KGHPF (KGHPF) Q2 2026 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. A very warm welcome at the conference dedicated to the discussion of the results of KGHM Group for the first half of the year. Remigiusz Paszkiewicz, CEO; Anna Sobieraj-Kozakiewicz, Vice President of the Management Board for Foreign Assets; Zbigniew Bryja, Vice President of the Management for Development; Piotr Krzyzewski, Vice President of the Management for Finances; and Miroslaw Laskowski, Vice President for Production. We also have Janusz Krystosiak, Director of Investor Relationships Department. I would like to inform you that our meeting is streamed online. And in the second part of the meeting, you will be able to ask questions both here in the room and by sending it to our e-mail address of the Investor Relationships department. Now over to the CEO.

Good afternoon, ladies and gentlemen. The first half of 2026 brought very good financial results and results in terms of efficiency throughout the entire KGHM Group. Revenues up by almost 40%, almost 90% increase of EBITDA compared with the first half of the previous year. And it is worth stressing that all that happened with a simultaneous decrease of debt throughout the group and a significant strengthening of cash flows. We also saw a significant stabilization and optimization of operations, which led to great efficiencies and costs. Of course, we continue to work on this because we want to take advantage of the good macroeconomic environment in order to build a financial base for the implementation of our investments in Poland and to take advantage of what our foreign assets offer. Not a long time ago, we presented our strategy, which shows the priorities of our management Board. And regarding operationalization and implementation of strategic initiatives, I would like to signal that we have recently accelerated quite significantly the implementation of those strategic initiatives that were started already before we announced the latest strategy. That was mainly about domestic efforts, but also with regard to expansion of our foreign assets. Our colleagues from the Management Board will talk you through more details of those developments. But I would like to stress that the portfolio of our product is very broad. Domestic investments are one thing but above all, we had this cost optimization program whose implementation has already started and we want to combine it with the implementation of the strategy in order to obtain the best possible base, benefiting from the good moment in the business cycle in order to increase value of KGHM to be -- continue to be a company that pays out dividends. That is as important as the fact that we continue to develop. We also invest, thanks to co-funding from energy transformation funds. In the first half of the year, we signed contracts for over PLN 200 million with the National Fund for Environment Protection. And that will be spent on photovoltaic and wind farms. Abroad on the 1st of October, we will have the launch of our investment in the fourth line of processing in Sierra Gorda in Chile. And we are also working on possible acquisitions and alliances with other mining companies so as to achieve a certain good perspective for expansion of our resource base outside Poland. We have also accelerated renovation downtime in Glogow foundry, and we will shorten it for sure. It is very important for our production levels, not only for copper and silver production, our core product, but it will also allow us to high production of sulfuric acid, which all in the situation of uncertainty regarding [indiscernible] and global conflicts around it became a very good product, high-margin product. This acceleration also means that we will base the decision on increasing the value chain in Cedynia smelter regarding copper [ roller ] and the construction of the fourth line in Chile. We should also remember something that I really want to reiterate, the cost optimization program, we can achieve as much several hundred million by increased efficiencies. So we want to have a high efficiency innovation, security of work, security of employee -- employment and work conditions. Here, I would like to extend my thanks to all employees throughout the group in Poland and abroad for all their contribution to such good results. It is not only the result of the good moment in the business cycle. But in a moment, you will see some more specific reasons behind this greater performance. Foreign expansion, not only geographically but also upward the value chain. That is also Cedynia smelter, new products, new plans for the Legnica smelter. We also have new directions. Let me mention the commencement of works on extraction of polyhalite in Puck. We have signed a relevant contract with the authorities of Puck municipality so that we can go through the formalities together, leading to the obtaining of the relevant license. We want to take the maximum advantage of the business conditions to achieve lower debt, good financial situation, the prospect of high cash flows because we want to be a company that pays out dividends. To justify this, let me quote a few points that follow directly from our report, but which seem highlights to us. High results of the group of the entire KGHM in the first half 2026 are the result of excellent standing and implementation of development assumptions, including numerous initiatives that have been started earlier and that are covered by the current strategy. High prices in the first half of the year. Also, I would like to say that we faced significant volatility in the quotations of our products. That regards not only high prices for core metals, but also for rhenium and sulfuric acid that I have already mentioned, almost doubling of EBITDA, operating EBITDA, you must have noticed that in our results, tenfold increase in net profit of the group year-on-year. That is particularly important for stable financial standing. Higher -- and let me stress it again, production of paid copper by 20% year-on-year and silver production, 8% up year-on-year. Increased sales volumes for all our core products, also gold. We know it all happened in the conditions of high and stable quotations in spite of the volatility signaled earlier, which proves that we are able to navigate those slightly changeable, but overall stable quotations times marked by these conditions. It also seems to me that another important factor is that we recorded a decrease in C1 cost indicator for those who specialize in KGHM analytics, that's an important piece of information, also increase in operating margin from 25% to 34% in the entire group. That is a significant growth. Now I would like to hand over to my colleagues from the Management Board with the request to present details for the first half of the year. Let's start with Madam Vice President.

