KGHM has updated the carrying amount of its mining assets

The testing of assets for impairment was required by International Financial Reporting Standards. The cause was the continuation of low commodities prices in international markets. Assuming that the macroeconomic environment would have been similar to that at the end of 2014, the results of the impairment tests would have indicated the lack of impairment of these assets.

Impairment losses are a natural phenomenon in the mining sector. Recently, numerous companies in the mining sector have announced impairment losses. The life of a mine is measured in decades and usually goes through several phases of the mining cycle. The volatility in prices observed during this time has a substantial impact on market valuation, but presents a picture of the company only at a given moment in time.

 “A company’s condition and its real worth are primarily based on its cost competitiveness compared to its market peers, the modern technology it employs and is developing and its projects pipeline, as these reflect its potential to generate operating profits and shareholder value. I am confident that in the long term the assets of KGHM will provide us with the expected return on investment,” says Krzysztof Skóra, President of KGHM Polska Miedź S.A.

As a result of KGHM’s fulfilment of its obligations as respects the testing of assets for impairment, the net profit of KGHM Polska Miedź S.A. for 2015 will be lower by PLN 1 052 million    as compared to the situation prior to conducting the tests.

 In the consolidated financial statements the impact of the aforementioned impairment tests on the Group in the total amount of PLN 3 320 million were generated by the international assets of the Group: the Sierra Gorda mine, in which KGHM has a 55 percent interest, mines located in the Sudbury region in Canada, and the mines Robinson and Franke. The domestic assets in Poland were also tested for impairment, but there was no indication of the need to recognise an impairment loss in their value. A favourable factor impacting the value of the Polish assets is the significant weakening of the Polish zloty versus the American dollar.

 KGHM, as a mining company active in the international commodities markets, has no influence on the shaping of global copper, silver and molybdenum prices.

 “Our response to the fall in the prices of the commodities which we produce is consistent efforts to control costs and a flexible approach to investment plans. The company is financially stable, which guarantees that, in the current conditions, both current operations and development projects will be continued in the long-term perspective.  ” says Krzysztof Skóra, President of KGHM.  

The final results of the testing will be presented in the financial statements for 2015, whose publication is planned for 17 March 2016.

Department of Communications and CSR

KGHM Polska Miedź S.A.