The Management Board of KGHM Polska Miedź S.A. (“the Company”), in reference to regulatory filing no. 4/2024 dated 10 January 2024, announces that as a result of the identification of indications of a possible change in the recoverable amount of key Polish and international assets, the Company conducted impairment testing regarding the following Cash Generating Units:
- the Polish production assets (mining and metallurgical assets) of KGHM Polska Miedź S.A.,
- the assets of the Robinson mine,
- the assets of the Carlota mine,
- the assets of the Sudbury Basin (comprised of the Morrison mine, the Podolsky mine and the McCreedy mine), and
- the assets of the pre-operational Victoria project.
In terms of the Polish production assets (mining and metallurgical assets) of KGHM Polska Miedź S.A., the recoverable amount of these assets was determined on the basis of an analysis of the discounted cash flows generated by these assets, and which took into account, among others, the current forecasts of price paths of individual commodities and energy carriers, as well as verified assumptions on medium- and long-term productions plans, operating costs and capital expenditures.
The update of assumptions on operating costs, capital expenditures and the discount rate, as well as a revision of medium-term production plans, had a significant impact on the level of future cash flows generated by the Polish production assets (mining and metallurgical assets) of KGHM Polska Miedź S.A.
In terms of the international assets, the recoverable amount of these assets was determined on the basis of an analysis of the discounted cash flows generated by individual assets, and which took into account, among others, the current forecasts of price paths of individual commodities, verified technical and economic assumptions on mine lives, production volumes, the size of the deposits, operating costs and capital expenditures.
The update of current forecasts of price paths, mainly the long-term price of copper as well as discount rates, had a significant impact on the level of future cash flows generated by the aforementioned international mining assets of the KGHM Group.
With respect to the separate financial statements of KGHM Polska Miedź S.A. for the financial year ended on 31 December 2023, the performed impairment tests indicated justification for:
- the recognition of an impairment loss on the Polish production assets (mining and metallurgical assets) of KGHM Polska Miedź S.A. in the amount of PLN 3 771 million,
- the reversal of a part of the impairment losses recognised in prior years on shares in the holding company Future 1 Sp. z o.o., which directly holds 100% of the shares in KGHM INTERNATIONAL LTD. in the amount of PLN 741 million.
With respect to the consolidated financial statements of KGHM Polska Miedź S.A. for the financial year ended on 31 December 2023, the performed impairment tests indicated justification for:
- the recognition of an impairment loss on the Polish production assets (mining and metallurgical assets) of KGHM Polska Miedź S.A. in the amount of PLN 3 616 million,
- the recognition of an impairment loss on the assets of the Victoria project in the amount of USD 89 million (PLN 349 million per the exchange rate announced by the National Bank of Poland on 31 December 2023),
In terms of the other international mining assets, since there are no differences, or no significant differences, between their carrying amounts and the recoverable amounts, it was determined that there is no basis to change their carrying amounts.
The amounts of impairment losses/reversal of impairment losses presented above illustrate their impact on the profit/loss before tax. The recognised impairment losses are of a non-cash nature and do not affect the liquidity of either KGHM Polska Miedź S.A. or the KGHM Group.
The amounts presented above may change as they are estimates and are subject to verification by the certified auditor. The final results of the testing will be presented in the separate and consolidated financial statements for the financial year ended on 31 December 2023, the publication of which is planned for 24 April 2024.
Legal basis: Art. 17 (1) of MAR (Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Official Journal of the European Union dated 12 June 2014, no. L 173/1)