KGHM Polska Miedź S.A. - Creating a Strong Global Growth Platform with Quadra FNX

TORONTO, Dec. 6, 2011 /PRNewswire/ - KGHM Polska Miedź S.A. (KGH:WSE), a leading global copper and silver producer and Europe's largest copper miner, announced today that it has reached an agreement with Quadra FNX Mining Ltd (TSX:QUX) to acquire all of the outstanding common shares of Quadra FNX for a cash consideration of C$15 per share, a premium of 41% based on Quadra FNX's 20 trading day VWAP on the TSX up to December 5, 2011. The aggregate consideration for the transaction is C$2.87 billion.

Quadra FNX provides KGHM with an attractive portfolio of world-class development projects allowing for sustainable growth supported by strong cash flows, secured financing, and a stable balance sheet. Pro forma 2010 copper production for the combined company will be 1.16 billion lbs, increasing to 1.40 billion lbs when the project at Sierra Gorda reaches its designed capacity. The combination will also improve cost competitiveness.

KGHM's Chief Executive Officer, Herbert Wirth, said, "This carefully prepared transaction is in line with KGHM's strategy of focused development and value creation. KGHM will benefit greatly from Quadra FNX's high quality management team and employees and we plan to make Canada our base for further growth in the Americas. Quadra FNX has a proven track-record and ambitious future development plans. Coupled with KGHM's strong balance sheet and substantial positive cash flow, this transaction will provide a solid financial foundation and improve prospects for securing necessary financing for projects in Canada and abroad."

The Canadian headquarters of the combined company will oversee mining operations throughout the Americas, including the large Sierra Gorda project in Chile.

KGHM is committed to maintaining Quadra FNX's existing plans for its operations and employment in Canada, as well as developing future growth projects, thereby improving the long-term employment prospects in Canada. KGHM believes the transaction will provide employment stability for Quadra FNX employees through increased diversification, access to capital and financial strength.

The board of directors of Quadra FNX has unanimously approved the acquisition. The acquisition will be completed through a plan of arrangement, and must be approved by a 66 ⅔% vote of Quadra FNX's shareholders and warrantholders, and by the court. The transaction is also subject to regulatory approvals, including under the Investment Canada Act. The arrangement agreement includes customary protection, including a break fee of C$75 million or 2.6% of transaction consideration.

KGHM will fund this acquisition from existing cash resources.

It is anticipated that materials will be mailed to Quadra FNX's shareholders in early January 2012, and Quadra FNX's shareholder meeting will occur in mid-February 2012.

A conference call for sell-side analysts, investors, and media is scheduled for 10 a.m. EST on December 6, 2011.

You will be able to dial-in to listen and place questions at:

A webcast of the proceedings is also available at:
http://event.on24.com/r.htm?e=387059&s=1&k=DF9B3F44C28B5542B9154C38E90E7130

Advisors and Counsel 

KGHM is advised by:
Financial: BNP Paribas, and Rothschild
Legal: Davies Ward Phillips & Vineberg LLP, and Gide Loyrette Nouel
Tax: Ernst & Young
Technical: AMC Consultants, and KGHM Cuprum

About KGHM

KGHM is a leading global copper and silver producer, headquartered in Lubin, Poland.  The company was founded in 1961 and has a long and successful history in copper and silver mining.  KGHM is Europe's largest producer of mined copper and is the 9th largest mined copper producer and 3rd largest silver producer in the world.

The company's mines and smelters are situated in Poland, which provides a favorable location in the middle of the European market.  KGHM operates the deepest mines in Europe and has considerable expertise in underground mining.  The company operates on its own copper ore deposit (which is the largest copper deposit in the world) and has an integrated production structure, comprising three mines, copper smelters, a wire rod plant and auxiliary units supporting the core business.  In 2010, KGHM produced 937.8 million lbs of mined copper, 1.206 billion lbs of refined copper, 37.3 million oz silver and 24,949 oz of gold.

KGHM is listed on the Warsaw Stock Exchange and for 2011 has estimated revenue and net income of US$6.76B and US$3.44B respectively.

Forward-Looking Statement

Certain information contained in this news release, including any information relating to the proposed transaction (the "Transaction") and KGHM's future financial or operating performance may be deemed "forward-looking." These statements relate to future events or future performance and reflect KGHM's expectations regarding the Transaction, and the combined company. These forward-looking statements also reflect KGHM's current internal projections, expectations, or beliefs and are based on information currently available to KGHM. These forward-looking statements are subject to a variety of risks and uncertainties that are identified and disclosed in KGHM's public disclosure record. In some cases forward-looking information can be identified by terminology such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "projects," "potential," "scheduled," "forecast," "budget," or the negative of those terms or other comparable terminology. Assumptions upon which such forward looking information regarding completion of the Transaction is based include that KGHM will be able to satisfy the conditions to the Transaction, that the required approvals will be obtained from the shareholders and warrantholders of Quadra FNX, that all regulatory approvals to the Transaction will be obtained and all other conditions to completion of the Transaction will be satisfied or waived. Although KGHM believes that the forward-looking information contained in this news release is based on reasonable assumptions, readers cannot be assured that actual results will be consistent with such statements. Accordingly, readers are cautioned against placing undue reliance on forward-looking information. KGHM expressly disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, events, or otherwise, except in accordance with applicable security laws.

SOURCE KGHM Polska Miedz S.A.