Good afternoon, ladies and gentlemen. Welcome to the conference devoted to presenting the results of the KGHM Group for the first half of 2025. The results are going to be presented by Mr. Andrzej Szydło, President of the Management Board, Ms. Anna Sobieraj-Kozakiewicz, Deputy CEO for Foreign Assets, Zbigniew Bryja, Deputy Chairman for Development, Mr. Krzyżewski, Deputy President for Financial Affairs and Deputy President for Production Affairs, and Mr. Stryczek, Corporate Deputy for Corporate Affairs. We also have Mr. Janusz Krystosiak, Director of the Investor Relations Department. I would like to inform you that our conference is transmitted online. In the second part we're going to have a Q&A session. The questions are going to be asked from the room and sent to the address ir@kghm.com. All the questions and answers are going to be presented on our website. Now, Mr. President, please take the floor.
Good afternoon. As usual, I will start with the introduction, a bit broader one this time maybe. I'll divide my statement into two parts. First is the general remarks about what KGHM, the Board, and the crew, the team, has influence on, limited influence on, or practically no influence on. In the second part I will discuss and comment again on an introductory basis the general indicators and results achieved by KGHM in the first half of 2025. Traditionally, we will present it compared year-on-year to 2024, the most important in KGHM production and costs. These are the things that we can influence, not fully, of course, because both in terms of production it would be dependent on the deposits and the conditions that are unpredictable. However, in terms of the availability of the technological line we should have influence. Of course, there are force majeure.
Fortunately, we didn't have any major random incidents in this period. The things that we don't have on the slides are the reference to production results of KGHM related to our plans or our budget, and in general in each position, in each option here maybe, except for, I think, molybdenum that was very ambitious and performed higher than year-on-year 2024. Sorry, that is slightly below the forecasted budget. The copper and silver components and the production of the copper concentrate and electrolytic copper, all of them were above the planned values. Also in terms of copper wire and silver, good levels of concentrate anodes. We have a stopover of Głogów Smelter II , so we need to have a spare stock of anodes related to that.
It coincided with other actions that were planned for that period of time that are going to be presented and commented in detail. The level of electrolytic copper was planned as lower than year-on-year 2024. I don't want to get into details because I know that President Krzyżewski is very well prepared in terms of the details. The only thing that pertains to KGHM is the exchange rate. We are dealing with a very strong position of zloty, Polish zloty, very strong. Yesterday I spent a moment to check, of course, in terms of KGHM, the exchange rates USD versus PLN and the two currencies euro and eollar that can be called global. The ratio of these two currencies is between $1- $1.40 per Euro. It was easier for me to compare.
However, looking at the strength, the power of the Polish law to compare the last 10 years or 20 years of inflation that occurred in the Euro area, in the Eurozone and in Poland. Interestingly, in the last 10 years, especially the accumulated difference between the inflation between the Eurozone and Poland reaches 30% or even above 30%. 20 years ago, euro to zloty was at the level of 4. Right now it's 4.25. Dollar for dollar it's 3.65. We can talk about a certain phenomenon that would be related to the market sentiment. Poland is not an emerging market any more, is a developed market, not according to my assessment, but in general, I think not only in Europe, but also around the world that we are all. We are the country that is stable with credible currency.
Coming back to the facts, the strengthening of zloty can be seen on the results by the results of KGHM. Because 3.65 today zloty per US dollar. This is the level that in terms of dollar is an average level. We did not foresee in our budget such optimistic values for the zloty. That would be it. In terms of the brief introduction, in terms of the copper prices, the things that we can we have no influence. 2024, 2025 half won 9,430, 1,000 and compared to, as you can see, copper prices in terms of Polish zlotys per ton 36,546, which is a challenge for the company because the level of costs and level of sales prices determine the financial results in terms of silver and a marked increase $32 compared to $26 last year. That gives us 126 zlotys per oz in the first half of 2025.
As of today, the copper price is at the level of $9,703.65. The dollar currency exchange rate contributes to the level below 36,000 zlotys per ton. The increase of sales of copper prices compared with a stronger zloty means lower zloty price per ton. The revenues of KGHM Group are a bit higher, as you can see, + 0.4% if you take a look at it. In terms of the copper prices in zloty, up by 1% year-on-year with lower production. Lower sales? No sales? Not, I guess. No, sorry. Slightly higher sales because of the changes in stock. This is the level that seems to be relevant to the situation. Nothing special here. EBITDA of the group is + 16% year-on-year and net profit for the period is - 46%. This results mainly from the exchange rate differences.
I'm pretty sure that the Financial Deputy will comment on that and on the exchange rate in general. In terms of KGHM Polska Miedź S.A., 14,860,000,000 zlotys of revenues, - 1% year-on-year. EBITDA - 2% and profit for the period - 92% year-on-year. It will be commented as well. I think I've introduced that also a bit. Next slide please. Now, key production indicators. As said before, production was realized on the level of the budget, maybe slightly higher. The differences of 3%-4% maximum depending on whether it pertains to copper or silver concentrate or production. In terms of the capital group, we have - 4% year-on-year in terms of the production level of payable copper. Here, 7% of difference also justified a moment ago. The level of production, 272.4, is above the budget, above the plan.
