Kghm Polska Miedz S.a. · GPW:KGH
Kghm Polska Miedz — Investor Presentation (September 2024)
49 slides from Kghm Polska Miedz's investor presentation, September 2024
Slide 1: KGHM Group Investor Presentation
KGHM Group Investor Presentation mmm mmm September 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. 122 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: Employee safety as a strategic priority for the KGHM Group
Employee safety as a strategic priority for the KGHM Group 2021 Safety and development Accident rates1) ▪ ISO 45001:2018 Change2) in LTIFR 2023 vs 2020 We hold an Occupational Health and Safety Management System Certificate. -18.2% in KGHM Polska Miedź S.A. ▪ Leader’s Gold Card of Workplace Safety C
Slide 16: Advancement of key strategic performance indicators in H1 2024
Advancement of key strategic performance indicators in H1 2024 Strategic measure of success Base year 2020 H1 2024 (strategic KPI) Goal 2030 Domestic approx. 560 kt Approx. 600 thousand tonnes of electrolytic copper copper production of electrolytic copper (including production based on a higher amo
Slide 17: Performance in the first half of 2024 - KGHM Group
Performance in the first half of 2024 - KGHM Group
Slide 18: Summation of H1 2024 in the KGHM Group
Summation of H1 2024 in the KGHM Group Main macroeconomic factors and aspects of the Group compared to H1 2023 Macroeconomic environment1) Operating results Indicators +4% -3% no change Copper price Copper price in extraction of ore, dry weight in KGHM Polska Miedź S.A. +15% in PLN/t Higher CAPEX ex
Slide 19: Payable copper production by the KGHM Group
Key production indicators H1 2024 358 Payable copper production +2% H1/H1 by the KGHM Group [kt] higher by 2% (H1/H1) ▪ KGHM Polska Miedź Payable copper production Payable copper production -10% H1/H1 Production slightly lower than in KGHM Polska Miedź S.A. [kt] Sierra Gorda1) [kt] the prior year –
Slide 20: Other major metals: silver, TPMs, molybdenum
Other major metals: silver, TPMs, molybdenum ▪ Slightly lower copper production by KGHM Payable copper production Silver production Polska Miedź S.A. due to execution of the [t] [kt] -5% H1/H1 adopted production plan for 2024 712 678 +2% H1/H1 ▪ Higher copper production by KGHM INTERNATIONAL LTD. du
Slide 21: C1 unit cost
C1 unit cost 1) KGHM Group C1 – KGHM Group C1 – KGHM Polska Miedź S.A. [USD/lb] [USD/lb] -1% H1/H1 ▪ KGHM Polska Miedź S.A. – a decrease in C1 by -7% H1/H1 3.03 3.00 incl. the 1% mainly due to higher production from own 2.95 minerals extraction concentrates, higher valuation of by-products and lower
Slide 22: Expenses by nature
Expenses by nature KGHM Polska Miedź S.A. Lower expenses by nature compared to H1 2023 mainly due to lower costs of purchased metal- Expenses by nature bearing materials, as well as energy and natural [mn PLN] gas 17 371 Impairments/reversals of impairments 7 16 394 -6% H1/H1 11 174 11% 1 973 15 Min
Slide 23: 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% 16% 15000 12% Total unit cost of electrolytic copper produ
Slide 24: Key financial indicators of the KGHM Group
Key financial indicators of the KGHM Group H1 2024 Group adjusted EBITDA1) Group adjusted EBITDA1) [mn PLN] [mn PLN] Adjusted EBITDA of the KGHM Group +35% H1/H1 4 208 2 657 Higher adjusted EBITDA compared to H1 2023 applies mainly to KGHM 184 INTERNATIONAL LTD. and to a lesser extent 475 4 208 to K
Slide 25: 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] -3% H1/H1 +8% H1/H1 +10% H1/H1 15 510 15 076 1 331 2 472 1 207 Other 1 272 2 289 1 145 Silver 2 256 2 284 Copper and copper 11 982 11 647 products H1 202
Slide 26: Net debt of the KGHM Group
Net debt of the KGHM Group As at the end of Q2 2024 Main factors affecting net debt in 2024 Net debt / adjusted EBITDA1) 1.2 1.0 1.4 Increases in debt 0.9 0.7 ▪ Cash expenditures on property, plant and equipment (PLN 2 599 mn) 30-06-2023 30-09-2023 31-12-2023 31-03-2024 30-06-2024 ▪ The minerals ext
