August 4, 2014 / 2:33 PM / in 4 years

UPDATE 1-KGHM says cost of launching Sierra Gorda mine reached $4.16 bln

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WARSAW, Aug 4 (Reuters) - Europe’s No.2 copper producer KGHM said on Monday that the final cost of launching production at its Chilean Sierra Gorda mine, one of the world’s largest copper projects, reached $4.16 billion.

“Today I can say that the cost of launching (production at Sierra Gorda) amounted to $4.156 billion,” KGHM Chief Executive Officer Herbert Wirth told a news conference.

The cost of getting production underway at Sierra Gorda has been over a third more than Poland’s KGHM expected when it bought the project as part a C$3 billion ($2.8 billion) purchase of Canada’s Quadra FNX, now named KGHM International.

That deal allowed it to book the world’s fourth-largest copper deposits.

The state-controlled miner launched production at Sierra Gorda last week. Its target for annual production is 220 thousand tonnes of copper, 25 million pounds of molybdenum and 64 thousand ounces of gold.

The Polish miner controls 55 percent of the Chilean project, while Japanese partner Sumitomo holds the rest.

To finance its investment plans, pegged at a company-wide total of 4.3 billion zlotys ($1.4 billion) this year alone, KGHM signed a five-year revolving credit deal worth $2.5 billion with a group of lenders earlier this month.

Last week, the previously almost unindebted miner additionally signed a 2 billion-zloty credit deal with the European Investment Bank (EIB). ($1 = 3.1048 Polish Zlotys) (Reporting by Adrian Krajewski, editing by William Hardy)

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