Following earlier announcements KGHM has submitted a non-binding offer for a prospecting concession in Karaganda, Kazakhstan. According to the CEO, Mr. Herbert Wirth the prospecting works may cost a couple dozen million dollars, and take up to four years. Mr. Wirth describes the deposit composed mainly of copper with some amount of gold, silver and other critical metals as large. Meanwhile, KGHM has signed an agreement with the National Centre for Research and Development (NCBiR), which foresees spending PLN200m on R&D projects related to innovative technologies in the non-ferrous metals segment. In many respects, this is a historic agreement, as it is the first co-operation of such nature of such a big scale in Poland. Moreover, there is a chance the research will actually help the industry rather than remain only in the lab.
The news is neutral in terms of today trading. We expect the news regarding the result of the tender in Kazakhstan will show up on the market within next couple of months. Spending on R&D seemingly is going to increase significantly (we expect R&D cost to amount to PLN 6m in 2012). On the other hand we do not expect this do become a new pattern for the company.