Kazakhmys has climbed higher after agreeing a deal to reduce tax on some of its older assets which are earmarked for disposal.
The copper producer said it would save around $40m a year following the agreement with the Kazakh goverment, which would be backdated to the start of 2014.
The lower mineral extraction tax will be for one year initially and will be applied to the deposits in the Zhezkazgan region, excluding Zhomart mine, and at Konyrat mine in the Central region. The company said the assets had been affected by declining quality and low profitability.
As part of a restructuring, it plans to put assets in the regions into a separate company to be owned by Vladmir Kim, the billionaire who owns about a third of Kazakhmys. The sale is expected to be done and dusted by next year, once it is approved by shareholders later in 2014.
At the same time the company said it completed the acquisiton of Koksay for $260m.
The news has sent its shares up 4.4p to 288.4p.
Analysts at Numis said
[The tax reduction] bumps up our numbers but more importantly, indicates government support for the potential restructuring. We maintain our hold recommendation but increase our target price to 290p, from 260p. We continue to retain caution pending the restructuring of the new company expected later this year, which we see as value accretive but challenging and risky to the balance sheet.
