Kghm Polska Miedz Sa Ord

Ladies and gentlemen, welcome to the press conference of KGHM Polska Mieci S.A. during which we will present the results for the Q1 2024. The results are going to be presented by the board of KGHM Polska Mieci S.A. Andrzej Szydło, president of the board of KGHM Polska Mieci S.A. Mr. Mirosław Laskowski, vice president of the board for production. And Mr. Zbigniew Bryja, Vice President of the Board for Development of KAG Chambers Committees. We also have Janusz Krystosiak with us, Investor Relations Department Director, that in the second part of our meeting will take the floor. and will deal with the Q&A session. The questions will be able to be asked from the room and from our email address. So now I would like to ask the members of the board to take the floor. First, Mr. Andrzej Szydło. Good morning, ladies and gentlemen. this time I'm welcoming you on our own turf because the previous conference took place in Warsaw quite recently so we are dealing with quite a lot of meetings but it's not only in terms of the results meetings but also the board's activities we would like to present you with the summary of Q1 2024 and comment on it, and we will try to do it quickly enough to give enough time for potential questions and answers, of course. So Q1 2024 can be called Khan, in which the company implemented all the tasks according to the plan. In terms of macroeconomic environment, we had slightly weaker, 5% less weaker in terms of copper prices compared to Q123 and quite marked weaker USD slash PLN exchange rate that then contributed to the lower copper price by 14% and silver price lower by 6% in PLN. In terms of operating results, President Laskowski will mention that Brodler, in terms of production, but in general, production in KGH and Polskomitia was higher by 2%. Then production of metallic silver and gold, respectively, minus 17.3% and minus 35%. Let me just comment on that briefly in terms of silver. It is a result of the so-called KLD furnace renovation. This is the only place where we can obtain death metal and in January we had a stopover of Caldo furnace by 15, 16 days. The furnace is being stopped for regular renovations every six to eight months. And because the stopover happened also in Q4 2022, so quite distant in the past, Then by the end of 2022, so we entered to 23 with quite a big amount of slag, anode slag, that contributed to a big production at the beginning of amount of production in the first quarter 2023. and then the stopover in January 24 made for slightly less production or operating results. So that doesn't look very nicely, minus 17.3% quarter to quarter, but this is a normal cycle. This is the consequence of the maintenance stopovers and that of course contributed to the production of gold. And then in terms of CAPEX will be discussed a bit broader by President Brea, but it's plus 2%, so higher CAPEX execution compares to Q1 20, according to the plan, apologies. So plus 2%. Minus 13% decrease in revenues and that is directly related to the USD slash PLN exchange rate and slightly lower copper price. As of now, the copper prices are significantly higher. higher than the budgets assumed, but that's the average. The average of 2024 compared to 23 was slightly lower by 5% in U.S. dollars and 14% in terms of Zlotys. Safe amount of debt, this is the indicator measured as net debt to adjust as a bid. 1.5. Next slide, please. Here, I'm presenting the results both in terms of KGHM and consolidated KGHM group. I will focus on the group. So revenues 8 billion, 8 billion, 8 billion, 350, 15 million, adjusted EBITDA, 1.5 billion zlotys and profit for the period 424 billion zlotys and And just to remember, just to remind you, it's 146 billion zlotys for Q1 2023. And then in terms of the expenses by nature, I would say these conditions were slightly more favourable in terms of costs. So by 12% we lowered the Q1 quarter on quarter in terms of foreign inputs. 24 other materials, mainly energy and gas, due to the more stable prices compared to the kind of craziness that happened last year. And then, analogously, to copper prices, also our tax charge is lowered due to some mines by 25%, 5.3% lower in costs of work and so in general expenses by nature were 12% lower quarter on quarter. So these are the financial results. and consolidated SaaS perspective, KGHM group. So comparison of Q1 23 to 24, the main influence here would be the exchange differences in terms of 336 million net results, 424 consolidated profit in Q1, higher than in 23. And now I would like President Laskowski to take over. I have to apologize for my voice. I think I've come down with some allergies, but I hope that I will be able to stay with you for this dozens of minutes. So key performance indicators, the paid copper, almost 180 kilotons, comparable to the Q1 in 23, And then, in particular destinations, KGHM Polska Miecz SA 146,000, Sierra Gorda 17,000 and KGHM International Limited 16,000. And then, in