POLISH FINANCIAL SUPERVISION AUTHORITY

Consolidated quarterly report QSr 1 / 2022

(in accordance with § 60 section 2 and § 62 section 1 of the Decree regarding current and periodic information)

for issuers of securities involved in production, construction, trade or services activities

For the first quarter of the financial year 2022 from 1 January 2022 to 31 March 2022 containing the condensed consolidated financial statements prepared under IAS (International Accounting Standard) 34 in PLN, and condensed financial statements prepared under IAS 34 in PLN.

publication date: 12 May 2022

KGHM Polska Miedź Spółka Akcyjna (name of the issuer)
KGHM Polska Miedź S.A.	Mining
(name of the issuer in brief) 59 – 301	(issuer branch title per the Warsaw Stock Exchange)
(postal code)	LUBIN
M. Skłodowskiej – Curie	(city)
(street)	48
(48 76) 74 78 200	(number)
(telephone)	(48 76) 74 78 500
[email protected]	(fax)
(e-mail)	www.kghm.com
692–000–00-13	(website address)
(NIP)	390021764
	(REGON)

SELECTED FINANCIAL DATA

data concerning the condensed consolidated financial statements of the KGHM Polska Miedź S.A. Group

	in PLN mn		in EUR mn
	from 1 January 2022 to 31 March 2022	from 1 January 2021 to 31 March 2021	from 1 January 2022 to 31 March 2022	from 1 January 2021 to 31 March 2021
I. Revenues from contracts with customers	8 993	6 745	1 935	1 475
II. Profit on sales	1 801	1 442	388	315
III. Profit before income tax	2 508	1 862	540	407
IV. Profit for the period	1 899	1 365	409	299
V. Profit for the period attributable to shareholders of the Parent Entity	1 900	1 366	409	299
VI. Profit for the period attributable to non-controlling interest	( 1)	( 1)	-	-
VII. Other comprehensive income	( 339)	( 937)	( 73)	( 205)
VIII. Total comprehensive income	1 560	428	336	94
IX. Total comprehensive income attributable to shareholders of the Parent Entity	1 560	429	336	94
X. Total comprehensive income attributable to non controlling interest	-	( 1)	-	-
XI. Number of shares issued (million)	200	200	200	200
XII. Earnings per ordinary share (PLN/EUR) attributable to shareholders of the Parent Entity	9.50	6.83	2.05	1.50
XIII. Net cash generated from operating activities	1 725	927	371	203
XIV. Net cash used in investing activities	( 195)	( 714)	( 42)	( 156)
XV. Net cash used in financing activities	( 76)	( 1 129)	( 16)	( 247)
XVI. Total net cash flow	1 454	( 916)	313	( 200)

	As at 31 March 2022	As at 31 December 2021	As at 31 March 2022	As at 31 December 2021
XVII. Non-current assets	37 167	36 664	7 989	7 971
XVIII. Current assets	12 874	11 363	2 767	2 471
XIX. Total assets	50 041	48 027	10 756	10 442
XX. Non-current liabilities	10 418	11 351	2 239	2 468
XXI. Current liabilities	10 962	9 538	2 356	2 074
XXII. Equity	28 661	27 138	6 161	5 900
XXIII. Equity attributable to shareholders of the Parent Entity	28 606	27 046	6 149	5 880
XXIV. Equity attributable to non-controlling interest	55	92	12	20

data concerning the quarterly financial information of KGHM Polska Miedź S.A.

in PLN mn		in EUR mn
from 1 January 2022 to 31 March 2022	from 1 January 2021 to 31 March 2021	from 1 January 2022 to 31 March 2022	from 1 January 2021 to 31 March 2021
7 555	5 569	1 626	1 218
1 602	1 359	345	297
1 838	1 425	396	312
1 325	975	285	213
( 362)	( 792)	( 78)	( 173)
963	183	207	40
200	200	200	200
6.63	4.88	1.43	1.07
1 839	887	396	194
( 381)	( 632)	( 82)	( 138)
( 122)	( 1 187)	( 26)	( 260)
1 336	( 932)	287	( 204)
I. Revenues from contracts with customers II. Profit on sales III. Profit before income tax IV. Profit for the period V. Other comprehensive net income VI. Total comprehensive income VII. Number of shares issued (million) VIII. Earnings per ordinary share (PLN/EUR) IX. Net cash generated from operating activities X. Net cash used in investing activities XI. Net cash used in financing activities XII. Total net cash flow

	As at 31 March 2022	As at 31 December 2021	As at 31 March 2022	As at 31 December 2021
XIII. Non-current assets	34 429	34 671	7 400	7 538
XIV. Current assets	10 300	8 787	2 214	1 910
XV. Total assets	44 729	43 458	9 614	9 448
XVI. Non-current liabilities	8 740	9 707	1 879	2 110
XVII. Current liabilities	9 186	7 911	1 974	1 720
XVIII. Equity	26 803	25 840	5 761	5 618

Table of contents
-------------------	--

Part 1 – Condensed consolidated financial statements	3
CONSOLIDATED STATEMENT OF PROFIT OR LOSS	3
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	4
CONSOLIDATED STATEMENT OF CASH FLOWS	5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	7
1 – General information	8
Note 1.1 Corporate information Note 1.2 Structure of the KGHM Polska Miedź S.A. Group	8 9
Note 1.3 Exchange rates applied	11
Note 1.4 Accounting policies and the impact of new and amended standards and interpretations	11
2 – Realisation of strategy	12
3 –Information on operating segments and revenues	16
Note 3.1 Operating segments	16
Note 3.2 Financial results of reporting segments	19
Note 3.3 Revenues from contracts with customers of the Group – breakdown by products	22
Note 3.4 Revenues from contracts with customers of the Group – breakdown by type of contracts	24
Note 3.5 Revenues from contracts with customers of the Group – geographical breakdown reflecting the location of
end customers	26
Note 3.6 Main customers Note 3.7 Non-current assets – geographical breakdown	27 27
Note 3.8 Information on segments' results	28
4 – Selected additional explanatory notes	39
Note 4.1 Expenses by nature	39
Note 4.2 Other operating income and (costs)	40
Note 4.3 Finance costs	40
Note 4.4 Information on property, plant and equipment and intangible assets	40
Note 4.5 Involvement in joint ventures	41
Note 4.6 Financial instruments Note 4.7 Commodity, currency and interest rate risk management in the KGHM Polska Miedź S.A. Group	42 50
Note 4.8 Liquidity risk and capital management in the KGHM Polska Miedź S.A. Group	54
Note 4.9 Related party transactions	57
Note 4.10 Assets and liabilities not recognised in the statement of financial position	58
Note 4.11 Changes in working capital	59
Note 4.12 Assets held for sale (disposal group) and liabilities associated with them	59
5 – Additional information to the consolidated quarterly report	62
Note 5.1 Effect of changes in the organisational structure of the KGHM Polska Miedź S.A. Group	62
Note 5.2 Seasonal or cyclical activities	62
Note 5.3 Information on the issuance, redemption and repayment of debt and equity securities Note 5.4 Information related to paid (declared) dividend, total and per share	62 62
Note 5.5 Other information to the consolidated quarterly report	62
Note 5.6 Information on the impact of COVID-19 on the Company's and the Group's operations	64
Note 5.7 Impact of the war in Ukraine on the Group's operations	66
Note 5.8 Subsequent events	68
Part 2 - Quarterly financial information of KGHM Polska Miedź S.A.	69
STATEMENT OF PROFIT OR LOSS	69
STATEMENT OF COMPREHENSIVE INCOME	69
STATEMENT OF CASH FLOWS STATEMENT OF FINANCIAL POSITION	70 71
STATEMENT OF CHANGES IN EQUITY	72
Explanatory notes	73
Note 1 Revenues from contracts with customers – geographical breakdown reflecting the location of end customers73
Note 2 Expenses by nature	74
Note 3 Other operating income and (costs)	75
Note 4 Finance costs	76
Note 5 Changes in working capital	76

Part 1 – Condensed consolidated financial statements

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

		from 1 January 2022 to 31 March 2022	from 1 January 2021 to 31 March 2021
Note 3.3	Revenues from contracts with customers	8 993	6 745
Note 4.1	Cost of sales	(6 831)	(4 970)
	Gross profit	2 162	1 775
Note 4.1	Selling costs and administrative expenses	( 361)	( 333)
	Profit on sales	1 801	1 442
Note 4.5	Gains due to the reversal of allowances for impairment of loans granted to a joint venture	64	-
Note 4.5	Interest income on loans granted to a joint venture calculated using the effective interest rate method	183	97
	Profit or loss on involvement in a joint venture	247	97
Note 4.2	Other operating income, including:	762	981
	other interest calculated using the effective interest rate method	4	1
	reversal of impairment losses on financial instruments	1	12
Note 4.2	Other operating costs, including:	( 195)	( 356)
	impairment losses on financial instruments	( 1)	( 1)
Note 4.3	Finance costs	( 107)	( 302)
	Profit before income tax	2 508	1 862
	Income tax expense	( 609)	( 497)
	PROFIT FOR THE PERIOD	1 899	1 365
	Profit for the period attributable to:
	Shareholders of the Parent Entity	1 900	1 366
	Non-controlling interest	( 1)	( 1)
	Weighted average number of ordinary shares (million)	200	200
	Basic/diluted earnings per share (in PLN)	9.50	6.83

