¹ Includes finished metals produced and the finished metal equivalent of concentrate sold in the period.

The ongoing ramp up of operations at Bozshakol and Aktogay oxide has resulted in a significant increase in copper output. Copper cathode equivalent output rose by 43% to 52.6 kt in H1 2016 versus the comparative period as Bozshakol and Aktogay contributed new production of 7.8 kt and 5.4 kt respectively. Bozymchak increased output to 3.8 kt from 0.9 kt in H1 2015, having operated at 100% of design capacity following optimisation works at the end of 2015.

Production in Q2 was above Q1 2016 as the Bozshakol and Aktogay ramp up continues. The Bozshakol concentrator was impacted by a planned 17 day shutdown for bolt tightening in May and limited throughput capacity in June whilst other minor commissioning issues were addressed.

The increase in ore extraction reflects the commencement of mining at Bozshakol and Aktogay in the second half of 2015. Of the 11.0 million tonnes extracted at Bozshakol in H1 2016, 6.4 million was clay ore removed to access sulphide material and has been stockpiled for processing later. The reduction in the Group's average copper grade reflects the transition to extraction at the new open pit mines where grades are lower than at the East Region's underground assets.

The East Region mines saw a reduction in all by-product grades during the first half of 2016, which resulted in lower zinc and silver output. However, Group gold bar equivalent output increased by more than 2.4 times from 16.1 koz to 39.1 koz due to the new production from Bozshakol and increased volumes from Bozymchak. Similarly, gold bar equivalent output more than doubled in Q2 2016 to 26.1 koz compared to 13.0 koz in Q1 2016.

 BOZSHAKOL

¹ In sulphide ore.

Ore mined at Bozshakol increased by 20% in Q2 2016 to 6,007 kt, versus the previous quarter, as higher volumes were extracted to support the ramp up of the sulphide concentrator. Sulphide ore output in Q2 2016 approximately doubled to 3,015 kt with a copper grade of 0.57% (Q1 2016: 1,554 kt, grade 0.54%). Clay ore output reduced by 13% to 2,992 kt. The clay ore has been stockpiled for processing at the separate 5 MT per annum clay plant which will be commissioned later in 2016.

Processing

¹ The finished metal equivalent of concentrate sold in the period.

Following the commencement of production at the Bozshakol concentrator in February 2016, 9.5 kt of copper in concentrate and 11.7 koz of gold in concentrate were produced in the second quarter.

Key equipment has been tested during the commissioning period and the crusher, SAG mill and both ball mills successfully completed 100% load tests during the first half. Throughput increased in the second quarter but was limited by a planned 17 day shutdown in May for bolt tightening and other maintenance procedures required by the mill manufacturer, and minor commissioning issues requiring repairs during June. The plant is continuing to ramp up and commercial production is expected to be achieved in the second half of 2016.

Bozshakol recorded copper cathode equivalent output of 7.5 kt and gold bar equivalent output of 8.8 koz in Q2 2016, calculated as the finished metal equivalent of the concentrate sold in the period. Sales shipments ran smoothly in H1 2016, with 18 loads dispatched to China. Full year guidance is maintained at 45-65 kt of copper cathode equivalent production.

 AKTOGAY

Oxide ore output at Aktogay continued in order to supply the heap leaching process and to prepare access to sulphide ore for the start-up of the main concentrator in 2017. Ore containing 19.1 kt of copper was placed on heap leach cells during Q2 2016, an increase of 2.5 kt as the copper grade improved to 0.44% compared to 0.38% in Q1 2016. At the end of the quarter, heap leach cells #101 to #106 were loaded with oxide ore and cells #102 to #105 were under irrigation.

In H1 2016, 5.4 kt of copper cathode was produced at the SX/EW processing facility, 3.9 kt of which was produced in Q2. Improvements were made at the SX/EW plant in the second quarter including raising the capacity of the automated cathode stripping system in the EW facility, with manual stripping expected to cease in the second half of the year. The facility is on track to achieve the Group's production guidance of 15 kt in 2016. 
 

EAST REGION & BOZYMCHAK

The East Region and Bozymchak extracted 2,404 kt of ore in H1 2016, an increase of 177 kt or 8% compared to the prior year period, driven by increased mining at Bozymchak to supply the concentrator which has operated at design capacity throughout 2016. Ore extraction at Bozymchak increased by 276 kt or 123% to 500 kt in the first half, whilst the East Region mines decreased ore output by 99 kt.

In Q2 2016, ore output declined by 68 kt or 6% compared to Q1, as mining at Bozymchak returned to lower levels following a planned increase in output in Q1 to access a new block of ore, with output in the East Region mines unchanged from Q1.

The average copper grade in H1 2016 declined to 1.97% from 2.24% in H1 2015 due to the increased contribution from Bozymchak at a 0.86% copper grade (H1 2015: 0.99%), and lower grades at Artemyevsky, Irtyshsky and Yubileyno-Snegirikhinsky. Grades in Q2 2016 were in line with Q1 2016.

Ore extraction and grade at Orlovsky were broadly unchanged across the periods above, however volumes are expected to be lower in H2 2016 as maintenance work on a ventilation shaft will restrict mining operations to six days per week.

Ore output at Artemyevsky was stable, but copper grades declined slightly as mining continued through a transitional zone between two ore bodies.

