Kazakh miner Kazakhmys posted a 25 percent fall in 2008 underlying earnings per share, hit by high costs and a collapse in copper prices, and remained cautious about the coming year.

Market conditions in 2009 are likely to be challenging but we are taking decisive action, across the group, to conserve cash, Chief Financial Officer Matthew Hird said in a statement on Tuesday.

Hird was reiterating an outlook made on March 5 when it released a trading statement with financial results from its own operations, excluding earnings from its 26 percent stake in rival Kazakh miner ENRC, which had not yet reported.

London-listed Kazakhmys, the world's eighth-biggest copper producer, said 2008 underlying EPS, including ENRC earnings, fell to $2.27 from $3.02 the previous year.

Some analysts said the numbers should come as no surprise since they largely consisted of previously published numbers.

The only new numbers today were tax and finance items, which were slightly less negative than we had modelled, said Merrill Lynch in a note.

Kazakhmys said its effective tax rate was 16.2 percent, down from 29.6 percent in 2007, partly due to several one-off credits, but the underlying tax rate was 32 percent.

The EPS figure was lower than the average forecast of 11 analysts polled by Reuters Estimates of $2.51, but some of the forecasts were produced before ENRC released its results.

Kazakhmys shares surged 6.0 percent to 352.5 pence by 0822 GMT, outperforming a 2.2 percent increase in the UK mining index .

One analyst, who declined to be named, said the shares were boosted by a higher copper price and was rebounding after sliding by 12 percent on Monday.

I think it's dominated by momentum chasing and thin volumes -- the copper price is up quite nicely this morning.

CAUTIOUS ON COPPER

Evolution Securities, however, advised clients to sell the shares on a view that copper prices would lose steam after jumping about 30 percent so far this year.

Copper is the main driver of the company's earnings and share price. We believe that this will continue to weaken over the course of the year... this is a good time to reduce exposure to base metals, analyst Charles Cooper said in a note.

Kazakhmys' results were hit by the slide in copper last year, when the average price fell by more than half to $3,940 a tonne in the fourth quarter compared to $7,966 in the first nine months. It was trading at $4,037 on Tuesday morning.

The firm's earnings before interest, tax, depreciation and amortisation and excluding special items fell 12 percent to $2.06 billion on 2 percent lower revenues of $5.15 billion.

Profit was also impacted by a surge in the cost of sales, which rose 20 percent to $3.4 billion, but the company said a devaluation of the Kazakh currency would help costs in 2009.

On March 5, Kazakhmys said it had cancelled its final dividend to conserve cash and said a possible sale of part of its power business would help pay off debt.

The firm said last October it had signed a memo of understanding with a state-owned firm about establishing a possible joint venture for its power division.

That agreement allowed a six-month period for due diligence, so a deal may be finalised in May or June, spokesman John Smelt told Reuters on Tuesday.

The firm had net debt of $1.63 billion at the end of 2008 and had an undrawn revolving credit facility of $200 million. (Reporting by Eric Onstad; Editing by Rupert Winchester and Jon Loades-Carter)

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