Kazatomprom JSC has published its audited financial statements for 2025. We assess the report as neutral: revenue remained broadly unchanged due to the absence of enriched uranium sales. However, adjusted net income remained at the level of the previous year, while operating cash flow increased by 57% year-on-year. The key risk is a significant increase in mining costs in 2026: management forecasts a 34% YoY increase in the C1 cash cost and a 21% YoY increase in AISC due to the introduction of a differentiated mineral extraction tax (MET). In our valuation model, we updated forecasts for uranium prices, costs, and joint venture valuations. As a result, our valuation of Kazatomprom shares is KZT 35,500, implying the current price on KASE is 6% overvalued. Recommendation: Hold.
Key valuation factors
The main risk is the introduction of a differentiated MET scale from January 1, 2026, depending on annual production volumes and uranium prices. According to the company’s own forecasts, this will lead to a 34% YoY increase in C1 costs and a 21% YoY increase in AISC. On the other hand, the company expects revenue growth in 2026 driven by increased production volumes (27,500–29,000 tonnes on a 100% basis) and positive contracting dynamics. A key strategic development was granting Kazatomprom priority rights to explore and reserve uranium deposits (amendments to the Subsoil Code dated December 26, 2025). Requirements for JV partners have also been tightened when extending contracts: Kazatomprom’s share must be at least 90%, or partners must transfer conversion and enrichment technologies. We also note that the Akdala deposit (SGCC, KAP share 30%) was transferred to Kazatomprom’s trust management on March 28, 2026, following the expiration of the contract, with remaining reserves of around 1,500 tonnes of uranium.
Revenue: stable overall, but with a structural shift
Consolidated revenue in 2025 amounted to KZT 1.8 trillion (-0.6% YoY). Revenue from natural uranium sales increased by 16% YoY to KZT 1,638 billion, driven by an 11% increase in sales volumes and a higher average USD exchange rate. The average realized price in USD decreased by 6% YoY, while the 14% decline in spot prices had a limited impact due to the structure of the contract portfolio. The absence of enriched uranium sales, which generated KZT 249 billion in 2024, had a negative impact on total revenue. Production volumes increased to 25.8 thousand tonnes on a 100% basis and 13.6 thousand tonnes on an attributable basis. Consolidated finished goods inventory increased by 5% YoY to 6.6 thousand tonnes, in line with the company’s strategy to maintain a comfortable inventory level.
Margins: MET pressure but strong cash flow
Gross margin slightly declined from 48.6% to 47.8%. The main negative factor was the increase in the MET rate from 6% to 9%, which increased the tax component of production costs by 50% YoY to KZT 137 billion. Depreciation within cost of sales increased by 22% YoY to KZT 146 billion due to the consolidation of Budenovskoye. The average price of sulfuric acid rose 43% YoY to KZT 70,000 per tonne, increasing its share in production costs from 12.5% to 14.7%. At the same time, raw materials and supplies costs decreased 4.5% YoY to KZT 495 billion due to lower purchased uranium costs from JVs, while processing expenses fell 49% YoY due to the absence of enrichment services. C1 cash costs and AISC remained within guidance. EBITDA margin remained broadly unchanged at 61%. Net income attributable to shareholders amounted to KZT 570 billion (-35% YoY). However, excluding the one-off gain from the consolidation of Budenovskoye (KZT 296 billion), adjusted net income remained almost unchanged (KZT 570 billion vs. KZT 577 billion, -1.1% YoY). Operating cash flow reached KZT 810 billion (+57% YoY) due to higher cash inflows from customers and normalization of working capital. This significantly increases the probability of higher dividends for 2025. Dividend growth of 30–40% appears likely.
Our view and changes in the valuation model
Overall, the report confirms stable operating performance and strong cash flow generation. However, structural increases in mining costs create pressure on margins. Capital expenditures of mining enterprises increased 25% YoY to KZT 398 billion on a 100% basis. Further growth is expected in 2026, including KZT 121 billion allocated for infrastructure development at Budenovskoye, Ortalyk (Zhalpak), and Inkai-3. Income from joint ventures and associates increased 25% YoY to KZT 199 billion, reflecting higher sales volumes at KATCO and SGCC. In our valuation model, we increased forecasts for mining costs but also raised our uranium price assumptions due to stronger raw material market conditions than previously expected. We also revised upward the valuations of associated and joint ventures. As a result, the target price for Kazatomprom shares is KZT 35,500, implying the current price is around 6% overvalued. Recommendation: Hold.