KGHM said higher revenues for the first half of 2019 (US$2.86 billion) were due mainly to 22% better copper sales volumes and 45% more silver, and the stronger US dollar exchange rate, though metal prices, including for copper, were lower.
The Lubin-headquartered company's first-half production has it on track to achieve full-year production targets of 691,000 tonnes of copper and 43 million oz of silver.
BMO said KGHM's operations were "stabilising and cash is building on the balance sheet despite commitments to Sierra Gorda" in Chile. KGHM, which owns 55% of the copper-molybdenum mine with Japan's Sumitomo Metal Mining Co, committed to a US$2 billion expansion last year to increase output to 220,000tpa of copper.
BMO said Sierra Gorda "remains a cash burner".
"Despite making EBITDA of US$62 million in Q2 [on a 100% basis], Sierra Gorda remains cash flow negative and KGHM injected US$17 million into the JV during the period. Nonetheless, this is an improvement on Sierra Gorda's previous position," the investment bank said.
"With stabilising metallurgical output from the Polish assets, cash flows and margins are forecast to continue improving with the rundown of inventories over the next six-to-12 months, although we prefer KAZ Minerals for a leveraged investment on copper prices."