The Management Board of KGHM Polska Miedź S.A. announces the definitive cost estimate and scheduled startup for the company's flagship Sierra Gorda copper-molybdenum-gold project in Chile, 55% owned by KGHM International Ltd. (100% subsidiary of KGHM Polska Miedź S.A.), 31.5% owned by Sumitomo Metal Mining and 13.5 % owned by Sumitomo Corporation.
The estimated total initial capex is projected at approximately USD 3.9B compared with the February 2011 estimate of USD 2.9B. The Sierra Gorda SCM JV shareholders also agreed to pursue saving plans to reduce the capital cost and to adopt leasing program for mining equipment.
With continuing strong copper prices, construction activities in northern Chile - the largest copper producing region in the world - have increased significantly, impacting construction costs across the mining industry. Consequently, many mining projects have seen substantial increases in their planned costs, and significant timing delays. However, we have been able to limit this effect by various methods, including hedging, and a focus on cost control.
The start of commercial production is still scheduled to be in 2014.
The Sierra Gorda mine over its twenty year mine life will be one of the largest copper-molybdenum-gold mines in the world and is expected to be in the lowest quartile of cash operating costs of copper mines worldwide.
The Management Board of KGHM Polska Miedź S.A. announces also that the Board of Directors of KGHM International Ltd. has approved the 2013 budget. The key assumptions of the budget are: copper production at the level of 93.7 thousand t (207 million lbs), nickel production at the level of 5 thousand t (11 million lbs) and total precious metal production at the level of 2 t (64 kozs). The estimated C1 cash cost is projected at the level of USD 2.3/lb. Total capital expenditures for 2013, including the capital expenditures on the Sierra Gorda project, are projected to reach USD 733 million.
Legal basis: Art. 56 sec. 1 point 1 of the Act dated 29 July 2005 on public offerings and conditions governing the introduction of financial instruments to organised trading, and on public companies (Journal of Laws from 2009, No. 185, item 1439 with subsequent amendments)
At a Glance
A brief overview of KGHM