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	from 1 January 2022 to 31 March 2022	from 1 January 2021 to 31 March 2021
Profit for the period	1 899	1 365
Measurement of hedging instruments net of the tax effect	( 285)	( 763)
Exchange differences from the translation of statements of operations with a functional currency other than PLN	-	( 149)
Other comprehensive income which will be reclassified to profit or loss	( 285)	( 912)
Measurement of equity financial instruments at fair value through 41 other comprehensive income, net of the tax effect
Actuarial losses net of the tax effect	( 95)	( 29)
Other comprehensive income, which will not be reclassified to profit or loss	( 54)	( 25)
Total other comprehensive net income	( 339)	( 937)
TOTAL COMPREHENSIVE INCOME	1 560	428
Total comprehensive income attributable to:
Shareholders of the Parent Entity	1 560	429
Non-controlling interest	-	( 1)

from 1 January 2022 to 31 March 2022 from 1 January 2021 to 31 March 2021 Cash flow from operating activities Profit before income tax 2 508 1 862 Depreciation/amortisation recognised in profit or loss 493 495 Gains due to the reversal of allowances for impairment of loans granted to a joint venture ( 64) - Interest on loans granted to a joint venture ( 183) ( 97) Other interest 24 29 Gains on disposal of property, plant and equipment and intangible assets ( 133) ( 51) Gain on disposal of subsidiaries ( 38) - Exchange differences, of which: ( 241) ( 323) from investment activities and cash ( 305) ( 583) from financing activities 64 260 Change in provisions for decommissioning of mines, liabilities related to future employee benefits programs and other provisions ( 63) ¹⁸ Change in other receivables and liabilities other than working capital 188 202 Change in assets and liabilities due to derivatives ( 221) ( 316) Reclassification of other comprehensive income to profit or loss due to the realisation of hedging derivatives ²⁷⁹ ³⁷¹ Other adjustments 4 ( 3) Exclusions of income and costs, total 45 325 Income tax paid ( 181) ( 200) Note 4.11 Changes in working capital, including: ( 647) (1 060) change in trade payables transferred to factoring ( 10) ( 204) Net cash generated from operating activities 1 725 927 Cash flow from investing activities Expenditures on mining and metallurgical assets, including: ( 936) ( 678) paid capitalised interest on borrowings ( 24) ( 21) Expenditures on other property, plant and equipment and intangible assets ( 148) ( 136) Expenditures on financial assets designated for decommissioning mines and other technological facilities ( 29) ( 24) Repayment of loans granted to a joint venture 431 - Proceeds from disposal of property, plant and equipment and intangible assets ³³⁰ ⁷³ Proceeds from disposal of subsidiaries 151 - Proceeds from disposal of equity instruments measured at fair value through other comprehensive income - ⁵³ Other 6 ( 2) Net cash used in investing activities ( 195) ( 714) Cash flow from financing activities Proceeds from borrowings 44 24 Repayments of borrowings ( 87) (1 103) Repayment of lease liabilities ( 9) ( 10) Payment of interest, including: ( 31) ( 41) borrowings ( 30) ( 38) Other 7 1 Net cash used in financing activities ( 76) (1 129) NET CASH FLOW 1 454 ( 916) Exchange gains/(losses) ( 3) ( 40) Cash and cash equivalents at beginning of the period 1 904 2 522 Cash and cash equivalents at end of the period, including: 3 355 1 566 recognised in assets held for sale (disposal group) 18 -

CONSOLIDATED STATEMENT OF CASH FLOWS

restricted cash 26 19

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		As at 31 March 2022	As at 31 December 2021
	ASSETS
	Mining and metallurgical property, plant and equipment	21 414	21 564
	Mining and metallurgical intangible assets	2 370	2 316
	Mining and metallurgical property, plant and equipment and intangible assets	23 784	23 880
	Other property, plant and equipment	2 646	2 593
	Other intangible assets	277	250
	Other property, plant and equipment and intangible assets	2 923	2 843
Note 4.5	Involvement in joint ventures – loans granted	8 348	7 867
	Derivatives	536	595
	Other financial instruments measured at fair value	687	637
	Other financial instruments measured at amortised cost	540	496
Note 4.6	Financial instruments, total	1 763	1 728
	Deferred tax assets	191	185
	Other non-financial assets	158	161
	Non-current assets	37 167	36 664
	Inventories	6 892	6 337
Note 4.6	Trade receivables, including:	1 405	1 009
	trade receivables measured at fair value through profit or loss	924	614
	Tax assets	246	364
Note 4.6	Derivatives	192	254
	Other financial assets	180	172
	Other non-financial assets	281	162
Note 4.6	Cash and cash equivalents	3 337	1 884
Note 4.12	Assets held for sale (disposal group)	341	734
	Current assets	12 874	11 363
	TOTAL ASSETS EQUITY AND LIABILITIES	50 041	48 027
	Share capital	2 000	2 000
	Other reserves from measurement of financial instruments	(1 949)	(1 705)
	Accumulated other comprehensive income, other than from measurement of financial instruments	2 123	2 219
	Retained earnings	26 432	24 532
	Equity attributable to shareholders of the Parent Entity	28 606	27 046
	Equity attributable to non-controlling interest	55	92
	Equity	28 661	27 138
Note 4.6	Borrowings, lease and debt securities	4 809	5 409
Note 4.6	Derivatives	1 163	1 134
	Employee benefits liabilities	2 353	2 306
	Provisions for decommissioning costs of mines and other technological facilities	884	1 242
	Deferred tax liabilities	577	643
	Other liabilities	632	617
	Non-current liabilities	10 418	11 351
Note 4.6	Borrowings, lease and debt securities	1 145	455
Note 4.6	Derivatives	1 149	889
Note 4.6	Trade and similar payables	2 858	2 974
	Employee benefits liabilities	1 536	1 437
	Tax liabilities	1 904	1 453
	Provisions for liabilities and other charges	203	207
	Other liabilities	1 781	1 661
Note 4.12	Liabilities associated with disposal group	386	462
	Current liabilities	10 962	9 538
	Non-current and current liabilities	21 380	20 889
	TOTAL EQUITY AND LIABILITIES	50 041	48 027

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Equity attributable to shareholders of the Parent Entity
	Share capital	Other reserves from measurement of financial instruments	Accumulated other comprehensive income	Retained earnings	Total	Equity attributable to non-controlling interest	Total equity
As at 1 January 2021	2 000	(1 430)	1 728	18 694	20 992	89	21 081
Profit for the period	-	-	-	1 366	1 366	( 1)	1 365
Other comprehensive income	-	( 759)*	( 178)	-	( 937)	-	( 937)
Total comprehensive income	-	( 759)	( 178)	1 366	429	( 1)	428
Reclassification of the result of measurement of equity instruments measured at fair value through other comprehensive income	-	-	-	( 18)	( 18)	-	( 18)
As at 31 March 2021	2 000	(2 189)	1 550	20 042	21 403	88	21 491
As at 1 January 2022	2 000	(1 705)	2 219	24 532	27 046	92	27 138
Profit for the period	-	-	-	1 900	1 900	( 1)	1 899
Other comprehensive income	-	( 244)	( 96)	-	( 340)	1	( 339)
Total comprehensive income	-	( 244)	( 96)	1 900	1 560	-	1 560
Changes due to loss of control of subsidiaries	-	-	-	-	-	( 37)	( 37)
As at 31 March 2022	2 000	(1 949)	2 123	26 432	28 606	55	28 661

*PLN 18 million due to reclassification resulting from the disposal of equity instruments measured at fair value through other comprehensive income was recognised in other comprehensive income.

1 – General information

Note 1.1 Corporate information

KGHM Polska Miedź S.A. ("the Parent Entity", "the Company") with its registered office in Lubin at 48 M.Skłodowskiej-Curie Street is a joint stock company registered at the Regional Court for Wrocław Fabryczna, Section IX (Economic) of the National Court Register, entry no. KRS 23302, on the territory of the Republic of Poland.

KGHM Polska Miedź S.A. has a multi-divisional organisational structure, comprised of a Head Office and 10 divisions: 3 mines (Lubin Mine Division, Polkowice-Sieroszowice Mine Division, Rudna Mine Division), 3 metallurgical plants (Głogów Smelter/Refinery, Legnica Smelter/Refinery, Cedynia Wire Rod Division), the Concentrator Division, the Tailings Division, the Mine-Smelter Emergency Rescue Division and the Data Centre Division.

The shares of KGHM Polska Miedź S.A. are listed on the Warsaw Stock Exchange.

The Parent Entity's principal activities include:

the mining of copper and non-ferrous metals ores; and
the production of copper, precious and non-ferrous metals.

The business activities of the Group include:

the mining of copper and non-ferrous metals ores;
the mined production of metals, including copper, nickel, silver, gold, platinum, palladium;
the production of goods from copper and precious metals;
underground construction services;
the production of machinery and mining equipment;
transport services;
services in the areas of research, analysis and design;
the production of road-building materials; and
the recovery of associated metals from copper ore.

The KGHM Polska Miedź S.A. Group (the Group) carries out exploration for and mining of copper, nickel and precious metals based on concessions for Polish deposits held by KGHM Polska Miedź S.A., and also based on legal titles held by companies of the KGHM INTERNATIONAL LTD. Group for the exploration for and mining of these resources in the USA, Canada, and Chile.

Note 1.2 Structure of the KGHM Polska Miedź S.A. Group

As at 31 March 2022, KGHM Polska Miedź S.A. consolidated 65 subsidiaries and used the equity method to account for the shares of two joint ventures (Sierra Gorda S.C.M. and NANO CARBON Sp. z o.o. in liquidation).

The percentage share represents the total share of the Group.