Okay, then. Thank you. As regards production results and foreign assets, let me start with a discussion of Sierra Gorda. You can see in the graphs, the results of Sierra Gorda that account for 55% share, payable copper at 19,600 tonnes, for the entire 6 months, 40,200 tonnes. That is minus 5% year-on-year. As for silver production in the first 6 months, 38% increase in production, which stands at 14.9 tonnes. Gold and precious metals stand at 9,300 ounces and the result is thus 37% worse. However, I would like to comment on this by saying that the content of silver and precious metals in the ore depend on the nature of the ore, and that was the modeled exploitation of the deposit. As for copper production, here, we see a slight decrease year-on-year. As we informed you earlier, Chile experienced torrential rains in the first quarter 2026. Initially, we did not see the impact of those rains on production. But after the first 6 months of the year, this negative deviation on production is visible. It is slight yet visible. Sierra Gorda is trying -- now working on making up for this, and we are optimistic about success of this. We can see that the content of metal in the ore is higher. So that proves Sierra Gorda is working to achieve the targets. As for molybdenum production, we see a 6% growth in production year-on-year. We are at 11.8 (sic) [ 1.8 ] million pounds molybdenum up. This higher production is the result of higher output, although the ore had a lower content of the metal and lower processing levels. That means overall that the processing plant stabilized its production and the output indicators remain stable. In this slide, you can see the future project of building the fourth production line in Sierra Gorda on the 30th of June, together with our South42 (sic) [ South32 ] partner, we decided to fund this investment. CapEx amounts to $725 million as of the end of July, and the funding will happen from debt instruments, which are available to Sierra Gorda and from operating cash flows. Why are we doing this? Well, we are doing this in order to increase metal production by 20% as a target solution, but also to further reduce C1 costs that is to optimize even further production in this mine. We expect that in line with the assumptions that construction will last 3 years. And in the fourth year, that is in the second half 2030, it will be fully operational and Sierra Gorda is working on making all this happen. Soon, we will witness physical launch of this investment on site. The design work have been underway for quite some time. The debate on this project started some 5 years ago. And our studies as well as those of our Australian partners indicated positive NPV, hence, this decision. We expect the greatest outlays in 2027, 2028. Also, there will be an increase of employment in 2028. Well, this slide really shows what the construction looks like. We intend to have additional crusher and the HPG mill, ball mill and flotation line. It's a complicated project because we are going to do it during the ongoing operation of the Sierra Gorda facility. So we need to coordinate the work of multiple teams and the work is underway. From January 1, 2027, we are going to become the Chair of the Sierra Gorda Supervisory Board. One important caveat here. Since we speak about the Line 4, it means that potentially LOM is shortened by 3 years until '45, but this is based on the deposits that have been included in the metal plan. So whatever is currently available and identified as available in Catabela excavation area. But Sierra Gorda continues to work on exploration drilling around the Catabela excavation area. New areas were identified where there is very likely high mineralization, both for copper and molybdenum. And in case of Catabela Deep, the drills also show that underneath the excavation area, there is some potential, but also in the horizontal dimension, the mineralization is passing through [ an area ] location and possible pit, which is Salvadora. So we know for sure that this is a mineralized area and an ongoing drilling project, Catabela Northeast, like 42 drills have already been performed, and we do have confirmed mineralization. It is important to note that we are working on the intensification of the exploration drilling because it means, well, prospective deposits that may prolong the life of the entire Sierra Gorda mine. Different colors in the cross-section, like blue and red show high level of mineralization. And you can see that on your right, there is a higher density of that. So that shows that the pit, Catabela Out-Pit also has potential to have mineralization underneath the current production area. On the left corner, we see the map that shows the position of Catabela Northeast versus Catabela Space, which is owned by BHP Spence facility. So again, the projection is based on the assumption that we shorten LOM by 3 years, but this is based on the already identified and proven deposits. However, our current exploration show that there is more potential for production around that area. Therefore, this new line will definitely support the production of the new -- from the new deposits. Now production and the output. We do for KGHM International, we are down 34% year-on-year. This is related to the reduced output of copper, reduced content of copper in the ore and less core was -- less ore was processed. So in terms of Carlota, this is a very tiny part of our international assets. So it doesn't really contribute much to EBITDA or to overall production. In terms of silver production, it's not located there because that mine does not offer silver. For TPM, we also see the reduction for gold. This is 15.5 ounces of gold, but this is in line with the budget. And there is a slight increase in molybdenum production. And a brief commentary on that. As we have already informed to you before, at Robinson, we currently operate Liberty pit, which is less abundant with metal. This is like a transition area from the previous pit that was previously operated, and we are underway to the ultimate pit. So we are in the transition period. So material that we are currently working with, this is not geological material that was historically heap material. So this is definitely offering less of the product. The negative surprise was that the Liberty ore turned out to be much more challenging for processing in our plant. And the ultimate output is less than anticipated. And hence, the deviation is from our forecast. In addition to that, we had some other challenges. There were some failures with some of the machines like thickener and mill. So the operating assets that failed also contributed to that negative deviation. But we actually came up with a repair program and the Robinson is working on sort of bridging the gap during the second half of the year and deliver the budget. In terms of numbers, the situation with Robinson with the positive macro environment and high prices of metals is really very good. Robinson generated the EBITDA, which is twice as high as the one we had in the budget. It's over PLN 780 million after the first 6 months. So the good pricing of metals have certainly contributed to this production. And Sierra Gorda and financial results also shows that the numbers outperformed our expectations and the budget. So overall, cash flow from international assets after 6 months are at $290.3 million. Sierra Gorda contributed over $270 million, paying back all the loans, guarantees and other financial instruments. International assets after the 6 months contributed nearly 20% to the adjusted EBITDA of the entire capital group. This is nearly PLN 2.5 billion. And I think that this is the point where I will actually have my full stop and turn the floor over.

