Kghm Polska Miedz S.a. · GPW:KGH

Kghm Polska Miedz — Investor Presentation (July 2021)

99 slides from Kghm Polska Miedz's investor presentation, July 2021

1. Slide 1: KGHM Group Investor Presentation

   KGHM Group Investor Presentation July 2021

2. 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

3. Slide 3: Agenda

   Agenda 1. Key information about 2. Sustainable development 3. The KGHM Group the KGHM Group of the KGHM Group vs the sector 4. Production and financial 5. Advancement of 6. Additional slides, results of the KGHM Group the Group’s Strategy Q&A 3

4. Slide 4: We care, we act, we protect

   We care, we act, we protect Effectively fighting the spread of the coronavirus Initiatives Preventative Communication & procedures methods & education  COVID-19 unit at the  Voluntary employee vaccination  Numerous communication hospital MCZ program through the KGHM channels  Two temporary hospi

5. Slide 5: Key information about the KGHM Group

   Key information about the KGHM Group

6. Slide 6: KGHM Group in brief

   KGHM Group in brief One of the world’s largest producers of copper and 709 thousand tonnes A diversified portfolio of silver with 60 years of of payable copper production assets at various stages of experience in mining and by the KGHM Group in 2020, development located in mining- metallurgy (1.1% h

7. Slide 7: 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 Seventh Cu Second Ag largest largest copper silver producer producer Other KGHM Group products:  Molybdenum  Platinum  Copper  Lead  Rh

8. Slide 8: KGHM among the biggest copper and silver producers

   KGHM among the biggest copper and silver producers1) Mined Copper production 2020 2) Silver production 2020 3) 1,73 50,3 1,26 43,5 1,18 32,8 1,11 27,8 1,00 24,6 0,78 21,6 0,71 21,5 0,53 18,8 0,47 17,3 0,46 [in million metric tonnes] 13,5 [million ounces] 1) KGHM results as reported in its consolidat

9. Slide 9: 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

10. Slide 10: 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 36 years LOM Capacity of ca. 120 kt electrolytic Cu/year 1)  Copper in extracted ore in 2020:

11. Slide 11: Key international assets

    Key international assets Existing operations and growth potential from projects Producing assets Potential growth projects Sierra Gorda (55% stake), Chile Sierra Gorda Oxide, Chile 23 years LOM 2020 production stats: 11 years LOM  Open-pit mine  Cu production  The project aims at processing the o

12. Slide 12: Sierra Gorda

    Sierra Gorda Sierra Gorda is an open pit copper and molybdenum mine located in Chile’s Antofagasta region in the Atacama desert. Sierra Gorda is a Joint Venture of:  KGHM Polska Miedź S.A. – 55% share  Sumitomo Metal Mining – 31.5% share  Sumitomo Corporation – 13.5% share Schedule of Sierra Gord

13. Slide 13: Sustainable development

    Sustainable development TOE “UTURE |S MAD= OF COPPER

14. Slide 14: Copper - a strategic material

    Copper - a strategic material in a carbon neutral and circular economy Metal in a circular Lower GHG emissions 22 million tonnes economy Amount needed in the years While adding 0.4% GHG, Nearly 50% of copper 2020 – 2050 to make the copper contributes to reducing produced in the EU is obtained Europe

15. Slide 15: Raw materials a key to sustainable development

    Raw materials a key to sustainable development as well as care for the environment and ensuring life’s comforts to employees and society In working towards our goals we We want to wisely invest our profits in new concentrate on creating added value while at the technology, innovative solutions, best

16. Slide 16: Sustainable value chain in the KGHM Group

    Sustainable value chain in the KGHM Group Raw materials Extraction Production Logistics Stakeholders Commerce Tailings Rational deposits Commerce based Product life cycles based Responsible use of Reduction of the Reduction of Customers, management - on Fair Trade on the Circular Economy raw materia

17. Slide 17: Ethical standards

    Ethical standards KGHM Polska Miedź S.A. KGHM Ethics Hotline. Protection for whistleblowers. KGHM is a Company based on strongly-rooted  The Platform is available in four languages values and principles, which guide our  Available at https://liniaetyki.kghm.com/web/liniaetyki/ home for employees,