* An entity excluded from consolidation due to the insignificant impact on the consolidated financial statements

MERCUS Logistyka sp. z o.o. 100%

NITROERG S.A. 87.12%

PHU Lubinpex Sp. z o.o. 100%

84.98%

NITROERG SERWIS Sp. z o.o 87.12%

Note 1.3 Exchange rates applied

The following exchange rates were applied in the conversion to EUR of selected financial data:

for the conversion of turnover, profit or loss and cash flow for the current period, the rate of 4.6472 EURPLN*,
for the conversion of turnover, profit or loss and cash flow for the comparable period, the rate of 4.5721 EURPLN*,
for the conversion of assets, equity and liabilities at 31 March 2022, the current average exchange rate announced by the National Bank of Poland (NBP) as at 31 March 2022, of 4.6525 EURPLN,
for the conversion of assets, equity and liabilities at 31 December 2021, the current average exchange rate announced by the NBP as at 31 December 2021, of 4.5994 EURPLN.

*the rates represent the arithmetic average of current average exchange rates announced by the NBP on the last day of each month during the period from January to March respectively of 2022 and 2021.

Note 1.4 Accounting policies and the impact of new and amended standards and interpretations

The following quarterly report includes:

1. the condensed consolidated financial statements of the KGHM Polska Miedź S.A. Group for the period from 1 January to 31 March 2022 and the comparable period from 1 January to 31 March 2021, together with selected explanatory information (Part 1),
1. the quarterly financial information of KGHM Polska Miedź S.A. for the period from 1 January to 31 March 2022 and the comparable period from 1 January to 31 March 2021 (Part 2).

Neither the condensed consolidated financial statements for the period from 1 January to 31 March 2022 and as at 31 March 2022 nor the quarterly financial information of KGHM Polska Miedź S.A. for the period from 1 January to 31 March 2022 and as at 31 March 2022 were subject to audit by a certified auditor.

The consolidated quarterly report for the period from 1 January 2022 to 31 March 2022 was prepared in accordance with IAS 34 Interim Financial Reporting as approved by the European Union and for a full understanding of the financial position and operating results of KGHM Polska Miedź S.A. and the KGHM Polska Miedź S.A. Group, should be read jointly with the Annual Report RR 2021 and the Consolidated annual report SRR 2021.

This quarterly report's financial statements were prepared using the same accounting policies and valuation methods for the current and comparable periods and principles applied in annual financial statements (consolidated and separate), prepared as at 31 December 2021.

Note 1.4.1 Impact of new and amended standards and interpretations

From 1 January 2022, the Group is bound by:

Amendments to IFRS 3 on references to the Conceptual Framework,
Amendments to IAS 16 on proceeds before intended use of an item of property, plant and equipment,
Amendments to IAS 37 on cost of fulfilling onerous contracts,
Annual amendments to IFRS 2018-2020 amendments to IAS 41, IFRS 1, IFRS 9.

Up to the date of publication of these consolidated financial statements, the aforementioned amendments to the standards were adopted for use by the European Union. In the Group's opinion, amendments to standards will be applicable to the Group's activities in the scope of future economic operations, transactions or other events, towards which the amendments to standards will be applicable.

In particular, the application of amendments to IAS 16 on proceeds before intended use of an item of property, plant and equipment will result in a change in the Group's accounting policy in this regard. In accordance with the current policy, the Group decreased expenditures by the amount of revenues achieved before an item of property, plant and equipment was brought into use, which incidentally took place during the shaft sinking. Pursuant to the amendments, revenues from sales of products manufactured while an asset is brought to the desired location and condition (e.g. test production), together with associated costs, should be recognised in profit or loss for the period. Transitional provisions on the implementation of these amendments are applied retrospectively to items of property, plant and equipment brought into use on or after the beginning of the earliest presented period. The Group applied amendments to IAS 16 from 1 January 2022. With respect to the application of transitional provisions, the Group did not identify significant items of property, plant and equipment that would be subject to adjustments on or after 1 January 2021.

2 – Realisation of strategy

2.1 Strategy description – basic elements of the Strategy of KGHM Polska Miedź S.A.

On 14 January 2022, the Company's Supervisory Board approved the "Strategy of the KGHM Polska Miedź S.A. Group to the year 2030 with an outlook to 2040" as presented by the Management Board, reflecting the macroeconomic environment and the geopolitical situation affecting the mining sector. In the planned activities, a particular place is held by the green transformation through renewable energy and modern technology. The Strategy does not alter the Company's current approach to its business activities, the Parent Entity continues to act responsibly and to think long-term about the Company's future. Therefore, the Company's mission and vision remain unchanged. The goals of the Strategy are ambitious, but attainable. To reflect the changes in the environment, the four existing strategic development directions (Elasticity /flexibility, Efficiency, Ecology and E-industry) were updated to include an additional, fifth element – Energy.

Diagram 1. Mission, Vision and Development Directions of the Strategy of KGHM Polska Miedź S.A.

2.2 Advancement of the Strategy in the first quarter of 2022

During the reporting period being discussed, KGHM Polska Miedź S.A. commenced the advancement of the "Strategy of the KGHM Polska Miedź S.A. Group to the year 2030 with an outlook to 2040", approved in January 2022. The process of operationalisation of the Strategy continues, in which the units responsible for advancing its individual elements take part in terms of cooperation and collaboration within the organisation. As a result of the indicated activities, a Strategy Implementation Plan (SIP) will be developed, defining the Initiatives, Strategic Programs, projects and tasks which are indispensable to achieving the strategic goals defined in the Strategy, together with setting forth their execution over time, their means of financing and the persons responsible for their accomplishment.

The Company's Strategy has been presented through the prism of five strategic development directions (Flexibility, Efficiency, Ecology, E-industry and Energy). After completion of the operationalisation process, it is likely to be reported on the basis of strategic pillars.

In advancing the Strategy, the Company endeavoured to maintain stable production in its domestic and international assets, and a level of costs guaranteeing financial security while ensuring safe working conditions and minimising its impact on the environment and surroundings, pursuant to the idea of sustainable development. To enhance the effectiveness of the actions taken, the decision was made to define and establish subsequent Strategic Programs.

In the context of the impact of the conflict in Ukraine on the implementation of the Strategy, no significant negative consequences have been recorded and neither they are expected. The risk of disrupting the business continuity of the Group is assessed as low. Rising prices of goods and services may turn out to be potentially negative, which may result in an increase in the overall costs of implementing the Strategy, but currently they do not constitute an obstacle to its implementation.

Key achievements in terms of realised strategic actions taken in individual strategic directions of development, accomplished in the first quarter of 2022:

	EFFICIENCY
Production in Poland and abroad	– Mined production in Poland amounted to 114.4 thousand tonnes of copper in ore with a C1 cost of 5 281.30 USD/t (2.40 USD/lb) of payable copper. – Payable copper production abroad in the first quarter of 2022 amounted to: ▪ Sierra Gorda: 23.9 thousand tonnes (on a 55% basis); ▪ Robinson: 14.3 thousand tonnes; ▪ Carlota: 1.2 thousand tonnes; ▪ Franke: 2.3 thousand tonnes; ▪ Sudbury Basin: 0.4 thousand tonnes. – Metallurgical production amounted to 151.1 thousand tonnes.

EFFICIENCY

Production in Poland
and abroad

–
Mined production in Poland amounted to 114.4 thousand tonnes of copper in
ore with a C1 cost of 5 281.30 USD/t (2.40 USD/lb) of payable copper.
–
Payable copper production abroad in the first quarter of 2022 amounted to:
▪
Sierra Gorda: 23.9 thousand tonnes (on a 55% basis);
▪
Robinson: 14.3 thousand tonnes;
▪
Carlota: 1.2 thousand tonnes;
▪
Franke: 2.3 thousand tonnes;
▪
Sudbury Basin: 0.4 thousand tonnes.
–
Metallurgical production amounted to 151.1 thousand tonnes.

	– Silver production amounted to 348 tonnes.

Continued advancement of the Deposit Access Program	– The GG-1 shaft reached a depth of 1313.7 m. The Stage 8 of shaft sinking is in progress. – Work continues on procedures involving the selection of contractors for tasks involving the construction of the GG-2 "Odra" Shaft. – Work continues on the procedure of purchasing land for the investment involving the construction of the "Gaworzyce" Shaft. – 10.3 kilometres of tunnelling were excavated in the Rudna and Polkowice Sieroszowice Mining Areas (25% of work planned for 2022). – In terms of the Central Air Conditioning System, work continued on building the Surface-based Air Conditioning Station at the GG-1 Shaft. The main technological and installation work as well as on electrical and automated equipment work was completed. The technological start-up of the installation is in progress. – The technical handover of the first part of the Ice Water Transportation System was completed. Construction continues on building the second part of the System.
Development of the Żelazny Most Tailings Storage Facility	− Southern Quarter: operational permits were obtained. Total advancement of the physical scope of work for the Southern Quarter together with slurry, water and power infrastructure reached 99.5%. Tailings continue to be deposited in the Southern Quarter. − Tailings Segregation and Compacting Station (TSCS): work was completed on assembling the technological part of the Station. Work continues on developing infrastructure in the vicinity of the station. Total advancement of the physical scope of work on the TSCS is 81%. The process of segregation and compacting is underway for the purpose of deposition of waste in the Southern Quarter as well as a separate process of building up the dam in the Southern Quarter.
Preparations for the maintenance shutdown of the Głogów II Copper Smelter and Refinery	− The shutdown of the flash furnace for maintenance occurred in the last week of April 2022. It is planned that the shutdown will last for 78 days.
R&D initiatives to enhance the efficiency of the core production business	- Tests are underway on pilot flotation machinery rotors in the Concentrators. - R&D work commenced on the utilisation of PbZn concentrate in pilot installations at the Głogów Copper Smelter and Refinery. - The work of a scouting team was completed regarding the production of silver powders and pastes for photovoltaic purposes as well as metal powders dedicated to additive technology (so-called "3D printing"). - Actions were completed related to the possibility of improving the properties of titanium alloys as a result of adding rhenium. - Activities were carried out under the Dolina Miedziowa "CuValley Hack" program: attempts to implement the solution created under last year's Hackathon were made and the 2nd edition of the event was carried out.
Use of external financing for R&D&I	- Advancement of European research projects continued and applications were prepared for the subsidising of initiatives under the Horizon Europe and KIC Raw Materials Programs.
Intellectual property	- Proceedings are underway to obtain legal protection for the selected word trademarks. - Proceedings are underway in the Patent Office of the Republic of Poland for the granting of seven patents to protect the submitted inventions.
	FLEXIBILITY