terms of other metals, silver was particularly described by the president, Szydło, We mainly produce the silver in KGHM, Polska Mieciesa, and the resulting capital group was at the level of 316 tons, then noble metals, TPMs, 41,000, and then molybdenum production, At the level of 600,000 tons of pounds. This is the only parameter that has not been up to the estimations due to the budget. I will discuss it in detail with discussing the results of Sierra Gorda mine. The production results here in our Polish locations, ore extraction at the level of 8 million tons. This is the dry weight, so identical results compared to Q123 with higher metal contents, both silver and copper, that contributed in production of copper in concentrates over 100,000 tons. of electrolytic copper comparable to the previous year 146,000 and lower production of metallic silver on the level of 310 tons discussed by the President Szydło. Then in terms of production results in Sierra Gorda according to the estimated budget in the Q1 24 There were 17,000 tons of payable copper. Silver production, almost 6 tons. TPM production, 6.5 thousand. And molybdenum production, because of the budget, because of the results of Q123. There was a lot of concentration of clays, so we noted 20% of decrease in production. In terms of KGHM International, the main lever would be here in the Robinson mine. Almost 100% result more than, a better result than in Q123. We've already informed you about big problems of the Robinson mine in the previous year, both in terms of operations and in terms of availability of high concentration of ore. So that's why we achieved the result of 16,000 payable copper and then silver, TPM and molybdenum in KGHM International are a result, let's say, of the ore that is being processed. That's it for me. Thank you very much. Now, President Briga will take the floor. Hello. In terms of the capital expenditures and capex execution in Q124, execution compared to Q123 is slightly better, as it was noticed, 2% better, quarter on quarter. And then in terms of execution compared to the expected result, that was 718 million slots. That would be 569 million slots. It's not fully performed, but that doesn't mean that we... gave up on any of the enterprises or purchases. We will just shift it in time. All the services report that the execution of this quarter will be postponed to the second quarter or next quarters. And then in terms of capital expenditures, that was 652 million zlotys Out of that, 569 are expenditures on assets and then servicing of external financing at the level of 59 million zlotys. Then research and development, we didn't include any work related to that, so that's zero. And then leasing for Q1, 24 million zlotys. That gives us 569 assets, items, and then costs connected with implementing all these. Q1 was continuation of works related to the previous periods. If you take a look at the left chart here, the pie chart here, as you can see, the brown area gives you the execution of investment in mining area, 82%. So majority of investment is in mining area. Second would be the grey one, grey-green one, 87, that would be metallurgy, 13%. So again, this would be also one of the basic areas of our investments. Then the second chart shows you the division by category in which we accounted Capex expenditures. And here we have replacement, development, maintaining mine production and other activities that would be the smallest 2% area. So I would say 30, 30 something percent. So these activities are aimed at maintaining the machine park and production capabilities and in terms of development also preparing the exploration areas for further shafts and in terms of maintaining. It's about maintaining the capabilities estimated in the production level. So I would say a third to each of these areas. Next slide. This gives you the distribution of the directions of our key investments. So mining, as I said, the biggest beneficiary in terms of investment, and out of 628 million zlotys, the biggest fragment would be the deposit access program. All the works related to starting new shafts, GG1, that is deepened and connected with the ventilation network from last year. And then we are finishing work, surface work. right now and work related to connecting utilities to the shafts. So it's going to be material slash excavating. So we are starting the reinforcement right now. Materials are being prepared. So right now we will prepare outfitting the shaft. It will probably take 1.5 to 2 years. Then GG2 shaft, Odra. And this one right now, we have just completed the geological soil studies and right now we're analyzing whether the shaft can be situated there and what kind of housing should be prepared in the geological profile that can be done. So studies are ongoing and at the same time we are dealing with some administrative processes carried out to building the main 110 kilovolt transformer station. In terms of Redkowschaft here We are preparing