Good morning, ladies and gentlemen. This time I'm welcoming you on our own turf, because the previous conference took place in Warsaw quite recently. We are dealing with quite a lot of meetings, but it's not only in terms of the results, meetings, but also the board's activities. We would like to present you with the summary of Q1 2024, and comment on it, and we will try to do it quickly enough to give enough time for potential questions and answers, of course. Q1 2024 can be called calm, in which the company implemented all the tasks according to the plan.
In terms of macroeconomic environment, we had slightly weaker, 5% less weaker in terms of copper prices compared to Q1 2023, and quite marked weaker USD/PLN exchange rate that then contributed to the lower copper price by 14% and silver price lower by 6% in PLN. In terms of operating results, President Laskowski will mention that broader in terms of production. But in general, production in KGHM Polska Miedź was higher than by 2% than production of metallic silver and gold respectively, -17.3% and -35%. Let me just comment on that briefly. In terms of silver, it is a result of, we'll take the so-called Kaldo furnace renovation.
This is the only place when we can obtain that metal, and in January, we had a stopover of Kaldo furnace by 15-16 days. The furnace is being stopped for regular renovations every 6-8 months. And because the stopover happened also in Q4 2022, so quite distant in the past, then by the end of 2022... So we entered 2023 with quite a big amount of slag, anode slag, that contributed to a big production at the beginning of amount of production in the first quarter 2023, and then the stopover in January 2024 made for slightly less production or operating results. So that doesn't look very nicely, -17.3% quarter-to-quarter. But this is a normal cycle.
This is the consequence of the maintenance stopovers, and that, of course, contributed to the production of gold. And then, in terms of CapEx, will be discussed a bit broader by President Bryja, but it's +2%, so higher CapEx execution compared to Q1 according to the plan, apologies. So +2%. -13% decrease in revenues, and that is directly related to the USD/PLN exchange rate and slightly lower copper price. As of now, the copper prices are significantly higher than the budget assumed, but that's the average. The average of 2024 compared to 2023 was slightly lower by 5% in US dollars and 14% in terms of zlotys.
Safe amount of debts. This is the indicator measured as net debt to adjusted EBITDA, 1.5. Next slide, please. Here, I'm presenting the results both in terms of KGHM Polska Miedź and consolidated KGHM group. I will focus on the group. So revenues, PLN 8.355 billion. Adjusted EBITDA, PLN 1.5 billion, and profit for the period, PLN 424 million. And just to remind you, it's PLN 146 billion for Q1 2023. And then, sorry, in terms of the expenses by nature, I would say these conditions were slightly more favorable in terms of costs.
So by 12%, we lowered the Q1 quarter on quarter in terms of foreign inputs, 24 other materials, mainly energy and gas, due to the more stable prices compared to the kind of craziness that happened last year. And then analogously to copper prices. Also, our tax charge is lowered due to some mines by 25%, 5.3% lower in costs of work. And so in general, expenses by nature were 12% lower quarter on quarter. So these are the financial results and consolidated as perspective, KGHM Group. So comparison of Q1 2023 to 2024, the main influence here would be the exchange differences in terms of PLN 336 million.
Net results, PLN 424 consolidated profit in Q1, higher than in 2023. And now I would like President Laskowski to take over. I have to apologize for my voice. I think I've come down with some allergies, but I hope that I will be able to stay with you for this dozens of minutes. So, key performance indicators, the payable copper, almost 180 kilotons, comparable to Q1 in 2023. And then in particular, destinations, KGHM Polska Miedź S.A., 146 thousand, Sierra Gorda 17, and KGHM International Limited, 16 thousand. And then in terms of other metals, silver was particularly described by the President Szydło. We mainly produce the silver in KGHM Polska Miedź S.A., and the score...
