Production costs of copper concentrate C1* in the Group (USD/GBP)

2017
2016
 Change (%)
Q4 2017Q3 2017
Q2 2017
Q1 2017
Group
1.59
1.41
+12.8

1.79
1.65
1.43
1.53
- KGHM Polska Miedź S.A.
1.52
1.30
+16.9

1.84
1.62
1.34
1.33
- KGHM INTERNATIONAL LTD.
1.92
1.63
+17.8

1.81
1.90
1.72
2.35
- Sierra Gorda S.C.M.
1.67
1.96
(14.8)
1.44
1.62
1.66
1.94

* Production costs of copper concentrate – C1 (a unit cash production cost of payable copper concentrate, taking into account the costs of extracting and processing the winnings, transport costs, tax on extraction of certain minerals, administrative costs of the mining phase and treatment charge and refining charge (TC/RC), decreased by the value of by-products).

At KGHM Polska Miedź S.A., production costs of copper concentrate – C1 was 1.52 USD/pound in 2017. The value of the costs was influenced by the strengthening of the Polish zloty against the US dollar, a higher tax on the extraction of certain minerals and lower production of own minerals.

Production costs of copper concentrate – C1 (USD/pound)

*including the tax on the extraction of certain minerals

At KGHM INTERNATIONAL LTD., the average weighted unit cash cost of copper production for all the operations was 1.92 USD/pound in 2017, which is higher by 18 percent against the previous year. The increase in C1 cost was caused by the decline in the volume of copper sales and achievement of lower revenues on the sales of by-products (which reduce the cost).

 In the Sierra Gorda segment, the increase in the prices and growth in the sales of molybdenum contributed to the reduction of cash cost of copper (C1) production by 15 percent (revenues on the sale of Mo, with other accompanying metals, are subject to a deduction in the calculation of C1).

 A favourable impact on the above was also exerted by the increase in the volume of sold copper by 4 percent. In Q4 2017, Sierra Gorda made changes to the method of calculating the C1 cost by including in the calculation the change in the balance of inventories and production in progress of materials used in the process of molybdenum co

Costs (before impairment losses for fixed assets) and unit cost of copper production (C1) at Sierra Gorda S.C.M.


2017
2016
Change (%)Q4 2017Q3 2017
Q2 2017
Q1 2017
Basic operating costs
USD million
898
938
(4.3)
226
266
214
192
Basic operating costs for the segment (share of 55%)
PL/million
1,849
2,048
(9.7)
443
535
446
425
C1* unit cost
USD/pound
1.67
1.96
(14.8)
1.44
1.62
1.66
1.94

* Unit copper production cost C1 – cash production cost of payable copper, taking into account the costs of extracting and processing the winnings, tax on minerals, transport costs, administrative costs of the mining phase and treatment charge and refining charge (TC/RC), decreased by the value of by-products.

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