Our Assets

The KGHM Polska Miedź S.A. Group holds geographically diversified mining assets (mines of copper ore and accompanying elements, such as silver, molybdenum, nickel, gold and other precious metals) located in Poland, the USA, Chile and Canada and copper smelters and refineries in Poland.

The key international asset – the Sierra Gorda mine, which is a joint venture between KGHM INTERNATIONAL LTD., Sumitomo Metal Mining and the Sumitomo Corporation (from February 2022 a joint venture of KGHM INTERNATIONAL LTD. and South32) – is located in Chile. In addition, the KGHM Polska Miedź S.A. Group has a mine project at the preproduction phase (Victoria) and other exploration projects.

The Group’s main assets are presented in the chart below:

Location of production assets of the KGHM Polska Miedź S.A. Group

Best practice

KGHM is the largest silver mine in the world

KGHM took first place in the World Silver Survey 2022 ranking. In turn, the Polish giant took second place in the category of the largest silver producers.

Silver production in KGHM

Silver production in KGHM takes place in the Głogów Copper Smelter and Refinery where the Precious Metals Unit has existed since 1993. It was set up especially to recover precious metals such as silver and gold from copper ore. They can be found in what is referred to as “black mud”, or the anode slimes that emerge during the electrorefining of copper. Metallic silver is produced from cathode silver with an Ag content above 99.99% in the form of granulate packed in 25 kg sacks and silver ingots with a mass of ca. 1,000 troy ounces, or roughly 31.1 kg.

Properties of silver:

in nature silver is rarely encountered as a pure metal – it most frequently appears in connection with copper ores, lead, zinc and gold
it has unique physical properties – it is ductile, malleable and lustrous
it is an excellent conductor of electricity and heat
it is nearly white
in ancient times it was appreciated as a precious metal to make jewellery and used as
currency
at present, silver is used to produce electrical and electronic equipment, tapes and film
panels, windows and musical instruments
it also has applications in medicine thanks to its bactericidal properties – it is used to make surgical instruments and medicine.

In 2021 the KGHM Group produced 1,366 tonnes of silver.

Poland

Location	Lower Silesia, Poland	The Polkowice-Sieroszowice mine is located in Lower Silesia, to the west of the town of Polkowice. Currently, it conducts mining works in four mining areas: Polkowice, Radwanice Wschodnie, Sieroszowice and in a part of the Głogów Głęboki – Przemysłowy (Deep Głogów) area. Within the Sieroszowice mining area, there are also rich deposits of rock salt above the copper-bearing horizon.
Ownership	KGHM Polska Miedź S.A
Type of mine	underground
Main ore type	copper ore
Associated metals	silver, lead, rock salt, gold
Type of orebody	stratiform
End product	copper ore
Copper in extracted ore in 2021	195.4 thousand tonnes

Mining of the deposit is conducted using room-and-pillar methods with natural roof settlement, using blasting technology. The Polkowice-Sieroszowice mine’s current production capacity is around 12 million tonnes of ore per year

Location	Lower Silesia, Poland	The Rudna mine is located in Lower Silesia, to the north of the town of Polkowice. It mines the copper deposit in the Rudna mining area as well as in parts of the mining areas of Sieroszowice, Lubin-Małomice and Głogów Głęboki-Przemysłowy (Deep Głogów). The copper orebody in the currently mined deposit ranges from 844 meters to 1250 meters. Mining is conducted using room-and-pillar methods with natural roof settlement with hydraulic backfill, using blasting technology. The current average production capacity is approx. 12 million tonnes of ore per year.
Ownership	KGHM Polska Miedź S.A
Type of mine	underground
Main ore type	copper ore
Associated metals	silver, lead, gold
Type of orebody	stratiform
End product	copper ore
Copper in extracted ore in 2021	175.7 thousand tonnes

Location	Lower Silesia, Poland	The Lubin mine is located in Lower Silesia, Poland, to the north-west of the town of Lubin. It mines the copper deposit in the mining area Lubin-Małomice at a depth from 550 meters to 1006 meters. Mining is conducted using room-and-pillar methods with natural roof settlement with hydraulic backfill, in the vicinity of the support pillar of the town of Lubin, using blasting technology. The mine’s current production capacity is around 8.4 million tonnes of ore per year.
Ownership	KGHM Polska Miedź S.A
Type of mine	underground
Main ore type	copper ore
Associated metals	silver, lead, gold
Type of orebody	stratiform
End product	copper ore
Copper in extracted ore in 2021	71.6 thousand tonnes

