Mr. Adam Sawicki, KGHM Polska Miedz - Euromines
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Mr. Adam Sawicki, KGHM Polska Miedz - Euromines

Agenda• KGHM – general information• Global investments• CSR as an integral element of the mining industry• Strategy for the future1

Core business of KGHMLead Silver GoldCopper ore Cu concentrate Blister copperElectrolyticcopper(cathodes) Wire rod Round billetsOreextractionMineralprocessingSmelting Refining Copper processingMiningSmelting/refining5

KGHM has more than 40 years of future activity in productionProven & Probable ore reserves1.44 B tonnes @ 2.01% Cu and 57 g/t AgProduction estimate (tonnes)Głogów depositPolkowice-Sieroszowice mineRudna mineLubin mineSource: KGHM Polska Miedź S.A.6

Agenda• KGHM – general information• Global investments – international activity• CSR as an integral element of the mining industry• Strategy for the future7

KGHM – studies advanced on construction of additional 2 minesSIERRA GORDA - CHILEDEEP GŁOGÓW – POLAND (LGOM)CuAu MoCu AgResources ~1 274.8 Mt @ 0.39% Cu, 0.024% Mo Resources ~292 Mt @ 2.4% Cu, 78.7 g/t AgOwnershipProductionMine type55% KGHM International, 45% Sumitomo226.8 kt/ 500 Mlbs Cu, 11.3 kt / 25 Mlbs MoOpen pitOwnershipProduction100% KGHMProduction in the years 2013-2042Average target (2023-2035) 9.7 Mt/yearMine type Underground (1100 – 1400 m)StatusOn time and budget.Project fully financed.Production to start in 2014.StatusPreparatory work to sinking the GG-1 ventilationshaft; work on drifts to connect from existing mineinfrastructure of the Rudna mine.12

KGHM’s portfolio also includes 3 resource projects (pre-construction stage)AFTON-AJAX - CANADAVICTORIA - CANADAMALMBJERG - GREENLANDCuAuNiCuAuPtMoResources~ 512 Mt @ 0.31% Cu, 0.19g/t AuResources~14,5 Mt @ 2,5% Cu, 2,5% Ni,7.6g/t TPM**Resources216.9 Mt @ 0.198% MoOwnershipProductionMine typeStatus80% KGHM, 20% Abacus Mining50 kt Cu/ 100 k troz AuOpen pitBankable Feasibility Studycompleted.Preparations to start construction.Planned start date for productionof Cu-Au concentrate: by 2015.Ownership 100% KGHM International* Ownership 98.2% KGHM InternationalProduction n/a Production n/aMine type Underground Mine type Open pitStatusFurther exploratory work.Negotiations with Vale.Pre-construction analysesStatusFeasibility Study beingprepared.Mining from 2020.* Vale has a right to acquire a 51% interest in the project**TPM – total precious metals13

The most important KGHM International project – Sierra Gorda in Chileis advancing on time and on budget• Mine equipment is being delivered, e.g.– Trucks have been delivered– Orders for machines with long delivery time havebeen placed• Engineering works on salt water pipeline have begun• R.O. (reverse osmosis) plant and waste treatmentplant are in advanced construction14

Portfolio of exploration projects will ensure further growth for KGHM*Germany Poland CanadaGermany• Weisswasser(Cu, Ag)Poland• Wartowice(Cu, Ag)Poland• Szklary (Ni)Poland• Gaworzyce-Radwanice(Cu, Ag)Canada• Kirkwood (Cu, Ni)• FalconbridgeFootwall• Foy* Plus additional exploration potential in currently active mines15

The investments activities and transactions will reduce average operational costsEstimated production cost C1Reduction by-21%>20%KGHM 2018(estimate)KGHM+QUX 2018(estimate)Source: KGHM outlook (including impact from by-product metals)16

Copper production should grow by 25% in 2018Thousand tons of paid copperCu+25%635509187KGHM International mines100Current KGHM assets41044820112018** Estimated forecast.17

Agenda• KGHM – general information• Global investments• CSR as an integral element of mining industry• Strategy for the future18

KGHM – corporate social responsibilityInvestment in local communitiesKGHM Charity Foundation focused on• Cultural heritage protection• Science, education and healthcare projects• Sport and entertainment eventsEnvironmental protectionMinimizing the impact on the natural environmentKGHM SO 2 emissions, k tonnesMinesSmelter "Legnica"Smelter "Głogów II" Smelter "Głogów I"Healthcare system• Own network of clinicsand hospitals• Medical coverage for allemployees and localcommunity78.231.2-94%4.8Premier leagueSoccer Club• KGHM Zagłębie Lubin• Stadium built by KGHM198519942010• Adherence to stringent environmentalEuropean Union standards• Environmental protection expenditures overthe last 15 years exceeding US$ 800MSource: KGHM Polska Miedź S.A.19

Agenda• KGHM – general information• Global investments• CSR as an integral element of the mining industry• Building the future in innovations20

EU innovation projects with participation of KGHM since 1994 (FP4)1994-1998 1998-20022002-20062007-2013FP4FP5FP6FP7EurothenBiomineIRISLICYMINBioshaleLAGUNAPROMINECLOTADAMI2MineLIFETIMEERAMIN

The Polish-Swedish cooperation in the field of extractive industry – three levels1. Participation in the EU funded innovative projectsowing to their activity in the European TechnologyPlatform on Sustainable Mineral Resources (ETP-SMR)2. Academic and Industrial cooperation between bothcountries in the field of the extractive industry3. Cooperation in the area of supply andprocurement of equipment and machines forthe mining sector

Horizon2020KGHM is going to participate actively in Horizon 2020 Strategy and EuropeanInnovation Partnership in Raw Materials (2014-2020)EuropeanInnovationPartnershipon RawMaterials

ConclusionsMain points:• There is a need for new vision of safe andefficient deep mining technologies in Europe• The vision should be based oncooperation between mining companiesand mining machine producers• Innovation in mining sector should securethe safe access to many deep layingmineral deposits in Europe• The active role of KGHM in hard rockcontinuous mining should be a valuableinput to implement novel deep miningbreakthrough technologies in Europe24

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