Stock of the day 25/02/2015 – KAZ Minerals PLC

Copper has been causing trouble of late, a fact that is likely to make it presence felt when KAZ Minerals announces its full year 2014 earnings release on Thursday.

A nightmare 2013, that saw the stock fall from £8.25 a share to £2.21 at the start of 2014, meant that KAZ Minerals was in a precarious position at the start of last year. This was seen immediately, as the stock quickly plummeted to £1.70 by the end of January; however steady growth, prompted by a spike at the end of February, culminated in KAZ reaching £3.53 at the end of July. Whilst this is nowhere near its 2013 high, it was a positive sign for the previously struggling mining company.

This price was to be the peak of its first half push, as copper’s gradual decline began to drag the stock down. KAZ managed to stall its losses by the end of October, and opened 2015 at £2.54; however, it wasn’t out of the woods yet, dropping 34% to £1.60 as copper crashed to $2.50 per pound. After this fall the company once again managed to recover, with a string of good news causing it to currently trade at £2.56 following a fairly flat fortnight due to the rapid changes in copper’s price.



Copper’s fairly erratic performance has caused headaches for the not just KAZ Minerals, but the sector as a whole. However, restructuring at the company last year has left KAZ better equipped than most to endure the metal’s movements. Compared to a rival like Vedanta Resources, KAZ Minerals has had a better performance on the markets since the copper price issues began, even when the difference in stock valuation is taken into account.

Ahead of its full year earnings, news seems to be going in KAZ’s favour. Firstly the depreciation of the Kazakhstani currency has helped its exports, with the tenge following the rouble in its downward slope. Secondly, the company announced in January it had reached its production target for 2014; it produced 83,500 tonnes of copper cathode, smack bang in the middle of its 80,000-85,000 guidance figure.

Despite this positive news, analysts have been tentative over the stock with a consensus rating of ‘hold’ and a slightly higher price target of £2.61, largely due to the continued instability in copper. However, given the way KAZ Minerals has weathered the commodity’s declines so far, it may be well positioned to beat its estimates come tomorrow morning.