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WARSAW, Aug 12 (Reuters) - Polish firm KGHM, Europe’s second-biggest copper producer, reported a slightly better than expected 8 percent drop in its second-quarter net profit on Wednesday, as lower global metals prices took their toll.
The state-controlled miner booked net earnings of 612 million zlotys ($195 million), just ahead of the 598 million zlotys expected by analysts polled by Reuters.
KGHM has said its full-year net profit could come close to analysts’ forecast of 2.26 billion zlotys, its lowest profit since 2004. In the first-half it made 1.12 billion zlotys, with the company estimating that lower metals prices reduced the result by 905 million zlotys.
Copper prices averaged $6,916 a tonne in the first half of the year, below the miner’s full-year goal of $7,100. KGHM has, however, got halfway towards its copper output target of 567,500 tonnes for this year.
The earnings figures are for KGHM’s unconsolidated results, generated only by the parent company. They are the basis for dividend payouts and KGHM’s foreign subsidiaries do not add much to the bottom line.
This will change thanks to the start up last month of production from the miner’s key overseas asset, the Sierra Gorda mine in Chile.
The target for Sierra Gorda’s annual production is 220 thousand tonnes of copper, 25 million pounds of molybdenum and 64 thousand ounces of gold.
KGHM controls 55 percent of the Chilean project, launched at a cost of $4.16 billion, while Japan’s Sumitomo holds the rest. The mine’s capacity is seen holding a total 1.4 billion tonnes of ore, which is expected to take 23 years to mine.
To finance its investment plans, pegged at a company-wide total of 4.3 billion zlotys this year alone, KGHM signed a five-year revolving credit deal worth $2.5 billion with a group of lenders earlier this month.
The previously almost debt-free company additionally signed a 2 billion-zloty credit deal with the European Investment Bank (EIB) earlier this month. (1 US dollar = 3.1317 Polish zlotys) (Reporting by Adrian Krajewski; Editing by Greg Mahlich)