So right now, it's time for the individual segments of the Polish assets. I have been always thinking about the proper adjective to describe the situation. I was speaking about the stable production and the robust results. Now let me say that after 6 months, we have very decent numbers to show. And again, I would like to thank our employees that work in the smelters and other facilities because there is something that we can praise about. We had a very challenging budget, but we were able to deliver. And as you can tell, the overall production and the production of the copper in concentrate or electrolytic copper or silver production, we are -- all the bars are higher than last year. And perhaps a few words about the production of the electrolytic copper, 7% up, but let me remind you that the last year, we had a low base because of the standstill and the refurbishment of one of the holes in the Glogow II smelters. Silver, 8% up compared to the last year. It is true that we take advantage of the availability of the material. Last year, we were able to grow by 40 tonnes of the metal, mainly because of the better content of silver in the ore by 2 ppm. And I would like to provide more details about ongoing refurbishment of Glogow II smelter. We initially planned that the first concentrate will be actually loaded on the 26th of September. Today, we know that the schedule will be updated and shortened but 9 days. So we are back in business on 17th of September. So this is when we have the first load coming to the furnace. So this is truly very good, I should say, very decent result of the Polish assets.

So now development programs for KGHM. It's been a good time. And you can tell that we have really accelerated our development projects. The CapEx for the first 6 months is PLN 1.439 billion. Most of it was in the mining operations. And I think that this is natural, and it has been like that for years, and I don't think that we can expect any change in these proportions. When you want to break it down in different categories, development, recovery, maintenance, et cetera, I think that the development has accelerated. We were up 14% compared to the 6 months of 2025. And this is the result of the new shafts becoming operational. And in terms of these categories, we can tell that there is more spending on actual refurbishment and reconstruction, a major overhaul of Glogow II smelter. The CapEx is around PLN 500 million. In Q4 2025, we started the procurement process. This year, the work is going in full swing, and we are going to wrap it up in September, as you've just heard. And I think that here, we can offer more details. In terms of the development, the greatest part of this investment is availability of the deposit. Overall, over PLN 1.04 billion is allocated to that. And that includes everything, the fits, the shafts and all you may think of that has to do with the future production in the mines and in the smelters. So out of PLN 497 million that was spent in the first 6 months, PLN 395 million was allocated to mining operations. Last year, we were working on the shafts for Retkow and then GG-2 and Gaworzyce. So last year, we had only GG-1. Today, we have 4 shifts that are covered by our CapEx. GG-1 is actually coming towards the final phase. So when we zoom in right here, this is the shaft, which is very much advanced. In September 2029, the first workers will start actually going down in that shaft. We have completed the first phase of work, and you see the air conditioning unit that was refurbished and refitted. Currently, we have already installed all the temporary equipment. Now we are building cages and the bath and loading facility for fuel, et cetera. So in 3 years, 2,500 people will be actually using this shaft to go down and work in the mine. Okay. GG-2. GG-2 is the shaft, which was located a few years ago. Regretfully, the location was not good in terms of geological properties. So we had to move 800 meters to the site. We are completing our surveillance work. In 2 years, we will start freezing and 2.5 years, we start deepening back. This is GG-2. And now Retkow. The Retkow shaft is currently at the end of the geological survey. And again, we have the confirmation that it was the excellent location, but would be another shaft for the transportation of people, materials downwards. And this is close to the bridge on the east side of our deposits. The work is very much advanced, more or less in the same way as in case of GG-2. So these 2 shafts will be going hand-in-hand in terms of advancement of work. And Gaworzyce is the final shaft, and we currently are still in the