Good afternoon, ladies and gentlemen. Very warm welcome at the conference at which we will present the results of KGHM Group for 2025. Remigiusz Paszkiewicz, CEO. Anna Sobieraj-Kozakiewicz, Vice President for Foreign Assets. Zbigniew Bryja, Vice President for Development. Piotr Krzyżewski, Vice President for Finances. Mirosław Laskowski, Vice President for Production. We also have Janusz Krystosiak, Director of Investor Relations Department at KGHM. I would like to inform you that our conference is broadcast online. In the second part, you will have a Q&A session, and the questions can be asked both here in the room or by email. All answers will be published on our website in the Result section. Now over to the CEO.
Good afternoon, ladies and gentlemen.
Once again, a very warm welcome at the annual conference, summing up the results and above all, the efforts of the entire KGHM Group throughout 2025. If I were to summarize the year 2025, I could say that it was a good year for the entire group. I'm talking not only about KGHM Polska Miedź S.A., but I would also like to focus on the Polish group and its foreign assets, which contributed very significantly to excellent results achieved by the group globally, both in production, processing, and first of all, sales, which translated finally into financial results, which again, translated into a significant increase in the value of the entire group at the end of 2025.
The company and the group had excellent results, thanks to a number of factors which we will talk you through in a moment. I would like to say that those good results were achieved against the background and under the pressure of changing macroeconomic environment last year, as well as in the context of additional factors which are more global geopolitical. When we talk about stability with regard to mining output, in particular in Poland, which was a major achievement, and brought excellent results. I would like to mention something that was not noted by everyone last year. It was somewhere on the margin, while in fact it very much helped us in defining the future of mining in Poland, namely minimizing the risk of mine flooding in Poland.
I would like to emphasize that under a longer period of omissions or even negligence, if I can put it bluntly, the Management Board of KGHM and an entire group of employees engaged in projects which minimized virtually to zero the risk of mining waters destroying the mines. Those projects were finalized in 2025, as a result of which we can now look at mining output in Poland without this risk. Coming back to this broader context which we operated in in 2025. The macroeconomic volatility was characterized mainly by the impact of a greater demand, which was reflected in the quotation of our core products.
Let me remind you that at the beginning of 2025, for example, the quotations of copper, $8,500, and at the end of year, on 30 December that was already $12,500. This stable, high level of increased quotations continues, meaning that we are in the conditions of higher than last year quotations for both copper and silver. As you can see in the annual report and financial statements published yesterday, that also contributed to an excellent result for the entire group for last year. As for more geopolitical environment, I think, for the first time in many years, we had experienced deep destabilization of tariff policy. It is not only about the U.S. or a response to the U.S. actions.
In key markets in which we are active, those countries, in response to the developments in the U.S., modified or changed completely the tariff policies. In spite of that, KGHM responded very well, and the major reaction was the diversification of sales markets, somewhat deeper diversification than in the previous years. Also, I would like to mention not sales, but also the production that makes sure that we have what to sell and what to trade in. As for production results, in mining and in metallurgy in Poland, we had very good results, and I will allow Mr. Krzyżewski to discuss specific numbers. You can see them in the slides, and you probably had an opportunity to get acquainted with them. We also faced turbulences on the part of our competitors.
There were some industrial accidents. There were some weather issues in certain parts of the world, which decreased the supply of raw materials, including copper concentrate with high utilization of the concentrate by China. As you know, China concentrates a large part of copper production. We returned with a better margin to some customers on copper concentrate. After a certain break in trading with customers, we were able to return to them offering better margins. The global situation in the market helped us. That was also driven by changes in the policies of key countries worldwide. We were also helped, apart from the increase in quotations, by major demand for gold.
Maybe it is not a major or the most important item in our production, but we know what happened with gold reserves and what policy was pursued, not only by the National Bank of Poland, but also by other central banks and private investors worldwide. We also experienced volatility in foreign currencies market. Dollar and PLN prices changed. PLN grew in value versus the U.S. dollar. Thanks to our stable policy of hedging the prices of core products as well as Forex hedging and securing our energy raw materials, including fuels, all that had a positive impact on our operations because we were able to avoid turbulences or negative impact of those factors in 2025.
I mentioned three parts of our group, all this division into KGHM Polska Miedź Capital Group in Poland and foreign assets. I would like to stress now that for the first time in the history of the group, foreign assets, our foreign companies, became financially independent. It is also worth adding here that we saw the first major repayment of loans to the mother company, Polska Miedź, from those foreign asset businesses, and that came from U.S. and Chilean assets. At the end of the year, we revalued Sierra Gorda assets, and after the test, the result was positive $504 million. That's an important aspect because there was a checkered history of that part of operations over the past years, even the past decade.
There were varied opinions about the value of those investments, their exposure. Now we can say, however, that this stage is over. Foreign assets started generating appropriate profits. I would also like to stress here that in the near future, we would like to utilize those profits in the investment program that we plan for the future, for the upcoming years, starting already in 2026. Also, we do not forget about building the foundation that will consolidate the position of KGHM worldwide. That is the base of our resources. Of course, at a time when the quotation of our resources of metals are high, this building of the base is difficult because there are a few opportunities to do so.
There are a few well-developed investments with regard to the mining of copper or metals that we deal with on a regular basis. That is why this is a very cautious, very prudent search, not so much for opportunities as for things that can help us develop an increased value of the entire group. We also have the Victoria project in Canada. 2025 was the year of intense investing and development of this project. Our drilling went down to 1,400 m. Now we are starting lateral drilling, which will allow us to operationalize not only the deposit, but also its surroundings. We want to operate it.
In a foreseeable period, which is now, longer according to our estimates than initially expected in the project. That has a very positive impact on the projections here. Among the factors that I would also like to mention as the ones that contributed to the 2025 results, I would like to say that in the context of our foreign assets, I talked to the CEO of our Chilean partner. There's a very good relationship. The partnership, based on last year's experiences, is going to be developed. We will increase our efforts with regard to looking for opportunities abroad. Also, we made some decisions regarding the development of Sierra Gorda itself. That is the fourth line of processing and preparation of the concentrate. Ms.
