Kazatomprom’s expectations for 2020 remain unchanged

6 November 2020

Kazakhstan’s National Atomic Company Kazatomprom has announced its operating results for the 3rd quarter and nine months ended 30 September.

Kazatomprom noted that field development activities at all mining enterprises had resumed in line with company's plans. Production drilling and related work to commission new blocks was resumed in August 2020 after a four-month period of reduced operational activity resulting from minimising the number of workers in production to protect them from COVID-19.

“In the event of delays in mining preparatory work in 2020 (further development of the pandemic, weather conditions, availability of drilling rigs) this will affect the development of reserves and production plans in 2021, but will not affect the production volumes in 2020,” Kazatomprom said. Expectations for 2020 in terms of production volume, on a 100% basis, remain unchanged and amount to 19,000 - 19,500 tons of U3O8 (10,500 - 10,800 tons of U3O8 with respect to Kazatomprom’s share).

According to the Company's Competent Person Report (CPR) in the 2018 IPO Prospectus, the company is currently carrying out exploration activities in four areas. These are in their final stages, the subsoil use rights for them, issued by the Ministry of Energy for up to five years, expire in 2021-2022. Before the completion of the exploration period in each of the promising areas, it is required to make a decision on the return of the territories or on the transition to the pilot production stage. The pilot will be followed by commercial production carried out in accordance with the field's production contract.

Kazatomprom said proportional and 100% production volumes for Q3 and the nine months of 2020 were lower as a result of the expected impact from lower development activities and lower production personnel throughout the second quarter amid the COVID- 19 pandemic. “Typically, it takes four to eight months to move from field development to in-situ leaching production, which is why the safety measures taken in the first half of 2020 are expected to have a predominant impact on production in the second half of 2020.”

The increase in the spot price for uranium had a positive impact on the average realised price of Kazatomprom, which increased in the 3rd quarter and during 9 months of 2020. If spot prices remain above 2019 levels in 2020, the upward trend in selling prices is expected to continue, given that the Company's fourth-quarter delivery schedule is expected to slightly exceed third-quarter volumes.

Kazatomprom noted that the duration and full impact of the COVID-19 pandemic are not yet known. “However, for the purposes of preparing these expectations, it is assumed that the decline in the number of employees in production will continue for four months. As such, annual production volumes may differ from our expectations depending on actual impact.”

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