18. Slide 18: Ethical standards

    Pokłady możliwości Ethical standards KGHM Polska Miedź S.A. We follow We avoid the principle of We take responsibility conflicts “Zero tolerance for the quality of our We care about the of interests for corruption” products and services We care about security of information our Company’s property an

19. Slide 19: Employee safety as a strategic priority for the KGHM Group

    Employee safety as a strategic priority for the KGHM Group Summary of 2020 Safety and development Accident ratios1)  ISO 45001:2018 Granting of an Occupational Health and Safety -29% Change in LTIFR yoy in KGHM Polska Miedź S.A. Management System Certificate  Leader’s Gold Card of Workplace 18,6 -

20. Slide 20: Environmental protection

    Environmental protection Primary obligations of KGHM Polska Miedź S.A. We supply metals and related products We keep abreast of new technologies in order to achieve the environmental to reduce industrial impact on the goals of contemporary society, environment and introduce them including actions on

21. Slide 21: SO2 and dust emissions

    Emissions by the divisions of KGHM Polska Miedź S.A. SO2 and dust emissions1) SO2 emissions by KGHM Polska Miedź S.A. Dust emissions by KGHM Polska Miedź S.A. [tonnes] [tonnes] 80 000 –78% Reduction of SO emissions over the last 10 years 2 12 000 –75% Reduction of dust emissions over the last 10 yea

22. Slide 22: Lead and copper emissions

    Emissions by the divisions of KGHM Polska Miedź S.A. Lead and copper emissions Lead emissions by KGHM Polska Miedź S.A. Copper emissions by KGHM Polska Miedź S.A. [tonnes] [tonnes] 400 350 350 –77% Reduction of lead emissions over the last 20 years 300 –70% Reduction of copper emissions over the las

23. Slide 23: CO2 emissions by KGHM Polska Miedź S.A.

    CO2 emissions by KGHM Polska Miedź S.A.1) ETS2) direct emissions + non-ETS equivalent [kt CO2] 2 000 1 800 1 714 1 600 1 678 average 1 539 1 532 1 521 1 519 1 508 1 400 1 492 1 489 1 482 1 481 1 476 1 470 1 466 1 430 1 407 1 200 1 000 800 Scope 1 -16% yoy 600 Direct emissions by KGHM Polska Miedź S.

24. Slide 24: We are preparing a climate policy

    WE ARE PREPARING A CLIMATE POLICY The KGHM Group has committed to preparing a Climate Policy which will comprise medium-term (2030) and long-term (2050) quantitative goals, including among others:  decreases in GHG emissions (Scope 1, 2 and 3)  improved energy efficiency and greater use of renewab

25. Slide 25: The KGHM Group vs the sector

    The KGHM Group vs the sector Macroeconomic environment

26. Slide 26: Macroeconomic environment: commodities and currencies prices

    Macroeconomic environment Commodities and currencies prices Copper prices in Q1 2021 continued their upward trend, approaching the levels of 2011. Silver prices remained [USD/t] Cena Price (USD/t) (USD/t) Śr. roczna Annual av.(USD/t) (USD/t) [PLN/t] above 25 USD/koz t. Price (PLN/t) Cena (PLN/t) Ann

27. Slide 27: Precious metals prices in Q1 2021

    Precious metals prices in Q1 2021 Gold prices fell against the backdrop of economic recovery, silver prices in the range of 25-29 USD/koz t The price of silver in Q1 2021 remains at a high level despite The inflow of cash into ETF precious metals funds is strongly gold’s weakness correlated with cha

28. Slide 28: A spectacular rise in copper prices over the last months

    A spectacular rise in copper prices over the last 12 months This price volatility was related to fluctuations in metal inventories in recent months Over the last 12 months the price of copper has doubled, In February 2021 copper inventories in official warehouses approaching the historic highs of 20

29. Slide 29: Economic activity in Q1 2021 increased, ending the quarter with record-high readings

    Economic activity in Q1 2021 increased, ending the quarter with record-high readings Industrial PMI in the USA, Germany and several other countries approached, and even substantially surpassed, the 60 level. Average industrial PMI in the eurozone was 62.5. Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 O