Sobieraj-Kozakiewicz. I do apologize, Madam President. That's because of my today's presentation. The stage fright made me confuse your name. I do apologize.
Stable hedging policy, that's something I have already mentioned. The beginning of this year was marked by turbulences in the market of gas and fuels. Thanks to those previously prepared and proven solutions, we were able to go through this difficult situation, maybe not completely unharmed, but we've had better than those who are more heavily dependent on fuel prices. I think maybe I should mention some extra things. The first view of what we would like to do this year and in the following years, building on what was achieved in 2025.
We would like to focus on preparing the entire capital group, strengthening some key companies in Poland so that they can develop, so that we can benefit from their potential even more. We would like to enhance their capacity to be able to better use the capacity and potential of those companies in Poland. This already was reflected in 2025 and was true in early 2026. That is the cooperation and mutual respect with the social actors involved. Towards the end of my preliminary remarks, let me extend my gratitude to a large group of over 34,000 people who work throughout the world for our group. This is an effort of all of them, all of our colleagues across the group, not just in Poland, let me reiterate that. They're the ones that have done it.
Once again, many thanks for that. We're hoping to continue our great successful cooperation, not just in the current year, but also going forward, because I want to announce that towards the end of quarter two, we will be announcing our strategy. Work has been completed. There are some pathways that we want to emphasize again that have been addressed already adequately, and I think that the ending of quarter two will be a good time for us to announce the strategy. The baseline also will be the experience from early 2025 and early this year, and I think that will be the baseline for the final touches to the strategy. Now over to Mr. Laskowski for the production part. That's the baseline and the core of our operations.
Indeed, you spoke about the water risk.
Let me just perhaps bring you closer to what has been done over the last two years in KGHM to mitigate this natural threat. First of all, extending the two mines, Rudna, Polkowice- Sieroszowice water draining system injections to the leak site. Those injections have allowed us to stabilize the water flow to the mining fields at the pace of 36 cu m per minute. The Lubin mine for dedicated for not so low mineralized water from the Rudna mine. What was our biggest concern was the water management on the Żelazny Most retention container. We started work there in 2024. The capacity of this container was 40 million cubic meters .
Right now, the latest measurements show us that there's only just over 5 million cubic meters of water in this location. A lot of work there, and a lot of work has been done. We managed to get a permit to extend this location, which will allow us to stock floating deposits.
In this tank. Before I describe our results for 2025, let me just say that we have managed to perform all our production goals in all our production segments, starting from mining, but also copper processing. This is not mentioned in my presentation, however, it's important to say that our budgets have been fulfilled and exceeded. Now regarding the results that you can see on the screen here, let me just comment on 2025 from the point of view of our production schedule. It was not quite so favorable to us compared to 2024. 2025 is just 28 working days in February compared to 29 the year before, 2024, and also an additional day off, which is Christmas Eve, and that was the first historically in our country.
This is specifically meaningful for mining pre-production because our crew and ourselves, we do not systematically work on public holidays, so this is based on voluntary basis. Despite the unfavorable calendar, let's look at the bars here comparing 2025 to 2024. You can see that the output was quite similar or even better. Let me go back to what I said initially. This will allow me to comment on the production results of 2025 in three words: stable, solid, and good. Now going to details, the output, the first mining segment over 30 million tons, but that perhaps might not be quite as important as the fact that we have already been able to get 1.49% of copper in the output, and silver is 51 g.
That directly translates to producing copper and concentrate, which was higher in 2025 than 2024 by about 1,000 tons, and it attained a level of 401,000 tons. The Cu in concentrate is 22.6%. The production of silver is stable over 1,300 tons. In total, together with the silver in our overseas assets, allows us to keep in the top three silver producers in the world. The electrolytic copper production, you can see a slight decrease vis-à-vis 2024, but we already communicate that on multiple occasions throughout the first semester of 2025. We were conducting some refurbishment work in electrorefinery hall in Głogów II.
Already in quarter three and quarter four, the work showed us that the capacity was being used to its maximum extent, and the production of the electrolytic copper was over 50,000 tons per quarter. I also would like to say a few words about copper processing. In 2025, we produced over 262,000 tons in Cedynia copper mine, and then 17,836 tons. And why am I saying that? Of wire. Because this is the biggest figure in our over 45 years history of the copper plant in Cedynia. Now, early this year, this was a very good result.
We already announced them for two months, and they are also over the budget, over the assumed budget, and the production in our national asset stable, solid and good. Again, the same three words apply. Ladies and gentlemen, let's move on to the production results of our overseas assets. Now, regarding Sierra Gorda SCM, 55% of the share that we have in this enterprise, the production results for the extraction of copper were very good and they went according to the budget, and that was 86,800 tons of paid copper. And that's 8% higher year-on-year. We were able to obtain that thanks to a higher copper content in the ore, but also a higher output despite lower volume of the ore extracted, processed. Now for silver production, we also see a 3% growth year-on-year.
For silver production, we were able to produce 24 tons. For gold, we can see a 15% decrease year-on-year. You must remember that silver and precious metals only account for 11% of the revenue of Sierra Gorda. This is mostly due to the metal content in the ore. Now, we can, however, proudly say that we had a very good year for molybdenum. The value of the production was 5 million pounds, and that's a 52% growth year-on-year, which also results from a higher content of this metal in the extracted ore and a higher output despite a lower volume. To comment in just a few words about Sierra Gorda.
Last year, we managed to stabilize the copper production on the processing plant, and we managed to maintain a high cost discipline. Thanks to that, of course, thanks to the support from metal prices and other macroeconomic indicators, Sierra Gorda was able to close the year with very good financial results. This was a historically good year for Sierra Gorda in terms of production, but I will talk about it further on. Now, for the international segment, let me initially remark that because we disposed of the assets in Sudbury in Canada in early March, we stopped commenting on the production of copper, gold, and silver, which lowered the balance of these metals in KGHM International.