It will be even higher in half two of the second year since certain reconstruction or renovation processes are going to be finished. Sierra Gorda + 19%, which is 42.4, + 19% year-on-year, and payable copper production in KGHM International is - 1%. Similar level year-on-year here. One thing is worth commenting here. I think a positive thing. If you take a look at the payable copper production in KGHM Polska Miedź S.A., you can see that the own input contributed to our own concentrate. That was 67% of copper compared to 66% last year. The percentage of payable copper of own concentrate increased even though the mining was slightly less. Silver production is slightly lower, - 3% year-on-year. This follows the thing I said related to the maintenance that is planned maintenance of the infrastructure of the electrorefining hall.
TPM production, so gold, platinum, and palladium, is at the same level year-on-year. Molybdenum production is 1.7 compared to 1.1, a huge increase, + 55%, but again slightly lower than the estimated budget. The plan for this half of the year, I think I'm not wrong. If so, I will be corrected. That's it for me, I think. In the Q and A session we may talk about the details and I'm giving the floor to the next person.
I think it's my turn. Andrzej, you said everything I wanted to talk about. I will confirm that in terms of Polish assets, production results were slightly higher than the estimated budget. On the slide here you see the references to the previous year, half 1. What was the reason for the differences? The production calendar was detrimental. Lower production in holidays or bank holidays, weekends.
With such a big mass, 1% less copper content in concentrate, as you can see. The seventh month stopover on Głogów Smelter mine II was already mentioned. That's why the results were estimated. Results were lower than last year. A couple of words about water problems and water risks. We are conducting injection works for the ore that are aimed at creating the anti-filtration barrier and limiting the access of waters to Polkowice-Sieroszowice mine for a couple of months. The inflow of water is at a stable level and in terms of the reservoir levels that are used to deposit post-flotation deposits and is also a retention reservoir for us for excess waters from dewatering of the mines. The level for that season of the year is estimated as safely low. That's it.
Thank you very much. All right. Going into the production results for the international companies, they are as follows. In the first half of this year, we have a 19% increase of production of payable copper in Sierra Gorda. It's a reference value for 55% of shares. However, when it comes to the results of molybdenum, it's 89% more compared to the previous half. The first half of the previous year also saw a 7% increase of TPM production. It's 14,700 oz. Those production results, when referring to the budget, are looking good. Production of payable copper is almost 50% of the assumed budget until the end of the year. When it comes to the molybdenum, it's almost above 40% of the assumed budget.
When it comes to the production results, they're a result of the higher percentage of content of molybdenum at the lower volume of production of ore. Can I have the next slide, please? When it comes to the production results of KGHM International Ltd., we also see a small decrease of payable copper. It's a matter of 1%, so 29,200 of payable copper. It's a difference of 200 tons compared to last year. It's a result of the higher production of the Robinson Mine where optimization programs were introduced in those cost regimes. The production of copper is in accordance with the budget. When it comes to silver, we are seeing some decreases of 80%. This is dictated by consequences of selling the international assets. In Sudbury Basin, TPM production is at a leveled level at the same stage compared to the previous year.
The first half of the previous year, here we are seeing an increase in the Robinson Mine. It's 22% above the budget. This has been compensated for the lack of production due to disposal of assets. Those are not relevant amounts, small amounts when it comes to the profit. Can I have the next slide, please, ladies and gentlemen? The good production results of the international are transferring into inflows, cash inflows in the capital group, and are resulting in paying off the international assets of almost $131 million of KGHM Polska Miedź S.A. All right, Mr. President, the floor is yours. Right now, let's go into the investments. The assumptions for the budget for 2025 assumed expenses at PLN 3.8 billion. The execution was PLN 1.512 billion. The previous plan of the previous year was PLN 4.1 billion. Right now, we have PLN 3.8 billion, so 8% lower.
The execution for the first half of the year is just 4% lower. There's no need to worry at this stage of development of specific investments and going into the projects. We know that this parameter is going to be improved until the end of the year. As you can see on the charts, the basis of our expenses is mining 1.240 and I will go into details in a moment that are very crucial. On the right side, we can see the division into four analytic divisions: replacement, maintenance, development, and adaptation projects. Replacement is 33%, maintenance of the production is 31%, and 35% is something concerning development. Here we are counting on, due to starting some works with increasing the category of Bitum Odzanski concession, that from next year this segment will be much bigger. Next slide please.
When it comes to the biggest projects that we managed to carry out, let's click the next one. Outfitting of the mines is usually a very high position because apart from the works on the provision of the deposit, we also need a constant exchange of the machinery park and outfitting of the fields from the blocks prepared for mining for exploitation. One of the expensive conveyor belts that we have managed to start: 14 conveyor belts under construction. It's 2.2 km already accepted. When it comes to the infrastructure of the region sections, we need to talk about the whole infrastructure in here: installations, air conditioning installations, and full preparation of the sections segments for production. When it comes to the machinery part, assuming that 260 machines that we wanted to purchase, we managed to purchase 140. The remaining will be purchased later on.