30. Slide 30: The production of miners in Q1 2021

    The production of miners in Q1 2021 Copper production by miners, Q1 2021 vs Q1 2020 20% 10% -5% -6% -8% -19% 0% 24% 9% 7% 7% 4% 3% 1% 0% -10% -20% Freeport Anglo Codelco KGHM Grupa KGHM KGHM Polska Glencore Teck Rio Tinto Southern Antofagasta BHP Vale McMoran American Group Miedź S.A. Copper Copper

31. Slide 31: Production and financial results of the KGHM Group

    Production and financial results of the KGHM Group Part I: 5 years data

32. Slide 32: Key production data – 5 years

    Key production data – 5 years KGHM Polska Miedź S.A. Ore extraction Production of copper Production of Metallic silver production [mn t dry weight] in concentrate electrolytic copper [t] [kt] [kt] 536 522 565 560 419 502 1 400 1 323 424 401 399 32,0 31,2 393 1 191 1 218 1 189 30,3 29,9 29,7 2016 201

33. Slide 33: Key production data – 5 years: Sierra Gorda

    Key production data – 5 years Sierra Gorda1) Payable copper production Silver production [kt] [t] 14 27,6 14,1 14,5 14,6 2016 2017 2018 2019 2020 81,8 TPM2) production [koz t] 59,5 22,9 28 23,2 31,2 31,4 51,5 53,4 53,3 2016 2017 2018 2019 2020 Molybdenum production [mn lbs] 19,7 11,2 12,2 14,7 9,0 2

34. Slide 34: Key production data – 5 years: KGHM INTERNATIONAL

    Key production data – 5 years KGHM INTERNATIONAL Payable copper production Silver production [kt] [t] 1,7 1,6 1,6 2,4 1,7 89,8 2016 2017 2018 2019 2020 81 78,8 76,5 66,9 TPM production [koz t] 92,1 74 67,6 85,2 66,1 2016 2017 2018 2019 2020 Molybdenum production [mn lbs] 0,8 0,7 0,6 0,8 0,4 2016 201

35. Slide 35: Sales revenue and net profit – 5 years

    Sales revenue and net profit – 5 years KGHM Group Revenues Net profit [mn PLN] [mn PLN] 23 632 22 723 20 358 20 526 19 156 1 787 1 658 1 525 1 421 1 225 * 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 * Net profit of 2016 excluding impact of impairment of non-current assets, loans and impairment

36. Slide 36: EBITDA and EBITDA margin – 5 years

    EBITDA and EBITDA margin – 5 years KGHM Group EBITDA by segments 1) EBITDA margin 2) [mn PLN] KGHM Polska Miedź S.A. KGHM INTERNATIONAL Sierra Gorda (55%) Others 6 623 5 753 26% 5 229 25% 4 972 23% 22% 4 666 21% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 1) Sum of segments; adjusted EBITDA =

37. Slide 37: Net debt and net debt/EBITDA ratio – 5 years

    Net debt and net debt/EBITDA ratio – 5 years KGHM Group Net debt Net debt/adjusted EBITDA [mn PLN] [ratio] 7 262 7 000 6 891 6 577 1,6 1,6 1,5 4 834 1,3 0,9 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 37

38. Slide 38: Basic items of the consolidated financial statements

    Basic items of the consolidated financial statements KGHM Group Consolidated data [unless otherwise indicated] 2016 2017 2018 2019 2020 Sales revenue [mn PLN] 19 156 20 358 20 526 22 723 23 632 Adjusted EBITDA [mn PLN] 4 666 5 753 4 971 5 229 6 623 Profit/(loss) for the period [mn PLN] -4 449 1 525

39. Slide 39: Production and financial results: Part II: FY 2020

    Production and financial results of the KGHM Group Part II: FY 2020

40. Slide 40: Summation of the year 2020 in the KGHM Group

    Summation of the year 2020 in the KGHM Group Main macroeconomic factors and aspects of the Group in the age of the COVID-19 pandemic compared to 2019 Macroeconomic environment1) Production and C1 cost Financial results +3% +1.1% +4% Copper price Copper production Increase in revenues to PLN 23 632 m

