In a mixed morning for miners, Kazakhmys is standing out with a 20p rise to £11.93.
The copper producer has sold a 25% stake in Ekibastuz GRES-1, the largest power plant in Kazakhstan to government owned sovereign wealth fund Samruk-Kazyna for $339m in cash. The money will be used to repay debt.
Meanwhile it has also announced it is in discussions with Samruk-Kazyna and the China Development Bank about a $2bn loan facility. If the deal is signed the loan would help fund the development of major growth projects. One suggestion had been the money would be used for the Bozshakol copper deposit in the north of the country.
Commenting on the power plant sale, Cazenove said:
Overall this is a useful step in adjusting the company's capital structure - we project net debt post sale falls to $1372m at year end 2009 versus $1568m at the end of the first half of 2009.
We expect further to come in this regard as the company seeks buyers for many of its other assets (Boschekul, Aktogay, Petroleum, MKM and potentially its stake in ENRC) to degear and grow the business. We remain buyers on valuation.
Meanwhile Bank of American/Merrill Lynch said:
We view this announcement as a marginal positive as our sense is that the market was frustrated that this deal hadn't been completed despite a memorandum of understanding being signed in October 2008. Maintain buy, we view Kazakhmys as cheap copper exposure trading on 7 times our 2010 estimated earnings per share, 5 times ex-its 26% ENRC stake.
