Kghm Polska Miedz S.a. · GPW:KGH
Kghm Polska Miedz — Investor Presentation (December 2023)
56 slides from Kghm Polska Miedz's investor presentation, December 2023
Slide 1: KGHM Group Investor Presentation December 2023
KGHM Group Investor Presentation December 2023
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 4
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 2023 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 20222) 1.55 54 1.53 43 1.13 30 1.06 24 0.90 22 0.86 22 0.78 21 0.54 19 0.52 19 0.47 [mn tonnes] 14 [moz] Source: 1) KITCO, March 2023 2) World Silver Survey, April 2023 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 26 years LOM 2022 production stats: ~ 11 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 165.1 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 46.8 kt production in 2022 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: KGHM's efforts towards energy transformation
KGHM’s efforts towards energy transformation KGHM Polska Miedź S.A. aims at permanently increasing the share of renewable energy sources and in-house generation to meet its energy needs BACKGROUND CONDITIONS ACTIONS UNDERTAKEN Climate Policy EU The Company is currently advancing further investments
Slide 15: 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 16: 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 17: 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): 9M 2023: Own generation sources, including RES, covered 16.89% of KGHM Polska Miedź S.A.’s total power needs. Natural Mar
Slide 18: 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 Change in LTIFR1) Occupational Health and Safety Management System Certificate -10.3% in KGHM Polska Miedź S.A. ▪ Leader’s Gold Card of Workplace Safety 20.0 Change in TRIR2) KGHM Pols
Slide 19: Actions in support of families and CSR
Actions in support of families and CSR We create a 311 Beneficiaries: good climate for families! 1 500 wonderful parents of employees of KGHM joined the CUdowni Rodzice (Wonderful KGHM since the start of the parents) of KGHM program program 1500 books collected during the Over 4 000 books borrowed f
Slide 20: Strategy of the KGHM Polska Miedź S.A. Group
Strategy of the KGHM Polska Miedź S.A. Group
Slide 21: Strategy of the KGHM Group to 2030 with an outlook to 2040
Strategy of the KGHM Group to 2030 with an outlook to 2040 While the mission and vision of KGHM remain unchanged, the strategic directions were expanded to include a fifth element – Energy, to reflect changes in the overall environment. MISSION To always have copper VISION To use our resources effic
Slide 22: Key elements of the Strategy advanced in the first 9M 2023
Key elements of the Strategy advanced in the first 9M 2023 ▪ Continuation of the Hybrid Legnica Smelter and Refinery ▪ Completion on 31 August 2023, in accordance with the plan, of the Program to adapt the Strategic Program (including advancement of the concept for technological installations of the
Slide 23: Performance in the first 9 months of 2023 - KGHM Group
Performance in the first 9 months of 2023 - KGHM Group
Slide 24: Summation of the first 9 months of 2023 in the KGHM Group
Summation of the first 9 months of 2023 in the KGHM Group Main macroeconomic factors and aspects of the Group compared to the first 9M of 2022 Macroeconomic environment1) Operating results Indicators -5% -8% +1.3% Copper price Copper price Increase in extraction of ore, dry weight in KGHM Polska Mie
Slide 25: Payable copper production by the KGHM Group
Key production indicators of the KGHM Group and segments 9M 2023 527 Payable copper production -5% 9M/9M by the KGHM Group [kt] lower by 5% (9M/9M) ▪ KGHM Polska Miedź – Payable copper production Payable copper production -12% 9M/9M KGHM Polska Miedź [kt] Sierra Gorda1) [kt] production similar to pr
Slide 26: Other major metals: silver, TPMs, molybdenum
Other major metals: silver, TPMs, molybdenum Payable copper production Silver production ▪ Copper production by KGHM Polska [kt] [t] +8% 9M/9M Miedź S.A. similar to prior year -5% 9M/9M ▪ Copper production lower 9M/9M: 1 022 1 100 557 − in KGHM INTERNATIONAL LTD. 527 due to lower production by the 4
Slide 27: C1 unit cost
C1 unit cost 1) KGHM Group ▪ The increase in C1 cost in KGHM Polska Miedź by 26% C1 – KGHM Group C1 – KGHM Polska Miedź S.A. compared to the first 9M of 2022 was mainly due to a [USD/lb] [USD/lb] higher minerals extraction tax charge and to higher +26% 9M/9M +34% 9M/9M incl. the minerals costs of ma
Slide 28: Expenses by nature