We are remarking here that there is a decrease by 14% of paid copper year-on-year to the level of 52,500 tons. Lower copper content despite higher output. There is a slightly higher production of copper in the mine, but due to very low volumes, this is the Carlota mine, of course, but due to low volumes and copper production, this is not really meaningful for the whole segments and this asset's financial results. For silver production, we are also remarking that there is a drop, 87%, similarly to gold, 19%. Like I said, it's this is mostly due to, first of all, disposing of the assets in the Sudbury, but also lower content of precious metals in the area of the Robinson Mine.
Robinson Mine is our main asset in the United States in the KGHM International segment. Ladies and gentlemen, we may also say that molybdenum is increasing up to 43%, thanks to higher content of this metal in Nevada. Now, a brief comment. Let me go back to the fact that we were able to complete a lot of work in terms of optimizing the costs. We also need to be clear about the fact that last year we had a very good conditions in our mines in Chile and in Robinson. Thanks to that also, we were able to use the favorable macroeconomic conditions and the TCRC premiums that our overseas assets positively contributed to the whole capital group EBITDA.
They in total accounted for 48% of the adjusted EBITDA of the whole capital group. From that point of view, this was a record year, and I think that we can perhaps cover potential development plans further on. To sum up, last year, overseas assets paid into the budget of the group $379.7 million, Sierra Gorda SCM over $300 million of that. In total, Sierra Gorda SCM has repaid over $1 billion to KGHM Polska Miedź. Thank you.
Thank you very much. Now, let's hear about our development initiatives. Mr. Zbigniew Bryja.
Good afternoon again. Rational and responsible investment program. This is a slogan that best illustrates what we are trying to do for CapEx for two years now in our company.
On the one hand, we need to sustain the production. We need to replace the machinery part, which is naturally getting old and, well, is devalued every year. But we need to think about the future, look forward, not just maintaining the volume, but we need to think ahead what we are going to do in 10 years, 15 years or 20 years, or even perhaps further from that. We have adopted an investment plan for this year at CapEx on the level of PLN 3.8 billion, PLN 126 million of reserve. PLN 3.56 billion was actually performed, adding on top of that external financing. On the right-hand square, you can see PLN 3.829 billion, plus leasing PLN 3.926 billion. Now, what has been in the books is 96% of that.
The slight difference results from the fact that many of our investments are still in the pipelines due to some delayed contracting processes. A very good result, large discipline, and you must say that all our services have really done their job excellently. As this circle on the right-hand side and analytical categories, we generally have three areas. Recovery, maintenance. Recovery is this replacement of machine park. Development is everything that stands for the future, which is slightly more distant. Here, year- by- year.
Last year, we started development of three shafts in KGHM area. Those three shafts in the future are supposed to pump in additional air to the mines. This production will grow. Now we are at a very early stage, but very soon the proportions will change significantly. Annually, we have about 500 investment projects of a smaller and bigger size. The discipline in spending CapEx here is very important to us. Here, in this amount of PLN 3,014,000,000 , we are looking at the split of funds for mining. Both here and at other conferences, I mentioned that mining is the kind of enterprise, whatever name you give to it. It's an enterprise that every day consumes part of its resources and every day has to prepare another portion.
Hence, expenditures stand for 70%. That's nothing out of the ordinary. That's a natural way of investing. Out of those, PLN 3.14 billion, 17% goes to maintenance of mining areas. They were partially handed over for an operation, but they need some fine-tuning, like extension of conveyor belts, and minor improvements that guarantee our ability to keep production at a high level. Another big area of expenses is replacement of machine. We bought new machinery, and this is the level at which we also kept in previous years. We watch closely the lifetime of our machinery. Maybe in the future we will readjust the number of machines. Now this is the minimum necessary for our operation in mines.
Another area is water removal, water drainage in mines. Mr. Paszkiewicz mentioned this task that we dealt with two years ago when we found the company, maybe not in a disastrous situation, but in a difficult one. The Żelazny Most tank, which is our tank for retention of our technological waters, was practically completely filled. The condition of pipelines, retention of water in underground corridors did not give us the peace of mind necessary for regular operations, in particular in the context of the other flooding. We had to apply for repairs, development of redundant pipelines and all activities needed for water drainage, both up and down. This explains this high item in expenditures. Extension of the Żelazny Most tank.
Elevation of the embankment. We started intense work here at the end of 2024. In 2025, we continued this work. We changed the parameters of the land around the mine to change the hydrostatic pressure conditions. Recovery of mines and hydrotechnical plant. We had the shaft relocators. This was not really maintenance, but a recovery of obsolete machinery park. The next item, exploration. This is the output from the deposit that we are only going to operate. Thanks to good planning, we are able to carry out our operations in the right way, and there is a dual mode of performing this exploration. Here, the trend is constant.
We are ahead of time so that our geological knowledge about the relevant sections of the deposit is up to date. The next item, maintenance of the shaft. This is mainly SW-4 shaft, which has no casing. Now the plan is that 160 m of salt section will be cleaned of salt regularly. PLN 73 million out of PLN 170 million was spent on this task. The next item, the program of making the deposit available for operations. In fact, I should have started with that. This is the largest portion, because out of the PLN 3.014 billion, PLN 1.3 billion goes to this program. That is preparation of deposits for future operations, future shafts, identifying subsequent sections that will be handed over for operation.
It is also the construction of shafts. In a moment, I will go to the slide that will show you the GG-1 shaft works. We will be soon starting the construction of one more shaft. We were 300 m short to get PLN 800 million , which is a very significant amount, which contributed to this PLN 1 billion result in the deposit availability program. In this slide, you can see our favorite image showing the areas on which we have licenses where we work. This dark circle, that GG-1 shaft, Głogów, the deepest shaft in Poland at the moment. Definitely our deepest shaft, 1,348 m. Retków, GG-1 and Gawłoszowice shaft. In June last year, they were identified in the field.