two tender procedures and then Gabořice Šaft, the last one that is presented and planned. Right now, the municipality is currently working on the changes in the state spatial development plan. Then, another fragment would be outfitting of the mines and this is well a never-ending story unfortunately the mining is an investment that has never been completed we are just constantly modernizing renovating it so it's either at the level of ending or starting something so starting any other part of the deposits excavating new or It requires, for example, extending the conveyor belt, inputting air there or taking out the ore from the area. So it's a never-ending story. Taking into account the stage... At KGHM right now we're closing to the level of 1,000. Right now at the level of Polkowice and Sieroszowice mine the roads are lengthening so we're constantly lengthening our conveyor belts. It's cheaper than the road transport, of course, so the investment will be kept on a high level. And then cables, pipes, administering cool air. Then next would be also the replacement of machine park. And it's also a never-ending story because year on year, We plan to buy 250 machines and right now we already built 69 machines that were divided into three mines, 15 to Lubin, 14 to Rudna and 40 to Polkowice-Sieroszowice. Right now this is the biggest mine in terms of development. So this is a constant fixed position, especially that the company adopted a policy that the machines, especially the transport and conveyor machines work for five years and then we are not starting the general renovation but we are just exchanging the machine park. And then other positions are smaller, markedly smaller, however equally important. So mine dewatering, then continuously we are preparing the work on the high-pressure pumping units, but also in Polkowice-Sieroszowice mine and Rudna mine. Then we are developing the piping network between the mines that will enable us the watering that would be adequate to our needs both on the surface and the possibilities of then directing water to the Odra River. Everything starts downstairs so we need to have a good properly working system. So it's a major position there as well. And then let's speed things up a bit. And these are the investments related to the, for example, MSR, development of storage facilities, modernization of the smelters or refineries. So it's about adjusting to the norms, regulations, EU regulations as well. In terms of exploration, we are currently finishing the works for the Puck deposit near Władysławowo, potassium saline, and then we are preparing the drilling in the prospective areas, Kulów, Redków. and that would be maybe the last position from the bigger ones and then development of the most tailing storage facility we have just completed forming the enscapement on the reserve war on the southern part of sediment tank and we have just finished I mean the hydro-cyclone on the waste processing plants. Right now we're also finishing the 950, 195 meters of the main reservoir and then the other areas would be much smaller. That would be a result of the routine work, I would say, and the continuous of the cycle of the machine. Next slide, please. So GG1 shaft, as you can see here, was included in the ventilation network in June last year. So quarter and quarter, as you can see, this is the increase of production of ore. in dry weight and copper and silver. So as you can see, there is an increase resulting mainly from the improvement of climate conditions in terms of crew works. Right now we have seven mining units, one from Sieroszowice, six from Rudno, and we have observed a marked increase of the ore mining and even quarter on Q4, if you compare Q4 23 and Q1 24 you still see a marked increase in the performance. Of course it will stabilize eventually but this is only the effect of introducing ventilation to underground work prolonging the amount of time that is possible to be worked there. We're observing it carefully, so that's why we are caring for other shafts being created there, because adding air, adding ventilation would then clearly contribute to the production outputs. Thank you very much, gentlemen. for all these results, quarterly results. And now we're moving on to the Q&A session.

So now it's your time to ask questions. You can do it here or online. And this part will be conducted by Mr. Janusz Krystosiak. Thank you. So, as always, Please tell your name, tell the institution that you represent. And we're waiting for questions from the room. If there are no questions, I will move on to the questions online that are now, that have been sent to our address. I have one question. In the press communication, we received information that there are 11.7 kilometers and you said it's only four kilometers of mining ore. So what's the difference? Why the difference? Dear editor, I mean, it was about the completed investment from APEX and CAPEX.

We combined it because many, many...