In 2019 KAP still expects a attributable share of uranium mining in the range of 13.0ths-13.5ths tons of U3O8, which takes into account the planned reductions in the period 2018-2020. In accordance with the existing contracts, it is expected that in this year mining will amount to 22.7 - 22.8 thousand tons of uranium (on a 100% basis). Expectations in terms of sales also remain unchanged. Sales in 2019 are planned at the level of 13.5-14.5ths tons.
The forecast for cash costs C1 and cash costs including CAPEX has not changed. However, due to the weaker compared to the pledged (375 vs. 370 tenge /$1) tenge rate, which was formed during 1H2019, the forecasts shifted to the bottom of the expected values.
Our view
The dynamics of sales volumes improved significantly from -28% in 1Q2019 up to 15% growth in 2Q2019 yoy due to the uneven supply schedule. At the end of 2019, we maintain our assumptions regarding the achievement of sales at the level of 13.7ths tons, expecting that the main supply volumes will be at the rest of the year. We note a marked improvement in prices in the spot market as a positive factor for the industry as a whole. Keeping our expectations on financial indicators unchanged, we confirm our Buy recommendation on Kazatomprom’s shares.