Geological study started in Retków. We had three drills done, including one down to 1,370 m. Gawłoszowice is where we are now drilling, and we are able to start drilling in GG2. Let me remind you that GG2 is where we started drilling, but the previous location was not fortunate. We had to change it. It took us a year and a half, and unfortunately, the planning procedures, finalization of the plot, purchase, and so on. In GG1, we started utility connection and now we are eliminating the structures from the transition part when we were just building the shaft. Now we are getting ready to hand over the infrastructure with all necessary installations. The moment of handing over the shaft for operation is September 2029.
That's it as we count the shafts. I would like to draw attention to the bars at the top. The ones that we showed previously show very significant differences. Now, GG-1, the one marked in black circle, that was joined with the underground areas. Now, our crew is working regularly there. Last year, we had ups and downs at 38%-40%. That shows how very important it is. It is something extremely relevant to us. Then the next slide. PLN 3,014,000,000 was mining. Now we move on to foundries. This is mainly recovery investments or maintenance investments, but also to some extent development. If we go from the top, components and significant renovations, MSRs.
These are renovations within Głogów and Legnica foundries, rectifiers, convectors, anode furnaces. We have grinders that are renovated. The next major items is recovery of the foundry. Again, 34% of CapEx. That is, the money that was spent on preparatory works, mainly purchases and preparation of some elements that will be necessary to renovate Głogów II foundry. At the end of June, we will start a major renovation program of Głogów II. We wouldn't be able to buy everything this year. Hence, we started expenditures already last year as part of this project. We have this major furnace and recovery. That is, dispatch boards, purchases of new mills, classifiers, and new type of engines with permanent magnets.
That is an element that contributes to environmental protection and cost reduction. The alignment of the functioning and the operation of the foundry with current regulations. We have storage boxes, modernization of ventilation in the lead hall in Głogów. That accounts for about 8% of CapEx spend on foundries. We have modernization of those furnaces in Legnica, change of the refinement methodology. The project has been running for the third year now. We believe that this year it is likely to see the completion of a major part, but preparation of anodes for Głogów II, and development of machine park for Form i Kesonów in Głogów III. This year we spent PLN 3.8 million on documentation of a new continuous line for Cedynia.
That's it from me. Thank you. Thank you so much.
Now the financial part of our presentation, Vice President for Finance, Piotr Krzyżewski.
Good afternoon, ladies and gentlemen. It's good to be the last one making the presentation, so I will be able to refer to what my colleagues have said. Undoubtedly, 2025,
Almost the entire first quarter of 2026 has one common denominator, namely high volatility. In the raw materials industry which we represent, this volatility is even greater. Our major objective, something very clear to us is focus on efficient production, which we are able to translate into sales, and that can translate into cash, while cash translates into investments, all that building value for shareholders. If you look at production on its own, major facts about 2025 have already been stated. I would like to stress some elements relevant to 2026 that you might have inferred from your reading of the report. I would like to draw your attention to silver.
Mirek, I extend a great thanks to you and your team for the fact that you were able to produce more Silver than planned, and I was then able to sell this, and it was excellent placing because the Silver prices in January and February were very high. That was our very intentional action and informed decision. We left more Silver in storage for the end of the year, and then we were able to sell that in the first quarter. This is not random. This is based on our informed decisions. As you can see, the actions from 2026 translate into our actions and prices at which we sell this year.
I think this is the right moment now to thank our entire sales team, both in Poland, and Toronto, Santiago and Shanghai. Just to remind you, 2025, 2nd April Liberation Day, we had a breakage in part of our standard connections between China and the U.S. The U.S. and Canada also faced some challenges. Europe, U.S. also faced some difficulties with delivering our products. Nevertheless, the CEO said diversification and change of directions. We also needed to recognize the higher prices, ultimately. It's very difficult probably for all of us to say what tomorrow is going to bring, but we have built our reorganizational resilience. We are prepared to find our way through this volatility. However, we would probably much prefer for it to be more stable and calm.
It's something that everyone needs to be able to better plan investments. Also, what has already been said, let me remark what has been said about south. We are 100% responsible for Sierra Gorda sales, but the decision that's taken there and then is something that we sometimes agree and sometimes disagree with. I'd like to thank our partners for that, because this creative discussion, which is sometimes quite powerful that we have with them, always allows us to develop a common ground, and it's optimal from the point of view of the output and results. Going to cash flow, what you're seeing in our equity and cash flow, we have put some of the copper and some of the silver into the inventory, 36,000 tons, I understand, of anodes. 38,000 tons actually. Why we do that?
The goal is simple but also very ambitious, 90 days of interruption for the Głogów plant, but we want to have a higher production than last year. Higher by 20,000 tons exactly. This seems logically not an easy thing to do. It will not be simple, but we know how to go ahead to do it, so the anodes will be growing. I know that we will get to 50,000 tons probably in anodes, but that's only so that in quarter three and four we can strengthen the production. There will be a lot of cash there.
We don't know what the macro will be like, but I can say that the end of the year will be very aggressive on our side in terms of production and sales, which is something that we are prepared for. Now, referring to what Mr. Bryja has said about the shafts, yes, they are a priority. Again, this is our ambition, and I think we will attain it. It's not easy to add the CapEx of the shafts and to produce the total CapEx. No, it is our ambition for the total CapEx to be smaller. Of course, it'll be slightly larger than now, but it won't be one plus one equals two. We want it to be one and a half.
It's not going to be simple, but seeing that we managed to do that when we tried to optimize costs, I will show you the details soon. I think that this is also something that we can do. The last component for building value and flows, it's a very important aspect for you, is the dividend. It is too early yet to say to talk about its value, but we can see grounds to be able to pay the dividend. From that point of view, I think it's an component that's worth discussing, and we will be making that recommendation to the shareholders meeting. Now, with reference to two components that are a day-to-day item right now is energy and gas.