drilling process to check all the geological properties. Is that's going to be confirmed? We don't know as the final location, we continue the discussions right now. At the horizon, you can see the Glogow smelter. So we have already spent over PLN 100 million on those shafts. You may think that this is all field work. It doesn't happen that much there. But one drill is like between PLN 12 million and PLN 15 million. Now we also have to take into account access carrying the load and the output back. Each cubic meter of going down translates into tangible results. We have 7 licenses here marked in gray. These are areas where we currently exploit the deposit. And the remaining are exploration licenses. Radwanice Wschod will be the places for which we will apply for exploitation. Now we only explore them. Up to the Oder River and beyond the Oder River, we have made some drillings across the river, 9 drills will be made this year. 4 have been completed, and we plan to have the same number next year. Then we are examining geologically the area near Bytom Odrzanski. Retkow-Grodziszcze is also the place where we expand our resources eastward. At the moment, we can start from top on the left. Refurbishment in the smelter, that has already been mentioned by Mr. Paszkiewicz and Mr. Laskowski. Major refurbishment process that we repeat once in 5 years. Imagine, we have this furnace which has this inlet of ceramics is dismantled. We have to recover all those spots, specifically checking the weakest points. Then we have to replace this inlet. We bow our heads to the workers who really worked very hard. We now have such refurbishments, not every 3 years, but every 5 years. And we also shortened the time needed as downtime for the process. In this picture, you can see the moment of placing of those ceramic bricks that are resistant to temperatures of well over 1,000 degrees, and they are supposed to resist such high temperatures for the upcoming 5 years. Here, we can see Glogow II smelter, PLN 670 million will be the cost of the refurbishment here. And also similar works are going on in Legnica. Here, we are fitting machinery for production of cathodes with fixed base or without a base. These are machines that allow us to save time and a lot of raw materials that do not need to be re-smelted to create anodes, because copper will be torn off this base and will go directly to Cedynia. Here, you can see another fragment of this line. We faced some difficulties there because it is an installation that is completely new in our facilities. This year, we intend to complete it. And at the beginning of next year, a similar installation is to be put into operation in Glogow. Here, I would like to mention Cedynia. Cedynia is not really a smelter. It's our rolling facility. This rolling plant has been operational for over 40 years. So it's time to refurbish the -- or replace the machines. They are still performant. They are still in good condition, but we endeavor to replace them and also take this opportunity to expand our product offer with molders, shapers and other products made of copper. So we are thinking about UPCAST as well. Exploratory and development work focus above all on maintaining highly productive geological lines. We work in increasingly difficult conditions. We are successful in withdrawing humans from the most dangerous areas. And thermic hazards are becoming the most serious ones. Now we had a robot for cleaning the passage between the furnace and the recovery boiler in Glogow II. Now we are finalizing a similar robot like this for Glogow I. Also down in the mines, we need machines that -- well, when they emit heat, they should not emit fumes. So we have electrically propelled machines. Here in the picture, you can see a vehicle for transporting employees. It will be equipped with modern air conditioning devices, both in the cabin and in the park for carrying workers. It will be a mobile device, which will also give a chance to the workers to get a moment of rest. We work under very difficult conditions. The deeper you go, the warmer it gets. We feel it acutely. Also, we remove humans from the front of the corridors. We now shift to automatic anchors. And all processes will be done from automated boots. We're also considering automation of drilling and automation of loading of explosives. Also all things related to removal of water, improvement of productivity of MCRs. And I would not focus too much on figures because sometimes they only signal that a certain machine was put into routine operation or was phased out. We generally increase the capacity of our exploration machinery.

