Kghm Polska Miedz S.a. · GPW:KGH
Kghm Polska Miedz — Investor Presentation (June 2024)
55 slides from Kghm Polska Miedz's investor presentation, June 2024
Slide 1: KGHM Group Investor Presentation June 2024
KGHM Group Investor Presentation June 2024
Slide 2: Cautionary Statement
Cautionary Statement This presentation was prepared by KGHM Polska Miedź S.A. (KGHM). The presentation is strictly of an informational nature and should not be construed as containing investment advice. The users of this presentation are solely responsible for their own analysis and assessment of th
Slide 3: Intellectual Property Rights
Intellectual Property Rights All rights reserved. All content on this presentation of the KGHM are protected by copyright and other protective laws. The presentation and the trademarks, service marks and logos on the presentation are owned by or licensed to KGHM, and are subject to copyright, tradem
Slide 4: Key information about the KGHM Group and our approach to Sustainability
Key information about the KGHM Group and our approach to Sustainability
Slide 5: KGHM: a top ten copper producer and a leading Polish exporter
KGHM: a top ten copper producer and a leading Polish exporter The Group has a global reach and plays a significant role on the global copper and silver markets Eighth Cu Second Ag largest mining largest copper silver producer producer Source: Kitco 2023, World Silver Survey 2024 Other KGHM Group pro
Slide 6: KGHM among the biggest copper and silver producers
KGHM among the biggest copper and silver producers Mined Copper production 20221) Silver production 20232) 1.55 54 1.53 46 1.13 24 1.06 20 0.90 20 0.86 19 0.78 19 0.54 18 0.52 18 0.47 [mn tonnes] 18 [moz] Source: 1) KITCO, March 2023 2) World Silver Survey, April 2024 6
Slide 7: A proud history of mining and metallurgy
A proud history of mining and metallurgy Discovery of the copper deposit brought about a fundamental change in the region’s economy thanks to the growth of KGHM Polska Miedź S.A. As a result of M&A activities, capped by the acquisition of Quadra FNX, KGHM became a truly global copper producer aimed
Slide 8: Core production assets in Poland – stable output and earnings
Core production assets in Poland – stable output and earnings Underground copper mines, fully integrated production Legnica Smelter and Refinery Polkowice-Sieroszowice Mine LME grade A-registered cathodes approx. 36 years LOM Capacity of ca. 120 kt electrolytic Cu/year 1) ▪ Copper in extracted ore i
Slide 9: Key assets in the Americas
Key assets in the Americas Existing operations and growth potential from projects Producing assets Potential growth projects Sierra Gorda (55% stake), Chile Sierra Gorda Oxide, Chile 24 years LOM 2023 production stats: ~ 10 years LOM ▪ Open-pit mine ▪ Cu production ▪ The project aims at processing t
Slide 10: Sierra Gorda mine – KGHM's main asset in the Americas
Sierra Gorda mine – KGHM’s main asset in the Americas Location Region II, Chile 55% KGHM INTERNATIONAL LTD, Ownership 45% South32 Type of mine open pit Main ore type copper ore Associated metals molybdenum, gold copper concentrate, molybdenum End product concentrate 143.0 kt of copper in concentrate
Slide 11: Sierra Gorda Oxide project
Sierra Gorda Oxide project Current plan heap oxide ore leaching stockpile Oxide ore processing on a permanent heap Facility type and copper production in a SX-EW plant Copper cathodes Main product/ Annual production: 30 kt/year. copper production Total production during LOM estimated at 298 SX-EW th
Slide 12: Robinson mine
Robinson mine Location Nevada, USA Ownership 100% KGHM INTERNATIONAL LTD. Type of mine open pit Main ore type copper ore Associated metals gold and molybdenum Type of orebody porphyry / skarn copper and gold concentrate, End product molybdenum concentrate Payable 31.5 kt production in 2023 Life of m
Slide 13: Victoria project
Victoria project Location Sudbury, Ontario, Canada Ownership 100% KGHM INTERNATIONAL LTD. Type of mine underground Main ore type copper-nickel ore gold, silver, cobalt, platinum Associated metals and palladium End product copper, nickel and precious metals ore This project is located in the Canadian
Slide 14: The Copper Mark
The Copper Mark® The Copper Mark® was created to promote responsible copper production. The prolongation of this certification enables KGHM’s products to continue being registered (copper cathodes and lead products) on the London Metal Exchange. The Copper Smelters and Refineries in Głogów and Legni
Slide 15: Climate neutrality by 2050