Right now, we also changed the structure when it comes to the category, but the plan is 260 machines will be completed and the expense will be PLN 243 million. The next one: mine dewatering. President Laskowski has mentioned this already. The thing that we are facing in Polkowice-Lansky, so the water issue in KGHM is Polkowice-Sieroszowice topic mostly. Since last year, we started a separation division system construction. That's why there are certain investments in that area, and the mine that is giving us more of that water is Polkowice-Sieroszowice. PLN 74 million are the resources devoted to building an anti-filtration barrier, so it's a relevant amount of money. Right now, we are ending the B1 haul. Right now, we are preparing for B3 and B5. The execution of those projects is in line with the project of the experts that establish that level.
Of.
The level of injection is provided right now over 40 m. It's maintained in Polkowice -Sieroszowice . Because right now if the works haven't been carried out, I think that one third inflow would be greater in that case. When it comes to the instruments for the main dewatering equipment, we are completing this month and that will be given into the acceptance, the main dewatering unit, and it has been reported to the Office of Mining. The next point is development of the most tailing storage facility. We were watching the level of the reserve water if it's going to be enough or not. Right now the level of the waste is safe. Right now we have sped up the process and we have the green light of the governor to build the reservoir.
Very shortly we are expecting the marshal's office acceptance when it comes to the reserve waters to about 5 m. Apart from that, we are carrying out some other works, putting some more in the western section and eastern section. Pump house development along with water stations and purchase of plots from the citizens who would like to, what we're expecting. According to the agreements we have with the villages and towns, they wanted to move out to a different location. Two plots were purchased from the citizens at that time as well. When it comes to expenses to the replacements of mines and tailings divisions, it's modernization of conveyor belts, shafts, air conditioning, ventilation, power supply and electrical. Also pipelines as well, pumps and this type of appliances. That was the weak point of our predecessors.
We weren't able to use the full capacity of the concession of legal waterworks concession when it comes to exploration. The next topic, huge segment here, we are carrying out the identification works. The borehole drilling was completed and we also completed the Kuluflu Borsice, just two wells right now. Those are the possibilities of the drilling companies. Next year we would like to increase that to 20 wells per year, just to increase the category of Bitum Odzanski when it comes to maintenance of shafts, also in this category. We are completing the SW4 shaft complex deposit access program as well. A huge program, relevant program, because mine is a huge device composing of deposits and connection of working the underground with the tanks on the ground. Out of 21.6 kilometers of corridors, were already excavated right now. We are in accordance with the plan.
Also the conveyor belts, for example, we need to follow that up with the infrastructure. 11 belts are under construction right now in Q2 and air conditioning and all other installations and systems as well. When it comes to the construction of shafts, I will devote the next slide into that and I'll explain to you what we did in that regard in a moment.
Okay, onto the shafts. I think we got used to this slide, but I think it's going to be still interesting in the coming years because we are referring to these bars here in which we show how the mining production is looking like in mine. That increased thanks to the connection of different shafts with industrial shafts that happened in June 2023. Despite some deviations between first and second quarter, we keep quite stable high production from these departments, from these sections. Once we move on with these works, starting new ventilation connections, we count on the fact that there is going to be a better chance to place further departments or sections there, for example, we are mentioning. Right now, when the surveying work has started, we're also trying to obtain the mining permit.
Next year, hopefully if everything goes according to the plan, we will have a mining section there. In terms of the shafts that are conducted right now, GG-1 here, shaft outfitting continues. By the end of the year, the outfitting will be finished in all these sections. We are about to sign the agreement with the company that is going to use or manage the terrain. This is going to be a big investment, big amount of responsibilities in one investor. It's going to be done by the District Mining Office in Wrocław and our company subsidiary and BIPROMET as well. We are about to finish outfitting the surface areas as well. 33 MW of power were installed. We are increasing the capabilities to 40 MW. GG-2 shaft, after the initial assessments, based on first holes that were drilled there, it showed that unfortunately geological composition here is not promising.
There's too much, too big of a layer of salt and not enough of strong rocks that would keep the shaft maintenance or shaft outfitting. That is why we purchased the plots in new location better according to archival holes that were drilled there before. Currently, we have submitted an application to change the local spatial development plan and we hope that the commune will approve that plan. Right now, we perform design works. For three shafts, GG-2, Retków and Gaworzyce, we have signed agreements with PeBeKa and with Cuprum for making the shafts and for the geological survey and 3D assessment of the geological composition. In the areas of further shafts, we don't assume any deal. The drilling machine will go from one area to the other. These three shafts have one agreement and one contractor for all those works.
In terms of Retków shaft, as you know from the press, due to our mining traditions, we have defined the axis of the future shaft. Right now we're preparing the site for starting the drilling machines and we will start in September, we'll start drilling then in Gaworzyce shaft. We have geological work projects contained, we have the agreements on the plans, local spatial development plans, and then from Retków the drilling machines will go to Głogów and then to GG-2 shaft. That's it in terms of the shaft works development and the last slide about CapEx execution in key investments in metallurgy. As you can see, the brown area here would be PLN 190 million. The year is not good in terms of development of metallurgical projects because we are preparing for bid expenses next years.