So to close this presentation, I would like to say that the first half of the year was favorable for the company also in terms of what we saw in the market. In a moment, I will talk you through that in greater detail because there have been questions. But as the CEO mentioned, we improved efficiency. We improved the balance sheet and cash flows. We also tried to do anything we could to ensure a certain buffer that will help the company in a more difficult external conditions. I would like to highlight 3 elements in the first 6 months of this year. First is the resilience of our business; two, the market; and three, consistent building of value through the strategy. And I will explain what it means for our operations and how we implemented it in the first half of the year. Starting with the first point, that is resilience. Resilience is understood through the lens of income. And if we look at revenues, I can also say it referring to what Mr. Laskowski said, production is crucial. But given how fragmented and divided the market is, the sales also becomes a very important aspect. Production is our back office, so to speak. And now you can see that we focused more on stock. We also replaced conditions in some contracts by focusing on products which were previously niche ones. However, they generated good margins, selenium, molybdenum, the sulfuric acid. Here, we diversified our hedging also, which provided another good element. The prices, which we achieved for the 6 months were very high. And that is the result of good market conditions, but also efficient action of our sales teams. So I would like to thank our sales teams globally. These people work from Santiago to Shanghai. So my thanks go to all the sales staff for the hard work. We are also opening 2 new markets, new products. Importantly, we also increasingly focus on already processed products. 50% of our products go in the direction of rolled metal. And that means also that we are soon to make important decisions. For example, in Cedynia, the new production line will have an additional possibility of scrap metal input. At the next conference, we will be able to give you more details on that. But anyway, we can see that the margin generated in this project contributes to a greater profit on the company in subsequent periods. While talking about income now, we should also mention costs as another important element to which we pay close attention. We minimize cost. That is our core activity. But we also look at the costs through the lens of production. At the end of the day, we want to generate the highest possible value added on each tonne of output. As for costs, we might look at costs by type. On the one hand, if we look at taxes and third-party input, here, the numbers are high. But if we deduct the elements, which are beyond our control and if we look at the costs, excluding the annual bonus, which we have in collective bargaining agreements, we have a stand-alone 4% year-on-year growth. Our target was also to benchmark to inflation, but we optimize costs. The cost optimization program, which has been mentioned here repeatedly, evolved over recent periods. And we want to show you that it covers a series of activities. Our ultimate goal is to have the benchmark of 2024 and PLN 1 billion savings are expected by 2028 compared to this benchmark of 2024. Now after 1 year of implementation of those activities showed savings of PLN 300 million. And next steps will also be reflected in KPIs, not only stand-alone KPIs for the company, but also for other companies within the group. And eventually, they will bring all those total savings. We break down this in greater detail for the last 2 quarters to show you the change that occurred from 2024. This slide shows this breakdown. Now the question, what kind of benchmark for inflation should be adopted. We looked at CPI. A real dynamic of decrease in 2025 on materials and services was over 5%. And in the first half of the year, that was 5.7%. We stopped the cost decrease, but we still have the ambitions to improve further and look for further savings, look for optimization activities that will generate additional value. Probably with regard to costs as such, it is worth discussing those related to energy in more detail. Very often, analysts and others who watch the market are interested in that. So when we look at the cost of electricity for the first 6 months, putting aside the volumes because the volume is up because the output is up. But if you look at the price net effect, it's PLN 57 million. Gas, PLN 20 million down. CO2, PLN 5 million up. So how much more we paid for energy for the period is PLN 32 million in terms of price outcome. To a large extent, we are actually optimizing our consumption. We are hedging in Amsterdam. We are actually active on the power exchange. So all those transactions and optimization projects translated into really slight increase, given that PLN 1.2 billion is the cost of gas electricity for the first 6 months. So going up by PLN 32 million is really negligible given what has been actually happening in the market during the past periods. Now resilience is also about cash flow, a strong operating cash flow over PLN 2.5 billion. And globally, after our investments, all the cash flow is PLN 774 million. But I think that inventory should be also mentioned sort of a peak in our inventory when we were collecting anodes for current processing to