KGHM International Ltd.

Our Company

KGHM International Ltd., (“KGHMI”) a wholly owned subsidiary of KGHM Polska Miedź S.A., is focused on growth in copper and other metals. We operate mines in Canada, the USA and Chile, and are currently constructing the Sierra Gorda copper-molybdenum project in Chile and actively progressing the Victoria project in Sudbury, Ontario, and the Ajax project in Kamloops, British Columbia. Our team-oriented environment offers the opportunity to be challenged, to contribute and to grow.

Our Core Assets

The Robinson Mine

The Robinson Mine is an open pit copper and gold mine located in eastern Nevada approximately 11 km west of the town of Ely. Beginning in 1994, Magma Copper Company, which was later acquired by BHP Copper Inc., constructed and started up a modern mining and sulfide concentrating facility at a reported cost of U.S. $480 million. We acquired the Robinson Mine from BHP Billiton in 2004, implemented capital improvements on the concentrator and began processing ore on August 31, 2004, nearly two months ahead of plan. As of January 1, 2007, the Robinson Mine had proven and probable mineral reserves of 122 million tonnes at a grade of 0.69% Cu and 0.26 g/t Au. Estimated average annual production exceeds 125 million pounds of copper and 60,000 ounces of gold with an estimated nine year mine life.

The Carlota Project

The Carlota Project is a permitted and financed development copper project, currently in construction, and which we expect to bring to full production in the second half of 2008. The mine has an estimated nine year life. Located in the Globe-Miami mining district of Arizona, one of the most significant copper mining regions in the world, the mine is an open pit operation together with a run-of-mine heap leach and solvent extraction project. As of March 2006, the Carlota Project had probable mineral reserves of approximately 78 million tonnes grading 0.45% total copper.

The Sierra Gorda Project

The Sierra Gorda Project covers an area of approximately 23 square kilometers in Northern Chile and has seen exploration by Chevron Corp., Rio Tinto PLC and Outokumpu S.p.A. It is in immediate proximity to a number of major copper mines including BHP's Spence project and Antofagasta's El Tesoro. KGHM International Ltd. has completed three exploratory drill programs, identifying a NI 43-101 compliant resource of 5 billion pounds of contained copper equivalent. In addition, a new mineralized zone of a potentially large porphyry copper system has been discovered. We will be evaluating strategic alternatives for the Sierra Gorda Project in 2007.

The Malmbjerg Project

In early 2007, the Company purchased 82% of International Molybdenum plc, who have the rights to the Malmbjerg Project in Greenland. The Malmbjerg Project is one of the highest grade open pit projects being considered for development globally, containing an NI 43-101 compliant resource of 560 million pounds of contained molybdenum.


Our Business Strategy

Our strategy is to expand and diversify our base metals production capabilities, to reduce the average cash costs across our projects and to develop a sustainable production pipeline that will allow us to maintain our profitability throughout the commodity price cycle and generate cash flow to fund attractive investment opportunities.

  • Increase Production and Diversify Operating Assets. We plan to reinvest cash flow generated from operations to fund our inventory of development projects and expand our operations. In addition, we plan to pursue acquisitions that will be value-enhancing and will grow our reserves and production base. Our acquisition strategy focuses on acquiring assets within our established core areas of expertise that are expected to create long-term value in jurisdictions where we have experience.
  • Reduce Cash Costs. We are focused on reducing our cash costs at the Robinson Mine and in managing cash costs at the Carlota Project to position our Company to maintain profitability throughout the commodity price cycle.
  • Focus on Base Metals. We have considerable technical expertise and have achieved significant success in developing and operating base metal mines including copper and zinc projects. We plan to continue to focus on finding and developing long-life base metal assets that are expected to be profitable and provide us with an attractive return on capital.

Our Competitive Strengths

We believe that the following strengths provide us with significant competitive advantages as we execute our business strategy:

  • Experienced, Motivated Management Team and Employees. Our Chief Executive Officer and senior operating personnel have been involved in base metal development and operations on average for over 25 years each and have a proven performance record through their work in large mining companies such as BHP Billiton, Placer Dome Inc., Rio Algom Limited, Barrick Gold Corporation and Phelps Dodge Corporation and in mid-tier companies such as Gibraltar Mines Ltd., Westmin Resources, Inc., Princeton Mining Inc. and Viceroy Resource Corporation. Three of our seven non-executive directors each have over 30 years of experience in the mining industry.

    In addition, our Chairman and Chief Executive Officer co-founded us, and together they beneficially own, directly or indirectly, approximately 3% of our shares. All of our directors and executive officers collectively own approximately 4% of our shares. We believe that the significant level of management and board ownership closely aligns our interest with those of our other stakeholders.
  • Ability to Capitalize on Strong Market Dynamics. We expect to benefit from a robust copper price environment, the consolidation within the sector, which has concentrated supply and limited competition for smaller assets, and the availability of single asset companies to be acquired by leveraging the skill sets of our management and directors, including financing, development and construction of projects and acquisition and integration, as well as the operation of large scale copper mines and projects.

    We expect to produce an average of 125 million pounds of copper annually at our Robinson Mine and to have over 200 million pounds of annual copper production once the Carlota Project becomes fully operational (which we expect to be at the end of 2008). We plan to reinvest our internally generated cash flow to fund the expansion of our existing production facilities and selective value-enhancing acquisitions.
  • Technical Expertise. Through our years of experience we have developed significant technical expertise in operating and developing mines. We believe our technical ability enables us to generate new prospects and develop new mines, and to acquire new mining operations. Prior to forming our Company, our Chief Executive Officer and Chief Operating Officer were responsible for the development, construction and commissioning of the 130 million pounds per year Lomas Bayas SX-EW copper mine in Northern Chile, which uses the same technology as is proposed for the Carlota Project. In addition, since the startup of the Robinson Mine, we have installed Falcon concentrators, which materially enhance gold recovery, and we have constructed and commissioned a molybdenum recovery circuit, which was completed on time and within budget.
  • Well-invested Asset Base. Our primary asset, the Robinson Mine, is a well equipped facility which we acquired in 2004 from BHP Copper Inc. Beginning in 1994, Magma Copper Company, which was later acquired by BHP Copper Inc., constructed and started up a modern mining and sulfide concentrating facility at the Robinson Mine at a reported cost of U.S. $480 million.

    Similarly, we benefited from approximately U.S. $68 million spent over 14 years on permitting and feasibility studies at the Carlota Project by Cambior prior to our acquisition of it in 2005.
  • Ability to Acquire and Integrate Strategic Assets. Our management and board of directors have demonstrated an ability to make and integrate strategic corporate, land and facility acquisitions. Future growth opportunities will be pursued through systematic review of industry activities, ownership changes and other competitive intelligence processes. A streamlined decision process and our ability to move quickly represent a considerable advantage over the larger copper producers and our experience accessing both the debt and equity capital markets represents an advantage over many other mid-tier producers.

In summary, our strategy for increasing shareholder value centres on expanding and diversifying our production through development of our existing properties and the acquisition of interests in advanced exploration, development and producing base metal properties.

Contact KGHM International Ltd.

KGHM International Ltd., Vancouver Office
Suite 500, 200 Burrard St.
Vancouver, BC
V6C 3L6
Phone: +1 604 689 8550
Fax: +1 604 689 8556

KGHM International Ltd., Toronto Office
145 King Street West, Suite 1500
Toronto, ON
Canada M5H 1J8
Phone: +1 416 628 5929
Fax: +1 416 360 0550

KGHM International Ltd., Corporate Communications
Kristina Howe – Manager, Corporate Communications
Phone: +1 604 699 3095

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