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KGHM Polska Mied S.A. – Creating a Strong Global Growth Platform with Quadra FNX

December 6, 2011

TORONTO, Dec. 6, 2011 /PRNewswire/ – KGHM Polska Mied 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 2/3% 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:


        Conference name: KGHM announces offer to acquire Quadra FNX

        Conference ID # 34469187

        (888) 231-8191 - North America Toll-Free

        (647) 427-7450 - Local Dial-in

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.


Source: PR Newswire