Location	Lower Silesia, Poland	This complex of metallurgical plants located in Głogów comprises two copper concentrate smelting lines based on the one-stage smelting of concentrate in a flash furnace directly into blister copper. Apart from electrolytic copper, the Głogów Copper Smelter and Refinery produces crude lead (around 30 thousand tonnes annually), silver (around 1400 tonnes), gold (around 2 tonnes) and sulphuric acid (over 500 thousand tonnes).
Ownership	KGHM Polska Miedź S.A.
Type of metallurgical plant	smelter/refinery
End product	electrolytic copper
Electrolytic copper production in 2021	455.5 thousand tonnes

Location	Lower Silesia, Poland	The copper smelter and refinery located in Legnica has a current production capacity of 120 thousand tonnes of electrolytic copper. It has been in operation since the 1950s and uses shaft furnace technology. Apart from electrolytic copper, the smelter also produces around 30 thousand tonnes annually of refined lead and also around 100 thousand tonnes of sulphuric acid, as well as copper sulphate and nickel sulphate.
Ownership	KGHM Polska Miedź S.A.
Type of metallurgical plant	smelter/refinery
End product	electrolytic copper
Electrolytic copper production in 2021	122.1 thousand tonnes

Location	Lower Silesia, Poland	Production at the Cedynia Wire Rod Plant, located in the vicinity of Orsk, is based on the use of copper cathodes from the Głogów Copper Smelter and Refinery and from the Legnica Copper Smelter and Refinery. The basic product of the Cedynia Wire Rod Plant is copper wire rod produced in a Contirod line amounting to around 265 thousand tonnes annually and around 18 thousand tonnes annually of oxygen-free copper wire rod produced in an UPCAST line, including oxygen-free, silver-bearing copper wire rod.
Ownership	KGHM Polska Miedź S.A.
Type of metallurgical plant	processing
End product	copper wire rod and Cu-OFE rod
Production in 2021	264.3 kt of copper wire and 17.6 kt of Cu-OFE rod

The United States

Location	Nevada, USA	The mine is located in White Pine county, Nevada, USA, around 11 km west of Ely (approx. 400 km north of Las Vegas), in the Egan range, at an average altitude of 2130 meters a.s.l., near highway no. 50. The mine is comprised of 3 large pits: Liberty, Tripp-Veteran and Ruth. Currently, Ruth is in operation. The sulphide ore is extracted by conventional methods, and is then processed in a concentrating plant into a copper and gold concentrate, and separately into molybdenum concentrate.
Ownership	100% KGHM INTERNATIONAL LTD
Type of mine	open pit
Main ore type	copper ore
Associated metals	gold and molybdenum
Type of orebody	porphyry/skarn
End product	copper and gold concentrate, molybdenum concentrate
Payable copper production in 2021	53.7 thousand tonnes

Location	Arizona, USA	The Carlota mine is located in the Western part of the Miami Globe mining region, in the state of Arizona at an altitude of 1,300 meters a.s.l. Surrounding the mine is mountainous, desert terrain. Copper ore extraction by the Carlota mine is by conventional methods typical for open-pit metals mines, i.e. the ore is mined by blasting and then is transported by haulage trucks. In 2018 mining re-commenced in the Eder South area, while in 2021 mining commenced in the Eder North area. Due to the nature of the oxide ore, it is processed using the heap leach, solvent-extraction and electrowinning method. The end product is electrolytic copper in the form of cathodes. By a decision dated 17 September 2020 the Management Board of KGHM Polska Miedź S.A. approved the designation of the Carlota mine as held for sale. The Carlota mine, starting from 30 June 2021, has been recognised as an asset held for sale. The process of disposing of the mine continues.
Location	100% KGHM INTERNATIONAL LTD
Ownership	open pit
Type of mine	copper ore
Main ore type	porphyry
Produkt końcowy	copper cathodes
Produkcja płatnej miedzi w 2021 r.	5.4 thousand tonnes

Canada

Location	Sudbury, Ontario, Canada	The Sudbury Basin is located in central Ontario in Canada, approx. 400 km north of Toronto. In this region KGHM INTERNATIONAL LTD. owns a variety of assets, though since April 2019 mining has only been conducted in the underground McCreedy West mine, due to the fact that the Morrison/Levack mine has been placed into Care & Maintenance. Extraction is through mining methods which are dependent on the geometry of the deposit – mainly a mechanised method of selective extraction using undercutting of successive levels from bottom to top at various mine levels. All of the ore extracted from the mine, containing copper, nickel and precious metals, is processed in the Clarabelle plant in Sudbury, owned by Vale.
Ownership	100% KGHM INTERNATIONAL LTD.
Type of mine	underground
Main ore type	copper, nickel, platinum, palladium and gold ore
Type of orebody	footwall/contact Ni
End product	copper and nickel ore with precious metals
Payable copper production in 2021	1.9 thousand tonnes.