The Irtyshsky mine extracted slightly less ore in H1 2016 compared to H1 2015, while the copper grade declined to 1.53% from 1.71% due to higher dilution rates. In Q2 2016, ore output and grade were broadly unchanged from Q1 2016.

Ore output at the Yubileyno-Snegirikhinsky mine in H1 2016 was 19% below the comparative period in 2015 and copper grade declined to 1.71% from 1.97%. Q2 2016 production was in line with Q1 2016 but copper grade declined to 1.66% from 1.75% as resources at the mine deplete. The mine is expected to cease operations by the end of 2016.

Copper processing

¹ Includes finished metal produced and the finished metal equivalent of concentrate sold in the period.

Copper in concentrate output declined slightly in the first half of 2016 to 42.7 kt as higher output from the optimised Bozymchak concentrator was more than offset by lower output from the East Region. Copper in concentrate output in Q2 2016 was in line with Q1 2016. Copper in concentrate output is expected to be lower in H2 2016 compared to H1 2016 due to the ventilation works commencing at Orlovsky.

Copper cathode equivalent output in H1 2016 increased by 2.7 kt or 7% to 39.4 kt compared to H1 2015, when cathode output was restricted by a build-up of work in progress. Copper cathode equivalent output in the first half of 2016 includes 0.9 kt recognised following the sale of Bozymchak copper concentrate produced in 2015 to a third party processor in Q1 2016.

Zinc

As expected, zinc in ore mined in H1 2016 reduced by 15% compared to H1 2015, with average grades declining to 2.91% from 3.25%. The decline in grades was driven mainly by Artemyevsky where the zinc grade reduced to 2.16% compared to 3.34%. The Irtyshsky and Yubileyno-Snegirikhinsky mines also saw a reduction in zinc grades. Zinc in ore mined in Q2 2016 declined by 1.4 kt or 5% to 27.0 kt.

Zinc in concentrate output also reduced in H1 2016, to 39.6 kt compared to 49.9 kt in H1 2015 reflecting the decrease in zinc grade and ore mined.

Zinc output is expected to be lower in H2 2016 compared to H1 2016 due to the ventilation works commencing at Orlovsky in the second half of the year.

Gold

¹   Includes finished metal produced and the finished metal equivalent of concentrate sold in the period.

Gold in ore mined increased by 6.8 koz or 13% to 60.1 koz in H1 2016, compared to H1 2015, as the Bozymchak concentrator operated at 100% of design capacity in 2016. During the ramp up in H1 2015 Bozymchak produced 12.5 koz of gold in ore and output almost doubled to 24.5 koz in H1 2016, more than offsetting the 5.2 koz decrease in production from the East Region. Gold in ore mined decreased by 10% from 31.7 koz in Q1 2016 to 28.4 koz in Q2 2016, as mining at Bozymchak returned to lower levels following a planned increase in output in Q1 to access a new block of ore.

Gold in concentrate output in H1 2016 was 34.8 koz, 78% higher than in H1 2015, also reflecting the fully ramped up output of Bozymchak in H1 2016. Bozymchak produced 23.3 koz of gold in concentrate in H1 2016 compared to 6.8 koz in H1 2015. Gold in concentrate output in Q2 2016 was in line with Q1 2016.

Gold bar equivalent output from the East Region and Bozymchak increased by 86% to 30.0 koz and is now on course to meet or exceed the top end of the full year guidance range of 40-50 koz. Gold bar equivalent output was also 36% higher in Q2 2016 compared to Q1 2016, when output was impacted by a build-up of work in progress that was only partially offset by the sale of 5.2 koz of gold in concentrate to a third party processor. 
 

Silver

¹   Includes finished metal produced and the finished metal equivalent of concentrate sold in the period.

Silver in ore mined decreased as expected to 2,929 koz in H1 2016, a reduction of 326 koz or 10% compared to H1 2015, as grades and ore output reduced at Orlovsky, Irtyshsky and Yubileyno-Snegirikhinsky. Silver in ore mined increased by 5% in Q2 2016 compared to Q1 2016, despite a reduction in silver bearing ore mined, due to higher grades at Artemyevsky and Yubileyno-Snegirikhinsky.

Silver in concentrate output reduced by 45 koz or 3% in H1 2016 compared to H1 2015, as a 162 koz decrease in output from the East Region concentrators was partially offset by higher output from Bozymchak. Silver in concentrate output in Q2 2016 increased by 11% to 854 koz compared to Q1 2016, mainly reflecting the increase in silver in ore mined.

Silver bar equivalent output decreased in H1 2016 to 1,386 koz, a reduction of 275 koz or 17% compared to H1 2015, due to the lower amount of silver in ore mined and a build-up of work in progress in Q2 2016. Q2 2016 silver output declined by 112 koz or 15% compared to Q1 2016 output of 749 koz.

Silver output is expected to be lower in H2 2016 compared to H1 2016 due to the ventilation works commencing at Orlovsky in the second half of the year.

APPENDIX - GROUP PRODUCTION SUMMARY

¹ Includes finished metal produced and the finished metal equivalent of concentrate sold in the period.

Zinc

Gold

¹ Includes finished metal produced and the finished metal equivalent of concentrate sold in the period.

Silver

¹ Includes finished metal produced and the finished metal equivalent of concentrate sold in the period.