41. Slide 41: Metals production

    Metals production KGHM Group Payable copper production Silver production [t] [kt] -4.5% Y/Y  Slightly lower production vs 2019: 1 417 1 352 − by KGHM Polska Miedź due to the lower grade +1.1% Y/Y and thickness of the mined deposit, as well as due to the restricted supply of copper scrap in the firs

42. Slide 42: Production results

    Production results KGHM Polska Miedź S.A. Ore extraction Production of copper Electrolytic copper Metallic silver [mn t dry weight] in concentrate [kt] production [kt] production [t] –0.7% Y/Y –1.6% Y/Y -0.9% Y/Y -5.5% Y/Y 29,9 29,7 1 400 565 560 1 323 From 399 393 purchased 48.7 47.9 147 147 metal-

43. Slide 43: Production initiatives implemented in KGHM Polska Miedź S.A.

    Production initiatives implemented in KGHM Polska Miedź S.A. Full integration of processes in management of the supply chain  Implementation of an integrated material planning system based on the structure of where Integrated planning of costs arise material needs  Implementation of systemic tools

44. Slide 44: Production results: Sierra Gorda

    Production results Sierra Gorda1) Payable copper production Silver production +87% Y/Y [kt] [t] +37% Y/Y  Higher extraction by 27,6 14,6 the Sierra Gorda mine 3,7 7,5 81,8 led to higher production of copper, 59,5 Q4 2019 Q4 2020 2019 2020 silver and gold in 2020 compared to TPM production +1% Y/Y 2

45. Slide 45: Production results: KGHM INTERNATIONAL

    Production results KGHM INTERNATIONAL Payable copper production Silver production -29% Y/Y [kt] [t]  Lower silver production -13% Y/Y in the Sudbury Basin due 2,4 1,7 to lower extraction and 0,6 0,6 lower silver content in 76,5 66,9 ore Q4 2019 Q4 2020 2019 2020  Lower gold production by -22% Y/Y

46. Slide 46: Sales revenue

    Sales revenue KGHM Group Revenues from contracts with customers +4% Y/Y Revenues from contracts with [mn PLN] customers [mn PLN] 22 723 +1 345 +306 23 632 23 632 22 723 -48 -433 -261 1 603 1 956 2 703 3 084 Revenues for Change in sales Change in Change in Decrease in Other Revenues for 2019 volumes

47. Slide 47: Sales revenue: KGHM Polska Miedź S.A.

    Sales revenue KGHM Polska Miedź S.A. Sales revenue Higher revenues from sales by PLN 1 643 million (+9%) [mn PLN] were achieved in 2020 compared to 2019 mainly due to: +9% Y/Y  higher metals prices (copper +3%, silver +27%) 19 326 17 683  a more favourable USD/PLN exchange rate (+2%) 1 615 Other 1

48. Slide 48: The financial situation of the KGHM Group remains stable and safe

    The financial situation of the KGHM Group remains stable and safe 2020 Budget Total unit production cost of electrolytic copper from own concentrate KGHM Polska Miedź S.A.1) 19.3 [k PLN/t] 17.8 Investments Capital expenditures 2 331 2 250 KGHM Polska Miedź S.A.2) 3) [mn PLN] Other expenditures, incl

49. Slide 49: C1 unit cost

    C1 unit cost1) KGHM Group C1 – KGHM Polska Miedź S.A. C1 – Group [USD/lb] [USD/lb] -7% Y/Y incl.the minerals  The decrease in C1 cost in KGHM Polska 1,74 1,62 extraction tax Miedź versus 2019 was due to the 0,47 0,48 weakening of the PLN vs the USD and to -6% Y/Y 1,28 1,14 higher silver and gold pr

50. Slide 50: Expenses by nature

    Expenses by nature KGHM Polska Miedź S.A. Expenses by nature [mn PLN] Expenses by nature higher by +3% Y/Y 15 386 PLN 490 million yoy 14 896 Minerals extraction tax 1 625 recognised in expenses 1 520 by nature 3 778 3 974 Purchased metal- 4 296 Minerals 3 941 extraction bearing materials 3 771 3 636