- Extension of the value chain	Detailed technical and economic analyses continued with respect to the development of copper processing in the Cedynia Wire Rod Plant Division. Work is aimed at defining the design concept, assortment, selecting technology and production resources, taking into account the investment's profitability and strategic assumptions of KGHM Polska Miedź S.A.
- Hybrid Legnica Smelter and Refinery	The investment project "Documentation for the Hybrid Legnica Smelter and Refinery - Legnica Smelter and Refinery Scrap Turnover Base" was launched.

Exploration projects with	-	In the concession areas "Retków-Ścinawa" and "Głogów" geological work continued. An alteration of the concession in the Głogów area was received in March 2022.
	-	Geological work continued within the Synklina Grodziecka and Konrad concession
respect to exploring for and		areas.
	-	The restoration of terrain following the first exploratory-evaluation drilling in the
evaluating copper ore		Bytom Odrzański concession area was completed.
deposits	-	Geological work continued within the Kulów-Luboszyce concession area.
	-	In the Radwanice concession area, evaluation work continued using underground
		mine workings.
	-	On the terrain of the Puck concession laboratory and analytical work was carried out
Realisation of exploration		related to drilling at the end of 2021, on the basis of which two scientific reports were
projects with respect to		developed.
exploring for and	-	A concept was developed to conduct further geological work within the Nowe
evaluating other deposits		Miasteczko concession.
	-	Sierra Gorda: there were no substantial interruptions in work. The achieved EBITDA
		and payable copper production exceeded targets.
Continuation of	-	Sierra Gorda Oxide: actions continued aimed at preparing for the next stage of project
development projects in		development and the decision of the owners of the project (Sierra Gorda S.C.M.) as to
the international assets		the further direction of project development.
	-	Victoria project: preparatory work continued related to selected elements of the
		infrastructure. Work commenced on updating the design of the production shaft.
	-	Under the four editions of the competition, 25 R&D projects having a total value of
CuBR venture		over PLN 180 million were launched: 6 projects are currently being in progress, 19
		projects have been completed.
Implementation Doctorates Program	–	Advancement of the Implementation Doctorates Program for employees of the
		Group was continued. At the end of the first quarter of 2022, 29 doctoral students
		from the two editions had participated in the program.

ECOLOGY, SAFETY AND SUSTAINABLE DEVLOPMENT

	E-INDUSTRY
Program to adapt the technological installations of the Company to the requirements of BAT conclusions for the nonferrous metals industry and to restrict emissions of arsenic (BATAs)	– The Program to adapt the technological installations of the Głogów Copper Smelter and Refinery and the Legnica Copper Smelter and Refinery was continued. In the first quarter of 2022, 7 projects were advanced.
Continuation of the Occupational Health and Safety's Improvement Program in KGHM Polska Miedź S.A.	- The LTIFR ratio of the Company: 3.94 (lower than the amount recorded for the same period of 2021 by 0.27). The number of workplace accidents: 30. The TRiR ratio for the international assets (total for the employees of the KGHM INTERNATIONAL LTD. Group and Sierra Gorda S.C.M. as well as contractors for these entities): 0.2. – Planned activities related to mitigating the threat arising from the SARS-CoV–2 pandemic were successively carried out, and a program of vaccinations for Company employees was carried out. – Cooperation with domestic and international academic institutions and opinion makers was engaged. – An active model of coordination of the work of OHS units was applied. Active forms of education and employee support were prepared.

E-INDUSTRY

Program to adapt the
technological installations
of the Company to the
requirements of BAT
conclusions for the
nonferrous metals industry
and to restrict emissions of
arsenic (BATAs)

–
The Program to adapt the technological installations of the Głogów Copper Smelter
and Refinery and the Legnica Copper Smelter and Refinery was continued. In the first
quarter of 2022, 7 projects were advanced.

Continuation of the
Occupational Health and
Safety's Improvement
Program in KGHM Polska
Miedź S.A.

-
The LTIFR ratio of the Company: 3.94 (lower than the amount recorded for the same
period of 2021 by 0.27). The number of workplace accidents: 30. The TRiR ratio for
the international assets (total for the employees of the KGHM INTERNATIONAL LTD.
Group and Sierra Gorda S.C.M. as well as contractors for these entities): 0.2.
–
Planned activities related to mitigating the threat arising from the SARS-CoV–2
pandemic were successively carried out, and a program of vaccinations for Company
employees was carried out.
–
Cooperation with domestic and international academic institutions and opinion
makers was engaged.
–
An active model of coordination of the work of OHS units was applied. Active forms
of education and employee support were prepared.

Continued advancement of	–	Work continued related to the electromobility of mining machinery.
projects to automate the	–	A letter of intent was signed involving cooperation on hydrogen drives.
production lines of the	–	The anti-collision system was integrated as well as the system for locating and
mining divisions of KGHM		identifying machinery and people in the underground mines.

	– In terms of work on the broad-band transmission of data in the mines, a total of 78 wi-fi access points were built, mainly used for the transmission of data from mining machinery. – Robotisation of production and auxiliary processes were continued. – Advancement of the KGHM 4.0 Program was continued, divided into two main areas: In the area of ICT (Information and Communication Technology) and Cybersecurity: – Due to the war in Ukraine, as well as the growing threat of cybercrime, work was carried out in terms of ICT security.
KGHM 4.0 program	In the area of Digitalisation of business processes: – The process of adapting the organisation to digital change was carried out - a Digital Workplace in the IT environment of the Company under the Microsoft 365 packet. – The project "Optimisation of the Production Planning and Settlement Process": the entire path of testing the process of production planning in the Company for 2022 was carried out in the ePlan SAP BPC model. – The implementation of the CMMS system supporting production and material logistics in the Metallurgical Plants, Concentrator Division and Tailings Division: work was continued on the efficiency of the process between operational continuity services and external companies. – The project entitled "Development of an automatic system to control the composition of air using unmanned aerial vehicles": a Specific Operation Risk Assessment (SORA) was performed for the approved scenario of flights developed on the basis of analysing zones surrounding the Głogów Copper Smelter and Refinery, and all requisite legal permits were obtained in order to carry out cyclical flights over the
	terrain of the Głogów Copper Smelter and Refinery. ENERGY
Development of solar energy	– A project to construct a photovoltaic power plant of approx. 1.5 MWe at the Cedynia Wire Rod plant was initiated. Preparatory work is underway for the commencement of two subsequent photovoltaic farm projects on the Parent Entity's grounds with a total capacity of around 6.5 Mwe as well as analytical work on the utilisation of other terrain of the Company to develop renewable energy sources. – Construction work of the photovoltaic power plants complex HMG I-III was continued: a technical project on the conditions for connecting to the network was prepared. – Construction work of the Obora I Sandpit photovoltaic power plant was continued: work began on developing the documentation necessary for realisation of the investment.
Development of	– The Memorandum of understanding was entered into with Total Energies

wind energy, including

Development of hydrogen

Development of nuclear

Self-generation of electricity

offshore

technology

energy

Renewables SAS. Joint engagement was agreed in proceedings involving the obtaining

– "Sector Agreement for the development of hydrogen power in Poland" was signed under the patronage of the Minister of Climate and Environment of the Republic of

– In February 2022, an agreement with NuScale Power, LLC (a supplier of nuclear technology) was signed for preliminary work, constituting the first step in the process

- In the first quarter of 2022, 12.75% of the Parent Entity's need for electricity was met

of location decisions for the construction of Offshore Wind Farms.

Poland, the Lower Silesia Hydrogen Association was initiated as well.

of implementing SMR technology in the business activities of the Group.

by its own internal sources, including RES.

3 –Information on operating segments and revenues

Note 3.1 Operating segments

The operating segments identified in the KGHM Polska Miedź S.A. Group reflect the structure of the Group, the manner in which the Group and its individual entities are managed and the regular reporting to the Parent Entity's Management Board.

