Kazakhmys Plc (KAZ) gained the most in 10 months in London as the Kazakh currency was devalued, raising the profit outlook at the nation’s largest copper miner.
Kazakhmys jumped 18 percent, the biggest gain since April 19, to 208.4 pence by the close. The central bank devalued the tenge by about 19 percent as reduced bond buying by the U.S. Federal Reserve led to capital outflows from emerging markets.
The devaluation may increase the company’s earnings before interest, taxes, depreciation and amortization by 53 percent in 2014 and 30 percent in 2015, Bank of America Merrill Lynch analyst Jason Fairclough wrote today in a note to clients.
“We assume a lower impact to earnings in the out years due to inflation,” he said. “We also consider the possibility that the devaluation helps Kazakhmys by driving lower capex.”
The company, planning 500,000 metric tons of annual copper output by 2017, is building the Bozshakol and Aktogay mines for about $4 billion. It produced 294,000 tons last year.
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