Recommendation of the Management Board respecting the appropriation of profit for 2008

Friday, 17 April, 2009
Report no. 12/2009

The Management Board of KGHM Polska Miedź S.A. hereby announces that in accordance with the 2009 Budget and the Company Strategy for the years 2009-2018 as approved by the Supervisory Board, it will propose to the Ordinary General Shareholders’ Meeting of KGHM Polska Miedź S.A. that the profit for financial year 2008 in the amount of PLN 2 920 378 381.04 remain at the disposal of the Company.

The profit earned will increase the reserve capital of the Company, and will be used for the realisation of investment projects and work which is vital to maintain the production line over a period of five years – mine preparatory work and basic repair, maintenance and servicing.

The above recommendation is based on the following assumptions:
- In accordance with the investment program approved in the 2009 Budget and the Company Strategy for the years 2009-2018, it is assumed that expenditures will be on the order of PLN 2.2 billion in 2009 and PLN 19.8 billion over ten years.
- Despite the improvement in macroeconomic factors in the first quarter of 2009 as compared to those assumed in the 2009 Budget, there continues to be significant aversion to risk in the financial markets and high volatility in copper prices and exchange rates. Due to this situation, the financial results of the Company are characterised by high volatility and uncertainty.
- For the years 2005-2007, during bull market conditions on the metals markets, KGHM Polska Miedź S.A. paid out a total of PLN 7.2 billion (PLN 35.97 per share) in dividends, which represents respectively 87%, 100% and 47% of earned profit.

Taking these factors into consideration, the Management Board proposes that the financial surplus earned remain in the Company to guarantee the realisation of investments over the next several years and to stabilise the financial position of the Company given macroeconomic parameters of high volatility, with a safe financing structure.

The above proposal of the Management Board must be evaluated by the Supervisory Board of the Company before it is submitted to the Ordinary General Shareholders’ Meeting.

The final decision respecting appropriation of the profit of KGHM Polska Miedź S.A. for financial year 2008 will be made by the Ordinary General Shareholders’ Meeting of KGHM Polska Miedź S.A.

Legal basis: § 38 sec. 1 point 7 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)