KGHM Polska Mied? S A : Budget for 2023 – cost-conscious and developmentally ambitious

Continued operational and financial stability, a safe level of debt and advancement of ambitious development and investment goals alongside the highest expenditures ever planned by the copper giant for these purposes. The Supervisory Board of KGHM Polska Miedź S.A. has approved the Company's budget for 2023.

"KGHM's Budget for 2023 is the Company's ambitious and consistent response to operational and developmental challenges, as well as those deriving from the macroeconomic and geopolitical environments. We have proposed to spend the highest amount in history on tangible and equity investments, whilst maintaining a stable capital, financial and operational position. We want to strengthen the production potential of individual segments of the Group, in accordance with the profiles and characteristics of individual assets. Next year will see an accelerated rate of investment in mine development projects," said Tomasz Zdzikot, President of the Management Board of KGHM Polska Miedź S.A.

The mined production plan of KGHM Polska Miedź S.A. for 2023 foresees the extraction of copper in ore at a level similar to that expected for 2022. Silver production is expected to be higher as a result of the full utilisation of processing capacity alongside lower silver content in ore. It is expected that the total unit cost of electrolytic copper production from own concentrate will be higher, mainly due to an increase in prices of materials used in production, energy factors and fuels, as well as of rates for external services while maintaining the material scope of costs.

Capital expenditures on property, plant and equipment in the amount of PLN 3 250 million, including a reserve of PLN 250 million (for the financing of items requiring individual approvals during the year or for supporting alterations of ongoing projects), will primarily be aimed at the continuation of existing projects, including key strategic programs. These include the Deposit Access Program (including the GG-2 "Odra" project), development of the Żelazny Most TSF, Resource Base Development programs, KGHM 4.0 and also planned maintenance shutdowns in the Company's core business.

Equity expenditures planned by KGHM Polska Miedź S.A. in 2023 amount to PLN 2 129 million, including on key areas connected with energy projects - involving photovoltaics, the acquisition of shares in Offshore Wind installations and investments in the energy companies of the KGHM Group. These investments will undergo appropriate economic feasibility reviews, reflecting the expected rate of return. Equity expenditures also including financing for KGHM INTERNATIONAL LTD. connected with advancement of the Victoria project.

In 2023, the Sierra Gorda mine will extract ore from areas with lower copper content, but a higher molybdenum grade. Consequently, despite the increase in daily throughput, the planned decrease in copper content in ore will result in lower payable copper production by this international asset of KGHM.

In KGHM INTERNATIONAL LTD., the lack of contribution from the Franke mine, due to its sale in the first half of 2022, will be partially offset by higher copper production by the Robinson and Sudbury resources, alongside unchanged production by the Carlota mine. Work will continue on developing the surface infrastructure of the Victoria Project which is critical for moving to the Advanced Exploration stage (with the sinking of an exploration shaft which will serve later as the ventilation shaft).

Main assumptions of the KGHM Budget for 2023

Production of KGHM Polska Miedź S.A.
Copper in concentrate (kt)	390
Silver in concentrate (t)	1261
Electrolytic copper (kt) -including from own concentrate	582 385
Metallic silver (t)	1301

Sales of KGHM Polska Miedź S.A.
Payable copper (kt)	607
Payable silver (t)	1303

Production of KGHM INTERNATIONAL LTD.
Payable copper (kt)	56
TPM (koz t)	59.2

Production of Sierra Gorda (on a 55% basis)
Payable copper (kt)	80.3
Molybdenum (mn lbs)	5.7

The expected total unit cost of copper production from own concentrate ⁽¹⁾ in KGHM Polska Miedź S.A. amounts to 36,3 thousand PLN/t.

KGHM Polska Miedź S.A.'s capital expenditures on property, plant and equipment planned for 2023 amount to PLN 3 250 million, while other capital expenditures ⁽²⁾ amount to PLN 2 129 million.

⁽¹⁾the sum of costs of mining, flotation, smelter processing per electrolytic copper, together with support functions and cathode selling costs, adjusted by the value of inventories of half-finished products and work in progress, less anode slimes and divided by the volume of electrolytic copper production from own concentrate.

⁽²⁾acquisition of shares and investment certificates as well as loans.