The result in Capital Group was at the level of 3,316 tons. Then noble metals, TPMs, 41,000, and then molybdenum production at the level of 600,000 tons, tons of pounds. This is the only parameter that has not been up to the estimations due to the budget. I will discuss it in detail with discussing the results of Sierra Gorda mine. Then production results. Here in our Polish locations, ore extraction at the level of 8,000,000 tons. This is the dry weight, so identical result compared to Q1 2023, with higher metal contents both silver and copper.
That contributed in production of copper in concentrates, over 100,000 tons of electrolytic copper, comparable to the previous year, 146,000, and lower production of metallic silver on the level of 310 tons, discussed by President Szydło. Then, in terms of production results in Sierra Gorda, according to the estimated budget, in Q1 2024, there were 17,000 tons of payable copper. Silver production, almost 6 tons. TPM production, 6.5 thousand, and some molybdenum production, because of the budget, because of the results of Q1 2023, there was a lot of a lot of concentration of clay, so we noted some 20% decrease in production.
In terms of KGHM International, the main lever would be here, here in the Robinson Mine. Almost 100% result more than a better result than in Q1 2023. We've already informed you about big problems of the Robinson Mine in the previous year, both in terms of operations and in terms of availability of high concentration of ore. So that's why we achieved the result of 16,000 payable copper, and then silver, TPM, and molybdenum in KGHM International are a result, let's say, of the ore that is being processed. That's it for me. Thank you very much. Now, President Bryja will take the floor.
Hello.
In terms of the capital expenditures and CapEx execution in Q1 2024, execution compared to Q1 2023 is slightly better, as it was noticed, 2% better quarter-on-quarter. And then in terms of execution compared to the expected result, that was PLN 718 million. That would be PLN 569 million. It's not fully performed, but that doesn't mean that we gave up on any of the enterprises or purchases. We will just shift it in time. All the services report that the execution of this quarter will be postponed to the second quarter or next quarters. And then in terms of capital expenditures, that was PLN 652 million.
Out of that, 569 are expenditures on assets, and then servicing of external financing at the level of PLN 59 million. Then research and development, we didn't include any work related to that, so that's zero. And then leasing for Q1, PLN 24 million. That gives us 569 assets, items, and then costs include real, re-connected with implementing all these. Q1 was continuation of works related to the previous periods. If you take a look at the left chart here, pie chart here, as you can see, the brown area gives you the execution of investment in mining area, 82%. So majority of investment is in mining area. Second would be the gray one, gray-green one, 87, that would be metallurgy, 13%.
So again, that would be also one of the basic areas of our investment. Then the second chart shows you the division by category, in which we accounted, CapEx expenditures. And here we have replacement, development, maintaining mine production, and other activities, that would be the smallest, 2% area. So I would say 30, 30-something percent. So these activities are aimed at, maintaining the machine park and production capabilities. And in terms of development, also preparing the exploration areas, for further shafts. And in terms of maintaining, it's about maintaining the capabilities, estimated in the production level. So I would say a third to each of these areas. Next slide. This gives you the distribution of the directions of our KGHM investments.
So mining, as I said, the biggest beneficiary in terms of investment, and out of PLN 628 million, the biggest fragment would be the deposit access program. All the works related to starting new shaft, GG1, that is deepened and connected with the ventilation network from last year. And then right now we are finishing work, surface work right now, and work related to connecting utilities to the shaft. So it's going to be material slash excavating. So we are starting the reinforcement right now. Materials are being prepared, so right now we will prepare outfitting the shaft. It will probably take 1.5-2 years. Then GG2 shaft, Odra.
And this one, right now, we have just completed the geological soil studies, and right now we're analyzing whether the shaft can be situated there, and what kind of housing should be prepared in the geological profile that can be done. So, studies are ongoing, and at the same time, we are dealing with some administrative processes carried out to building the main 110-kilovolt transformer station. In terms of Retków shaft, here we are preparing to tender procedures, and then Gaworzyce shaft, the last one that is presented, and planned. Right now, The municipality is currently working on the spatial developments, changes in the state spatial development plan. Then another fragment would be, outfitting of the mines, and this is, well, a never-ending story.