The first investment is related to IAS metallurgical plants in concentrators, for example, maintenance on electrolyzers, converters, anode furnaces, and viaducts. That would be related to the maintenance at the Głogów and Legnica metallurgical plants and concentrators, maintenance of crushers, ball mills, and press filters replacement. We're preparing for the shutdown that will happen in Głogów II copper smelter and refinery next year. This year probably is going to be spent on preparation works and some investment purchases for the perspective of that shutdown. Electrorefining replacement of rails, for example, in electrorefining area in Głogów II copper smelter as well as Głogów I copper smelter. Also changing the roofs. In terms of replacement of the concentrators, replacement of switchboards and transformers in Lubin and building classifiers in the concentrators division and steel construction and switchboards in Rudna.
Concentrator adaptation projects, production of storage boxes at the Głogów copper smelter and refinery, depending on the environmental indications. Development projects for the smelters and concentrators include quite substantial expenses related to the changes in electrorefining technology at the Legnica copper smelter and refinery. PLN 116 million, PLN 53 million were already spent. In the first part of the year that would be PLN 26 million, almost PLN 27 million spent. We're counting on the fact that ultimately the technology will be started next year and the contractors promise us that. Mid 2025, mid 2026. Yes, we would like to close that topic, that project next year. Any questions? Maybe. Let's leave them for later. Thank you very much. Let's move on to the financial results of the group.
Good afternoon. The President started from the introduction. Let me start from the conclusion. Before we get to the presentation, I wanted to tell you about, tell you four sentences about the conclusion. What will be the common denominator in all of them is going to be the word but or although. First sentence, what the President said at the beginning. On one hand we have better results comparing to H1 2024, but first, let's look at the currency exchange and the USD rate and euro dollar exchange rate. That is not only affecting us, but the competitiveness of the whole economy is affected. Here we talked about tariffs and in a couple of sentences I will try to tell you how tariffs influence us and what is the result of all those changes.
In my opinion the influence of euro dollar is going to be visible still and as you can see from our financial report, it is visible when we talk about the exchange rates. We will go through these slides in detail and I will tell you what are the reasons for these exchange rate differences. You can see that in terms of sales it did not affect us significantly, which is good news, but it did not affect us. As the President showed, the average exchange rate for H1 is 3.68 with today's spot 3.65. The coming months will be a true test and will show how the macro influence is going to be: exchange rate, metal prices. The resulting effect may influence our sales results, of course. In terms of tariffs, to summarize them, on the 30th of July we have completed the process and the U.S.
started introducing the tariffs that pertain to semi products related to copper. That does not affect us directly. The tariffs that we are discussing or that are being discussed on the European Union level versus the United States, we don't see any tariffs that would affect us directly apart from copper. We're talking about silver and rhenium. You asked us that. Yes, there was a risk about changes, destination, changes of the destinations in the transfer of our products and depending, related to our international content with the U.S., with Canada, with China, we have predicted some changes in the supply chains. I may go over that if you want. What was the global effect? In one sentence I would say that the result was positive.
We ended up positive from these changes, from these tribulations and we had lower production, but the sales result was the same as last year, $2.1 billion sales results. If you would ask me about the reasons for that, I would name two, maybe three of those. First, silver and copper. I will show you that on the bridge. Silver with the 26% increase year-on-year cost for the results of revenues and sales results was better, significantly better. Second element would be the international or international activities. To use the statement of one of the analysts, I give my regards to Jason who said that so far international assets represented the value of zero. Right now we are recovering from that. This is the result. Yes, the performance of these assets is recovering. Also the President mentioned that. Why?
For once this is the result of our organic work, the result of geological surveys, these assets are just gaining in pace. Its contribution to EBITDA is very positive. This is the second thing I would like to point your attention to and the third reason or third statement? EBITDA is higher but cash flows were on the negative and maybe a word of explanation about that. There will be a slide dedicated to that but in two sentences that is true. Yes, again mining industry is very CapEx consuming. President Bryja mentioned from boxes to high expenses related to shafts, what are the investments? The CapEx are numerous. CapEx investments are numerous and in terms of operational cash flows I will explain you again the reasons why did it happen. One element that would be worth mentioning today is the level of stock of anode stocks.
The electro refination hall are renovation projects. What was the influence of that? We produced less cathodes, gathered more anodes. On the 30th of June that was 34,000 tons. 34,000 tons in the second half of the year. These anodes will be consumed right now into cathode, so the stock will go lower, and then we will accumulate anodes again for big stopover in 2026. That was also mentioned in Cedynia Smelter. All in all, by the end of the year, we assume that the level of anodes, the amount of anodes, will be from 34,000 tons= 38,000 tons. We will use that stock, of course, and I will be working on optimizing it. However, this is the production cycle, and it dictates our investments. We need to recalculate how to generate additional margin like that.