Slide 27: Market risk management
Market risk management Hedged position on the copper, silver, currency and interest rate markets (as at 30 June 2024) Copper Hedged position – open- otwarta as at 31na December 2023 At the end of the first half of 2024 the Parent Entity Pozycja zabezpieczająca 31.12.2023 [kt] Hedged Pozycja position
Slide 28: Capital allocation
Capital allocation Renewal of dividend payout 2024 Dividend Payout (on 2023 profit) (28% of net profit)** Dividend policy 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 40% shareholde
Slide 29: A rationale and responsible investment program
A rationale and responsible investment program Capital expenditures by KGHM Polska Miedź S.A. in H1 2024 CAPEX execution in H1 2024. incl. borrowings by area by category Mining Replacement Metallurgy Maintaining mine production Other activities Development (incl. R&D) Leasing IFRS 16 Adaptaion proje
Slide 30: CAPEX execution in key investments
CAPEX execution in key investments Deposit Access Program ▪ GG-1 shaft – Work continues on the final facilities. An environmental decision was obtained for the target facilities. Adaptation Outfitting of the mines 267 Shafts maintenance Outfitting of the mines ▪ GG-2 „Odra” shaft – Work carried out
Slide 31: 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] +2% Q2/Q1 +18% H1/H1 2 629 3 111 1 540 1 570 19.5%
Slide 32: Energy Development Program, including RES | major events in H1 2024
Energy Development Program, including RES| major events in H1 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 33: 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 34: Supporting slides
Supporting slides
Slide 35: 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 36: Cash flow
Cash flow KGHM Group [mn PLN] +3 028 + 405 2 441 - 102 - 43 1 729 -2 576 Cash as at 1 January 2024 Net cash generated from Net cash used in investing Proceeds from/repayments of Interest paid Other Cash as at 30 June 2024 operating activities activities borrowings 36
Slide 37: Macroeconomic environment in the first half of 2024
Macroeconomic environment in the first half of 2024
Slide 38: Macroeconomic environment: commodities and currencies prices
Macroeconomic environment Commodities and currencies prices Copper prices in H1 2024 ranged between 8 085 and 10 857 USD/t, remaining at the beginning of the year in a sideways trend, along [USD/t] Price SD t Annual av. or TD SD t [PLN/t] with worse data from the Chinese market and Euro Zone. Copper
Slide 39: Precious metals prices in H1 2024
Precious metals prices in H1 2024 Investors purchased gold in the expectation of the start of a cycle of interest rates cuts and as a hedge against geopolitical risk. In May 2024 gold prices reached their historic maximum. In H1 2024 the price of gold, contrary to its historic dependence, Silver pri
Slide 40: 2023 results - highlights
2023 results - highlights
Slide 41: 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 42: 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 43: 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 44: 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 Adjusted EBITDA of the KGHM Group 5 362 8 151 7 819 9 024 Lower adjusted EBITDA compared to 2022 in all the main Group segments Q4 2022 Q4 2023 2022 2023 5 362 Group
Slide 45: Governance
~ KGHM-_ POLSKA MIEDZ Sgn ox Governance
Slide 46: 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 47: 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 48: Upcoming events for investors
Upcoming events for investors Date Upcoming events 3 September DM BOŚ Back to school 2024 9 September Bank Pekao 21st Annual Emerging Europe Investment Conference, Warsaw 16 October GPW & Trigon 13 November Consolidated quarterly report for the third quarter of 2024 For the most recent information p
Slide 49: 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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