Sierra Gorda with a new investment. The KGHM Group is set to increase its production capacity in Chile

The KGHM Group, in partnership with South32 Ltd., will invest in the construction of a fourth grinding line at the Sierra Gorda mine in Chile. Thanks to this project, the plant's processing capacity will increase from around 48 million to around 60 million tonnes of ore per year (based on a 100% share). This is one of KGHM's most significant investments outside Poland and an important element of the work on Sierra Gorda's development strategy. The project is intended to increase copper production and strengthen the Group's position on the global non-ferrous metals market. The investment also forms part of the long-term value creation strategy developed by Sierra Gorda as part of the Life of Operation Plan ('LoOP'), the prospects for which are bolstered by the potential to extend the mine's operational life thanks to the Catabela Northeast area currently under exploration.

- KGHM is consistently implementing its development strategy and strengthening its position as one of the world's largest mining companies. Investments such as the construction of the fourth production line at Sierra Gorda are the best evidence of our long-term approach and our determination to increase the efficiency and scale of our operations.These are concrete measures that contribute to the growth in the Group's value and its competitiveness on the global market - said Remigiusz Paszkiewicz, President of the Management Board of KGHM Polska Miedź S.A.

- The decision to construct a fourth grinding line at Sierra Gorda strengthens KGHM's position in the international assets segment and increases our share in the production of metals that are vital to the global economy. This project will help us make better use of the mine's potential, increase copper production and improve cost efficiency. Sierra Gorda is an asset with very high production potential, and this investment will allow us to make better use of its capabilities and build long-term value for the Group and its shareholders. This project ties in perfectly with recent discoveries in the Catabela Northeast exploration area, where we see ore reserves that can significantly extend the effective life of the Sierra Gorda mine - said Anna Sobieraj-Kozakiewicz, Vice President of the KGHM Management Board (International Assets).

Increase in copper production thanks to the construction of a fourth production line

The project involves the construction of a fourth grinding line, the expansion of crushing and flotation capacity, and associated process infrastructure. Completion of the plant expansion is scheduled for the end of 2029, with full production capacity expected to be reached in the second half of 2030. Once the investment is completed, average annual payable copper production at Sierra Gorda (on a 100% basis) will increase by approximately 20% compared with current levels. A proportional increase in the production of by-products and a reduction in the C1 unit cost are also expected.

Capital expenditure on the project from 1 July 2026 until the facility is ready for operation is estimated at approximately USD 725 million in real terms on a 100% basis. The expansion will be financed from operating cash flows and Sierra Gorda's available debt instruments. According to the feasibility study, the project is expected to generate attractive rates of return by utilising the existing water and power infrastructure and the mine's long-term development potential.

Prospecting and Exploration Program

At the end of 2021, an exploration program was implemented at the Sierra Gorda Mine, the aim of which is to assess the potential for ore deposits outside the area designated for mining within the currently operational Catabela working. As part of this activity, a number of promising sectors have been identified. Given their direct potential to extend the mine's life, the Catabela Northeast (CNE) area and the zones immediately adjacent to the current deposit are considered the highest priority. To date, additional, more distant sectors with high mineralisation potential have also been identified, the development of which is envisaged in the long term.

Promising exploration results

Catabela Northeast is an exploration project situated in the immediate vicinity of the current operations. Initial evidence of mineralisation in the area was confirmed by drilling in the second half of the 20th century. Since 2014, several dozen conceptual core boreholes have been drilled, however, this work has been stepped up since 2022. As a result of the prospecting work, geochemical and geophysical surveys, and core drilling conducted to date, it has been confirmed that the zone shows strong evidence of the continuity of porphyry-type copper-molybdenum mineralisation and remains open at depth. Preliminary estimates indicate a deposit potential of several billion tonnes of ore with copper and molybdenum grades typical for this type of mineralisation. The location of the CNE in relation to the current working area, as well as the positive results of the work carried out to date, make this area another priority in the plan to extend the life of the Sierra Gorda Mine. To enable an accurate assessment of the size of the resource base, it is planned to continue and intensify exploration drilling in the area of the identified anomaly in the coming years. The main objective is to determine precise deposit parameters, including the extent of the mineralisation and its grade.

KGHM's key international asset

Sierra Gorda is an open-cast copper mine situated in the Antofagasta region of the Atacama Desert in northern Chile, approximately 60 km south-west of the City of Calama. The project functions as a joint venture between KGHM Polska Miedź S.A., which holds a 55% share, and the Australian mining group South32 Ltd. (45%). The mine uses, amongst other things, seawater supplied via a pipeline from the Mejillones region and modern processing infrastructure. It is also powered by electricity derived 100% from RES. This asset strengthens the international nature of KGHM's operations, which cover three continents: Europe, North and South America.