actually generate cash flow that is more in line with the standard operations without any refurbishment and retrofitting projects. So if you look from December through January, for inventory, it's PLN 2.5 billion and 63% is change in price and 37% is the volume. But let me add to that, that we were able to collect over 60,000 -- or nearly 60,000 anodes. Yes. But when you look from quarter-to-quarter, we were up only by PLN 485 million, including PLN 135 million for volume and over PLN 350 million for the price. But what we are seeing now, and you will be actually watching it over the quarters to come, the value of our inventory would be actually declining. So we are going to actually free and release the cash that was frozen when we were building up our inventory to be able to deliver on the production commitments. Now another part that I mentioned earlier is the market environment. I think that we've been all watching that. This is never black and white picture. In demand side, we have a strong demand for various categories of products. And economically, anything may happen any time. But from the point of view of projects and customers, we see stable and long-term volumes. So we are on the safe side. However, this picture is not entirely clear. You never have, these days, global demand and supply. The market is fragmented. So when you look COMEX and LME inventories, they are very high. All the cathodes are actually now located at [ COMEX ]. Now you were asking what has been happening recently. Like we had cash settlement on the market, the sort of usual third Wednesday of the month. So cathodes were shifting towards COMEX and the spreads that you've been able to see on the market was definitely nonstandard. And therefore, through the physical market, we've been seeing some volumes being pushed. So after that peak, we were always hedging, and we will be able to show you our transactions during the next -- after the next quarter. So we took advantage of the peak. But the market is under pressure as we can tell. But the trend that we are able to identify, whether for copper or silver, we believe that it's stable, and there is a strong demand underlying the whole picture. The main risk is supply. The supply that we see on our side and across the sector, it is likely that at some place in the world, there could be some incident that can actually undercut the supply because the mines are getting older and older, geological profile is not fully defined, and therefore, this risk is pertinent. And the final thing is the value. At the end of the day, we are looking at it from the perspective of our new strategy. So we want to report and generate performance in the short term. But when we have long-term strategy, so taking a long-term approach, as VP Bryja said, the shaft is not built overnight. It takes years to complete such a project. And when you look around the world, what's happening out there, the regulations that are enacted and you top it with the process that is very complex. You have to appreciate it that this is a long-term CapEx commitment. But at the same time, we want to make sure that we generate value for shareholders. As the Madam VP said, the fourth line. With brownfield, we are able to generate an additional value. And we presume that the project of the fourth line, Line 4 will generate much more additional value because we base our projections on the defined deposits. And it's very likely that the new deposits will be coming in as a result of the explorations. So that line should really generate additional value, high value. In terms of the financing, most of the financing will actually charge Sierra Gorda. Currently, we are supporting this process. We are going to refinance. And altogether, it will be around $1 billion in banking financing, we don't want to overcharge the ongoing cash flow from that operations because it's also important for our cash flow. This is an important contribution. And we want to make sure that there is a basis for the further investment and development. Catabela Northeast, that's another component of this picture. At the end of the day, from my point of view and yours, it is -- what does it mean in numbers? It is really hard to define the total potential for that deposit because we keep drilling. But what we were able to see so far, this is still estimates. And again, I stress that these are estimates. But we see that this deposit is a high prospect. And the copper that is sitting there makes it comparable to Sierra Gorda. So it could be another Sierra Gorda. So there are still many question marks at this point. But since we do have a plan to actually increase our efforts when it comes to drilling in that area. And once we do it, we should be able to demonstrate the value of the deposit that is sitting there, and that will contribute to the value of the company and the entire capital group. So this is a potential upside from the point of view of our investment projects, and that should bring a high return. Now another question that is frequently asked is about M&A. Yes, we are actually looking at it, but it's not that we will do it at any cost. We are a reasonable investor. We are currently actually during the process of the exclusive acquisition. The process is highly confidential, so I cannot disclose the details. But if we are successful during the next conference, we may actually have a new addition to our asset family. Thank you.