From the point of view of energy, we are the biggest consumer, industrial consumer of energy in Poland. Now, for gas 2 TWh-2.5 TWh, one of the bigger ones as well. What we have done and what the CEO has mentioned is focus on our basic goals. Whenever we have some unknown data, we are trying to make sure that we have informed risk management processes in place. We are secured for gas supplies, 50% at least for this year. It's not a coincidence, it's an informed choice we made, looking at our toolbox, here in Poland and seeing that gas is being delivered by Orlen. We have been actually contracting deals with Orlen.
We have hedged some of our exposure in gas, TTF, listed in Amsterdam, so we can manage this exposure to make sure that it's beneficial at the end of the day for our shareholders. Now, for gas, one more point here. As you will know, we have gas and steam engines as one of our production equipment. This is also arbitrarily launched. Sometimes we reduce the power, but we have also launched carbon units as well, and they are going to support us slightly, but also from the point of view of purchasing energy and gas. One more thing about energy is the transaction from BGK, 94 MW of photovoltaic installations. These will be something powering our units directly.
There is a subsidy included in there, but to illustrate that to you, the ultimate cost of producing this energy should be even below PLN 200. This project will be supporting us. We will have our own sources, we will be more resilient, but also the purchasing cost of this energy will positively contribute to our EBITDA. The last topic, managing risk from the point of view of revenue. As you can see in our financial statement, we are well secured from copper, 20%, silver, 32%, and that's an informed choice and a strategy of ours. We put in more building blocks, which you cannot yet see. We will show you after quarter one. We have added some components here, small ones.
Well, if I were to say what transaction they are, they're mostly silver and copper with higher exchange rates, and they will contribute a few hundred million PLN to our results. That's not the way we look at it. We implement some strategies step by step, focusing on the elements that I mentioned earlier. Now let me move on to our presentation to sum up the key components. On the side of the revenues, as you can well see, 3% increase in the capital group. A lot of attention attributed to costs. I won't show you that, but you can see the outcome here on this right from the point of view of the EBITDA. All of these segments, both Poland, KGHM International and Sierra Gorda, have a positive contribution to our EBITDA.
Let me just remind you that already last year when we were looking at 2023, 2024, the growth of EBITDA was 58%, 28%. This year, 2023 was 5% something. We tripled over the last two years. We have had some favorable contributions from the macroeconomic circumstances, but it's not just that that did the job. There was a lot of work put into that, but a lot of work still ahead of us. Now, from the point of view of revenues, one thing is the volume that negatively impacted that electrolytic refinery and some of the refurbishment in Robinson. That was according to the plan. We got some support from the market. The dollar to zloty rate and the negative valuation impacted our revenue. The adjustment from the derivative instruments, PLN 678 million.
This year, well, we have the subsidies in various places, but when we take into account all of them from 2025 was more than PLN 250 million , in plus that we actually got as a company. Now, in-kind costs about 8%, but if we were to list, third-party input is one of the impacts, one of the factors. We bought more of the third-party input and something that's also outside of our control is the copper tax and there's been a large increase, 21%. If we were to cut off those two elements, you could say that those in-kind costs year-on-year grew by about 4%. But also third-party services, and factually, in fact, their costs decreased year-on-year.
We spoke about it last year. This was something that we put a lot of attention to, and we continue doing so, and you can see the outcome. Please look at quarter two of 2024 and compare it to quarter four of 2025. The quarter-to-quarter increase is just over 3%, so we're trying to lower that just to the inflation level. So the cost discipline is definitely being applied. The outcome is, from the point of view of C1, it dropped by 3% throughout the group, but the tax contributes to quite a large component of that. If we were to exclude tax and look at C1, then the drop would have been -17% year-on-year.
If we look at specific segments, KGHM S.A. has an increase of 3% I could say, but on the other hand, it was determined by the tax that grew by 27%. Without that, we would see -10% on C1 in Poland. The operational leverage is well-performing, and the cost discipline has made it possible for KGHM International to attain -$0.32 and Sierra Gorda -$0.46, plus the accompanying metals TC/RC, which you are, I'm sure, observing. This has positively supported us, as has the very good sales we have attained. To sum up the results of the capital group, we've had the positive contribution of that, of the EBITDA vis-à-vis 2024. The exchange rate differences were quite significant because the dollar to zloty got stronger.
The outcome of our involvement in the joint enterprises according to international accounting standards, that was Sierra Gorda mostly. Perhaps a few words of explanation. In 2025, Sierra Gorda accounted a loss that we have been settling. This was the first trigger, and we then saw an improved performance. That's so good in Sierra Gorda that the asset after tests represents a value in our books, because before that, the value was zero, let me remind you. We are reconstructing its value, but that's not yet the end for Sierra Gorda. If it continues to perform so well in the subsequent periods, we will probably be talking to you about its impact from the point of view of presenting it in our accounts, in our books.
The last thing, key, I think, actually, financial flows. We are trying to make sure that we do it by the book, so the operations will finance investment, and that's done. That's attained. To a large extent, what Madam President has said for the investment activity, we have had quite a lot of support from the repayment of debt from Sierra Gorda, that's over PLN 1 billion, that has positively impacted the financial flows in the group. As you can see, we are landing, we are dropping our indebtedness, which I'm sure you will see that in the following periods. We will try to positively surprise you to make sure that our the cost of the debt servicing is as low as possible. Thank you very much.
Thank you for presenting the results. Now the Q&A session, which will be moderated by Mr. Kostrzak.
I open the floor for questions. Please introduce yourself.