As a result of the aggregation of operating segments and taking into account the criteria stipulated in IFRS 8, the following reporting segments are currently identified within the KGHM Polska Miedź S.A. Group:

Reporting segment	Operating segments aggregated in a given reporting segment	Indications of similarity of economic characteristics of segments, taken into account in aggregations
KGHM Polska Miedź S.A.	KGHM Polska Miedź S.A.	Not applicable (it is a single operating and reporting segment)
KGHM INTERNATIONAL LTD.	Companies of the KGHM INTERNATIONAL LTD. Group, in which the following mines, deposits or mining areas constitute operating segments: Victoria, Sudbury Basin, Robinson, Carlota, Franke and Ajax.	Operating segments within the KGHM INTERNATIONAL LTD. Group are located in North and South America. The Management Board analyses the results of the following operating segments: Victoria, Sudbury Basin, Robinson, Carlota, Franke, Ajax and other. Moreover, it receives and analyses reports of the whole KGHM INTERNATIONAL LTD. Group. Operating segments are engaged in the exploration and mining of copper, molybdenum, silver, gold and nickel deposits. The operating segments were aggregated based on the similarity of long term margins achieved by individual segments, and the similarity of products, processes and production methods.
Sierra Gorda S.C.M.	Sierra Gorda S.C.M. (joint venture)	Not applicable (it is a single operating and reporting segment)
Other segments	This item includes other Group companies (every individual company is a separate operating segment).	Aggregation was carried out as a result of not meeting the criteria necessitating the identification of a separate additional reporting segment.

The following companies were not included in any of the aforementioned segments:

Future 1 Sp. z o.o., which acts as a holding company with respect to the KGHM INTERNATIONAL LTD. Group,
Future 3 Sp. z o.o., Future 4 Sp. z o.o., Future 5 Sp. z o.o., which operate in the structure related to the establishment of a Tax Group.

These companies do not conduct operating activities which could impact the results achieved by individual segments, and as a result their inclusion could distort the data presented in this part of the consolidated financial statements due to significant settlements with other Group companies.

Each of the segments KGHM Polska Miedź S.A., KGHM INTERNATIONAL LTD. and Sierra Gorda S.C.M. have their own Management Boards, which report the results of their business activities to the Management Board of the Parent Entity.

The segment KGHM Polska Miedź S.A. is composed only of the Parent Entity, and the segment Sierra Gorda S.C.M. is composed only of the joint venture Sierra Gorda S.C.M. Other companies of the KGHM Polska Miedź S.A. Group are presented below by segment: KGHM INTERNATIONAL LTD. and Other segments.

THE SEGMENT KGHM INTERNATIONAL LTD.
Location	Company
The United States of America	Carlota Copper Company, Carlota Holdings Company, DMC Mining Services Corporation, FNX Mining Company USA Inc., Robinson Holdings (USA) Ltd., Robinson Nevada Mining Company, Wendover Bulk Transhipment Company
Chile	Aguas de la Sierra Limitada, Minera Carrizalillo SpA, KGHM Chile SpA, Quadra FNX Holdings Chile Limitada, Sociedad Contractual Minera Franke, DMC Mining Services Chile SpA
Canada	KGHM INTERNATIONAL LTD., 0899196 B.C. Ltd., Centenario Holdings Ltd., DMC Mining Services Ltd., FNX Mining Company Inc., Franke Holdings Ltd., KGHM AJAX MINING INC., KGHMI HOLDINGS LTD., Quadra FNX Holdings Partnership, Sugarloaf Ranches Ltd.
Mexico	DMC Mining Services Mexico, S.A. de C.V.
Colombia	DMC Mining Services Colombia SAS
The United Kingdom	DMC Mining Services (UK) Ltd.
Luxembourg	Quadra FNX FFI S.à r.l.

OTHER SEGMENTS
Type of activity	Company
Support of the core business	BIPROMET S.A., CBJ sp. z o.o., Energetyka sp. z o.o., INOVA Spółka z o.o., KGHM CUPRUM sp. z o.o. – CBR, KGHM ZANAM S.A., KGHM Metraco S.A., PeBeKa S.A., POL-MIEDŹ TRANS Sp. z o.o., WPEC w Legnicy S.A.
Sanatorium-healing and hotel services	Interferie Medical SPA Sp. z o.o., INTERFERIE S.A.*, Uzdrowiska Kłodzkie S.A. - Grupa PGU, Uzdrowisko Cieplice Sp. z o.o. - Grupa PGU, Uzdrowisko Połczyn Grupa PGU S.A., Uzdrowisko Świeradów - Czerniawa Sp. z o.o. – Grupa PGU
Investment funds, financing activities	Fundusz Hotele 01 Sp. z o.o., Fundusz Hotele 01 Sp. z o.o. S.K.A., KGHM TFI S.A., KGHM VII FIZAN, Polska Grupa Uzdrowisk Sp. z o.o.
Other activities	CENTROZŁOM WROCŁAW S.A., CUPRUM Development sp. z o.o., CUPRUM Nieruchomości sp. z o.o., KGHM (SHANGHAI) COPPER TRADING CO., LTD., KGHM Kupfer AG, MERCUS Logistyka sp. z o.o., MIEDZIOWE CENTRUM ZDROWIA S.A., NITROERG S.A., NITROERG SERWIS Sp. z o.o., PHU "Lubinpex" Sp. z o.o., PMT Linie Kolejowe Sp. z o.o., WMN "ŁABĘDY" S.A., Zagłębie Lubin S.A., OOO ZANAM VOSTOK, KGHM Centrum Analityki Sp. z o.o.

* Entities disposed of on 21 and 28 February 2022 (Note 4.12)

The Parent Entity and the KGHM INTERNATIONAL LTD. Group (a subgroup) have a fundamental impact on the assets and the generation of revenues in the KGHM Polska Miedź S.A. Group. The activities of KGHM Polska Miedź S.A. are concentrated on the mining industry in Poland, while those of the KGHM INTERNATIONAL LTD. Group are concentrated on the mining industry in the countries of North and South America. The profile of activities of the majority of the remaining subsidiaries of the KGHM Polska Miedź S.A. Group differs from the main profile of the Parent Entity's activities.

The Parent Entity's Management Board monitors the operating results of individual segments in order to make decisions on allocating the Group's resources and assess the financial results achieved.

Financial data prepared for management reporting purposes is based on the same accounting policies as those applied when preparing the consolidated financial statements of the Group, while the financial data of individual reporting segments constitutes the amounts presented in appropriate financial statements prior to consolidation adjustments at the level of the KGHM Polska Miedź S.A. Group, i.e.:

The segment KGHM Polska Miedź S.A. comprises data from the separate financial statements of the Parent Entity prepared in accordance with IFRSs. In the separate financial statements, investments in subsidiaries (including indirect investment in KGHM INTERNATIONAL LTD.) are measured at cost, including the impairment losses,
The segment KGHM INTERNATIONAL LTD. comprises consolidated data of the KGHM INTERNATIONAL LTD. Group prepared in accordance with IFRSs. The involvement in Sierra Gorda S.C.M. is accounted for using the equity method,
The segment Sierra Gorda S.C.M. comprises the 55% share of assets, liabilities, revenues and costs of this venture presented in the separate financial statements of Sierra Gorda S.C.M. prepared in accordance with IFRSs,
Other segments comprises aggregated data of individual subsidiaries after excluding transactions and balances between them.

The Management Board of the Parent Entity assesses a segment's performance based on adjusted EBITDA and the profit or loss for the period.

The Group defines adjusted EBITDA as profit/loss for the period pursuant to IFRS, excluding taxes (current and deferred income tax as well as the mining tax), finance income and costs, other operating income and costs, profit or loss on involvement in joint ventures, depreciation/amortisation and recognition/reversal of impairment losses on property, plant and equipment and intangible assets included in the cost of sales, selling costs and administrative expenses. Adjusted EBITDA – as a financial indicator not defined by IFRSs – is not a standardised measure and therefore its method of calculation may vary between entities, and consequently the presentation and calculation of adjusted EBITDA applied by the Group may not be comparable to that applied by other market entities.

Revenues from transactions with external entities and inter-segment transactions are carried out at arm's length. Eliminations of mutual settlements, revenues and costs between segments were presented in the item "Consolidation adjustments".

Unallocated assets and liabilities concern companies which have not been allocated to any segment. Assets which have not been allocated to the segments comprise cash, trade receivables and deferred tax assets. Liabilities which have not been allocated to the segments comprise trade liabilities and current corporate tax liabilities.

Note 3.2 Financial results of reporting segments

		from 1 January 2022 to 31 March 2022
						Reconciliation items
						to consolidated data
		KGHM Polska Miedź S.A.	KGHM INTERNATIONAL LTD.	Sierra Gorda S.C.M.*	Other segments	Elimination of data of the segment Sierra Gorda S.C.M	Consolidation adjustments****	Consolidated financial statements
Note 3.3	Revenues from contracts with customers, of which:	7 555	876	1 194	3 055	(1 194)	(2 493)	8 993
	- inter-segment	153	-	-	2 340	-	(2 493)	-
	- external	7 402	876	1 194	715	(1 194)	-	8 993
	Segment result - profit/(loss) for the period	1 325	390	239	( 53)	( 239)	237	1 899
	Additional information on significant revenue/cost items of the segment
	Depreciation/amortisation recognised in profit or loss	( 322)	( 110)	( 253)	( 68)	253	7	( 493)
	Reversal of impairment losses on non-current assets, including:	53	64	-	-	-	( 53)	64
	reversal of allowances for impairment of loans granted	53	64	-	-	-	( 53)	64
		As at 31 March 2022
	Assets, including:	44 729	13 769	12 699	6 087	(12 699)	(14 544)	50 041
	Segment assets	44 729	13 769	12 699	6 087	(12 699)	(14 545)	50 040
	Assets unallocated to segments	-	-	-	-	-	1	1
	Liabilities, including:	17 926	18 060	13 090	3 550	(13 090)	(18 156)	21 380
	Segment liabilities	17 926	18 060	13 090	3 550	(13 090)	(18 213)	21 323
	Liabilities unallocated to segments	-	-	-	-	-	57	57
	Other information	from 1 January 2022 to 31 March 2022
	Cash expenditures on property, plant and equipment and intangible assets – cash flows	781	263	342	139	( 342)	( 99)	1 084
	Production and cost data	from 1 January 2022 to 31 March 2022
	Payable copper (kt)	151.1	18.2	23.9
	Molybdenum (million pounds)	-	0.1	1.2
	Silver (t)	339.8	0.3	7.5
	TPM (koz t)	21.1	15.1	6.6
	C1 cash cost of producing copper in concentrate (USD/lb PLN/lb)**
		2.40 9.88	2.23 9.19	1.35 5.57
	Segment result - adjusted EBITDA	1 924	361	821	27	-	-	3 133
	EBITDA margin***	25%	41%	69%	1%	-	-	31%

* 55% of the Group's share in Sierra Gorda S.C.M.'s financial and production data.

