The History of KGHM International Ltd.


This historical overview is from the 2013 KGHM International Corporate Social Responsibility Report, click here:

KGHM International Ltd. is a wholly owned subsidiary of KGHM Polska Miedź S.A., the 7th largest copper producer and the largest silver producer in the world based in Lubin, Poland. The KGHM International story is one of rapid growth, from a junior mining company to a global industry player.

The Early Years

KGHM International, formerly known as Quadra FNX Mining Ltd. (“Quadra FNX”), was formed as the result of a merger between two equals: Quadra Mining Ltd. (“Quadra”) and FNX Mining Company Inc. (“FNX”). Both were incorporated in 2002, and later listed on the Toronto Stock Exchange, with the goal of becoming mid-tier base-metal producers.

The Quadra strategy: to grow through acquisitions

Quadra acquired its first asset, the Robinson Mine located near Ely, Nevada, in April 2004 and restarted production in December 2004. Quadra continued to grow through a series of acquisitions; in 2004, the company acquired the Sierra Gorda property in Chile through option agreements, and in 2005, added the Carlota Project near Globe, Arizona to its portfolio of assets. Carlota was brought into production in the last quarter of 2008. In 2009, Quadra acquired Centenario Copper Corporation and its Franke Mine in Chile and harvesting of copper cathode began in August of the same year.

The FNX strategy: to pursue growth through exploration

While Quadra made acquisitions, FNX continued to find success through the drill bit. FNX focused on the Sudbury Basin in Canada, where it held an interest in five historic mines: Levack, McCreedy West, Norman (later renamed Podolsky), Victoria and Kirkwood. At Podolsky, exploration efforts targeted copper, and in 2002, exploration drilling delineated the copper-rich 2000 Deposit. FNX subsequently moved to advanced exploration at the 2000 Deposit. Shafts were sunk in 2004 and commercial production began in late 2007. FNX restarted production at McCreedy West in 2003. The Levack Mine reopened in December 2006 and commercial production commenced on January 1, 2007. DMC Mining services was acquired by FNX Mining in October 2007.

A market downturn in 2008 caused FNX to suspend the contact nickel ore production at Levack and McCreedy West. In the meantime, ramp development continued at the Levack footwall (Morrison Deposit). By the end of 2009, the main access ramp reached the 3800 Level. In January 2010, FNX announced that nickel, copper and precious metals had been identified in core recently drilled at Victoria. In September 2010, commercial production began at the Morrison Deposit. McCreedy West and Podolsky continued to operate at a steady state.

Merger and Joint Agreements

In May 2010, Quadra and FNX completed a merger, creating Quadra FNX Mining Ltd. In September of the same year, the new company announced it was expanding exploration at its Victoria property in the Sudbury Basin. Exploration continued through 2011 at Victoria, and the company worked to advance and finance the Sierra Gorda project in Chile. Meanwhile, Quadra FNX pushed ahead with production at its operating mines.

In May 2011 Quadra FNX announced it had reached an agreement to form a joint venture with Sumitomo Metal Mining Co.,
Ltd. and Sumitomo Corporation for the development of the Sierra Gorda project. Quadra FNX retained a 55 percent interest. At the same time, the company announced the results of a positive feasibility study at the Chilean site. In June 2011, the company completed financing for the development of Sierra Gorda. Later that same year, the Sierra Gorda project received
permits and construction began.

Later in the year, Quadra FNX announced it had signed an agreement with Xstrata Nickel to enable further development and production at the Levack Mine, which included exploitation of the large new Morrison Deposit. Quadra FNX also decided to wind down operations at Carlota and Podolsky and make significant changes to the mine plan for Franke.

KGHM Polska Miedź S.A. Takes the Reins

In 2011, KGHM Polska Miedź S.A. gave notice of its intention to make an unsolicited bid for all outstanding shares of Quadra FNX. A formal offer was submitted to Quadra FNX shareholders on December 6, 2011. Three months later, Quadra FNX became a wholly owned subsidiary of KGHM Polska Miedź S.A. and its name was officially changed to KGHM International Ltd.

Throughout 2012 KGHM International focused on its operating assets and worked to advance their growth. It is actively
involved in the construction of the Sierra Gorda Project and progressing the Victoria Project. Effective September 1, 2012, KGHM International became the sole operator of the Ajax Project in Kamloops, British Columbia.

Over the course of the last decade, multiple ventures have evolved into what is now known as KGHM International and each
segment of the timeline has played an integral role in the company’s rich history. KGHM International is looking ahead to
years of challenge, growth and expansion.