As the President Szydło mentioned, we are using less foreign, not own input, so use that to maximize our margin. We have a very analytical approach to our production to maximize the results based on the external elements or the materials that we purchase so that we can't influence. The last thing, the production results are lower and the sales result are higher. It was mentioned in our statement to remind you the warehouse stock, both in terms of copper and silver, were closed on a good level, and that was a well thought decision discussed in the board, how to manage the sales strategy in the half 1 2025. Nobody expected deliberation day or the tariffs being introduced. Unfortunately, our flex and agility in terms of satisfying changing demand contributed to the additional, to extra result.
The last, but we have good results, but let me get to the buts right now and go through the slides.
If we could go back when it comes to revenues at the level of decent level. What we should notice is that the revenues increased at the level at the Capital Group, it's 38% of KGHM International, 1% decrease on S.A. We can see that the diversification was positive to the Capital Group. Looking at EBITDA, it increased 16% globally. The main factor that was contributing to that was international asset. 650 million of EBITDA that appeared versus H1 2024. The last middle chart, costs, costs. Cost control, operating cost increase for 1%. Taking back the amortization, it would decrease. We should note that the optimization program for costs is still in place. This is the topic that sort of wakes people up. The improvement of international assets. The next slide please. What factors had the highest impact that caused the differences between the periods? It's volume, of course.
This is something that we should look at from a different perspective. Per saldo, it's 365, but it's deficit of - 650 around per saldo. It's the volume deficit then slightly less than PLN 400 million globally. Just to explain what does it mean the protection of accounting, the first position. PLN 1 billion change in prices of basic products. On S.A. we have different situation. It's PLN 1 billion then 100. For KGHM International it's not even PLN 70 million. Looking deep inside that amount, what is this composed of? There are three. It's silver, copper and gold. 150 and over 400 of copper upper. Three elements that contributed to that. The second one that started affecting that as well, exchange rate changes. PLN 400 million . The third one, the adjustments of revenues due to derivatives. To interpret that amount we'd have to look in between periods.
After six years last year we have + 280 on revenues, this year + 60. It's -PLN 224 million . Looking at those three amounts right now. Looking at + 172, - 452, - 224. How effectively we work from the perspective of safeguards and protections. We can say that our protection strategies first of all allowed us to participate in certain changes. When it comes to exchange rate changes contribute to that as well. It didn't protect us from all the losses, but there is no strategy that would hedge 100% of it. year-on-year the results on the protection is PLN 500 million . The next slide please. The expenses by nature, so the dynamic is decreasing, but globally if we exclude the foreign inputs, it's still + 4%.
Where the greatest increase positions, there are three that I would like to refer to: it's amortization, it's + 13%, and it's a huge matter. Mr. President was talking about CapEx and tasks as well. The specificity of mining industry, as mentioned by President Szydło, is something that we cannot escape. We need to expand this infrastructure, but the thing that we focus on as a Management Board is how to transfer this input on one CapEx to investment CapEx because it allows us to expand.
It's just easy to say because I said two sentences about that, but it requires plenty of brain power, and from this perspective, as a program of optimization of cost, it is a huge program how to effectively change from the investment CapEx and the replacement CapEx, and year-on-year it's 7% tax on copper related to the fact that we have increases on silver at 6%. I'll show you that through C1 what that means. Foreign increase in relation to TCRC, the price increased by 6%, but there's less of that. This result from the perspective of expenses by nature is lower, but looking quarter- to- quarter, there's a decrease. We are in a certain line, but this optimization program, cost optimization program, is something that is with us every day. Please show us the next slide.
C1 unit, if we have a look at the book C1 including tax, it decreased by 5% in the whole group, in the capital group, but excluding the tax, it is the decrease of 11%. This is an irrelevant decrease, and this is a result of cost discipline that we were observing, also asymmetrically presented in specific C1s in certain assets. In the country, we can say that we have increased from $3 to $3.15. Please have a look that 10% of that is just the tax itself. Without it, the C1 is increased from $1.90 to $1.94, so it's just 2%. If we implemented the arithmetics of the median of 2024 to compare 2024 the first half to 2025 first half, and we would take the median exchange rate, it would decrease by 6%.
As we don't have the huge influence of the exchange rate on the dollar, C1 on the national assets has also decreased. KGHM International and Sierra Gorda, due to higher production, TPMs, it cost TCRC also as well. The cost discipline resulted in C1 in those assets decreasing. What we should also point out is if we have a look at the matter of taxes. 0.16 is the tax assigned in Nevada, in Robinson. In Poland, it's 1.21, so 8x higher in Poland when it comes to the taxation compared to the U.S. The cost related to C1 that we have discussed before. Next slide, please. This element is something that I would like to get back to. The red bar is something that we need to talk about: exchange differences.
We need to explain that, looking at our structure and the loans that we have, the accounting that is concerning all of us, there are minus results. It's PLN 1.7 billion on minus. We need to hedge natural or because we also loan in dollars. Our loans in the banking sector have decreased as a result of the exchange rate change. Persado, PLN 350 million. Persado was an amount of PLN 1.355 billion. The net result at the level of the Group Capital Group at PLN 580 million. Next slide. Cash flow. Here we are very close to this sort of book balance. The investment and the operational, two explanations. We were talking about the anodes. The turnover capital was already discussed.
