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Kazakhmys to buy back $250m of its shares
Frustration with the "irrational markets" is prompting Kazakhmys to buy back up to $250m (£153m) of its shares, but the process will need special approval from the London Stock Exchange because it could reduce the company's free float.
Only 35pc of the Kazakh copper giant is currently listed on stock exchanges in London and Hong Kong, but this could fall to 32pc if $250m shares are bought back over the next few months.
It is understood that Vladimir Kim, chairman, and Oleg Novachuk and Eduard Ogay, two executive directors, would be unlikely to tender any shares, so the buyback would consolidate their control over the company. Mr Kim owns 28pc of the company and the Kazakh government holds 26pc.
Kazakhmys is carrying out the buyback because it feels its shares are "significantly undervalued", following the flight from equities because of market instability. Its share price has fallen 37pc this year as investors have fled from mining companies over fears about falling growth in industrial demand for commodities. The company has also been affected by its 26pc stake in rival FTSE 100 miner Eurasian Natural Resources Corporation, which has seen a series of boardroom rows and corporate governance concerns batter its stock.
The copper giant announced the buyback along with a 33pc increase in its interim dividend, to be paid on October 4, from six cents to eight cents, causing its share price to rise 68, or 7pc, to £10.16.
Investors were also cheered by approval for the company to start development at its Bozshakol copper project, which should deliver growth in the face of largely flat production numbers over the past few years.
Kazakhmys' pre-tax profits were affected by a $455m write-off in its oil business, falling 13pc to $550m. The oil business, known as Kazakhmys Petroleum, has been sold to an unnamed party for $100m. However, the write-off was partially offset by strong commodity prices.
Copper prices averaged $9,398 per tonne in the period, an increase of 32pc compared with the prior period, while gold and silver prices were 25pc and 99pc higher at $1,445 per ounce and $35 per ounce, respectively.
Oleg Novachuk, chief executive of Kazakhmys, said: "In contrast to the current uncertainties in global financial markets, this has been a solid six months and the outlook remains positive. We are making excellent progress on our growth projects and have reached some important milestones."