Ladies and gentlemen, now it's time for questions and answers. We are collecting questions from the room -- from the audience in the room.

Robert Maj. I had a question about the inventory because it was, as you said, PLN 2 billion, now you are down to PLN 480 million in Q2. What about Q3? Are you going to invert this position and you're going to actually recover the cash flow that was kind of poor in Q2?

Well, I would not entirely agree with this assessment that the cash flow was poor. But it is true that in Q3, the volume will be going down. So in Q3, Q4, it's about sort of releasing and freeing everything that has been frozen and tied up. 60,000 anodes are being processed right now. They will be sold. So you will see it in the form of the final product and then you will see it in the form of cash flow. So that's what you're going to see.

So okay, what kind of dividend can be expected for 2026? Are we shooting at PLN 5 or rather at PLN 1?

Well, I think that we will communicate that on the occasion of the General Shareholders Meeting next year. But let me emphasize that we want to take advantage of the conducive macro environment, and we want to build the financial base with the proper level of the inventory. So -- but we are in the position to continue our investments and growth and further development. But at the same time, we want to have financial buffer that would have some room for sharing that with shareholders through the dividend.

And the final question from me is about the cost of personnel. Okay. Let me start with the total cost of production in Poland. It was over PLN 55,000 per tonnes. So it was 8% quarter-to-quarter. I understand that the main culprit was the growing payroll costs, PLN 2.1 billion, right? So cash flow of the group was not able to cover these costs in Poland. And that was because of the one-off bonus that was paid out to the workers. And we may expect that the total cost that is currently at PLN 55,000 per tonne may go down in Q3. Am I right?

Well, according to our regulations, when we generate the profit, we have to actually make a contribution to the price and reward fund. This is like over PLN 300 million year-to-year. And this is because of our collective agreement, we had to make that and that contributed to the increased cost. So -- but this is the consequence of the profit that we were able to generate. But right now, we are not going to continue that. So we may expect that cost per unit should not be growing in Q3, not in the way it was growing so far.

[indiscernible] Well, the CEO or the deputy mentioned that the family of assets can be growing. So I wanted to ask you about international expansion, about the directions and what are the most desirable critical commodities right now? This is a question from my area.

In terms of directions for M&As. I cannot exclude any geographical regions, but we are looking closely at the South America, North America, North Africa, but we look only at the stable jurisdiction in terms of the legal safety, like the North Africa and Morocco specifically. But we do not rule out our destinations. We are looking overall across the market. As you can tell, there are very few projects in the copper segment that would be very prospective in terms of their current development stage. Because of the prices, the projects are overstated. Therefore, we have to be very cautious. We are also surveying the American market, looking at various assets. But as it was said, we are currently performing further analysis, and we are not able to disclose more details at this point. One of our priorities is also to explore the Ukraine. Actually, we've been doing the exploration there for some time. But now we want to update the knowledge that we have already gathered. The most prospective deposits are undergoing due diligence. This is mostly lithium and titanium. And these metals, these elements are on the radar right now.