51. Slide 51: Operating results

    Operating results KGHM Group Change in adjusted EBITDA1) +27% Y/Y Adjusted EBITDA [mn PLN] [mn PLN] 6 623 6 623 +686 5 229 +839 211 -30 5 229 1 346 -101 241 660 608 709 2019 KGHM KGHM Sierra Other 2020 4 458 Polska Miedź S.A. INTERNATIONAL Gorda 3 619 Higher EBITDA for the year by PLN 1 394 million

52. Slide 52: Financial results

    Financial results KGHM Group 1797 Profit for the period +26% Y/Y [mn PLN] consolidated net profit for 2020 Higher Group profit by PLN 376 million (+26%) mainly due to: [million PLN]  a higher net result on sales  a higher result on involvement in joint ventures + 909 + 238 + 80 1 797 - 47 - 137 -

53. Slide 53: Higher EBITDA, higher net profit

    EBITDA and profit for the period KGHM Polska Miedź S.A. Adjusted EBITDA Profit for the period Higher EBITDA, [mn PLN] [mn PLN] +23% Y/Y +41% Y/Y higher net profit 4 458 3 619 1 779  EBITDA higher by 23% 1 264 vs the corresponding period of 2019  Higher net profit by PLN 515 mn (+41%) 2019 2020 201

54. Slide 54: Cash flow

    Cash flow KGHM Group [mn PLN] +1 172 +2 395 - 667 +2 756 2 522 -3 457 - 207 - 266 - 177 - 43 1 016 Cash as at Profit/loss Exclusion of Income tax paid Change in Acquisition of Acquisition of Proceeds from Interest paid Other Cash as at 31 Dec 2019 before income income and working capital property, p

55. Slide 55: Net debt of the KGHM Group

    Net debt of the KGHM Group As at the end of 2020 Main factors affecting net debt in 2020 Net debt / adjusted EBITDA Increases in debt 1,5 1,7 1,6 1,4 0,9  Cash expenditures on property, plant and equipment (PLN 3 458 mn) 31-12-2019 31-03-2020 30-06-2020 30-09-2020 31-12-2020  The minerals extracti

56. Slide 56: Production and financial results: Part III: Q1 2021

    Production and financial results of the KGHM Group Part III: Q1 2021

57. Slide 57: Key production indicators Q1 2021

    Key production indicators Q1 2021 186 Payable copper production +6.6% Q1/Q1 by the KGHM Group [kt] higher by 6.6% (q/q) Payable copper production Payable copper production +21% Q1/Q1 KGHM Polska Miedź [kt] Sierra Gorda1) [kt]  KGHM Polska Miedź: 19 23 146 higher availability of feed material +3.8%

58. Slide 58: 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 Existing concessions in Poland and potential areas Ore extraction dry weight from GGP [kt] +11% Q1/Q4 +29% Q1/Q1 869 982 982 696 Mining area

59. Slide 59: Key financial indicators Q1 2021

    Key financial indicators Q1 2021 Adjusted KGHM Group EBITDA Group EBITDA2) Group revenues [mn PLN] +27% Q1/Q1 [mn PLN] more than double that recorded +131% Q1/Q1 in Q1 2020 2 608 6 745 5 299 Higher EBITDA compared to Q1 2020 (+PLN 1 479 million; +131%) of which in the following segments:  KGHM Pols

60. Slide 60: Metals production

    Metals production KGHM Group Payable copper production Silver production  Higher production vs Q1 2019: [kt] [t] -8.4% Q1/Q1 − by KGHM Polska Miedź due to greater 335 307 availability of feed and higher availability +6.6% Q1/Q1 of production lines 186 − by KGHM INTERNATIONAL mainly due to 174 Q1 20

61. Slide 61: Production results

    Production results KGHM Polska Miedź S.A. Ore extraction +1.3% Q1/Q1 Production of copper –2.3% Q1/Q1 Electrolytic copper +3.8% Q1/Q1 Metallic silver -9.3% Q1/Q1 [mn t dry weight] in concentrate [kt] production [kt] production [t] 141 146 7,4 7,5 99 97 38 47 329 299 49.5 49.3 From purchased Silver g