Unfortunately, the mining is an investment that has never been completed. We are just constantly modernizing, renovating it, so it's either at the level of ending or starting something. So starting any other part of the deposits, excavating new ore, it requires, for example, extending the conveyor belts, then inputting air there or taking out the ore from the area. So it's a never-ending story. Taking into account the stage that KGHM is right now, right now we're closing to the level of 1,000. So right now, at the level of Polkowice and Sieroszowice Mine, the roads are lengthening, so we're constantly lengthening our conveyor belts. It's cheaper than the road transport, of course, so the investment will be kept on a high level.
And then cables, pipes, administering cool air. Then next, would be also, the replacement of machine park, and, it's also a never-ending story because, year on year, we plan to buy 2,250 machines, and right now we already built 69 machines, that were divided into three mines, 15 to Lubin, 14 to Rudna, and 40 to Polkowice-Sieroszowice. Right now, this is the biggest mine in terms of development. So this is a constant fixed position, especially that the company adopted a policy that the machines, especially the transport and conveyor machines, work for five years, and then we are not starting the general renovation, but we are just exchanging the machine park. And then other positions are smaller, markedly smaller, however, equally important.
So mine dewatering, then continuously, we are preparing the work on the high-pressure pumping units. But also in Polkowice-Sieroszowice Mine and Rudna Mine, then we are developing the piping network between the mines, and that will enable dewatering that would be adequate to our needs, both on the surface and the possibilities of directing water to the Odra River. Everything starts downstairs, so we need to have a good, properly working system, so it's a major position there as well. And then let's speed things up a bit, and these are the investments related to the, for example, SMR, developments of storage facilities, modernization of the smelters or refineries.
So it's about adjusting to the norms, regulations, EU regulations as well. In terms of exploration, we are currently finishing the works for the Puck deposit near Władysławowo, potassium saline, and then we're preparing the drilling in the prospective areas, Kujawy, Retków. And that would be maybe the last position from the bigger ones. And then development of the Żelazny Most tailings storage facility. We have just completed forming the escarpment on the reservoir, on the southern part of sediment and tank, and we have just finished, well, I mean, the hydrocyclone on the waste processing plant. Right now, we're also finishing the 950, 195 meters of the main reservoir.
And then the other areas would be much smaller, and that would be a result of the routine work, I would say, and the continuous of the cycle of the machine. Next slide, please.
Także to chcę mieć małe fragmenty. Kolejny poproszę. O, tutaj. Proszę państwa, ciekawa sprawa, właśnie szyb-
GG1 shaft, as you can see here, was included in the ventilation network in June last year.
Do kwartału.
Quarter and quarter, as you can see, this is the increase of production of ore and dry weight, and copper and silver. So as you can see, there is an increase resulting mainly from the improvement of climate conditions in terms of crew works. Right now, we have 7 units, mining units, 1 from Sieroszowice, 6 from Rudna, and we have observed a marked increase of the ore mining. And even quarter on quarter. If you compare Q4 2023 and Q1 2024, you still see a marked increase in the performance. Of course, it will stabilize eventually, but this is only the effect of introducing ventilation to underground work, prolonging the amount of time that is possible to be worked there.
We're observing it carefully, so that's why we are caring for other shafts being created there, because adding air, adding ventilation would then clearly contribute to the production outputs. Thank you very much, gentlemen, for all these results, quarterly results, and now we're moving on to the Q&A session.
So now it's your time to ask questions. You can do it here or online, and this part will be conducted by Mr. Janusz Krystosiak. Thank you.