Łukasz Piasecki, IPOPEMA Securities. Congratulations on the excellent results. About the dividend, the cap is PLN 324 million if we take into account the strategy that you listed. Can we expect about PLN 2, PLN 2.5? What is the outlook? The second is on your working capital. The second question, on what level can we expect the increase of the working capital in the subsequent period of 2026, that's quarter two and quarter two? I wanted to ask you about Morocco. Can we get any further information about it? Analysis indicate that Morocco also has 12% of the world resources of rare minerals. So the question is whether KGHM will want to also follow that, or focus on copper and silver instead. Thank you very much.
Okay, we will take it right now.
T he dividend or some potential in this regard, we do not want to, and we will not depart from our to date dividend policy, which means that although the company did not pay out, or the group did not pay out dividend last year, which was linked above all to the need to secure for ourselves the possibility for CapEx stocks and tax reduction. We obtained this, and we want to use all
Funds that were not distributed as our CapEx. That means that we can return to the dividend policy. As you know perfectly well, it can be said that it is not going to be over 30% of net profit. The decision about the amount to be distributed will be made in about a month. We want to make the distribution as part of our overall and to date dividend policy. As for Morocco, Madam President. As for Morocco or more broadly, the development of our resource bases of the group, we operate following a long-term plan of developing our base of resources in foreign assets. This policy envisages development of assets at various levels of advancement.
From greenfield stage, where we are only seeking to obtain exploration licenses through development projects to ready and operational mines. Based on the benchmarks with which we stake, that is, stable legislation, stable deposit, expected and predictable annual output and lifetime of the mine. Based on those parameters, we develop a map of future development. As for Morocco, indeed, we did sign an agreement with two public entities operating in that market. One of them is a company that seeks exploration licenses. The other is a company that extracts copper as well as other metals. I would like to say this is an open agreement at this stage yet, which allows us to explore those projects very broadly, also including non-copper products.
Our main priority is and will be copper and its accompanying metals. Nevertheless, we have a broad view of the market to which we follow quite closely, and we're interested in developing our competencies with regard to other metals. I hope that in the near future we will be able to communicate something more specific to you. At this stage, it is just a memorandum which is non-binding yet, and which opens out potential fields for cooperation. Thank you.
Let me add that as regards expansion of the company based on foreign assets, potential foreign assets, we will give you more details about our prudent exploration when we get to the presentation of our strategy. As for working capital, over to the colleague.
As you know, there are a lot of variables in this equation of working capital.
If I isolate only the anodes, that will be an extra PLN 1 billion. Also we are going to reduce our stocks of a large part of ready-made products. Maybe I should also make some comments on January and February production results, mainly in copper. The lower sales was driven by a few factors. January was difficult in ports, in harbors, from the perspective of their availability and that concerned not only us, but also other industries. Hormuz does not affect us directly. The Hormuz trade does not affect us directly, but indirectly it does. Because loading of containers takes an increased amount of time, and that can have some impact on working capital.
If I were to make some predictions, we will probably grow until June. Then probably there will be some growth till September and very strong flows in the fourth quarter, positive ones. We will focus on the strategy to make sure that the working capital is optimized.
Thank you.
Paweł Puchalski, Santander. I have two sets of questions. One set concerns the volume, the other CapEx. As for the volume, in the second half of 2025, you had very high levels of copper and silver in both group and parent company. Was it an exceptional semester and the following quarters will reduce those levels?
Talking of volumes, I would also like to mention KGHM International, because we can see the first two months were very weak in production. I would like to find out whether this is only a minor glitch that will soon be overcome, or should we expect a reduction of guidance for this project?
That was in volumes. As for volumes, the figures concerning copper content in the deposit and silver content in the deposit remain at a similar level, that is, the third decimal point. In the budget for 2026, we plan similar numbers to the actuals for 2025.
As for volumes in KGHM International, you should bear in mind that we make reference to the previous year, where copper was produced from 5 West , which had better deposit parameters. Now we are operating ore from Liberty deposit, which has much worse parameters. We also have stripping from Veteran deposit. You can see the difference if you make comparisons year-on-year in the budget. We strive to make sure that budget items for production are achieved as planned. Let me note that the volumes in international are worse not only year-on-year, but also are worse compared to your budget. I do not make comparisons between years. I make comparison to your budget. Indeed, there are some challenges of geological nature and technological nature that we are grappling with. We are not commenting our forecast.
We are analyzing the reasons, and we will strive to achieve our budgeted numbers. The second set of questions regarding CapEx. I wonder when and if at all KGHM will start a new investment, KGHM 2.0, that is building a new mine to cross the other. The second question from this set, you mentioned talks about the fourth production line in Sierra Gorda. I would like to understand the economic rationale of building the fourth line, because from my perspective, it's difficult to find such a rationale, but maybe there is one. I would like to discover what it is. Let me start with the second question. That is also about bringing us to the same page with our partners.
We are now together analyzing what we are going to communicate as for our decisions. The directional announcement of the decision, whether we are going into this project or not, that will come at the end of the first semester. Maybe the production will increase even up to 20% thanks to the fourth line. This is still conditional on at least two factors. First of all, we accelerated exploration works. That is the drilling in further part of the Sierra Gorda deposit. That's the first thing which will also affect the decision on the fourth line. We are also waiting for a report on the matter, which we are to receive in the upcoming weeks, so as to be able to prepare the overall calculations for the project by mid-year.
Another thing is talks about additional processing from neighboring mines. This is as much as I can tell you right now, answering your question.
Madam President, to add to what you have said, the fourth line assumes increase in the processing plant by about 20%. While maintaining the output that we have right now, we can expect an increase in production by about 20%. We are now at the stage of analyzing the project, not only financially, but also technically, to make sure whether the fourth grinding line will meet our expectations or maybe there are alternative ways to invest in this mine. We are talking with our partner in South32.
Also importantly, Sierra is preparing a strategy for its mine development that relies on additional drillings of deposits in the surrounding area around Sierra Gorda pit. The financial decision, you know, which is to be made by mid-year regarding the extension of the mine, will be the result of all those studies, not just technological analysis, but above all, a combination of technical, financial, and the strategy accepted by Owners' Council, with regard to the strategy of development of Sierra Gorda. As for CapEx, you know more or less what CapEx would be involved. This has already been mentioned. We expect it to be about $700 million. Sierra Gorda has this financial capacity to rely on debt funding and finance extension of the company.