Climate neutrality by 2050 Achieving climate neutrality by 2050 is the overriding goal of the Climate Policy of KGHM Polska Miedź S.A. Intermediate goal – the reduction of total Scope 1 and Scope 2 emissions by 2030 by 30%1) emissions climate 2030 reduction by 30% 2050 neutrality versus the base yea
Slide 16: By 2030 the increase in share of RES will lead to a substantial reduction in CO2 emissions
By 2030 the increase in share of RES will lead to a substantial reduction in CO2 emissions Share of power source in supplies to KGHM Polska Miedź S.A. 2020 – base year (2.9 TWh): Q1 2024: Own generation sources, including RES, covered 23.93% of KGHM Polska Miedź S.A.’s total power needs. Natural Mar
Slide 17: Employee safety as a strategic priority for the KGHM Group
Employee safety as a strategic priority for the KGHM Group Safety and development Accident rates1) ▪ ISO 45001:2018 +18.5% We hold an Occupational Health and Safety Management System Change in LTIFR1) Certificate. in KGHM Polska Miedź S.A. +8.8% Change in TRIR2) 20,0 ▪ Leader’s Gold Card of Workplac
Slide 18: Strategy of the Group
Strategy of the KGHM Polska Miedź S.A. Group
Slide 19: Key action in individual areas of the Strategy in Q1 2024
Key action in individual areas of the Strategy in Q1 2024 FLEXIBILITY ECOLOGY, SAFETY AND SUSTAINABLE DEVELOPMENT • Continuation of the Strategic Program Hybrid Legnica Smelter and Refinery, aimed at ensuring flexibility for the metallurgy industry by allowing the management of larger • The balance
Slide 20: Advancement of key strategic performance indicators in Q1 2024
Advancement of key strategic performance indicators in Q1 2024 Strategic measure of success Base year 2020 Q1 2024 Goal 2030 (strategic KPI) Approx. 600 thousand tonnes of electrolytic copper (including production Domestic approx. 560 kt based on a higher amount of purchased materials and copper fro
Slide 21: Performance in the first 3 months of 2024 - KGHM Group
Performance in the first 3 months of 2024 - KGHM Group
Slide 22: Summation of Q1 2024 in the KGHM Group
Summation of Q12024 in the KGHM Group Main macroeconomic factors and aspects of the Group compared to Q1 2023 Macroeconomic environment1) Operating results Indicators -5% -14% no change Copper price Copper price in extraction of ore, dry weight in KGHM Polska Miedź S.A. +2% in PLN/t Higher CAPEX exe
Slide 23: Payable copper production by the KGHM Group
Key production indicators Q1 2024 179 Payable copper production +2% Q1/Q1 by the KGHM Group [kt] higher by 2% (Q1/Q1) ▪ KGHM Polska Miedź Payable copper production Payable copper production -11% Q1/Q1 production slightly lower than in the KGHM Polska Miedź S.A. [kt] Sierra Gorda1) [kt] prior year –
Slide 24: Other major metals: silver, TPMs, molybdenum
Other major metals: silver, TPMs, molybdenum Payable copper production Silver production [t] [kt] -17% Q1/Q1 ▪ Copper production by KGHM Polska 381 316 Miedź S.A. similar to prior year +2% Q1/Q1 ▪ Copper production lower 9M/9M: 176 179 − in KGHM INTERNATIONAL LTD. 8 16 due to lower production by the
Slide 25: C1 unit cost
C1 unit cost 1) KGHM Group C1 – KGHM Group C1 – KGHM Polska Miedź S.A. [USD/lb] [USD/lb] -2% Q1/Q1 -6% Q1/Q1 3,08 3,01 incl. the 3,00 minerals ▪ KGHM Polska Miedź S.A. – a decrease in C1 by extraction 2,81 tax 2% mainly due to a lower minerals extraction tax charge and higher production of copper in
Slide 26: Expenses by nature
Expenses by nature KGHM Polska Miedź S.A. Lower expenses by nature compared to Q1 2023 mainly due Expenses by nature [mln PLN] to a lower minerals extraction tax charge, costs of purchased metal-bearing materials, and energy and natural gas 9 119 Impairments/reversals of impairments 199 Minerals ext
Slide 27: Margins under pressure, but recent higher metals prices support improved profitability
Margins under pressure, but recent higher metals prices support improved profitability KGHM Polska Miedź S.A. Revenues vs EBITDA (mn PLN) KGHM Polska Miedź S.A. 30000 30% Copper production cost vs copper price 25000 20% 23% 22% 20% 20000 19% 15000 12% 12% Total unit cost of electrolytic copper produ
Slide 28: Key financial indicators of the KGHM Group
Key financial indicators of the KGHM Group Q1 2024 Group adjusted EBITDA2) Group revenues [mn PLN] [mn PLN] -13% Q1/Q1 Adjusted EBITDA of the -14% Q1/Q1 9 585 KGHM Group 1 551 8 315 Lower adjusted EBITDA compared to Q1 2023 in respect of KGHM Polska Miedź S.A. and 1 802 Sierra Gorda S.C.M. 1 551 Q1
Slide 29: Financial results – KGHM Polska Miedź S.A.
