The article's author wrote: "We haven't received any official comment on that issue from KGHM". I would like to state that the newspaper has not approached KGHM requesting a comment or explanation. KGHM would have provided any information explaining this misunderstanding.
Information regarding all items of capital expenditures for this project has been available to the public since 3 June 2011, when Quadra FNX (now operating under the name of KGHM International) published a project feasibility study (the data is enclosed).
KGHM's opinion the authors of the report, on which reporter Adam Roguski based his story, hadn't applied due care preparing it. In the case of Sierra Gorda project they added the costs of further expansion of processing capacities of ore enrichment plants (Expansion Capex) and the replacement capital covering a 20 year period of mine operation (Sustaining Capex) to the expenditures for the construction of the mine (Initial Capex). The mine construction costs pursuant to the feasibility study published in 3 June 2011 amount to approximately 3 MM USD. In the case of other projects analysed by KPMG and included in that report, for example in respect to Cobre Panama project, only Initial Capex was presented – 6.181 MM USD, disregarding the Sustaining Capex item – 2.916 MM USD. If these values were added up as was the case in respect to Sierra Gorda project, we would obtain the amount of 9.097 MM USD. The data regarding various projects presented in the KPMG report is not comparable, which might mislead the public.
The current progress of engineering works on the construction of Sierra Gorda mine exceeds 75%, which allows to estimate the final capital expenditures. Pursuant to earlier announcements, this value should be known in January 2013.
Dariusz Wyborski Press Spokesman KGHM Polska Miedź S.A.
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