Kaz Minerals says can maintain profit in weak copper market

* Bolzshakol on track for commercial output in H2

* Share (LSE: SHRE.L - news) price rallies strongly

* Analysts caution about debt levels, say copper market fragile (Adds analyst comment, detail)

By Barbara Lewis

LONDON, Aug 18 (Reuters) - Kazakhstan copper firm Kaz Minerals said it can carry on making profits even if commodity markets stay weak as it steps up low-cost output after achieving a 30 percent increase in core profits in the first half of the year.

Analysts said Thursday's results were at the top end of the broad consensus, but were cautious about copper demand and said Kaz Minerals (LSE: KAZ.L - news) ' debt levels could become a problem if commodity markets take another dive.

The company's shares rose more than 12 percent, while the wider sector was 2 percent higher by 0845 GMT.

Benchmark copper prices are struggling to sustain gains this year as economic data has raised new doubts about the strength of demand from China, which accounts for nearly half of global consumption.

In a conference call with reporters, Chief Executive Oleg Novachuk declined to be drawn on the outlook for the copper market but said the London-listed company had conservative price assumptions and its low costs would protect its revenues.

Kaz Minerals has two major copper projects under construction, which it describes as world-class open-pit mines -- cheaper than having to extract from deep underground.

Bozshakol is on track to achieve commercial output in the second half, while Aktogay, the other, should start production in the second half of 2017 at a reduced budget of $2.2 billion, down $100 million from previous forecasts.

Bozshakol's gross cash cost guidance for 2016 was cut to 140-160 U.S (Other OTC: UBGXF - news) . cents per pound, while for the group it improved to 190 to 210 U.S. cents/pound from 200 to 220 cents/pound predicted previously.

First (Other OTC: FSTC - news) -half core profit (EBITDA) rose to $115 million from $88 million a year ago.

Kaz Minerals narrowed its 2016 copper output guidance to 135,000 to 145,000 tonnes from previous guidance of 130,000 to 155,000 tonnes.

The group's net debt at the end of June was $2.5 billion, Kaz Minerals said, adding all repayments to its Chinese lenders were being met on schedule.

It said it planned to start talks with its lenders in the near future with a view to "putting in place arrangements that are appropriate to the business for 2017 and beyond".

Jeremy Wrathall, analyst at Investec (LSE: INVP.L - news) , said the debt level was "way out of proportion to market capitalisation".

"If things get bad again, it would be a problem," he said.

The company's market value is around 800 million pounds ($1.05 billion). ($1 = 0.7597 pounds) (Additional reporting by Esha Vaish in Bengaluru; editing by David Clarke and Jane Merriman)