TRANSLATORS’ EXPLANATORY NOTE

The English content of this report is a free translation of the registered auditor’s report of the below-mentioned Polish Company. In Poland statutory accounts as well as the auditor’s report should be prepared and presented in Polish and in accordance with Polish legislation and the accounting principles and practices generally adopted in Poland.

The accompanying translation has not been reclassified or adjusted in any way to conform to the accounting principles generally accepted in countries other than Poland, but certain terminology current in Anglo-Saxon countries has been adopted to the extent practicable. In the event of any discrepancies in interpreting the terminology, the Polish language version is binding.

PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. , ul. Polna 11, 00-633 Warsaw, Poland, T: +48 (22) 746 4000, F:+48 (22) 742 4040 ,

www.pwc.pl

PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp. k. is entered into the National Court Register maintained by the District Court for the Capital City of Warsaw, under KRS number 0000741448, NIP 113-23-99-979. The seat of the Company is in Warsaw at Polna 11.

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Independent Registered Auditor’s Report

To the Shareholders’ Meeting and the Supervisory Board of KGHM Polska Miedź Spółka Akcyjna

Report on the audit of consolidated financial statements

Our opinion

In our opinion, the accompanying annual consolidated financial statements:

• give a true and fair view of the consolidated financial position of KGHM Polska Miedź S.A. Group (the “Group”), in which KGHM Polska Miedź S.A. is the parent entity (the “Parent Company”) as at 31 December 2020 and the Group’s consolidated financial performance and the consolidated cash flows for the year then ended in accordance with the appli cable International Financial Reporting Standard s as adopted by the European Union and the adopted accounting policies,

• comply in terms of form and content with the laws applicable to the Group and the Parent Company’s Articles of Association.

Our opinion is consistent with our additional report to the Audit Committee issued on the date of this report.

What we have audited

We have audited the annual consolidated financial statements of KGHM Polska Miedź S.A. Group which comprise:

• the consolidated statement of financial position as at 31 December 2020

and the following prepared for the financial year from 1 January to 31 December 2020:

• the consolidated statement of profit or loss,

• the consolidated statement of comprehensive income,

• the consolidated statement of changes in equity,

• the consolidated statement of cash flows, and

• the notes comprising a description of the significant adopted accounting policies and other explanations.

Basis for opinion

We conducted our audit in accordance with the National Standards on Auditing in the wording of the International Standards on Auditing as ado pted by the resolution of the National Counci l of Statutory Auditors (“NSA”) and pursuant to the Law of 11 May 2017 on Registered Auditors, Registere d Audit Companies and Public Oversight (the “La w on Registered Auditors” – Journal of Laws of 2020, item 1415) and the Regulation (EU) No. 537 /2014 of 16 April 2014 on specific requirements rega rding the statutory audit of public-interest entities (the “EU Regulation” – Journal of Laws EU L158) . Our responsibilities under NSA are further describe d in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordan ce with the International Code of Ethics for Professional Accountants (including International Indepe ndence Standards) issued by the International Ethics Standards Board for Accountants (“IESBA Code”) as adopted by resolution of the National Council of Statutory Auditors and other ethical requirements that are relevant to our audit of the financial statemen ts in Poland. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. During the audit, the key registered auditor and the registered aud it firm remained independent of the Compan y Group in accordance with the independence requirements set in the Act on Registered Auditors and in the EU Regulation.

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Our audit approach

Overview

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the Parent Company’s Management Board made subjective judgements; for example, in respect of significant accounting estimates that involved

making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

• The overall materiality threshold adopted for the purposes of our audit was set at PLN 182.4 million, which represents 4.5% of the arithmetic average of consolidated pre-tax profit from the last three financial years, adjusted for the effect of the tax on the extraction of certain minerals recognized by the Parent Company.

• Summary of the scope of work carried out by companies belonging to the PwC network: We have audited the annual financial statements of the Parent Company, the annual consolidated financial statements of the KGHM International LTD. Group and annual financial statements of 9 subsidiaries based in Poland,

• The scope of our audit covered 97% of the Group’s revenue and 82% of the sum of total assets of all the consolidated Group companies before consolidation eliminations.

• Recognition of revenues from contracts with customers,

• Valuation of financial assets from loans granted to the Sierra Gorda SCM joint venture,

• Assessment of the recoverability of non- current assets of KGHM International LTD. and domestic subsidiaries and investments in the joint venture Sierra Gorda SCM,

• Fair value measurement of derivatives and hedge accounting.

Materiality

Group scoping

Key audit matters

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We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operated.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error.

They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the consolidated financial statements as a whole, as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on the consolidated financial statements as a whole.

Overall Group materiality

PLN 182.4 million.

How we determined it

4.5% of the arithmetic average of consolidated pre-tax profit from the last three financial years, adjusted for the amount of tax on the extraction of certain minerals.

Rationale for the materiality benchmark applied

We have adopted consolidated pre-tax profit as the basis for determining materiality, because in our opinion this measure is commonly used to assess the Group's operations by users of financial statements and is a generally accepted benchmark. We adopted the arithmetic average of the last three years due to the volatility of the financial result. We have adjusted the impact of the extraction tax on certain minerals recognized by the Parent Company due to the fact that this fee is not dependent on the results achieved by the Group. We assumed significance at the level of 4.5% because based on our professional judgment it is within the acceptable quantitative thresholds of materiality.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above PLN 13.7 million, as

well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. They include the most significant identified risks of material misstatements, including the identified risks of material misstatement resulting from fraud. These matters were addressed in the context of our audit of the consolidated financial statements

as a whole, and in forming our opinion thereon,. We do not provide a separate opinion on these matters.