So as always, please tell your name, tell institution that you represent, and we're waiting for questions from the room. If there are no questions, I will move on to the questions online that are now that have been sent to our address. I have one question. Maciej Wiśniewski. In the press communication, we received information that there are 11.7 kilometers, and you said it's only 4 kilometers of mining ores. So what's the difference? Why the difference? Dear editor, I mean, it was about the completed investment from CapEx and to OpEx. We combined it because many, many-
Z kosztów poszczególnych oddziałów, tak Lubin, jak i Polkowice, i Rudna, one są wliczane do OpEx, dlatego że przysparzają zarazem rudy oddziałowi. I niewykluczone. W tej chwili tej danej nie mam przed sobą, ale prawdopodobnie to jest przyczyna tego nieporozumienia.
I don't have data here, but that's why we have 4 kilometers from the investment plan and 7.4 kilometers were completed from the cost of particular departments. And this is according to the proper classification, what can be a cost and what is the investment, right? Good morning, Tomasz Jóźwik, Miedziowe.pl. I would like to ask one question in terms of climate policy of the company. Please tell us about the situation with the SMRs. Will you correct your strategy in this sector, or you will change nothing, you will continue the path of your predecessors? Thank you. I will try to answer the question. During the conference in Warsaw, it was the question that was asked for year 2023, actually.
When I read some notes about that, I was a bit surprised, I have to say, that I wasn't actually precisely understood. SMRs, MMRs, it's a very interesting direction to protect energy supplies, broadly speaking, for the technological continuity. KGHM seriously thinks about this direction, and it seems to be very attractive. But at the moment, there is no information from the market, no clear information from the suppliers of technologies that in short-term perspective, this technology would be effectively used in KGHM. This is an attractive idea. We are waiting for the development of the technology. But for sure, when we will be able to think about starting the project, we will go into this direction because we cannot build the base of own generation, only on photovoltaics, only on PV or only on wind energy.
This is not possible. That's it, in brief. TVP Wrocław, Andrzej Lampart. One question about the recent increase of copper price, $2,000 per ton more, compared to what was, the price several months ago. What is the prognosis for the company for the following months? Well, each increase of prices of copper is, pleases us. We are not the only beneficiary of such increases. I don't want to speculate about the future. At the moment, the copper price seem to be satisfactory. Andrzej Andrzejewski, from Radio Wrocław. I have a question to President Bryja. You mentioned about exchanging machine park, buying 69 new machines. For some time we've received information about the fact that there is a small problem with the engines that were prepared previously, last year, with the engines that are according to the norm Stage III.
I have a question about these 369 machines. Do they have Stage III or Stage V engines? I know the topic, I know the problem, but here, we will ask the Vice President of the Board Production, Mr. Mirosław Laskowski. Will you answer the question? Really, me? Okay, I can do it. So one of the first topics, actually, that we had to, colloquially speaking, think about when we became appointed in the management board, was to invest at all the machines that were contracted to KGHM in 2024, in terms of Stage V norm. For several weeks, we were analyzing the problem.
We also renegotiated agreements with all the producers of the machines that supplied us with the engines below the Stage V norm to make as bigger group as possible, supplied according to EU Stage V regulations requirements. And I think dozens of such machines will be present, but we have a schedule of adapting them, and in the next years, in the following years, all machines in KGHM will be working according to Stage V norm. It doesn't mean that we're not trying to get opinions from scientific institutions about the real homologation of these engines, especially in below 1,000-1,200 meters of deposits. I want to explain
We want to explain if such engines affect negatively or positively the atmosphere in the mine, and consequently, into the possibilities of working of the crew. Such research will be published in the following months, and then maybe we will deregulate some activities that will allow us to get back to the stages that are lower than Stage V. So we will be able to work on lower norms. I have a question. Can I now ask you questions on. And okay, so there are now online questions to you. Daniel Major, UBS. Sierra Gorda production dropped to low level since 2019. What was the main reason for that? What was the main driver for that? Are you calm that this objective for 2024 will be met in Sierra Gorda?
