Forecast of results for 2012

Tuesday, 27 March, 2012
Report no. 14/2012

The Management Board of KGHM Polska Miedź S.A. announces that the Supervisory Board of the Company, at its meeting on 27 March 2012, approved the Company Budget for 2012 submitted by the Management Board. The bases for preparation of the Budget were the results for 2011 and the assumptions of individual operating plans. 
This forecast of Company results, which is based on the assumptions used in the approved Budget, assumes the achievement in 2012 of revenues from sales of PLN 19 418 million and profit for the period of PLN 3 804 million. 
The following assumptions were used in the forecast: 

  • Electrolytic copper production 562.0 thousand t 
  • - of which from purchased copper-bearing materials 147.3 thousand t 
  • Silver production 1 098 t 
  • Average annual copper price 8 000 USD/t 
  • Average annual silver price 30.00 USD/troz 
  • USD/PLN exchange rate 3.09 USD/PLN 
  • Total unit cost of electrolytic copper production from own concentrate 15 729 PLN/t 
  • Capital expenditure PLN 2 100 million 
  • Equity investments PLN 10 671 million 

The substantial decrease in profit versus 2011 is mainly due to: recognition in the result for 2011 of the sales of telecom assets, a change in the valuation of exchange differences, effects of the introduction of the minerals extraction tax and the deterioration of macroeconomic conditions. 
The high level of equity investments is due to realisation of the purchase of Quadra FNX Mining Ltd. in the first quarter of 2012. 
The assumed substantial increase in the cost of electrolytic copper production from own concentrate versus 2011 is mainly due to the following: 

  • recognition of the minerals extraction tax, starting from May 2012, 
  • decrease in the volume of electrolytic copper production from own concentrate due to the use of inventory in 2011 (the level of copper production in concentrate by the Company remains at a stable level), 
  • the unfavourable valuation of anode slimes due to planned lower silver and gold prices. 

At the present moment the legislative process for the introduction of the aforementioned tax continues – on 2 March 2012, Parliament adopted the Act, on 14 March 2012 it was approved without change by the Senate, and was then sent to the President for his acceptance. The Act will come into force within 14 days of its announcement in the Journal of Laws. 
Realisation of this forecast will be monitored by the Company on an on-going basis. Should there occur significant deviation from the amounts forecasted, the Company will perform an adjustment to the forecast and immediately will publish it in the form of a current report. 

Legal basis: § 5 sec. 1 point 25 of the Decree of the Minister of Finance dated 19 February 2009 regarding current and periodic information published by issuers of securities and conditions for recognising as equivalent information required by the laws of a non-member state (Journal of Laws from 2009 No. 33, item 259 with subsequent amendments)