We also need to remember what was happening in between because going back to the first half of 2024 we also have the turnover capital. There was also a hidden component. That was the return of the profit tax and that was a relevant amount that highly dictated capital for the turnover. From this perspective, this amount when it comes to the cash flows is majorly relieved by paying off the loans. Sierra Gorda, for example, and that determines that their capital cash resources were PLN 430 million. Thank you very much.
All right. On to the last part in the presentation section. Other segments including domestic companies. In terms of the companies from the capital group, we observe a stable situation here year, slight increase in revenues by 3% to PLN 6.57 billion. We're particularly happy of the companies like KGHM Zanam or Energetyka and Metraco, a slight decrease in terms of EBITDA, adjusted EBITDA, and profit for the period, which results mainly from the delays in signing the agreements on contracting works in mining and smelting areas. We do hope that the next two quarters are going to bring the improvement in that situation in these areas. However, we need to mention Energetyka company as a special mention, who achieved EBITDA at the level of PLN 53 million, Nitro Ergo PLN 43 million, and KGHM Zanam PLN 40 million.
Again, we do hope that the situation I mentioned before will improve for contracting in the next two quarters. Will improve. That's it. Thank you very much.
Thank you to the entire board for presenting the results for the first half of 2025. Now let's move on to the Q and A section. Let's start from the section from questions from the room. Any questions? If not right now, I'm ready with the questions.
Yes, I'm from Mozic Naradio. Two general questions. How do KGHM investments write into the long term strategy of Lower Silesia as the industrial and technological center? Second, how will the company cooperate with local governments in terms of the infrastructure, roads, power grids, housing estates in relation to development of new shafts?
First question. We are in constant contact with administrative entities, the Marshal's Office, Provincial Governor's Office. We have different proposals for cooperation.
If they are in line with our core business, we are more than happy to respond to that. One of the provincial governors is the former mayor of Pennswaff commune, so he's our person, let's say. He's definitely more than interested to locate the projects here. However, no tangible results. We want to be a facilitator of the development of industry in the region because this is the role we have been fulfilling for the last 65 years based on what we do. Definitely we accept and enter into different partnerships with local governments in terms of, in question about infrastructure in relation to the local governments. Cooperation with the local governments. Almost all of the new shaft project is related or even with Żelazny . Most tailing storage facility is related to some road infrastructure.
This is because of the increased amount of vehicles moving around that degrades the roads around. Sometimes small, small roads next to towns and villages. We know that this is going to be an endless row of renovations, but we are fully aware of that and ready to enter into that. Current technologies allow for creating the bypass roads outside of the towns and villages. Of course, we are counting on cooperation with the support programs and local governments. For example, right now we have a road to GG, two shafts to be performed. We have money, we have the budget prepared for that. The Djokovic commune will build that road for money from KGHM. To give you an example, in terms of detailing the storage development, we are in connection with the local commune. The traffic at the escarpment needs to be transferred from that, let's say, area.
We are also thinking about Rudna Yesmanova communes. We are in conversations. I would say I've been in that job for 30 years. I would dare to say that never before have we had such good relations with the local government. You know what is the financial condition of the company. We know that the local citizens expect more from us. Very often these citizens, or more commonly these citizens, are our employees as well. These projects will definitely be a win-win situation. Yes, we are in talks with many different communes in that respect.
From Radio Plus, question to President Bryja. I think you will start drilling in Redkuff from September. How many drillings do you need to make? Will it be similar with two other shafts? What is going to be the period, when will you finish the drilling?
I have a schedule here of this series of drills. Each site will have three holes drilled. They will allow us to know the rock composition, geological survey, and the geological structure of that area. As I said, in terms of GG-2, the first location was not good because of the huge amount of salt layer and low stability of the supporting rocks. That's why we changed the location for that shaft. Three holes per shaft are enough to recognize the rock composition and geological structure, especially that we also put the 3D readers, 3D monitors in all of these holes. We know how these layers will look like in a broader scope, not only in the area of the hole. Each of the side three holes will be drilled, and the period for performing those, well, one set of holes is two quarters, I would say.
We're starting from September. We will end in Q1 2026. We move on in Q4 2025 still, and Q1 2026 would be Gavog. At the end of Q1 2026 and the second quarter of 2026, that would be Odra shaft. This is the first M1 because different devices make these holes, drill these holes. We are returning to perform all these holes in Redkuff. The general period of the entire section, the entire schedule, would be from Q3 2025 to Q2 2027. After drilling all the holes, the results, also the cores and 3D, will be performed by Cuprum Company that, based on these drills, will design the outfitting of all these shafts, and it will be tailored to the particular shaft and to the particular results. Just like with all the other shafts we make for Retkuff, we will have the results ready in Q3 2026.
I will also have outfitting design for that. The company, the contractor maybe, may start building the shaft even in 2026.
I'm from a question about GG-2. Can we talk about any threats to this project due to the detrimental geological conditions, or you just needed to move the plot and everything will be okay?