Final decision in this regard will be communicated in the formal way. Coming back to KGHM 2.0, let me just add one thing. I think I know Mr. Puchalski's point about the model of the transaction. We shorten LOM, we discount our cash flows. That is the major purpose of the fourth line. By shortening LOM, we will shorten the cost, we will discount our cash flows faster. That is the whole point underlying the fourth line.
Comment. This is an exceedingly interesting point. The fourth line will shorten LOM. This is why we discussed details of strategy expansion, including the operation of neighboring deposits to minimize the risk of shorter LOM. Back to KGHM 2.0. As the exploration license on the licensed area Bytom Odrzański, granted many years ago, was appealed against to the international arbitration. No geological works were carried out there that could be used for the future operations. We did not carry out exploration across the Oder because we were unsure of the settlement. The situation now is that the license is maintained. We asked for its extension until 2036.
Bytom Odrzański deposit till the Oder will be operated based on the existing licenses of our company. This year, we will start a major exploration of 12 drills at least across the Oder to confirm the parameters of the deposit. Additionally, we are drilling in Gołuszowice, so just neighbouring area. We have information from Kulów for that geological information will allow us to design the whole thing in a nutshell. In over a decade, what we would be able to start building at least two shafts because that is the beginning that we planned. So you need to wait a few years more. Although we count very much on this development, when we talk about KGHM 2.0. We have to realize that we are operating on three mines and there will be one there. So this is also something that you have to bear in mind.
Going back to your question, specifically, in at least 10 years we will start work in fields. Thank you very much.
Okay. Very briefly now, a question from our mailbox. Jason Fairclough on Bank of America. Could the new CEO take us through his priorities, please? How is he going to manage the company? Could we have a comment on that?
First of all, ladies and gentlemen, this is a team effort, especially for a public company that has quite a big range in terms of functioning in many areas of activity, et cetera, et cetera. There's one priority, basic priority, and that's not just an empty slogan. The development of KGHM, building its value through a few of the components that we have already touched upon, first of all is to raise the production effectiveness and an optimization of cost program has been established, especially for the acquisition policy that we want to improve. Also effectiveness in terms of technology, searching for solutions, et cetera. Add on top of that is what Mr. Krzyżewski has mentioned, that some of the strategy has to be devoted to obtaining cheaper energy.
Because the scope of production and of the industry that we are operating in means that we are individually one of the bigger, energy and gas consumers, industrial consumers, so we want to improve and prepare a program so that we can be far lower than what it is now, what we have now in terms of energy prices, especially the contracts from offshore wind energy or, the predicted, energy prices for, nuclear. So we're looking for the golden means and we might not be able to find an individual one, but that's one of the basic cost elements that we're looking at. On top of that, what I mentioned before, a big emphasis on improving the capital group functioning by deepening our actions for better corporate governance, but also putting emphasis on better use for the group, for the whole company.
That includes part of what we define as local content.
Sometimes reaching out for more expensive solutions from outside. We have small companies with a lot of potential that can ensure that, especially for the CapEx programs that we have, can ensure better use of the already existing resources. This is what we want to do, and we want to do it even cheaper. We want to also deepen further our diversification in terms of sales. What Madam President has also mentioned, this is one of my personal priorities, but it's never a one-person effort. We also have set a priority for the research of further resources in order to reinforce and build further value for potentially overseas assets, whether it's Morocco or any other deposits. We're looking high and low. There are no bargains right now available.
We don't want to just look at things that are more expensive. We're looking at smaller, but high in potential. The assets that are higher in potential.
Okay. From Jason. Smelting copper on the market is not perceived as good investment, it does not generate a good return on capital. Have you spoken about.
That's not really a question. About building a plant in the U.S. Is that an actual consideration of yours?
It might have been my fault. In one of my interventions a few weeks back, I might have mentioned about this potential idea of building a copper smelter plant in the U.S. This is not just a slogan, although this notion for me is. Let me explain what it is to me.
We are considering a potential participation in the value chain for copper production globally. What we have here in Poland, metallurgy is half of the European potential in copper metallurgy. We want to be stable. We want to at least maintain that. We want to use the green policy. We can see that in Legnica, there's potential for waste copper smelter plant. Now, for foreign investments, potentially a plant in the U.S., we can see how Polish companies are developing and investing in the value chain that's based predominantly on copper in the United States. That's a growing market. There's a lot of potential still to tap on and to grab on the market. We have already for old copper, rolled copper, we are also considering our participation perhaps up to a final product.
Okay. Ladies and gentlemen, if we were asked right now whether it is profitable right now to open a copper smelter right now, anywhere geographically with the current TC/RC, perhaps not so much. We may not reveal, we aren't able to reveal exact destinations. The last copper smelter, other than the Chinese technology built, was in Głogów. We have some know-how right now, and various countries are wondering whether to erect such an installation. It's too early to say. We cannot really reveal any details at this point, but we are really touching on the geopolitical aspects rather than financials. If any country wants to construct one in order to become more independent in the supply chain and to have an asset like this asset could be built.
Potentially, we can design, construct one, so we are party to various talks. That's very sensitive information at this point, and it's also too early to disclose anything in particular. Yes, we are active in various market with various services, not necessarily goods, but also services and the know-how that we have in our capital group. Thank you.
Thank you very much.
Noble Securities. The work of analysis and research in Morocco, what kind of expenditure could this entail in 2026 or 2027, please?
Ladies and gentlemen, like I said earlier, at this stage, we have signed a memorandum of understanding. It's a non-binding document. It does not trigger any expenditure in the outlay, and this is where I will stop. We are not going to talk about the future. We're not aware yet of what the consequences will be of this MoU. We are analyzing the data, and at this stage, we cannot reveal any further information about potential CapEx or expenditures.
