The Yoshlik development project, a greenfield initiative valued at $4.8bn, stands at its penultimate phase with substantial capital expenditure projections over the ensuing 12 months, S&P Global Ratings reported.
This initiative, slated for completion by the end of 2024, aspires to augment annual copper and gold production significantly. Despite Almalyk Mining and Metallurgical Complex's (AMMC) success in securing comprehensive funding and maintaining an ostensibly uneventful construction phase, it faces inherent risks, notably the necessity for capital expenditures amounting to approximately UZS 20 trillion (over $1.6 bn) in the imminent fiscal year.
Financially, AMMC has experienced a notable shift. The company's payment of about $1bn in 2022 led to a deterioration in its credit indicators and a revision of our assessment of the likelihood of government support from “high” to “moderately high.” In 2022, AGMK paid the state UZS 5.1 trillion (around $414mn) in the form of dividends UZS and 5.6 trillion (over $454mn) in other payments. The concomitant dividend payout has engendered perturbations in financial ratios, leading to a recalibration of AMMC's ties with the government.
Notwithstanding prevailing economic headwinds, the industry dynamics appear propitious for AMMC. The demand for copper and gold, buoyed by applications in renewable energy and technological sectors, augurs well for the company. Projections indicate a stable EBITDA for AMMC, with anticipated figures of UZS 15-16 trillion (over $1.2-$1.3bn) in 2023, escalating gradually to UZS 19-20 trillion (over $1.5-$1.6bn) in 2025, coincident with the initiation of production at the Yoshlik field.
The outlook, characterized as "stable," predicates upon AMMC's capacity to sustain EBITDA levels and execute the Yoshlik expansion seamlessly. Negative rating actions remain plausible in the event of heightened leverage, leading to a contraction in the FFO/debt ratio. Operational impediments, increased dividends, or delays in the Yoshlik project constitute potential triggers for downward adjustments.
Conversely, positive rating actions are contingent upon the successful launch of the Yoshlik project, a fortification of the FFO/debt ratio beyond 30%, and the realization of positive discretionary cash flow.
Earlier Daryo reported that in the course of President Shavkat Mirziyoyev's official visit to Germany, Almalyk Mining and Metallurgical Complex (AMMC) reached a noteworthy achievement by securing a substantial $2.55bn mandate with Germany's KfW IPEX-Bank. This financial agreement is poised to bolster AMMC's endeavors in establishing an advanced copper smelting complex, representing a significant milestone in their investment initiative.
Follow Daryo's official Instagram and Twitter pages to keep current on world news.
Comments (0)