 

The dividend for 2019 paid May 28, 2020 is KZT 381.72 per ordinary share. 1 USD = 413 KZT (21.05.2020).....0.92 $ 

 

The dividend paid out in June 2018 is announced to be 308 Tenge (2) about > 0.81$ => 5.7% dividend yield

Withholding tax Kazachstan: 15%

 

Shareholders structure

   Shares and GDRs
Persentages
Samruk-Kazyna*   76.7%
Free float*   23.4%
Total issued shares
259 356 608 100%

 

Some News

2020/08/19 Kazatomprom says it will continue to "flex down" production by 20% through 2022. The company is also maintaining its 20% reduction in 2021(15) I hope that a soaring uranium price will change KAZATOMPROM`s mind. 

2020/06/04 The Kazakhstan "Sovereign Wealth Fund "Samruk-Kazyna" ("Samruk-Kazyna") sold off a 4.55 % stake on June 3rd 2020. It increased the free-float to 23.4% increases the liquidy of the share (14). The share price decreased these days due to the surplus shares that entered the market. 

2020/01/31 Kazatomprom announced today it intends to sell its 50% interest (minus one share) in Uranium Enrichment Centre JSC (UEC) to its partner in the joint venture, TVEL, for RUB6.253 billion (about USD100 million).(12)

2019/10/14 Due to low uranium prices many uranium only mines owned by private mining companies are on maintenance & care due to the low uranium price. For ex. it would cost about USD80 million to restart production of Langer Heinrich in Namibla at an average capacity of 5.2 million pounds per year. All-in sustaining cost (AISC) are estimated to USD33 per pound U3O8. This could be achieved during the planned restart within a 12-month commissioning time. (10)

2019/09 Samruk-Kazyna placed 9,863,021 GDR. Prior to the Placing it owned approximately 85 per cent of the /Company's issued share capital and following the completion of the Placing Samruk-Kazyna will own approximately 81.2 per cent of the Company's issued share capital.5,023,021 GDRs were placed through the AIX, of which 1,660,000 GDRs were placed to international investors and 3,363,021 GDR were placed to domestic investors, thereby satisfying domestic demand in full. (9)

2019/07 President Donald Trump decided to implement no new trade restrictions on uranium imports into the United States (6).

Kazatomprom sold 75% of solar manufacturing business. The Kazakh state-owned national atomic energy company has sold its three manufacturing units to an international consortium (5).

Some References:

KAZATOM Investor Relation https://www.kazatomprom.kz/en/investors/novosti

(15) 2020/08/19 https://world-nuclear-news.org/Articles/Kazatomprom-extends-uranium-production-cuts-into-2

(14) 2020/06/04 https://www.investegate.co.uk/jsc-nac-kazatomprom--kap-/rns/kazatomprom-responds-to-secondary-offering/202006031618358698O/

(13) 2020/04/07 https://www.miningweekly.com/article/kazatomprom-slashes-2020-uranium-guidance-2020-04-07

(12) 2020/01/31 https://world-nuclear-news.org/Articles/Kazatomprom-sells-stake-in-enrichment-JV

(11) 2019/11/02 https://www.investegate.co.uk/jsc-nac-kazatomprom--kap-/rns/kazatomprom-3q19-operations-and-trading-update/201911010700039437R/

(10) 2019/10/14 http://www.world-nuclear-news.org/Articles/Paladin-looks-to-rapid-restart-for-Langer-Heinrich

(9) 2019/09/26 https://www.investegate.co.uk/jsc-nac-kazatomprom--kap-/rns/samruk-kazyna-announces-results-of-gdrs-placement/201909260752377576N/

(8) 2019/08/20 http://www.stockmarketwire.com/article/6553616/Kazatomprom-to-extend-production-cuts-to-offset-oversupply.html

(7) 2019/08/01 https://www.investegate.co.uk/jsc-nac-kazatomprom--kap-/rns/kazatomprom-2q19-operations-and-trading-update/201908010706305185H/

(6) 2019/07/14 http://www.globenewswire.com/news-release/2019/07/14/1882283/0/en/Cameco-Pleased-with-Section-232-Decision-on-U-S-Uranium-Imports.html

(5) 2019/05/20 https://www.pv-magazine.com/2019/05/20/kazatomprom-sells-75-of-solar-manufacturing-business/

(4) 2019/05/03 http://www.world-nuclear-news.org/Articles/Quarterly-uranium-output-decreases-in-Kazakhstan-a

(3) 2019/04/30 https://www.investegate.co.uk/jsc-nac-kazatomprom--kap-/rns/integrated-annual-report-2018/201904300720425221X/

(2) 2019/04/30 https://www.investegate.co.uk/jsc-nac-kazatomprom--kap-/rns/agm-ar-and-dividend-recommendation-news-release/201904301248355916X/

(1) http://www.kazatomprom.kz/en/content/investoram/investoram/key-performance-financial-indicators-millions-kazakhstani-tenge

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