A long time ago, when we documented these areas, there were some research drills made, but in a very sparse grid. Right now, we're making this grid more detailed to recognize the geological composition, especially in terms of the shaft. It's so important that it is to be served, to be processed by the end of the mine's life. This is the area of the third stage of water risk because there is a river nearby, Kosivska river nearby. These are very responsible, very important projects.
The first location assumed a certain interpretation of historical holes that we've drilled. It seems that between the beneficial hole and the target hole, there is going to be an improvement. It did not occur there. We're coming to the historical hole that was drilled, and the results are definitely going to be better. We hope they're going to be enough to drill the shaft there. As I said, the salt layers and the supporting rocks—it's about the salt layers and it's about the supporting rocks. SW4 and GG-1 are great examples of great work and great fight with the element in GG-1. In the previous mine, we have 150 meters of salt layer. We had 25 months of delay for GG-1 because of the difficult elements. Each of our shafts is delayed for about a couple of years, 15 years, some of them.
We need to make sure that the location is good. That means lower maintenance costs, lower risks, and faster access of air to the horizontal layers of the mine.
A technological technical question. Would you say that these testing holes can also be performed or will they be performed to freeze or that would be a separate technology, M1 that I talked about that is going to be performed on all of the sites. M1 is the hole that is going to be used among 43 freezing holes for a given shaft.
We won't double that. One of them, or some M1 hole, is going to serve that purpose.
Question about financial issues. With this financial result, would you say that the staff can count on the bonus advance or the bonus salary or salary bonus.
Tomorrow we will have a board meeting among others. It will pertain to that topic, to the potential of advance payments and the annual reward on the profit being worked out. Advance payments to emphasize. I don't want to speak for the entire board. I think we will discuss it in detail with you one more time. As of today, the net result of KGHM, we know the collective agreement. By forecasting the second half of the year, if the board decides on paying the advance annual bonus, still that would be a highly defined, strictly defined level. I think it's too early to answer that question with a yes or a no. We have our doubts if that would be beneficial for the company, and will it be well perceived by the working staff.
To add to that, maybe what the President said, the collective agreement states directly what is the algorithm, what are the levels of the bonuses, and so on. With every month we are updating that. I think for H1 it is PLN 140 million. That is a reserve created for that particular purpose. As I said, nothing serious is happening mid-year. This is how it looks like. We will talk about it tomorrow. Financially, we respect all the provisions of the collective agreement, so it is reflected in the agreement sense as well. Counting.
Right. I don't see any questions.
Right.
We have three analytical institutes, similar questions. This is something I'll start with about the situation and our outlook on the international assets. We already talked about the results. There are things, but I would like to quote, sort of like referring to all three of those questions, a request from Jason Schleifer from Bank of America. If you could just discuss the improvement of international assets. We were referring to that before, the volume results, the financial results as well. Jason proceeds to the context on before we had losses, right now we have profits. Is KGHM the best owner of those assets? Would you consider selling those? Morgan Stanley is talking about and asking about this ownership as well, right? Ladies and gentlemen, as mentioned before, those production results are good at a stable level of production despite prior, in the previous year's problems.
Right now, production is stable and the Management Board is looking at the supervision over the operational part of the organization that transfers into the better production result. Sierra Gorda had temporary problems with molybdenum production and that was straightened out. There were technological issues there. Right now, we have a tendency to catch up with the production and since the beginning of this year, the production is in accordance with the budget and we are optimistic when it comes to the execution of the budget. Expanding a bit more, when it comes to Robinson Mine, we are at the moment of exploitation of the deposit and their production is at a very decent level as well. When it comes to selling, the Management Board is analyzing very thoroughly the costs and the income of international assets and we are overseeing that.
The performance of international assets is stable right now. This is the answer to that. If I could add two more sentences to that, because I understand what is the background of that question. As you know, there are the mining projects in the world, copper projects, there are less and less of those. The ones that are functioning right now, they're facing problems. It is natural to ask if something happens on the functioning projects. I can answer to that on behalf of what President Anna has said, said on their behalf, on behalf of our competition or partners rather, that everybody is focusing on their own assets and optimizes them because there are no new assets. If they appear, the access to those, as President Bryja mentioned, the accessing the first ton. It's dozens of years at least. I understand the background of that question.
Please remember, I think it was April last year, there was a similar question what we intend to do with the international assets. As Mr. President has mentioned, nothing has changed and we are looking at them, we are trying to expand them and the results thereof can be seen, are visible. There's plenty more work to be done. We are still acting. A couple of words from my perspective, if there are two or three shareholders of a certain project, and this is the case of Sierra Gorda Mine, the best case scenario of operation cooperation is just to cooperate and the Management Boards to cooperate as well. We have those contacts at very different levels, at Graham Kerr and myself level as well.
It would be a strange change for us to meet or talk, not to share any views, whether that's sales or purchase, or asking ourselves whether that level of shares is optimal. We agree on one thing. Discussion like that is always risky, but almost always premature because if the asset is not optimal, as long there. Are.
