The Management Board of KGHM Polska Miedź S.A. (“the Company”), in reference to regulatory filing no. 33/2021 dated 12 July 2021, announces that as a result of the identification of indications of a possible change in the recoverable amount of key international assets, the Company conducted tests to determine whether there occurred any impairment of these assets.
The recoverable amount of the international mining assets of the KGHM Polska Miedź S.A. Group was determined mainly on the basis of the analysis of discounted cash flows generated by individual assets, and which took into account, among others, the current forecasts of pricing paths of individual commodities and technical and economic assumptions as to the mine life, production volumes, the size of the deposits, operating costs and investment expenditures.
The update of current forecasts of pricing paths, mainly copper, had a significant impact on the level of future cash flows generated not only by the aforementioned mining assets of the Group, but also by Sierra Gorda S.C.M. (a joint venture), which are a significant element in the estimation of the recoverable amount of loans granted to finance the Sierra Gorda S.C.M. project in the separate and consolidated financial statements of KGHM Polska Miedź S.A.
With respect to the separate financial statements of KGHM Polska Miedź S.A. for the first half of the year ended 30 June 2021, the measurement of shares in the holding company Future 1 Sp. z o. o., which indirectly holds 100% of the shares in KGHM INTERNATIONAL LTD., indicated justification for the reversal of a part of the impairment losses recognised in prior years in the amount of PLN 1 010 million and an increase in the recoverable amount of the balance of loans granted to finance the joint venture Sierra Gorda S.C.M. by the amount of PLN 1 585 million.
With respect to the consolidated financial statements of KGHM Polska Miedź S.A. for the first half of the year ended 30 June 2021, the performed measurement indicated justification for the reversal of a part of the allowance for impairment recognised in prior years on the balance of loans granted to the joint venture Sierra Gorda S.C.M. in the amount of PLN 1 655 million (USD 435 million converted at the average exchange rate announced by the National Bank of Poland as at 30 June 2021) and a reversal of the impairment loss recognised in prior years on the Robinson mine’s assets in the amount of PLN 39 million (USD 10 million converted at the average exchange rate announced by the National Bank of Poland as at 30 June 2021).
The amounts presented above are estimates and may be subject to change. The final results of the testing will be presented in the separate and consolidated financial statements for the first half of 2021, the publication of which is planned for 17 August 2021.
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)