62. Slide 62: Production results: Sierra Gorda

    Production results Sierra Gorda1) Payable copper production +21% Q1/Q1 Silver production +37% Q1/Q1 [kt] [t] 7,8 5,7 22,9  Higher silver production 19,0 Q1 2020 Q1 2021 in Q1 2021 vs Q1 2020 thanks to higher ore grade TPM production -22% Q1/Q1 [koz t]  Lower TPM production 8,5 in Q1 2021 vs Q1 202

63. Slide 63: Production results: KGHM INTERNATIONAL

    Production results KGHM INTERNATIONAL Payable copper production +15% Q1/Q1 Silver production +30% Q1/Q1 [kt] [t]  Higher silver production by the Sudbury Basin 0,47 0,60 due to higher silver 16,2 content in ore 14,1 Q1 2020 Q1 2021  Higher gold production by the Robinson mine TPM production -32% Q

64. Slide 64: Group sales revenue

    Group sales revenue Q1 2021 Revenues from contracts with +27% Q1/Q1 Revenues from contracts with customers customers [mn PLN] [mn PLN] 6 745 +2 197 6 745 +30 426 5 299 750 5 299 -174 -389 442 632 -218 5 569 4 225 Revenues in Change in sales Change in Change in Adjustment to Other Revenues in Q1 2020

65. Slide 65: C1 unit cost

    C1 unit cost1) KGHM Group C1 – KGHM Polska Miedź S.A. C1 – Group [USD/lb] [USD/lb] +22% Q1/Q1  The increase in C1 w KGHM Polska Miedź by incl. the minerals 1,93 extraction 1,58 tax +13% Q1/Q1 0,40 0,90 22% compared to Q1 2020 was mainly the 1,18 result of a higher minerals extraction tax 1,03 charg

66. Slide 66: Operating results

    Operating results KGHM Group Change in adjusted EBITDA1) Adjusted EBITDA [mn PLN] [mn PLN] +131% Q1/Q1 2 608 +539 2 608 52 +186 +775 643 -21 1 129 238 1 129 73 Q1 2020 KGHM Polska KGHM Sierra Other Q1 2021 104 52 1 675 Miedź S.A. INTERNATIONAL Gorda 900 Higher adjusted EBITDA compared to Q1 2020 by

67. Slide 67: Financial results

    Financial results KGHM Group Profit for the period 1 365 [mn PLN] consolidated net profit for Q1 2021 +98% Q1/Q1 Higher Group profit for the period by PLN 675 million (+98%) mainly due to a higher net result on sales with higher CIT [million PLN] +1 446 + 85 +1 + 759 + 51 + 107 1 365 - 106 - 67 - 25

68. Slide 68: Cash flow

    Cash flow KGHM Group [mn PLN] + 325 +1 862 - 200 -1 060 2 522 - 814 + 51 1 566 -1 079 - 41 Cash as at Profit/loss before Exclusion of Income tax paid Change in Acquisition of Proceeds Interest paid Other Cash as at 31-12-2020 income tax income and costs working capital property, plant from/repayment

69. Slide 69: Net debt of the KGHM Group

    Net debt of the KGHM Group As at the end of Q1 2021 Net debt / adjusted EBITDA Main factors affecting net debt in Q1 2021 1,7 1,6 Increases in debt 1,4 0,9 0,8  Change in inventories (higher by PLN 879 mn) 31-03-2020 30-06-2020 30-09-2020 31-12-2020 31-03-2021  Cash expenditures on property, plant

70. Slide 70: Advancement of the KGHM Group’s strategy

    Advancement of the KGHM Group’s strategy

71. Slide 71: 4 strategic directions for KGHM’s development

    4 strategic directions for KGHM’s development The review of the Strategy of KGHM Polska Miedź S.A. for 2019-2023 # 4E ELASTICITY, EFFICIENCY FLEXIBILITY ECOLOGY, SAFETY AND SUSTAINABLE E-INDUSTRY DEVELOPMENT 71

72. Slide 72: Strategic priorities

    Strategic priorities #1 Higher #2 Energy #3 International assets 2.0 #4 Long-term production independence financial strategy #5 Ecosystem #6 Technologies #7 New quality innovation of the future Safety and for KGHM development 72