Gentleman in the first row.

[ Dariusz Nawrot ]. When can we expect improvement of output of copper in Robinson?

That's a difficult question. I am unable to answer the question asked this way. The Robinson mine is facing some challenges because the pit and the ore exploited there are difficult. The mine is working on meeting the budget targets. The failures that occurred have been eliminated as a result of remedy measures, and we expect an improvement of output in the upcoming time. We also have some development plans for that place. We have AI supported plans to improve our mix and enhance the quality of the output. If we implement this, that will take weeks. Now we are at the stage of confirming that this technology, if implemented, will boost the output. So that is also a quick path to return to high output levels. But also this phase of Liberty is a transitional phase to the next one, which will start in 2028. That is the shift to the open-pit mine in [indiscernible]. And that also results from a certain modeling of the deposit that will allow us to go to a better part. But before we get there, we need to go through the part of the deposit, which contains a greater share of lower quality material.

So is that the only problem here?

Yes, only this one, the type of soil.

Then I have a question regarding the global market. What is your feeling? Because there is some pressure on the supply side in copper supply. But something that the midterm can play a role is the decision of the American administration regarding customs. By the end of June, plans were to be announced until the -- regarding actions until the end of 2027. Aren't you afraid that there might be some changes if American traders introduce some of the stock to the market and stabilize copper price?

Well, of course, there is such a risk. This storage facility that in the past was created a little by accident, now has gained strategic importance. We watch closely what the U.S. and China are doing. Copper no longer is just an element subject to supply and demand loss. And it has become the object of political games. We all see the production of cathodes in the U.S. U.S. is dependent on this type of product to a large extent. And the storage facility builds some resilience. Whether that will be sufficient, it's not something for me to comment on. This storage facility has a much broader importance than just as a storage place for cathodes.

The CEO also said that when we were at the time of higher prices, you concluded a bit more hedging transactions. Is that the strategy for the upcoming weeks or months, namely more active hedging for copper? And one more question regarding hedging with respect to silver. The prices are higher than they were at the end of January. Will you consider reducing the number of hedging transactions here?

Well, we have our strategy for this. We monitor the market on a daily basis, but we also have certain intervals at which we complete such transactions. We targeted at the level which we considered appropriate for concluding certain transactions. For silver, you will see the results in the next report with $55, some transactions were closed. And now we monitor the market. I think I would say the market would be at $75 plus/minus 50%. We probably oscillate within that range. Silver is very strong in the industry. Also, ETF movement was visible. It is quite a shallow market. We have some institutional investors, central banks. And here, the demand is under no risk. We can see that the big players continue the purchases.

One more question from the room.

Jakub Szkopek, Ersete. I had a question. A few days ago, BHP had a conference and the CEO said the cost of new projects like buying copper project, costs well above $100,000 per tonne. Is that indicative also for your purchases that you might consider?

Let me take this. Of course, we cannot refer to this. We have no idea what the new CEO of BHP had in mind. For sure, we will inform you at the time when we are ready to do so. Talks are in progress. This is not that cost, but it is very difficult to refer to any statement made at the press conference of another institution.

Let me ask a technical question then. The VP mentioned change of guard in Sierra Gorda Supervisory Board. I understand Sierra Gorda will not change. It will continue at 50%.

No, no, no. Of course, this is like the binding JV, which defines that the leadership in this Board is cyclical with 2-year terms. Now South32 has this role. We take it over at the beginning of January next year. So nothing changes with respect to ownership.

Now online questions. I am on the defensive today. The Management Board presented the results and the questions asked in the room also answered a series of questions that had been sent by e-mail. And I have no new questions, no new topics. So maybe there are some more questions in the room. If there aren't any, then thank you very much for the participation in this conference. We invite you to the next one in November. And now we invite you to a little refreshments. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]