Financial results – KGHM Polska Miedź S.A. Revenues from contracts with customers Adjusted EBITDA Profit for the period [mn PLN] [mn PLN] [mn PLN] -13% Q1/Q1 -36% Q1/Q1 -20% Q1/Q1 8 370 702 7 279 1 410 Other 1 221 547 Silver 1 018 896 482 387 Copper and copper 6 447 5 714 products Q1 2023 Q1 2024 Q1
Slide 30: Indications to conduct impairment testing
Indications to conduct impairment testing 35 000 30 000 ▪ The Company’s market capitalisation was below the carrying amount for 25 000 nearly the whole of 2023. 20 000 ▪ As at 29 December 2023 market capitalisation was approx. 79% of the 15 000 carrying amount of the net assets of KGHM Polska Miedź
Slide 31: Production assets in Poland (mining and metallurgical assets)
Production assets in Poland (mining and metallurgical assets) Standalone financial statements Consolidated financial statements PLN mn PLN mn 20 348 20 166 16 577 16 577 -3 771 -3 589 Carrying amount Write-down Recoverable amount Carrying amount Write-down Recoverable amount 31.12.2023 31.12.2023 31
Slide 32: Net debt of the KGHM Group
Net debt of the KGHM Group As at the end of Q1 2024 Main factors affecting net debt in 2024 Net debt / adjusted EBITDA 1,2 1,5 Increases in debt 0,9 0,9 1,1 ▪ Cash expenditures on property, plant and equipment (PLN 1 392 mn) 31-03-2023 30-06-2023 30-09-2023 31-12-2023 31-03-2024 ▪ The minerals extra
Slide 33: Market risk management
Market risk management Hedged position on the copper, silver and currency markets (as at 31 March 2024) At the end of Q1 2024 the Parent Entity recorded a result on derivatives* and hedges in the amount of USD/PLN [mn USD] PLN 145 million: − +PLN 160 mn adjusted revenues from contracts with customer
Slide 34: Capital allocation
Capital allocation Renewal of dividend payout Proposed Dividend for Shareholders 2023 Dividend Payout (on 2022 profit) (6% of net profit) for 2024 200 mn PLN (1.00 PLN/share - gross) • PLN 300 000 000.00 (PLN 1.50 per share) 40% • dividend date 28 June 2024, dividend payment date 16 July 2024 33% 33
Slide 35: A rationale and responsible investment program
A rationale and responsible investment program Capital expenditures by KGHM Polska Miedź S.A. in Q1 2024 CAPEX execution in Q1 2024, incl. borrowings by area by category Mining Replacement Metallurgy Maintaining mine production Other activities Development (incl. R&D) Leasing IFRS 16 Adaptation proj
Slide 36: CAPEX execution in key investments
CAPEX execution in key investments Deposit Access Program Outfitting of the ▪ GG-1 shaft – Work continues on the final facilities Adaptation mines Outfitting of the mines required to support the shaft’s ultimate function as a projects 124 material and personnel transport shaft. Shaft injecting 11 Sh
Slide 37: Role of Deep Głogów (GGP) in maintaining output in Poland
Role of Deep Głogów (GGP) in maintaining output in Poland Deposit access program in KGHM’s concessioned areas Share of production from GGP in total production Active concessions and in Poland future potential Ore extraction dry weight from GGP [kt] +11% Q1/Q4 +15% Q1/Q1 1 391 1 540 1 340 1 540 19.4%
Slide 38: Energy Development Program, including RES | major events in Q1 2024
Energy Development Program, including RES| major events in Q1 2024 Ensuring energy security in KGHM M&A Development of wind energy ▪ The Natural Gas-Steam (CCGT) blocks of the Head Office ensured energy security for the Core ▪ On 12 September 2023 a preliminary contingent agreement was ▪ A siting an
Slide 39: Investor Relations Department
Investor Relations Department kghm.com/en/investors ir@kghm.com esg@kghm.com T +48 76 74 78 280 F +48 76 74 78 205
Slide 40: Supporting slides
Supporting slides
Slide 41: 2023 targets versus achievements and targets for 2024
2023 targets versus achievements and targets for 2024 Production – higher copper production by the Group in 2024 by 4.0 thousand tonnes (+1%) compared to the amount recorded in 2023: • KGHM Polska Miedź S.A. -23.2 thousand tonnes (-4%) with lower production from own concentrate by 15.1 thousand tonn