73. Slide 73: Strategy in practice (1)

    Strategy in practice Selected key operating initiatives (1) AREA MAIN TARGET SELECTED EFFECTIVENESS MEASURES Maintenance of cost-effective domestic and foreign production Level of production in Poland of Average yearly Yearly average of daily ore mined Cu in ore with an annual C1 metallurgical produ

74. Slide 74: Strategy in practice (2)

    Strategy in practice Selected key operating initiatives (2) AREA MAIN TARGET SELECTED EFFECTIVENESS MEASURES Increase the efficiency of the KGHM Group through innovation Increase expenditures on Ensure that all of the innovation Level of funds for R&D and innovation and R&D work projects are realise

75. Slide 75: Strategy in practice (3)

    Strategy in practice Selected key operating initiatives (3) AREA MAIN TARGET SELECTED EFFECTIVENESS MEASURES Implementation of systemic solutions aimed at increasing Ensure financial stability of Increase in the efficiency of Minimum level of achievement the KGHM Group’s the Polish-based Group suppo

76. Slide 76: Key elements of the Strategy advanced in 2020

    Key elements of the Strategy advanced in 2020  High production from domestic assets (mined production  Enhanced Energy efficiency Production 442 kt; metallurgical production 560 kt) Efficient  Continuation of digital transformation under the KGHM  Stable production from international assets (Sie

77. Slide 77: Strategy – actions to protect our climate

    Strategy – actions to protect our climate  Every year, KGHM’s metallurgical plants generate 650-700 thousand tonnes of mastic slag – all of Utilisation of which is processed into a full-fledged product, for example in road building Circular Economy  Over the last 10 years, KGHM Metraco has utilise

78. Slide 78: Strategy execution after 2 years - summary

    Strategy execution after 2 years - summary We are adapting our activities to changes Our response to increase in competitiveness in the Flexibility Efficiency in our environment production and mining sector and Industry 4.0.  Domestic mine production remains at the level of 450 kt of copper in ore;

79. Slide 79: A rational and responsible investment program: 2020 CAPEX

    A rationale and responsible investment program Capital expenditures by KGHM Polska Miedź S.A. in 2020 CAPEX execution in 2020 by area by category Mining (66%) Replacement (31%) Metallurgy (30%) Maintaining mine production (35%) Other activities (1%) Development (34%) Leasing IFRS 16 (3%) Development

80. Slide 80: A rational and responsible investment program: Q1 2021 CAPEX

    A rationale and responsible investment program Capital expenditures by KGHM Polska Miedź S.A. in Q1 2021 CAPEX execution in Q1 2021 by area by category Mining Replacement Metallurgy Maintaining mine production Other activities Development Leasing MSSF 16 Development - uncompleted 447 30% 327 1 mn PL

81. Slide 81: CAPEX execution in key projects

    CAPEX execution in key projects Construction of Damówka Large-diameter BATAs Replacement of Major SW-4 shaft pumphouse with drillholes machine park components reverse water in mines and piping maintenance Outfitting Maintaining Modernisation of mines Equipment Development Development mine of Głogów

82. Slide 82: Selected development projects

    Selected development projects CAPEX execution 2020 Tailings Segregation PLN 389 mn and Thickening Station PLN 161 mn Development of Żelazny Most TSF Program to adapt the technological installations Southern Quarter to BAT Conclusions Construction and start-up of the following completed: 88% of physi

83. Slide 83: Advancement of key investments

    Advancement of key investments Mining machinery Modernisation of WPA II deduster  Main installations and equipment of the deduster  Purchase of 161 machines, incl. 26 – Lubin process line built (exchangers, reactors, bag filters, mine, 62 – Polkowice-Sieroszowice mine, chimneys, ventilators, separ

84. Slide 84: Pro-ecological investments

    Pro-ecological investments KGHM Group Over 186 spent in 2020 by KGHM [including more than PLN 43 million on construction of an installation to eliminate on pro-ecological aresenic and mercury from gases at the Solinox investments1) installation in the Legnica Smelter/Refinery million PLN under the B