Expenses by nature KGHM Polska Miedź S.A. Expenses by nature Cost pressures in the KGHM Group [PLN mn] due to global inflation 20 491 +7% 9M/9M 7 323 19 105 6 827 Minerals extraction tax 6 790 2 797 recognised in expenses 6 341 Minerals extraction 2 300 by nature 6 155 tax recognised in expenses by
Slide 29: Margins under pressure
Margins under pressure Higher costs in the first 9 months of 2023 due to KGHM Polska Miedź S.A. global inflation Revenues vs EBITDA (mn PLN) KGHM Polska Miedź S.A. 35000 40% 28000 30% Copper production cost vs copper price 21000 23% 22% 20% 22% 19% 20% 14000 14% Total unit cost of electrolytic coppe
Slide 30: Key financial indicators of the KGHM Group
Key financial indicators of the KGHM Group 9M 2023 Group adjusted EBITDA1) Group revenues Adjusted EBITDA of the [mn PLN] [mn PLN] -0.2% 9M/9M KGHM Group -40% 9M/9M 25 696 25 648 Lower adjusted EBITDA compared to the first nine months of 2022, mainly 4 235 7 770 7 891 due to a less favourable 7 075
Slide 31: Financial results – KGHM Polska Miedź S.A.
Financial results – KGHM Polska Miedź S.A. Revenues from contracts with Adjusted EBITDA Profit for the period customers [mn PLN] [mn PLN] [mn PLN] +3% 9M/9M 21 783 22 470 -30% 9M/9M -51% 9M/9M Other 1 420 1 852 3 538 Silver 3 361 3 410 4 490 3 162 Copper and copper 1 737 products 17 002 17 208 9M 20
Slide 32: Net debt of the KGHM Group
Net debt of the KGHM Group As at the end of Q3 2023 Main factors affecting net debt in 2023 Net debt / adjusted EBITDA Increases in debt 1.2 0.8 0.9 0.9 ▪ Cash expenditures on property, plant and equipment 0.7 (PLN 3 200 mn) 30-09-2022 31-12-2022 31-03-2023 30-06-2023 30-09-2023 ▪ The minerals extra
Slide 33: Market risk management
Market risk management Hedged position on the copper, silver and currency markets (as at 30 September 2023) Copper Silver At the end of Q3 2023 the Parent Entity recorded a [kt] [koz] result on derivatives* and hedges in the amount of PLN 279 million: 47.25 1 050 − +PLN 425 mn adjusted revenues from
Slide 34: Capital allocation
Capital allocation Renewal of dividend payout Dividend for shareholders 2023 Dividend Payout (on 2022 profit) (6% of net profit) 200 mn PLN • PLN 200 000 000.00 (PLN 1.00 per share) (1.00 PLN/share - gross) • dividend date 27 July 2023, dividend payment date 10 August 2023 40% 33% 33% % of profit al
Slide 35: A rationale and responsible investment program
A rationale and responsible investment program Capital expenditures by KGHM Polska Miedź S.A. in 9M 2023 CAPEX execution in 9M 2023 by area by category Mining Replacement Metallurgy Maintaining mine production Other activities Development (incl. R&D) Leasing IFRS 16 Adaptation projects Development -
Slide 36: CAPEX execution in key investments
CAPEX execution in key investments Deposit Access Program Program to adapt the technological ▪ GG-1 shaft 1 – Construction/installation work underway to Deposit Access Outfitting of installations to BAT Conclusions prepare the shaft as a ventilation shaft (transitional period). Program the mines Des
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] +35% 4 070 +12% Q3/Q2 3 016 1 289 1 441 16.7% 18.7%
Slide 38: Energy Development Program, including RES | major events in Q3 2023
Energy Development Program, including RES| major events in Q3 2023 Development of solar energy ▪ Administrative proceedings commenced, including for a building permit and an announcement of intent to build a cable network for the HMG I-III1) photovoltaic power plants complex at the Głogów Copper Sme
Slide 39: Energy Development Program, including RES | major events in Q3 2023
Energy Development Program, including RES| major events in Q3 2023 Development of nuclear energy ▪ KGHM continued work on the SMR project. ▪ Jointly with the company Przedsiębiorstwo Energoprojekt-Katowice, work continued on analysing specific sites for the SMR installation under the second stage of
Slide 40: 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 41: Supporting slides
“ay ! KGHM POLSKA MIEDZ Supporting slides
Slide 42: 2022 targets versus achievements and targets for 2023
2022 targets versus achievements and targets for 2023 ❑ 2023 mined production of copper in ore similar to 2022 ❑ Silver production expected to be higher as a result of the full utilisation of processing capacity alongside lower silver content in ore ❑ Total unit cost of electrolytic copper productio
Slide 43: Group production and sales in the first 9M of 2023
Group production and sales in the first 9M of 2023 Execution of annual targets 2023 Budget Production Copper in concentrate [kt] 303.2 389.7 KGHM Polska Miedź S.A. Silver in concentrate [t] 1 011.6 1 261.5 Electrolytic copper, total [kt] 443.5 582.1 Electrolytic copper from own concentrate [kt] 287.
