AKIPRESS.COM - Kazakh copper producer Kaz Minerals cut its cost forecasts for the year, helped by a weaker tenge currency, and the prospect of more benefits sent its shares soaring on Thursday, reports Reuters.

Kaz Minerals, which is listed on the stock market in London, said the decision to introduce a floating exchange rate in Kazakhstan announced on Thursday could help it to lower costs further if the currency continues to weaken.

The company, which pays its bills in the local tenge currency but makes revenues in U.S. dollars, reduced its full-year forecasts for production costs to 260-280 U.S. dollar cents per pound from 280-300 cents earlier.

Those adjustments were based on a tenge rate of 170-198 per dollar, the miner said. The currency weakened to 257.20 per dollar on Thursday in response to the policy shift.

"We are not able to tell you any level we should expect, it's a free float exchange rate.(Tenge weakness) will help us because about 60 percent of our costs are in tenge," Chief Executive Oleg Novachuk told journalists in a conference call.

Kaz shares were up 13 percent as of 1045 GMT, outperforming a 2 percent rise in the FTSE 350 mining index.

"We attribute this reaction to expectations that some of the cost benefits of a currency depreciation would be retained by the company," Morgan Stanley analysts said in a note.

"However, we maintain that cost benefits of a weaker currency are typically eroded by an increase in underlying inflation."