85. Slide 85: Actions to reduce environmental impact

    Actions to reduce environmental impact KGHM INTERNATIONAL Actions taken by entities of the KGHM INTERNATIONAL LTD. Group in 2020 to protect the environment PLN 6 mn +20% Y/Y PLN 18 mn -36% Y/Y Carlota (USA) Robinson (USA) [incl. nearly PLN 3 mn due to environmental permits held] Actions related to m

86. Slide 86: Energy Development Program, including RES

    Energy Development Program, including RES Actions in 2020 Development of renewable Energy sources Optimisation and development of conventional sources  A contractor was selected for the project „Design for a PV power plant together with obtaining a construction permit” for the Obora Sandpit and HM

87. Slide 87: The first photovoltaic power plants projects

    The first photovoltaic power plants projects PVPP Piaskownia Obora Installed power 8 MW Projected avoided emissions Estimated production 8.5 GWh over 25 years:  CO2 more than 80 kt  SOx more than 70 tonnes  NOx more than 70 tonnes  CO more than 30 tonnes  PM more than 4 tonnes PVPP HMG I-III co

88. Slide 88: 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. 2019: 2020: 2019 Own generation sources covered 22.42% of KGHM’s 3 TWh total power needs in 2020 Natural Market Own source (almost 1.5% more than in

89. Slide 89: Supporting slides

    Supporting slides TOE “UTURE |S MAD= OF COPPER

90. Slide 90: Reasons to invest in KGHM

    Reasons to invest in KGHM A leading player on the copper A reliable producer, A diversified portfolio of and silver market in terms of mine a trusted business partner assets at various stages of output and size of documented and a company committed to development to guarantee resources, in mining-fr

91. Slide 91: Capital allocation

    Capital allocation Renewal of dividend payout 2020 Dividend Payout Dividend policy (17% of net profit) 300 mn PLN The Dividend Policy of KGHM Polska Miedź S.A. is part of its on-going (1.50 PLN/share - gross) efforts to ensure a balance between dividends paid out to 65% shareholders and opportunitie

92. Slide 92: 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 projects Oper

93. Slide 93: Committed to solid corporate governance

    Committed to solid corporate governance Independent directors on the board KGHM’s Corporate Governance is guided by international standards and follows best practices: 2  All members of KGHM’s Supervisory Board are appointed by Independent Directors the General Shareholders Meeting Employee Elected

94. Slide 94: 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 6% 7% Polish State Treasury 63,589,900 31.79% 31.79% 2% Nationale-Nederlanden OFE 10,104,354

95. Slide 95: Share price performance

    Share price performance Basic quotes Strong correlation with copper and silver [change in %] KGHM Cu WSE debut 10th July 1997 200% 100 Ag GPW ticker KGH 175% 150% 50 Bloomberg/Reuters ticker KGH PW / KGH.WA 125% Share price [PLN] 210.30 100% 0 Capitalization [bn PLN] 42.06 75% No. of shares 200 000

96. Slide 96: Market risk management

    Market risk management Hedged position on the copper market (as at 31 March 2021) Copper Hedged position – open as at 31 March 2021 At the end of Q1 2021 KGHM Polska Miedź S.A. [kt] recorded a result* on derivatives and hedges in the amount of –PLN 437 million: 93 76,5  -PLN 266 million adjusted re

97. Slide 97: Market risk management

    Market risk management Hedged positions on the silver, currency and interest rate markets (as at 31 March 2021) USD/PLN Hedged position – open as at 31 December 2020 In Q1 2021 transactions were implemented [mn USD] Hedged position implemented in Q1 2021 on the forward currency market: 900  Put opt

98. Slide 98: Events for investors

    Events for investors 2021 Date Upcoming events 17 Aug Half-year report for the first half of 2021 18 Aug MB’s results conference 19 Aug Investor chat with CFO 6 Sep Pekao 18th Annual Emerging Europe Investment Conference 28 Sep PKO BP Investor’s Day: CEE Metals & Energy 4 Oct Erste Bank Finest CEEle

99. Slide 99: Investor Relations Department

    Investor Relations Department https://kghm.com/en/investors ir@kghm.com | esg@kghm.com T +48 76 74 78 280 | F +48 76 74 78 205

KGHM Polska Miedź — Investor Presentation (July 2021) on 6ix