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Global expansion of KGHM

KGHM Polska Miedź S.A. is a mining and smelting company which has reached a high level of expertise in the mining and metallurgical technology and in the sale of copper and silver. It is obvious that the resources of copper ores in its basic area of operation are limited and the base of resources in this region will systematically shrink over time. Developing new resources of copper ore from the Głogów Głęboki-Przemysłowy deposit, which is located next to the deposits currently exploited, will allow the Company to maintain the current level of production, however reaching for ores located deeper (from 1 100 to 1 350 m) has a considerable impact on an increase in the costs of mining (higher pressure of the rock mass, higher temperatures, etc.) which affects KGHM’s competitive position.



The participation of KGHM Ajax Mining Inc. in the manufacturing process will enable KGHM to increase its annual copper production by 40 thousand tonnes, and gold by 3 tonnes.

Therefore, in the Company’s strategy for 2010–2018, one of the primary strategic goals is to obtain new resource assets. The following means will be used to this end:

1. Exploration of new deposits in the region (inter alia, a concession
    for  exploring deposits in Germany, i.e., the Weisswasser Project),

2. Acquisitions in the mining sector.

All projects relating to acquisitions in the mining sector must meet the basic profitability criteria at an acceptable risk level. KGHM prefers projects in countries which are politically and economically stable, with legislation which is friendly for foreign investments and mining. Such countries include members of NAFTA (North American Free Trade Agreement) and stable Latin American countries (Chile and Peru), countries of South Africa (Republic of South Africa, Namibia, Botswana, Morocco) and European countries.

In order to attain the strategic goals set out in 2010, KGHM Polska Miedź S.A. signed an agreement on accession to a joint venture with Abacus Mining & Exploration Corporation, Vancouver, Canada, under the name KGHM Ajax Mining Inc. The new company in which the Polish Company has an 80% shareholding, will implement a project of exploitation of copper and gold ores from the Afton-Ajax deposit in Western Canada, in the South-central part of British Columbia, approximately 5 km South-West of Kamloops. This is the first such considerable investment of the Company on western markets.

The planned undertaking will be an open pit mine with an anticipated life-time of approximately 23 years. Thanks to the deposits in Canada, a country which is both economically and politically stable, KGHM Polska Miedź S.A. intends to increase the production of copper concentrate by 40 thousand tonnes annually and gold by nearly three tonnes.

Another step to implement the strategy was the completion of a friendly take-over of the Canadian mining company Quadra FNX at the beginning of 2012. The value of the transaction amounted to CAD 2.9 billion, i.e., PLN 9.1 billion. KGHM Polska Miedź S.A. financed this transaction from its own funds. In this way, the Company became a global player on the non-ferrous metals market. The Company owns mines in Canada, USA and Chile. KGHM is also a co-owner of the Sierra Gorda deposit in Chile. This guarantees to the Company the safety of raw materials supply in the global economy and places it fourth in the world in terms of copper resources.



KGHM has a diversified portfolio of mining assets in safe jurisdictions

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Jan Kochanowski (1530­-1584) – poet and playwright of the Renaissance period, graduate
of the Kraków Academy and the Universities of Koenigsberg and Padua, secretary to
King Zygmunt II August of Poland. Considered one of the most outstanding authors of the
Renaissance in Europe and the most eminent Slav poet who contributed to the development of the Polish literary language.
Teresa Bałuk-Ulewiczowa, Ph.D.
Insitute of English Philology
Jagiellonian University in Kraków