Yes, the budget objectives will be achieved, except for molybdenum production. This is the information that I already gave you, but the amount of the production, like in each mining, is being developed based on the plan, and the production is the result of the deposit exploitation of particular geological parameters. Thank you. Another question. J.P. Morgan, Anna Antonova. Are you planning to give us any financial forecast or your guidance for your future results? How. The practice, which is popular or common among other mining companies? No. No. Well, ladies and gentlemen, according to the rules, we can share our opinions or forecast about the future, but very carefully, because we are not an agency. We are a mining company, and we wouldn't like to give more than strategy or our objective for the future.
We wouldn't like to express opinion about the markets. We wouldn't like to give opinion about the situation in the future. I don't know if this answer is satisfactory. Maybe another question online. Łukasz Rudnik. Why it's about the low average selling compared to Sierra Gorda and KGHM International? I'm talking about copper and silver. We analyzed, actually. That wasn't, it wasn't really the deviation from the norm. We didn't register the result of increase of average price from mark-to-market mechanism because the increase of the price of raw materials happened in the of the copper was increased in the last quarter. So it's close to average. It's a little above the average, but we don't register any deviations from the norm in this regard.
It shows us that the situation is quite dynamic, but positively dynamic, because the prices are now stable. And they've never been like that in the first quarter, and they are stable in the first quarter. Another question. Daniel Major, again. I understand that the new management is reviewing the strategy, is conducting a strategic renewal of business, including financial areas, or reviewing of international assets. When are you planning to finish this process? Because we talked about RES, but not in terms of financing, and I think that this topic was recently discussed during the presentation of annual result. Maybe, Mr. President, you would like to add something or to refer to our fresh narrative. Yesterday, during the management meeting, we discussed it.
Declarations or maybe the predictions about the finish of the quarter three in terms of strategy realization are still actual, are still valid. Do we have any questions from this room to change a bit the dynamics? No questions? Okay, so I will look here for another questions. Give me, please, one second. I would like to add that if we won't answer today to any questions, then they will be available on the website, in the tab, the center of results. Okay, I have one question in terms of technicalities. It's a good way of conducting things that after conference, we had a moment to discuss in the foyer. Maybe we should continue this tradition, 'cause it was great to talk after the meeting. Of course, we are transparent, we are open, but please don't be shy. You can approach us in foyer.
We shouldn't be very... we are open, and I took a special nose medicine, so I can talk. Okay, the last question, the recent question: in the energy cost, what was the drop of increase because of the decrease of energy? Detailed question, I don't think we have it in the report, such data, so maybe we can only confirm that the optimizing initiatives or the seasonality of work on technological line can be responsible for that. Of course, it's about the rationality of the prices, of the, let's call it like that. But in KGHM, we also have, under constant supervision, our energy consumption, and we plan this consumption. And such purchase, we do such purchase to optimize the price.
Recently, we also did some activities associated with the optimization of the power of our production forces, production possibilities. When the cost of our own production would be higher than the price of purchase on the spot, then we would limit the power of our sources to minimize the average price.
Thank you very much. Paweł Puchalski is asking a question about the stock package of Tauron stock package. Do we think about selling such package of stock? Well, of course, we, we can't give you any in advance decision on such, such activity. This is a 10% package. This is our capital investment, and if the investment committee deems it appropriate to sell these the stock, then we are obliged, according to the common practice, to publish that information. So we do not speculate. As of today, there is no decision related to this package. I met Paweł on the conference in Warsaw. He's a very nice man, but the question seems tricky to me. If we answered such questions, well, it wouldn't be a good situation, I guess. Thank you. One more question from Bank of America.
Alex Oppong asks a question: Your cost per unit at C1 and international has improved significantly. So we can see that the operation efficiency in the Robinson Mine, in the Robinson Mine. Or that's a question, actually. Can we assume that the operational efficiency in the Robinson Mine will be on a similar level, a similarly high level in the coming quarters, or are there any other areas of improvements, operational improvements, that you foresee in terms of KGHM International activities? Let me say a bit briefly, yes, there are. Łukasz Rudnik from Trigon: Do you expect in this year any purchases of PV farms, taking into account the recent decreases of prices per one megawatt hour? If we assume. Well, again, it's difficult to answer directly to that question.