** Unit cash cost of payable copper production, reflecting ore mining and processing costs, transport costs, the minerals extraction tax, administrative expenses during the mining phase and smelter treatment and refining charges (TC/RC) less by-product value. C1 cost is in regard to payable copper in own concentrate in the case of the segment KGHM Polska Miedź S.A. and payable copper in end products of individual mines of the segment KGHM International Ltd. and the segment Sierra Gorda S.C.M. C1 cost in PLN/lb was calculated using the average exchange rate by the NBP (arithmetical average of daily quotations per the NBP's tables).

*** Adjusted EBITDA to revenues from sales. For the purposes of calculating the Group's EBITDA margin (31%, i.e. [3 133 / (8 993 + 1 194) * 100]), the consolidated revenues from sales were increased by revenues from sales of the segment Sierra Gorda S.C.M.

**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.

Financial results of reporting segments for the comparable period

	from 1 January 2021 to 31 March 2021
	Reconciliation items
					to consolidated data
	KGHM	KGHM	Sierra Gorda	Other	Elimination of data		Consolidated
	Polska Miedź S.A.	INTERNATIONAL LTD.	S.C.M.*	segments	of the segment Sierra Gorda S.C.M	Consolidation adjustments****	financial statements
Revenues from contracts with customers, of which:	5 569	750	942	2 372	( 942)	(1 946)	6 745
- inter-segment	99	-	3	1 812	( 3)	(1 911)	-
- external	5 470	750	939	560	( 939)	( 35)	6 745
Segment result - profit/(loss) for the period	975	( 33)	160	13	( 160)	410	1 365
Additional information on significant revenue/cost items of the segment
Depreciation/amortisation recognised in profit or loss	( 309)	( 126)	( 191)	( 62)	191	2	( 495)
Impairment losses on non-current assets, including:	( 6)	4	-	1	-	1	-
impairment losses on investments in subsidiaries	( 3)	-	-	-	-	3	-
reversal of allowances for impairment of loans granted	4	-	-	-	-	( 4)	-
				As at 31 December 2021
Assets, including:	43 458	13 646	12 232	6 066	(12 232)	(15 143)	48 027
Segment assets	43 458	13 646	12 232	6 066	(12 232)	(15 172)	47 998
Assets unallocated to segments	-	-	-	-	-	29	29
Liabilities, including:	17 618	18 185	12 844	3 339	(12 844)	(18 253)	20 889
Segment liabilities	17 618	18 185	12 844	3 339	(12 844)	(18 299)	20 843
Liabilities unallocated to segments	-	-	-	-	-	46	46
Other information	from 1 January 2021 to 31 March 2021
Cash expenditures on property, plant and equipment and
intangible assets – cash flows	663	173	147	125	( 147)	( 147)	814
Production and cost data	from 1 January 2021 to 31 March 2021
Payable copper (kt)	146.4	16.2	22.9
Molybdenum (million pounds)	-	0.1	1.9
Silver (t)	298.6	0.6	7.8
TPM (koz t)	16.6	12.2	6.6
C1 cash cost of producing copper in concentrate
(USD/lb PLN/lb)**	1.93 7.28	2.32 8.75	0.93 3.52
Segment result - adjusted EBITDA	1 675	238	643	52	-	-	2 608
EBITDA margin***	30%	32%	68%	2%	-	-	34%

* 55% of the Group's share in Sierra Gorda S.C.M.'s financial and production data.

*** Adjusted EBITDA to revenues from sales. For the purposes of calculating the Group's EBITDA margin (34%, i.e. [2 608 / (6 745 + 942) * 100]), the consolidated revenues from sales were increased by revenues from sales of the segment Sierra Gorda S.C.M.

**** Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.

Reconciliation of adjusted EBITDA	from 1 January 2022 to 31 March 2022
	KGHM Polska Miedź S.A.	KGHM INTERNATIONAL LTD.	Other segments	Consolidation adjustments*	Consolidated financial statements	Sierra Gorda S.C.M. **	Adjusted EBITDA (segments, total)
	1	2	3	4	5 (1+2+3+4)	6	7 (5+6-4)
Profit/(Loss) for the period	1 325	390	( 53)	237	1 899	239
[-] Profit or loss on involvement in joint ventures	-	247	-	-	247	-
[-] Current and deferred income tax, mining tax	( 513)	( 50)	( 10)	( 36)	( 609)	( 120)
[-] Depreciation/amortisation recognised in profit or loss	( 322)	( 110)	( 68)	7	( 493)	( 253)
[-] Finance income and (costs)	( 105)	( 216)	( 8)	222	( 107)	( 192)
[-] Other operating income and (costs)	341	158	6	62	567	( 17)
[-] (Recognition)/reversal of impairment losses on non-current assets recognised in cost of sales, selling costs and administrative expenses	-	-	-	-	-	-
Segment result - adjusted EBITDA	1 924	361	27	( 18)	2 294	821	3 133

* Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.

**55% share of the Group in the financial data of Sierra Gorda S.C.M.

Reconciliation of adjusted EBITDA	from 1 January 2021 to 31 March 2021
	KGHM Polska Miedź S.A.	KGHM INTERNATIONAL LTD.	Other segments	Consolidation adjustments*	Consolidated financial statements	Sierra Gorda S.C.M. **	Adjusted EBITDA (segments, total)
	1	2	3	4	5 (1+2+3+4)	6	7 (5+6-4)
Profit/(Loss) for the period	975	( 33)	13	410	1 365	160
[-] Profit or loss on involvement in joint ventures	-	97	-	-	97	-
[-] Current and deferred income tax, mining tax	( 450)	( 8)	( 20)	( 19)	( 497)	( 90)
[-] Depreciation/amortisation recognised in profit or loss	( 309)	( 126)	( 62)	2	( 495)	( 191)
[-] Finance income and (costs)	( 302)	( 246)	( 5)	251	( 302)	( 202)
[-] Other operating income and (costs)	368	8	47	202	625	-
[-] (Recognition)/reversal of impairment losses on non-current assets recognised in cost of sales, selling costs and administrative expenses	( 7)	4	1	-	( 2)	-
Segment result - adjusted EBITDA	1 675	238	52	( 26)	1 939	643	2 608

* Adjustments arise from consolidation eliminations and financial data of companies unallocated to any segment.

**55% share of the Group in the financial data of Sierra Gorda S.C.M.

Note 3.3 Revenues from contracts with customers of the Group – breakdown by products

					Reconciliation items to consolidated data
	KGHM Polska Miedź S.A.	KGHM INTERNATIONAL LTD.	Sierra Gorda S.C.M.*	Other segments	Elimination of data of the segment Sierra Gorda S.C.M	Consolidation adjustments	Consolidated data
Copper	5 824	605	1 050	3	(1 050)	( 14)	6 418
Silver	1 214	4	24	-	( 24)	-	1 218
Gold	190	75	52	-	( 52)	-	265
Services	42	140	-	496	-	( 381)	297
Energy	9	-	-	108	-	( 55)	62
Salt	7	-	-	-	-	1	8
Blasting materials and explosives	-	-	-	56	-	( 27)	29
Mining machinery, transport vehicles and other types of machinery and equipment	-	-	-	49	-	( 32)	17
Fuel additives	-	-	-	44	-	-	44
Lead	70	-	-	-	-	-	70
Products from other non-ferrous metals	-	-	-	40	-	-	40
Steel	-	-	-	194	-	( 24)	170
Petroleum and its derivatives	-	-	-	111	-	( 89)	22
Other merchandise and materials	92	-	-	1 775	-	(1 766)	101
Other products	107	52	68	179	( 68)	( 106)	232
TOTAL	7 555	876	1 194	3 055	(1 194)	(2 493)	8 993

from 1 January 2022 to 31 March 2022

					Reconciliation items to consolidated data
	KGHM Polska Miedź S.A.	KGHM INTERNATIONAL LTD.	Sierra Gorda S.C.M.*	Other segments	Elimination of data of the segment Sierra Gorda S.C.M	Consolidation adjustments	Consolidated data
Copper	4 300	544	766	2	( 766)	( 5)	4 841
Silver	900	3	24	-	( 24)	-	903
Gold	129	59	45	-	( 45)	-	188
Services	36	108	-	545	-	( 478)	211
Energy	15	-	-	108	-	( 70)	53
Salt	8	-	-	-	-	21	29
Blasting materials and explosives	-	-	-	49	-	( 20)	29
Mining machinery, transport vehicles and other types of machinery and equipment	-	-	-	55	-	( 45)	10
Fuel additives	-	-	-	24	-	-	24
Lead	68	-	-	-	-	-	68
Products from other non-ferrous metals	-	-	-	23	-	( 2)	21
Steel	-	-	-	137	-	( 14)	123
Petroleum and its derivatives	-	-	-	71	-	( 61)	10
Other merchandise and materials	65	-	-	1 259	-	(1 224)	100
Other products	48	36	107	99	( 107)	( 48)	135
TOTAL	5 569	750	942	2 372	( 942)	(1 946)	6 745

from 1 January 2021 to 31 March 2021

Note 3.4 Revenues from contracts with customers of the Group – breakdown by type of contracts

	from 1 January 2022 to 31 March 2022
					Reconciliation items to consolidated data
	KGHM Polska Miedź S.A.	KGHM INTERNATIONAL LTD.	Sierra Gorda S.C.M.*	Other segments	Elimination of data of the segment Sierra Gorda S.C.M	Consolidation adjustments	Consolidated data
Total revenues from contracts with customers	7 555	876	1 194	3 055	(1 194)	(2 493)	8 993
Revenues from sales contracts, for which the price is set after the date of recognition of the sales (M+ principle), of which:	5 935	736	1 093	-	(1 093)	(39)	6 632
settled	4 856	521	16	-	( 16)	(39)	5 338
unsettled	1 079	215	1 077	-	(1 077)	-	1 294
Revenues from realisation of long-term contracts	-	132	-	43	-	( 40)	135
Revenues from other sales contracts	1 620	8	101	3 012	( 101)	(2 414)	2 226

