Fitch affirms KazakhGold

Fitch Ratings said it affirmed KazakhGold Group Ltd.'s long-term issuer default rating at B and $200 million senior notes issue rating at B.

The outlook for the long-term issuer default is stable.

The ratings reflect KazakhGold's extensive gold reserve base, its projected relatively low production costs, diversified production across mines as well as demonstrated strong revenue growth and profitability, S&P said.

KazakhGold's credit metrics depend on implementing its extensive investment program, the agency said. Given the company's planned extensive capital spending, Fitch said it believes the company's free cash flow will remain in negative territory for the next two to three years.

According to the agency, other risks include KazakhGold's single commodity focus, which exposes it to gold price volatility, and low revenue base, which limits financial flexibility. Fitch also cited the company's exposure to potential cost over-runs, delays and commissioning risks as well as foreign-exchange risk.

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