The company exercised its call option on a 29% stake of Canadian miner Ajax Mining Inc. held by partner Abacus for USD 29.9 m, raising its stake in the firm to 80% from 51% earlier. Ajax, a joint venture between KGHM (146,1 PLN, -0,27%) and Abacus, will operate the Afton-Ajax copper/gold project located in Canada. Investment outlays related to the project are estimated at USD 795m. Average annual production of copper and gold in concentrate amounts respectively to 50k tons of copper and 100k ounces of gold. Mine life was calculated at 23 years. The cost of producing 1 ton of copper was estimated at USD 1740 - USD 2800. Mine construction will last two years and the expected start-up date for the mine has been set at 2015. KGHM and Abacus Mining & Exploration Corporation set up a joint venture to carry out the copper and gold mining project Afton-Ajax in Canada back in May 2010. According to that agreement, KGHM paid USD 37 m, or PLN 110.7 m, for 51% stake in the venture and was granted the option to acquire a further 29% stake for up to USD 35 m. Our view: The exercising of the call option by KGHM is fully expected by the market and is part of our scenario for the company. We value the Afton Ajax project at PLN 5.21 per KGHM share.