One question about the sulfuric acid, sulfuric acid. There is a problem here in various mines.
You are well secured that you have your own production, the 600,000 tons annually in Poland. If you could say anything else about the product or the process, could you sell more of it? If you are producing 600,000 tons, how much can you sell to the regional customers? Another question is whether Sierra Gorda and Robinson are using this product, and are they not experiencing any problems with availability of this resource?
Like you said, yes, we are producing about 600,000 tons. This is an important product for us, also from the point of view of security, because as you know, we do not have a lot of retention, a lot of tanks. It needs to be sold quite quickly. It's natural that geography plays a big role here.
A big proportion of that remains in the country, and we will not be changing that. The prices perhaps are not quite as what you are saying. Let me just tell you why producers of sulfur cannot get net prices that they wish around the world. The export that we have in sulfuric acid is quite significant in various destinations. Let me tell you why $150 or $200 cannot be attained, because freight has become a lot more expensive. Availability of tanker ships is quite scarce. When we ship through Szczecin, only few large vessels can actually enter the harbor. Also in terms of railway transportation to Szczecin.
However, this is a product that has been playing an important role for the last two years, because so far, prices were even down to zero on sulfuric acid. We are now making money selling this product, quite a lot of money. It is quite an exceptional product looking at our portfolio. Now, the other question, we sell concentrate. We do not use this product in Sierra Gorda or in Robinson. We will probably be needing this in the future if we start leaching it. This, the importance of this substance is mainly for fertilizing industry. Our main partner is Police and the Grupa Azoty, so the nitrate group here domestically. It has slightly slowed down its production, I must say, to cut expenditure.
We will, I'm assuming, have more sulfuric acid for sale outside.
Thank you. Any other questions in the room?
Trybuna Górnicza. I wanted to ask you about the shaft construction in 2029. You said the shaft GG-1 is going to be just for the staff. What about the others? What are you planning this year in terms of that initiative? Are you asking about the GG-1 shaft?
Right now the reinforcement of the main shaft has been completed. We want to increase the capacity from 34 MW to 40 MW. Following from that, we will be eliminating the temporary units and constructing the permanent ones. We have a contract with our engineer. This is PeBeKa, a company that's ours, so it remains in the group.
The supervision will be carried out by BIPROMET, also a company that's owned by us. Other than the climate station with high technology devices, all of that, it will be local content other than just the technological solutions applied.
Okay, thank you. Again, from our mailbox. Morgan Stanley. What are the securities indicators for natural gas and electricity for 2026?
Like I said, 2026, especially the first semester, is over 50% on gas and more or less this 50% on electricity. If I were to illustrate that it is our ambition to. Well, despite the fact that electricity was a lot expensive, a lot more expensive in January, now gas is a lot more expensive.
We would like to wrap up. We're trying to meet the same budget as last year. From the point of view of the cost curve, we don't want the energy prices to increase vis-à-vis last year, but it is highly unpredictable whether we can do that. We will be monitoring this on an ongoing basis.
Thank you very much. A technical question perhaps. A follow-up. Are the securities on copper and silver going to be encumbered in advance, or is this going to be distributed over the next three years?
According to the accountancy, the transaction, first of all, needs to be effective. If it is effective, we will put it in operations, but they are settled once sold. You will see in our note what the dates are. I'm sure looking at the annex, you can trace the details. This will take a year or two, depending on which specific hedging transaction you are talking about.
Any other questions in the room, please? No, none. Okay, let me use this moment. Question from the internet, from our mailbox. That's a question from ESM. Can we say how we are going to distribute our capital between expansion in Europe, three new shafts and international expansion? Capital allocation.
Let me briefly comment on the backstage of it.
Each project is evaluated on an individual basis. At the end of this analysis, one by one, we build a list of projects which meet certain parameters. One of these parameters is risk, development, increase, decrease or maintenance. Then, we make our strategic decisions based on risk diversification. This is a structured process, and it is not the case that we consider one project as worse or better than another. Just like that, we have specific metrics that define whether a given project fits into our strategy or not. As a rule, it is a very structured process. The investment in three shafts is necessary for maintaining our production.
It is designed in a manner that will allow us not to exceed certain CapEx thresholds throughout the investment process. There are all calculations supporting this project. We can also use some of those studies to use for example the funds as leverage of the obtained capital. Globally, the company is not excessively burdened with debt, so we have a few opportunities. If we have good reasonable and one that gives hopes for profits project, we can do that.
Thank you. I can see no further questions here in the room. There are more questions in the mailbox, but they concern the aspects that have already been covered. We will answer all those individual questions specifically, adding additional information.
That brings us to the end of the questions. Is the CEO going to sum up?
No, I will not really wrap up the whole presentation. I just want to thank you for your presence here and for your attention, your interest in our results for 2025 and your questions regarding our near and more distant plans. I would like to say also that with the macroeconomic background, we continue to see a great uncertainty and volatility. It's enough to have a look at the prices of energy. Each development brings changes, sometimes downward, sometimes upward. We have an in-company mechanism that is in place and that triggers certain hedging solutions.
We do our best to operate in a prudent, reasonable manner that balances our activities in the context of our objective of increasing the company value and keeping that in equilibrium with expenditures. We also do our best to strike the right balance between securing the resources and output to sell. We will stick to our diversification plans. For sure, we will not make any sudden changes unless the macroeconomic environment gives us an extremely powerful blow. For the time being, in terms of hedging responses to market developments and geopolitical situation, we stick to the manner of operating that was presented to you earlier and that was reflected in our results for 2025.
We want to continue along those lines so as to be able to share with you, mostly good news. Thank you very much for today's meeting. Please, follow us regarding our plans to present the strategy. The strategy will be presented after the results of the first quarter this year. I also invite you to track our plans in this regard. Thank you very much and have a nice day.