Location	Sudbury Basin, Ontario, Canada	This project is located in the Canadian province of Ontario, around 35 km west of the town of Sudbury. In 2002 rights were acquired to the Victoria mineral deposit and a campaign of exploration in this region commenced. The current development scenario for the project calls for the sinking of 2 shafts to access the deposit (a production shaft and a ventilation shaft). Exploration work performed thus far has confirmed the continuity and characteristics of the mineralisation to the level of approximately 2200 meters below the surface. Based on analytical work performed in 2017, the current base scenario assumes the Victoria project will be developed in two stages, comprised of the sinking of a first shaft along with additional exploration, followed by a second shaft for production. In 2021, based on exploratory work performed, approx. 6 million tonnes of project ore resources were re-categorised to a higher recognition category (from Inferred to Indicated). In addition, work focused on preparing the foundations for the shaft’s headframe, the waste rock containment pad and the site’s parking lot, as well as a water treatment plant.
Ownership	100% KGHM INTERNATIONAL LTD.
Type of mine	underground
Main ore type	copper-nickel ore
Associated metals	gold, platinum and palladium
Mine life	14 years
End product	copper, nickel and precious metals ore
Forecast annual production	16 kt Ni, 18 kt Cu

Location	Kamloops, British Columbia, Canada	The Ajax project is located in British Columbia, Canada, 400 km north-east of Vancouver near the town of Kamloops. The project assumes the construction of an open-pit copper and gold mine and an ore processing plant, with associated infrastructure. Up to 2016 work had been carried out on a Feasibility Study for the project, setting out the preliminary economic conditions for the venture. In December 2017 the Ministers of Environment and of Energy, Mines and Petroleum Resources of British Columbia (provincial authorities) decided against the granting of an Environmental Assessment Certificate for the Ajax project. In June 2018, the Government of Canada, through the Governor-in-Council (Cabinet) issued a negative decision regarding the Ajax project as the project is likely to cause significant adverse environmental effects. The decisions were made through the environmental impact assessment process, and reflect the substantial engagement of provincial and federal governmental agencies, First Nations and a broad spectrum of stakeholders, including thousands of representatives of local communities. As a result of the decision not to grant an EA Certificate, in 2021 work continued which was mainly related to monitoring and securing of the project terrain in accordance with law in force.
Ownership	KGHM INTERNATIONAL LTD. 80%; Abacus Mining and Exploration Inc. 20%
Type of mine	open pit
Main ore type	copper ore
Associated metals	precious metals (gold and silver)
Mine life	19 years
End product	copper concentrate
Forecast annual production	53 kt Cu, 114 thousand ounces Au

Chile

Location	Region II, Chile	The Sierra Gorda mine is located in the Atacama desert, in the Sierra Gorda administrative area in the Antofagasta region, in northern Chile, approx. 60 km south west of the city of Calama. The mine is situated at an altitude of 1,700 meters a.s.l. and 4 km from the town of Sierra Gorda. On 1 July 2015 the Sierra Gorda mine commenced commercial production (since then it has prepared statements of profit or loss). The ore is extracted using explosives, and next is loaded and hauled away in trucks to the processing plant, where it is crushed and milled. The end product of Sierra Gorda’s processing plant is copper concentrate and molybdenum concentrate
Ownership*	55% KGHM INTERNATIONAL LTD, 45% SMM SIERRA GORDA INVERSIONES LIMITADA, incl. respectively: -Sumitomo Metal Mining Co., Ltd. (31.5%) -Sumitomo Corporation (13.5%)
Type of mine	open pit
Main ore type	copper ore
Associated metals	molybdenum, gold
Mine life	23 years for the current deposit based on phase 1 of the investment, including actions to remove bottlenecks. Moreover, there is a possibility to extend the mine’s life using new deposits
End product	copper concentrate, molybdenum concentrate
Payable production in 2021	189.8 kt of copper in concentrate, 14.9 million pounds of molybdenum in concentrate – on a 100% basis, share of KGHM Polska Miedź S.A. is 55%

* In 2021, Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation made a decision to sell all of their interests in the joint venture company Sierra Gorda SCM to the Australian mining group South32. The Management Board of KGHM Polska Miedź S.A. decided to refrain from exercising its right of first refusal to acquire the shares of the company Sierra Gorda SCM. In the first quarter of 2022 the shares belonging to Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation were transferred to South32.

In 2021, actions were continued aimed at limiting the negative impact of the COVID-19 pandemic by implementing safety measures. Sierra Gorda concentrated on implementing an optimisation program aimed at improving the work of the mine, processing plant, infrastructure and tailings storage facility.

The actions taken resulted in an increase in the annual average daily volume of the mine’s sulphide ore throughput from a base level of 110 thousand tonnes of ore daily to the level of 129 thousand tonnes of ore daily. Going forward the Sierra Gorda mine is aiming to increase the plant’s cost and operating efficiency.