In order to, you know, make some purchasing investment, we need to have it in budget, in the budget. Well, if there are some opportunities on the market, we don't, we don't say no to such acquisition. We wouldn't say no to such acquisition if an opportunity arises. Thank you very much. I'm looking for another source, or through another source of questions.
There is one, Jacek Saja, Radio-
Jacek Saja, Radio Plus Legnica. Question to Mr. Bryja. What is the stage of the excavation works in terms of new deposits of KGHM north to the current ones? Can we talk about any approximate results of starting to excavate these, to mine these deposits? Well, the current mine of, deposit development can, foresees the mining by 2025, 60. So in the current mining areas, and then the area north of the current areas, currently excavated areas, is the Bytom Odrzański deposit, and Głogów deposit, and Retków-Ścinawa deposit. In the first fragment, I would say, closer to Rudna North area. It's a pity that I don't have a map here. That would make it a lot easier. I have my own pointer, I just don't have a map. Can we display it on the map? Oh, yeah.
In brown, you can see the current excavation areas, and to the north, we have Bytom Odrzański, Bytom Odrzański, and behind here, the river that goes through here, we also have Kulów-Luboszyce deposits. Right now, apart from Bytom Odrzański, that is right now in the middle of court proceedings in the Provincial Administrative Court and General Administrative Court, in which we are in the trial against the Leszno Copper Company. And then the other ones are currently already have the concession, or we are trying to obtain the excavation concession by 2036, starting from 2036. So these are the concessions for prospecting and mining as well.
In terms of geology, these deposits are not as uniform as the previous area, so we need to perform a lot of prospecting work here, and it would be too early to talk about years of starting there. So we are. For, for now, we're focusing on excavating and mining up to the level of Odra River and then up in of, Retków, area. And then anything behind or on the other side of the Odra River, well, by 2036, we have the concession to prospect that area, so we still have time. Thank you very much. There's one more question, analytical question from Morgan Stanley, about the cash cost, C1 cost in KGHM Polska Miedź S.A. in Q1 2024 stayed on the increased level. So it was increased, compared to Q4 2023.
Can we expect some marked improvement starting from Q2 2024? Was the question about C1? Yes. Yes, the C1 cost. I think the best answer to that question would be that we don't foresee any major deviations compared to the estimate, to the forecasted budget. So the price would be a factor here. The price of the copper would be a factor here. But then, that we would go very deep in the operations of the taxation mechanisms, I think, so we wouldn't be able to give you a direct answer in terms of linear increase or decrease of the C1 cost compared to other aspects. Thank you very much for that answer. In the meantime, any question from the room?
I wanted to ask why did you change the name of the Retków deposit? Now, the whole Retków-Ścinawa deposit, the whole concession area is this, but then there is a fragment that is close to Rudna deposit, deep deposits, industrial deposit, that due to the current shafts we have, we can excavate it from the current shafts. So this fragment, as a fragment of a bigger deposit, would be prospected in the first place to start excavating it in the first place, and then before we even prospect the previous, the other deposit. So it's not changing the name, it's just taking fragments of the Retków deposit and joining it in a way to the Rudna excavation area.
Thank you very much. I have a last question, online question, and now I will ask for the support of, controlling and international assets directors. With the current prices of metals, would KGHM open, secure positions for future periods and the increased taxes? I'm not sure if we are disclosing such forecasts for our plans. No, we don't. I got the answer, so we can't disclose that kind of information. So that would be it in terms of online questions. These are all the questions we got to our inboxes. If there are any other, if you would have any other questions after the conference, or if we didn't exhaust the topic, your curiosity for the questions you've asked, we will make sure to answer those, and then the full information according in
with the transcript will be published on our website. And that would be it in terms of the Q&A part. That's. Thank you very much then for participating in the conference, and I would like to thank also the board members for preparing the results and answering all the questions. Thank you very much.