Slide 44: The financial situation of the KGHM Group remains stable and safe
The financial situation of the KGHM Group remains stable and safe 2023 Budget Total unit production cost of electrolytic copper from own concentrate 33.4 36.3 of KGHM Polska Miedź S.A.1) [k PLN/t] 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% Investments Capital expenditures 1 928 3 250 KGHM Pols
Slide 45: Cash flow
Cash flow KGHM Group [PLN mn] +1 708 +1 566 +1 692 -1 324 1 200 -3 039 1 403 - 71 - 43 - 200 - 86 Cash as at Profit/loss before Exclusions of Income tax paid Change in Acquisition of Proceeds Interest paid Dividend paid Other Cash as at 1 January 2023 income tax income working property, from/repayme
Slide 46: Macroeconomic environment in the first 9 months of 2023
Macroeconomic environment in the first 9 months of 2023
Slide 47: Macroeconomic environment: commodities and currencies prices
Macroeconomic environment Commodities and currencies prices Copper prices in Q3 2023 ranged between 8 017 and 8 720 USD/t. The price Price (USD/t) Annual av. or YTD (USD/t) [PLN/t] [USD/t] of copper in Q3 exhibited a sideways trend, given the lack of definitive Price (PLN/t) Annual av. or YTD (PLN/t
Slide 48: Precious metals prices and the copper market in Q3 2023
Precious metals prices and the copper market in Q3 2023 Precious metals were under pressure from the rising profitability of US bonds The prices of gold and silver in Q3 2023 fell in step with The decrease in investor interest can be seen in the size of rising interest rates and the profitability of
Slide 49: Governance
Governance
Slide 50: 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 51: Committed to solid corporate governance
Committed to solid corporate governance Independent directors on the Supervisory Board (10 directors total) KGHM’s Corporate Governance is guided by international standards and follows best practices: Independent Directors Employee Elected ▪ All members of KGHM’s Supervisory Board are appointed by 3
Slide 52: 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 9% Polish State Treasury 63,589,900 31.79% 31.79% 7% Allianz OFE 11,961,453 5.98% 5.98% 7% Na
Slide 53: Information on the impact of Russia's aggression against Ukraine
Information on the impact of Russia’s aggression against Ukraine on the functioning of the Company and the KGHM Group ▪ The geopolitical situation associated with the direct aggression of Russia on Ukraine and the implemented system of sanctions does not currently limit the operations of KGHM Polska
Slide 54: Selected ESG Policies and procedures in KGHM Polska Miedź S.A.
Selected ESG Policies and procedures in KGHM Polska Miedź S.A. Environment ▪ Environmental Policy ▪ Climate Policy Society ▪ Code of Ethics ▪ Code of Conduct ▪ Organisational Health and Safety Policy in KGHM Polska Miedź S.A. ▪ Responsible Supply Chains Policy ▪ Declaration of Diversity ▪ Human Righ
Slide 55: Upcoming events for investors
Upcoming events for investors Date Upcoming events 8 December WOOD’s Winter Wonderland EMEA Conference For the most recent information please visit our Investor calendar at https://kghm.com/en/investors/investor-handbook/investor-calendar 55
Slide 56: 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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