In 2021, an agreement was signed involving the transfer of the Oxide project from the structures of KGHM Chile SpA to Sierra Gorda SCM. Preparatory actions were also continued as regards subsequent stages to develop the project, involving among others the commencement of work on updating project documentation. The Sierra Gorda Oxide project involves the leaching of the copper oxide ore of Sierra Gorda on a permanent heap and the production of high-quality copper cathodes in a solvent extraction and electrowinning (SX-EW) installation, with production capacity of approx. 30 thousand tonnes/year. At present most of the oxide ore planned for processing has already been excavated and is currently stored near the site of the future plant.

Location	Antofagasta region, Chile	The mine is located in a desert area of northern Chile, in the Altamira district, near the southern boundary of the Antofagasta region, near a public road connecting the mine with the Pan-American highway. Mining is conducted by conventional open-pit methods. Due to the nature of the oxide ore, it is processed using the heap leach, solvent-extraction and electrowinning method. The end product is electrolytic copper in the form of cathodes.
Ownership	100% KGHM INTERNATIONAL LTD.
Type of mine	open pit
Type of orebody	IOCG (ore type containing iron, copper and gold)
End product	copper cathodes
Payable copper production in 2021	10.7 thousand tonnes

The Franke mine, starting from 30 June 2021, has been recognised as an asset held for sale.

On 26 April 2022 subsidiaries of KGHM International Ltd., i.e. Franke Holdings Ltd. and Centenario Holdings Ltd., signed an agreement for the sale of 100% of the shares of the company Sociedad Contractual Minera Franke, being the owner of the Franke mine in Chile, to the company Minera Las Cenizas S.A.

Other assets

In recent years, in the group of the companies located in Poland, there have been no substantial changes in the structure of the main assets. In terms of assuring the operations of the core business of KGHM Polska Miedź S.A. the domestic companies operating mainly on its behalf are still significant, including among others:

PeBeKa S.A. – mining work contractor,
KGHM ZANAM S.A. – a supplier and service provider for mining machinery, and also provides production maintenance services in selected areas and participates in investment tasks

KGHM Metraco S.A. – a supplier of copper scrap,
„Energetyka” sp. z o.o. – the company secures part of the energy needs of KGHM Polska Miedź S.A.

Investments in closed-end investment funds fill a role in the management of selected non-core assets. A significant portion of these Funds’ assets are investments in the general field of healthcare, including the Polish Spa Group (Polska Grupa Uzdrowisk).

In addition, the following events occurred after the balance sheet date:

On 28 February 2022 the KGHM VII Closed-end, Nonpublic Investment Fund (hereafter: Fund), 100% of whose Investment Certificates are owned by KGHM Polska Miedź S.A. (hereafter: KGHM), sold to Polski Holding Hotelowy sp. z o.o. all of the shares directly held in the company Interferie Medical SPA sp. z o.o. with its registered head office in Legnica, i.e. 41,309 shares representing 67.37% of the share capital and the same number of votes at the shareholders’ meeting. The remaining 32.63% of the share capital of the company Interferie Medical SPA sp. z o.o. were held by the indirect subsidiary of the Fund –INTERFERIE S.A

On 28 February 2022, as a result of settling a call to sell the shares of INTERFERIE S.A. (hereafter: the Company), announced by Polski Holding Hotelowy sp. z o.o., companies in the Fund’s portfolio – Fundusz Hotele 01 Sp. z o.o. S.K.A. and Fundusz Hotele 01 Sp. z o.o. – sold all of the shares held in the Company, or a total of 10 152 625 shares, representing 69.71% of the share capital and granting the right to the same percent of votes at the general meeting of the company.

As a result of the above, neither KGHM nor any of the entities of the KGHM Group hold shares in the Companies: INTERFERIE S.A. and Interferie Medical SPA sp. z o.o.

Moreover, amongst the international companies is a group operating under the DMC Mining Services brand: DMC Mining Services Ltd., FNX Mining Company Inc. (a branch of DMC), Raise Boring Mining Services S.A. de C.V. (from 11 February 2022 operating under the changed name DMC Mining Services Mexico, S.A. de C.V.), DMC Mining Services Corporation, DMC Mining Services Colombia S.A.S., DMC Mining Services (UK) Ltd. and DMC Mining Services Chile SpA, which provide services in shaft sinking, preparatory work, construction of aboveground and underground mine facilities, mine drilling, tunnel drilling for general construction purposes and engineering services.

In terms of the amount of capital engaged, the shares of the company TAURON Polska Energia S.A., listed on the Warsaw Stock Exchange, represent a significant investment. As at 31 December 2021 the share of KGHM Polska Miedź S.A. in the share capital of TAURON Polska Energia S.A. amounted to 10.39%. The value of the shares of TAURON Polska Energia S.A. held by KGHM Polska Miedź S.A. amounted to PLN 483 million.

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