Total revenues from contracts with customers, of which:	7 555	876	1 194	3 055	(1 194)	(2 493)	8 993
in factoring	2 238	-	-	1 555	-	(1 486)	2 307
not in factoring	5 317	876	1 194	1 500	(1 194)	(1 007)	6 686

	from 1 January 2022 to 31 March 2022	from 1 January 2021 to 31 March 2021
Revenues from contracts with customers, of which:	8 993	6 745
transferred at a certain moment	8 634	6 481
transferred over time	359	264

	from 1 January 2021 to 31 March 2021
					Reconciliation items to consolidated data
	KGHM Polska Miedź S.A.	KGHM INTERNATIONAL LTD.	Sierra Gorda S.C.M.*	Other segments	Elimination of data of the segment Sierra Gorda S.C.M	Consolidation adjustments	Consolidated data
Total revenues from contracts with customers	5 569	750	942	2 372	( 942)	(1 946)	6 745
Revenues from sales contracts, for which the price is set after the date of recognition of the sales (M+ principle), of which:	4 259	643	872	-	( 872)	( 18)	4 884
settled	3 499	379	8	-	( 8)	( 17)	3 861
unsettled	760	264	864	-	( 864)	( 1)	1 023
Revenues from realisation of long-term contracts	-	102	-	59	-	( 55)	106
Revenues from other sales contracts	1 310	5	70	2 313	( 70)	(1 873)	1 755
Total revenues from contracts with customers, of which:	5 569	750	942	2 372	( 942)	(1 946)	6 745
in factoring	2 082	-	-	12	-	-	2 094
not in factoring	3 487	750	942	2 360	( 942)	(1 946)	4 651

	from 1 January 2022 to 31 March 2022						from 1 January 2021 to 31 March 2021
		KGHM			Elimination of data	Reconciliation items to consolidated data		KGHM Polska Miedź S.A. Group
	KGHM Polska Miedź S.A.	INTERNATIONAL LTD.	Sierra Gorda S.C.M.*	Other segments	of the segment Sierra Gorda S.C.M	Consolidation adjustments	Consolidated data
Poland	1 938	-	3	2 955	( 3)	(2 484)	2 409	1 545
Austria	186	-	-	8	-	-	194	115
Belgium	17	-	-	5	-	-	22	4
Bulgaria	14	-	-	3	-	-	17	19
Czechia	600	-	-	3	-	-	603	485
France	104	-	-	-	-	-	104	244
The Netherlands	2	-	29	-	( 29)	-	2	1
Germany	1 380	-	-	28	-	-	1 408	777
Romania	45	-	-	-	-	-	45	76
Slovakia	50	-	-	4	-	-	54	34
Slovenia	42	-	-	-	-	-	42	40
Sweden	-	-	-	8	-	-	8	27
Hungary	396	-	-	3	-	-	399	269
The United Kingdom	516	-	-	2	-	-	518	195
Italy	549	-	-	8	-	-	557	433
Australia	195	-	-	-	-	-	195	323
Chile	-	29	286	-	( 286)	-	29	14
China	663	312	593	-	( 593)	-	975	746
Japan	60	-	243	-	( 243)	-	60	143
Canada	14	177	-	-	-	( 9)	182	146
South Korea	-	-	30	-	( 30)	-	-	-
The United States of America	183	167	1	3	( 1)	-	353	655
Switzerland	206	-	-	-	-	-	206	193
Turkey	77	-	-	2	-	-	79	29
Taiwan	11	-	-	-	-	-	11	-
Morocco	17	-	-	-	-	-	17	2
Mexico	-	91	-	-	-	-	91	-
Brazil	-	-	6	-	( 6)	-	-	-
Thailand	219	-	-	-	-	-	219	114
Philippines	-	100	-	-	-	-	100	3
Malaysia	-	-	-	-	-	-	-	15
Vietnam	62	-	-	-	-	-	62	71
Other countries	9	-	3	23	( 3)	-	32	27
TOTAL	7 555	876	1 194	3 055	(1 194)	(2 493)	8 993	6 745

Note 3.5 Revenues from contracts with customers of the Group – geographical breakdown reflecting the location of end customers

* 55% share of the Group in the revenues of Sierra Gorda S.C.M.

Note 3.6 Main customers

In the period from 1 January 2022 to 31 March 2022 and in the comparable period the revenues from no single contractor exceeded 10% of the revenues from contracts with customers of the Group.

Note 3.7 Non-current assets – geographical breakdown

	As at 31 March 2022	As at 31 December 2021
Poland	23 126	23 545
Canada	1 705	1 577
The United States of America	1 861	1 765
Chile	242	229
Other countries	33	94
TOTAL*	26 967	27 210

*Non-current assets, excluding: derivatives, other financial instruments, other non-financial assets and deferred tax assets (IFRS 8.33b) in the total amount of PLN 10 335 million as at 31 March 2022 (PLN 9 813 million as at 31 December 2021).

Note 3.8 Information on segments' results

3.8.1 The segment KGHM Polska Miedź S.A.

Production results

	Unit	st quarter of 1 2022	st quarter of 1 2021	Change %
Ore extraction (dry weight)	mn t	7.7	7.5	+2.7
Copper content in ore	%	1.48	1.48	-
Copper production in concentrate	kt	100.0	96.9	+3.2
Silver production in concentrate	t	330.3	313.0	+5.5
Production of electrolytic copper	kt	151.1	146.4	+3.2
- including from own concentrate	kt	96.6	99.6	(3.0)
Production of metallic silver	t	339.8	298.6	+13.8
Production of gold	koz t	21.1	16.6	+27.1

In the first 3 months of 2022, there was an increase in ore extraction by 280.0 thousand tonnes (dry weight) as compared to the corresponding period of 2021. Copper content in ore decreased slightly as a result of lower content of the mined deposit. Copper production in concentrate amounted to 100.0 thousand tonnes and was higher by 3.1 thousand tonnes (+3.2%) as compared to the first 3 months of 2021. The increase in production was a result of higher extraction and processing of ore. As compared to the corresponding period of 2021, there was an increase in electrolytic copper production by 4.7 thousand tonnes. The increase in cathode production was a result of meeting the targets stipulated in the production plan for 2022. Metallic silver production amounted to 339.8 tonnes and was higher by 41.2 tonnes (+13.8%) as compared to the first quarter of 2021. The increase in metallic silver production was a result of higher availability of feed in the Precious Metals Plant. Metallic gold production amounted to 21.1 thousand troy ounces and was higher by 4.5 thousand troy ounces (+27.2%) as compared to the first quarter of 2021. The higher metallic gold production was a result of the higher amount of gold-bearing materials processed.

Sales

Revenues from contracts with customers

	Unit	st quarter of 2022 1	st quarter of 2021 1
Revenues from contracts with customers, including:	PLN mn	7 555	5 569	+35.7
- copper	PLN mn	5 824	4 300	+35.4
- silver	PLN mn	1 214	900	+34.9
Volume of copper sales	kt	143.2	136.6	+4.8
Volume of silver sales	t	380.5	278.8	+36.5

Revenues in the first quarter of 2022 amounted to PLN 7 555 million and were higher than in the corresponding prior year period by 36%. The main reasons for this increase in revenues were mainly higher prices of copper (+18%) and gold (+5%) alongside a more favourable USD/PLN exchange rate (+9%) as well as the higher volume of sales of copper (+5%) and silver (+36%).

Costs

	Unit	st quarter of 1 2022	st quarter of 1 2021	Change (%)
Cost of sales, selling costs and administrative expenses	PLN mn	5 953	4 210	+41.4
Expenses by nature	PLN mn	6 207	4 954	+25.3
Pre-precious metals credit unit cost of electrolytic copper production from own concentrate(1	PLN/t	33 492	28 095	+19.2
Total unit cost of electrolytic copper production from own concentrate	PLN/t	21 977	17 214	+27.7
C1 unit cost C1(2	USD/lb	2.40	1.93	+24.4

1) Unit cost prior to decrease by the value of anode slimes containing, among others, silver and gold

2) Cash cost of concentrate production reflecting the minerals extraction tax, plus administrative expenses and smelter treatment and refining charges (TC/RC), less depreciation/amortisation cost and the value of by-product premiums, calculated for sold payable copper in concentrate

The Parent Entity's cost of sales, selling costs and administrative expenses (total cost of products, merchandise and materials sold, selling costs and administrative expenses) for the first quarter of 2022 amounted to PLN 5 953 million and were higher by 41% as compared to the corresponding period of 2021, mainly due to higher sales of copper and silver products and higher costs, mainly due to higher purchase prices of materials (including purchased metal-bearing materials), fuels and energy.

