UPDATE 2-Kazakhmys sees 2010 flat after copper output slides

* Q4 output falls 25 percent to 68,100 tonnes

* 2009 copper output off 6.6 pct to 320,400 tonnes

* Forecasts 2010 output of just over 300,000 tonnes

* Shares rise 1.4 pct, outperforms sector

(Adds analyst comment, quotes, shares)

By Eric Onstad

LONDON, Jan 28 (BestGrowthStock) – Kazakh copper producer Kazakhmys
(KAZ.L: ) forecast no output growth this year after shutting mines
to save cash in 2009 and seeing fourth-quarter production slide
by 25 percent.

Investors will have to wait until at least 2011 for the
company’s growth projects to lift output. It sealed a deal last
year for $2.7 billion in financing for expansion projects.
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The London-listed company said in a production report on
Thursday it slightly exceeded its 2009 output target of 315,000
tonnes of copper cathode, coming in with 320,400 tonnes, but
this was a 6.6 percent fall from the previous year.

Analysts said the production data was largely in line with
expectations. The shares were up 1.4 percent at 1283 pence at
1128 GMT, outperforming a 0.4 percent rise in the UK mining
index (.FTNMX1770: ).

Kazakhmys was the best performing stock of the blue-chip
FTSE 100 (.FTSE: ) last year, surging 475 percent.

Credit Suisse analyst Liam Fitzpatrick reiterated an
“outperform” rating and a target of 1270 pence, saying the 2010
price earnings ratio of 8.0 was a discount to the firm’s global
peers.

Kazakhmys, the world’s eighth largest copper producer,
suspended output at four high-cost mines last year to save cash
during the economic downturn, which hammered copper prices.

The mines are not due to be restarted in the near-term and
the company does not have the stockpiles to sell in 2010 like it
did last year, which allowed an upgrade of the annual cathode
target from an initial 300,000 tonnnes.

“In 2010 ore output will be maintained at a similar level to
2009 and the target for cathode production will therefore again
be just over 300,000 tonnes,” Chief Executive Oleg Novachuk
said.

GROWTH PROJECTS

Production of copper cathodes from its own concentrate
decreased to 68,100 tonnes in the three months to the end of
December from 91,300 tonnes in the previous year.

Part of the decline was due to maintenance work on smelters
and rebuilding inventories after depleting them earlier in the
year, so first quarter 2010 cathode production should improve,
said John Smelt, head of corporate communications.

However, it will take longer for growth projects to make an
impact on production.

The Bozymchak gold/copper mine is due to launch production
in 2011 and the bigger Boschekul mine is set to start up in 2013
or 2014.

Kazakhmys posted a sharp fall in first-half profit due to
weaker copper prices, but the decline was less than expected.
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Copper prices (MCU3: ) recovered in the second half of last
year, ending the year at more than double the level at the
start.

Kazkhmys is the largest shareholder in Kazakh rival ENRC
(ENRC.L: ) and an official told Reuters last week that the firm
had no current plans to exit its 26 percent stake.
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Investment Analysis

(Reporting by Eric Onstad; editing by Mike Nesbit and Karen
Foster)

UPDATE 2-Kazakhmys sees 2010 flat after copper output slides