Certain weak points, the pricing, the quotation of such asset is so difficult that it's actually without purpose to talk about that. First we need to optimize, we need to make the asset the best it can be. The discussion about potential sales or purchases is just premature. First of all, we will never answer questions about our plans about the future when it comes to acquisition or liquidation of assets that we have signaled officially before. Part of assets is not worth our while. Some assets are too small. We try to optimize the performance of certain assets. What is working out has been working out so far and I am pretty convinced that this will be the way in the future. The talks about potential changes are a distant perspective. If you've done that, thank you very much.
Question from Morgan Stanley: production, Polish production right now, and Mirosław Laskowski will probably support the answer in here. KGHM had 50% of copper in electrolytic concentrate. Considering that most of maintenance work has been carried out in the first half of the year, can we expect any improvements in maintenance works? Those were included in creation of the budget. The second half of the year will be in accordance with that budget. Thank you very much. The second quarter had a significant increase in the turnover capital. What was the result of that? Will the capital be freed out? The President was commenting on that, talking about the cash flow. Could we just supplement that as well? I think that I already answered that question. When talking about the turnover capital, there are plenty of factors that play a role in here.
We'll see the macro sales, our strategy for that as well in Q4, in the volume sales, whether we'll be making decisions if we want to go with such volumes through the years. At the end of the day, we need to calculate every single aspect just to see the profitability of the decisions. The turnover capital is also taken into consideration. This element, when it comes to the financial performance, is included in that analysis as well. All right, somebody from the room, maybe Radio Plus again. Once again, we had a matter of increase of the self input related to the financial result. Considering the history, the self input was there. There was a problem with the temperature at furnaces. There is no risk anymore, right?
If you could just clarify that there was a period when the input of self concentrates, considering the smelting possibilities, especially in periods when there was some renovation, cyclical renovation going on and the stock of concentrate of copper of Głogów or Legnica was not in line. It is natural that in such case it's also a financial and profitability matter too. There were problems to achieve a project smelting possibilities of the concentrate in furnaces. The aggregate that is first in line, first and foremost those possibilities were up to optimized. The project possibilities were met a long time ago. Second of all, there is no situation right now in which the provision of the concentrate, self concentrates, is over the smelting possibilities. Of course, we are using special installations. I'm referring to BOGO1 right now, but not continuing continuously and not in full scope of the production efficiency.
There's no surplus when it comes to that. Thank you very much. Robert Maj, IPOPEMA Securities S.A., do you have any options to change the provisions on the regulation on the copper tax, 28% not being related to the investments? Also a question from a couple of institutes. If you could just refer to that. We are not able to change the act. We can just comment on it. The decision when it comes to the final outlook of the act on the copper tax is taken by the Polish government, the same and as accepted by the President. As we have been doing that for a year and a half or five quarters, we have been presenting our opinion.
We provide information, arguments, and also at the stage of when the draft of the act has been presented on the RCL website, we presented our opinion as Management Board and our proposals of potential adjustments, improvements of that act. As our remarks have been noted, we are willing to provide the follow-up adjustments as well. We cannot influence the shape of the act as a company. Thank you very much. All right, another question from three analytical institutes. If we can comment about the share of the market right now, I would refer to the chart at the consolidation. We had the net result of the exchange rate, PLN 1.7 billion. It's very difficult to say what's going to happen next. This will determine the answer to that.
It's too soon to say because considering the dynamic and we are the recipient of those information that is affecting the exchange rate of euro, dollar, and zloty as well, we were discussing that. Those changes have a direct result on our net result. This is the basis for the dividend discuss. It's too soon. The question was concerning the dividends. All right, a question from the room once again. In the meantime, I'm browsing if we have some other aspects. All right. When President Bryja was talking about you have purchased certain plots, I understand that this is marginal meaning value right now. There's no, absolutely no issue of expansion right now, right? Ladies and gentlemen, when it comes to the geometry of a reservoir right now, when it comes to the placing construction, it's not horizontal expansion but vertical one.
Considering what we have agreed, the previous management have agreed upon with the neighboring villages as well, there was this opinion, will to cooperate. If the reservoir would increase, the citizens would, it would make it difficult for the citizens to sell their plots. We will be the one to purchase then. We are right now preparing the estimate, operate, and we are agreeing on the amounts, on the conditions, and in the first half we purchased two plots like that. There are 20 more motions in place right now. I would like to add one more, what President Bryja mentioned, there was this atmosphere of talks, discussions, and good neighborhood when it comes to us and the citizens of villages around Żelazny Most. As a company, we have the continuance of management. We want to be KGHM, so certain obligations, even if not formal, we are trying to meet them.
Also considering that we want to be here for the next tens and tens and tens of years, also considering the expectations. It's also a matter of finding that sweet spot between the expectation of the citizens that want to relocate and the real quotation or price of the plot. Credibility is the most important thing here. Thank you very much. I have a couple more questions, but this is a discussion about prognosis, so the company is not publishing any prognosis, so this is problematic. Very detailed questions. Cost guidance. Production costs prognosis. We're talking about the performance, cost performance, performance today, the budget as well. One more moment, if you please. There are questions of a different topic arriving. We're talking about shafts, so a bit of hesitation here. I don't have any new questions. Every question that we didn't manage to answer.
Thank you for attending this conference today, and please feel invited to attend the conference concerning the results for Q3. Thank you very much.