Slide 42: Cash flow
Cash flow KGHM Group [mn PLN] + 86 1 729 + 509 826 - 66 - 14 -1 418 Cash as at Net cash generated Net cash used in Proceeds Interest paid Other Cash as at 1 January 2024 from operating investing activities from/repayments 31 March 2024 activities of borrowings 42
Slide 43: Macroeconomic environment in the first 3 months of 2024
Macroeconomic environment in the first 3 months of 2024
Slide 44: Macroeconomic environment: Commodities and currencies prices
Macroeconomic environment Commodities and currencies prices Copper prices in Q1 2024 ranged between 8 085 and 8 973 USD/t, remaining to mid- Price (USD/t) Annual av. or YTD (USD/t) [USD/t] [PLN/t] March in a sideways trend, with a slower-than-expected Chinese economy and with 11 000 Price (PLN/t) An
Slide 45: Precious metals prices and the copper market in Q1 2024
Precious metals prices and the copper market in Q1 2024 Precious metals remain under pressure from expectations related to Fed decisions and fears surrounding geopolitical tensions At the start of 2024 the combination of geopolitical risk and The rise in precious metals prices has not yet instigated
Slide 46: 2023 results - highlights
2023 results - highlights
Slide 47: Summation of 2023 in the KGHM Group
Summation of 2023 in the KGHM Group Main macroeconomic factors and aspects of the Group compared to 2022 Macroeconomic environment1) Operating results Indicators -4% -9% -0.3% +21% Copper price Copper price Increase in extraction of ore, Higher CAPEX execution in USD/t in PLN/t dry weight in KGHM Po
Slide 48: Summation of 2023 in the KGHM Group: Basic measures of the 2023 results
Summation of 2023 in the KGHM Group and KGHM Polska Miedź S.A. Basic measures of the 2023 results KGHM Group KGHM Polska Miedź S.A. PLN 33 467 mn PLN 29 084 mn Revenues Revenues PLN 5 362 mn PLN 3 563 mn Adjusted EBITDA Adjusted EBITDA -PLN 3 691 mn -PLN 1 153 mn Loss for the period Loss for the per
Slide 49: Metals production
Metals production KGHM Group ▪ Higher production by KGHM Polska Miedź S.A. from purchased materials and from Payable copper production Silver production own copper-bearing charges due to [t] [kt] +8% y/y higher availability of production lines, in 1 428 1 327 particular better use of working time of
Slide 50: Key financial indicators of the KGHM Group
Key financial indicators of the KGHM Group 2023 Group adjusted EBITDA2) Group revenues [PLN mn] [PLN mn] -1%y/y -41% y/y 33 847 33 467 5 362 Adjusted EBITDA of the KGHM Group 8 151 7 819 Lower adjusted EBITDA compared to 9 024 2022 in all the main Group segments Q4 2022 Q4 2023 2022 2023 5 362 Group
Slide 51: Governance
~ KGHM-_ POLSKA MIEDZ Sgn ox Governance
Slide 52: Transparent Group structure
Transparent Group structure General Shareholders Meeting Supervisory Board Management Board KGHM Polska Miedź S.A. (Lubin, Poland) (Listed on Warsaw Stock Exchange since 1997) KGHM INTERNATIONAL LTD. Production Development & Group of subsidiaries (Vancouver, Canada) Development divisions related pro
Slide 53: Shareholder structure of KGHM Polska Miedź S.A.
Shareholder structure of KGHM Polska Miedź S.A. Ownership structure Geographical ownership structure [% of shares] No. of Percentage Share in Shareholder shares/ of share total number votes capital of votes 8% Polish State Treasury 63,589,900 31.79% 31.79% 10% Allianz OFE 11,961,453 5.98% 5.98% 8% N
Slide 54: Upcoming events for investors
Upcoming events for investors Date Upcoming events 7 June WallStreet 28 Individual Investor Conference, Karpacz 13 August Consolidated half-year report for the first half of 2024 For the most recent information please visit our Investor calendar at https://kghm.com/en/investors/investor-handbook/inv
Slide 55: Investor Relations Department
Investor Relations Department kghm.com/en/investors ir@kghm.com esg@kghm.com T +48 76 74 78 280 F +48 76 74 78 205
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