In the first three months of 2022, total expenses by nature as compared to the corresponding period of 2021 were higher by PLN 1 253 million, alongside higher costs of consumption of purchased metal-bearing materials by PLN 537 million (due to the 36% higher purchase price alongside a lower by 1.7 thousand tonnes of copper volume of consumption) and a minerals extraction tax higher by PLN 126 million (due to an increase in copper price and weakening of the PLN versus USD).

The result of the higher tax due to higher prices, was partially offset by the statutory decrease of rates from 1 January to the end of November 2022 by 30%.

The increase in expenses by nature, excluding cost of consumption of purchased metal-bearing materials and the minerals extraction tax, amounted to PLN 590 million and resulted mainly from an increase in costs of technological materials, fuel and energy and energy carriers (due to an increase in prices), as well as labour costs (due to an increase in wage rates) as well as fees for emissions of CO2.

C1 cost for the first three months of 2022 amounted to 2.40 USD/lb and was higher than in the corresponding period of 2021 by 24%. The increase in this cost was mainly due to higher costs of materials, fuels and energy, lower valuation of by-products due to the lower prices of silver and higher minerals extraction tax.

The pre-precious metals credit unit cost of electrolytic copper production from own concentrate (unit cost prior to decrease by the value of anode slimes containing, among others, silver and gold) amounted to 33 492 PLN/t (in the corresponding period of 2021: 28 095 PLN/t) and was higher by 19% mainly due to higher costs of materials, fuels and energy, higher minerals extraction tax and lower production from own concentrate by 3%. The pre-precious metals credit unit cost of electrolytic copper production from own concentrate, excluding the minerals extraction tax, amounted to 26 000 PLN/t (in the corresponding period of 2021: 22 767 PLN/t).

The total unit cost of electrolytic copper production from own concentrate amounted to 21 977 PLN/t and was higher than for the first quarter of 2021 by 28%, and after excluding the minerals extraction tax, this cost was at the level of 14 485 PLN/t (in the corresponding period of 2021: 11 886 PLN/t).

Financial results

In the first quarter of 2022, the Company recorded a profit for the period of PLN 1 325 million, or PLN 350 million higher than in the corresponding prior-year period.

Basic items of the statement of profit or loss (PLN million)

	st quarter of 1	st quarter of 1
	2022	2021	Change (%)
Revenues from contracts with customers, including:	7 555	5 569	+35.7
- adjustment of revenues due to hedging transactions	(216)	(266)	(18.8)
Cost of sales, selling costs and administrative expenses	(5 953)	(4 210)	+41.4
Profit on sales (EBIT)	1 602	1 359	+17.9
Other operating income and (costs), including:	341	368	(7.3)
Interest on loans granted and other financial receivables	63	67	(6.0)
Realisation of derivatives	(64)	(113)	(43.4)
Measurement of derivatives	7	(67)	×
Exchange gains/(losses) on assets and liabilities other than borrowings	219	358	(38.8)
Reversal of impairment losses on financial instruments measured at amortised cost	53	14	×3.8
- including due to loans	53	4	×13.3
Fees and charges on re-invoicing of costs of bank guarantees securing the payment of liabilities	12	48	(75.0)
Fair value gains/(losses) on financial assets measured at fair value through profit or loss	20	70	(71.4)
- including due to loans	26	91	(71.4)
Other	31	(9)	×
Finance costs, including:	(105)	(302)	(65.2)
Exchange gains/(losses) on borrowings	(78)	(273)	(71.4)
Interest on borrowings	(15)	(18)	(16.7)
Measurement of derivatives	-	(1)	-
Other	(12)	(10)	+20.0
Profit before income tax	1 838	1 425	+29.0
Income tax expense	(513)	(450)	+14.0
Profit for the period	1 325	975	+35.9
Adjusted EBITDA1	1 924	1 675	+14.8

1) Adjusted EBITDA = profit on sales + depreciation/amortisation (recognised in profit or loss) + impairment loss (-reversal of impairment losses) on noncurrent assets, recognised in cost of sales, selling costs and administrative expenses

The main factors affecting the change in the financial result

Item	Impact on change in result (PLN million)	Description
	+696	An increase in revenues due to higher achieved prices of copper and gold
	+50	Change in the adjustment of revenues due to hedging transactions, from -PLN 266 million to -PLN 216 million
Increase in revenues from	+568	An increase in revenues from sales of basic products (copper, silver, gold) due to a more favourable average USD/PLN exchange rate (a change from 3.78 to 4.13 USD/PLN)
contracts with customers (+PLN 1 986 million)	+586	An increase in revenues due to a higher volume of sales of copper (+6.6 thousand tonnes,+5%), silver (+102 tonnes, +36%) and gold (+5.5 thousand troy ounces, +30%)
	+86	An increase in other revenues from sales, including from the sale of sulphuric acid (+PLN 37 million), rhenium (+PLN 12 million) and merchandise and materials (+PLN 27 million)
	(446)	A decrease in change in products and work in progress from -PLN 770 million in the first quarter of 2021 to -PLN 324 million in the first quarter of 2022
Increase in cost of sales, selling costs and administrative expenses(1 (-PLN 1 743 million)	(537)	An increase in costs of consumption of purchased metal-bearing materials due to a 36% higher purchase price, despite a decrease in consumption by 1.7 thousand tonnes of copper
	(760)	An increase in other operating costs by PLN 760 million, including expenses by nature by PLN 716 million, mainly due to increases of the following costs: consumption of materials other than purchased metal-bearing materials (by PLN 240 million), energy and energy carriers (by PLN 186 million), minerals extraction tax (by PLN 126 million) and other taxes and charges (by PLN 73 million)
Impact of derivatives and hedging	+123	Change in gains/losses on measurement and realisation of derivatives in other operating activities from -PLN 180 million to -PLN 57 million
transactions(2 (+PLN 124 million)	+1	Change in gains/losses on measurement and realisation of derivatives in financing activities from -PLN 1 million to PLN 0 million
Effect of exchange differences	(139)	Change in foreign exchange gains/losses on measurement of assets and liabilities other than borrowings – in other operating activities
(+PLN 56 million)	+195	Change in foreign exchange gains/losses on measurement of liabilities due to borrowings (presented in finance costs)
Fair value gains/(losses) on financial assets measured at fair value through profit or loss (-PLN 50 million)	(50)	Decrease in fair value gains/(losses) on financial assets measured at fair value through profit or loss from +PLN 70 million to +PLN 20 million, including due to loans from +PLN 91 million to + PLN 26 million
Reversal of impairment losses on financial instruments measured at amortised cost (+PLN 39 million)	+39	Increase in this item from +PLN 14 million to +PLN 53 million, including due to loans from +PLN 4 million to +PLN 53 million
Fees and charges on re-invoicing of costs of bank guarantees securing the payment of liabilities (-PLN 36 million)	(36)	Decrease in revenues generated in this item from PLN 48 million in the first quarter of 2021 to PLN 12 million in the first quarter of 2022
Increase in income tax (-PLN 63 million)	(63)	Increase in income tax mainly resulted from an increase in current income tax by PLN 40 million

1) Cost of products, merchandise and materials sold plus selling costs and administrative expenses

2) Excluding adjustment to revenues due to hedging transactions

Capital expenditures

In the first quarter of 2022, expenditures on property, plant and equipment amounted to PLN 486 million and were higher by 9% than in the corresponding prior-year period.

Structure of expenditures on property, plant and equipment and intangible assets (in PLN million)

	1st quarter of 2022	1st quarter of 2021	Change (%)
Mining	384	327	+17.0
Metallurgy	84	85	(1.2)
Other activities	5	15	(33.3)
Development work - uncompleted	4	1	x4.0
Leases per IFRS 16	9	19	(47.0)
Total	486	447	9.0%
including borrowing costs	46	31	48.0%

Investment activities comprised projects related to the replacement, maintenance, development and adaptation: Projects related to replacement aimed at maintaining production equipment in an undeteriorated condition, represent 35% of total expenditures incurred.

Structure of expenditures on replacement:

Projects related to maintenance aimed at maintaining mine production at the level set in the approved Production Plan (development of infrastructure to match mine advancement) represent 35% of total expenditures incurred.

Structure of expenditures on maintenance:

Development projects aimed at increasing the production volume of the core business, implementation of technical and technological activities optimising the use of existing infrastructure, maintaining production costs and adaptation of the company's operations to changes in standards, laws and regulations (adaptation projects and those related to environmental protection) represent 28% of total expenditures incurred.

Adaptation projects aimed at adjusting the company's activities to obligations under the law, applicable standards or other regulations, in particular in the area of occupational health and safety, property protection, cybersecurity, ethical and anticorruption standards, environmental protection, quality standards and management systems by the construction of new or reinforcement of current infrastructure by new technical, technological and IT solutions, represent 2% of total expenditures incurred.

Structure of adaptation expenditures:

Detailed information on the advancement of key projects may be found in part 1, Note 2 of these consolidated financial statements in the section on advancement of the Strategy in 2022.

3.8.2 The segment KGHM INTERNATIONAL LTD.