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Key audit matter

How our audit addressed the key audit matter

Recognition of revenues from contracts with customers

In 2020, the Group recognized revenues from contracts with customers in the amount of PLN 23,632 million, which were described in part 2 of the consolidated financial statements.

The Group generates revenues mainly from sales of copper, silver and gold. Revenues are recognized when the Group meets the obligation to perform the service in the form of transferred good or services with simultaneous acquisition of control over this asset by the buyer. Revenue is recognized at an amount equal to the transaction price representing the consideration for the goods and services provided, including the pricing formulas used.

Bearing in mind the importance of revenues item in the consolidated financial statements of the Group, as well as the susceptibility of the item to the risk of misstatement, we recognized that this is a key matter for our audit.

Our testing procedures included in particular:

• understanding the internal control system and analysing the principles adopted by the Group in terms of recognizing revenue from contracts with customers and identifying the moment of passing control over the good or service provided,

• analysis of the conditions contained in significant sales contracts,

• conducting, on a selected sample, efficiency tests of selected internal controls, important for determining the correct moment of revenue recognition and the correct value of revenues from contracts with customers,

• analysis of trends in recognized revenues from contracts with customers and explanation of unusual events and one-off transactions,

• conducting tests of details on a selected sample, the selection of which used quantitative and qualitative criteria, including agreeing price rates and quantities used on issued sales invoices to contracts with customers, delivery documents and payment documents,

• confirmation of selected sales transactions directly with the Group's customers,

• verification, on a selected sample, of revenue recognition in the proper reporting period, taking into account the terms and conditions of contracts concluded with the Group's customers,

• assessment of the correctness and completeness of disclosures in the consolidated financial statements regarding revenues from contracts with customers.

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Valuation of financial assets due to loans granted to the Sierra Gorda SCM Joint Venture

As at 31 December 2020, the Group reported the balance of loans granted to the Sierra Gorda SCM joint venture in the amount of PLN 6,069 million, which represents 14.2% of the total assets of the Group.

Receivables from loans granted to Sierra Gorda SCM disclosed in the consolidated financial statements are measured at amortized cost, including an allowance for expected credit losses. At the time of initial recognition, according to IFRS 9, the loans were classified as POCI (purchased or originated credit-impaired) loans, i.e. affected by impairment due to credit risk.

Disclosures regarding the valuation of loan receivables from Sierra Gorda SCM, including assessments of their recoverability, are presented in section 6.2 of the consolidated financial statements.

Determining the expected credit losses in relation to financial assets from loans is associated with the necessity of applying a number of significant assumptions and making judgments, in particular regarding the Parent Company's strategy for investments in a joint venture, macroeconomic and market assumptions as well as predictions regarding legal conditions, financial plans and cash flow projections.

Considering the inherent risk of uncertainty associated with significant estimates made by the Management Board, as well as the significance of items in the consolidated financial statements, we have determined that this is a key issue for our audit.

Our testing procedures included in particular:

• understanding and assessing the correctness of the applied principles of measuring loan receivables in accordance with the relevant financial reporting standards,

• verifying the mathematical accuracy and methodological consistency (using internal valuation experts) of the valuation model of the impairment loss on loans granted, prepared by The Management Board of the Parent Company with the use of external experts,

• critical assessment of the assumptions made by the Management Board of the Parent Company and the estimates made to determine the expected credit losses, including:

o the projection period of future cash flows generated by the mines and the level of revenues, operating margin and future investment expenditures assumed in them;

o planned recovery scenarios adopted to estimate the level of future cash flows from loan receivables and the probability weights assigned to them,

• assessment of the sensitivity analysis carried out by the Management Board of the adopted assumptions for the valuation result,

• assessment of the correctness and completeness of disclosures in the consolidated financial statements in relation to valuation of financial assets from loans granted and assessment of their recoverability.

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Assessment of the recoverability of non- current assets of KGHM International LTD. and domestic subsidiaries and investments in the joint venture Sierra Gorda SCM

As at 31 December 2020, in the consolidated financial statements, the Group presents tangible and intangible assets in the total amount of PLN 25,598 million, which represents 59.9% of the total assets disclosed in the consolidated statement of financial position.

During 2020, the Group identified impairment indicators for the following subsidiaries:

• Sociedad Contractual Minera Franke;

• WPEC S.A.;

• Pol-Miedź Trans Sp. z o. o.;

• Uzdrowiska Kłodzkie S.A.;

• Uzdrowisko Cieplice Sp. z o.o.;

• Uzdrowisko Świeradów - Czerniawa Sp. z o.o.;

• Uzdrowisko Połczyn Sp. z o.o.;

• Interferie S.A.;

• Interferie Medical SPA Sp. z o.o.

As a result of impairment tests, the Group:

• recognized an impairment loss on the non-current assets of Sociedad Contractual Minera Franke in the amount of PLN 45 million,

• recognized an impairment loss on the non-current assets of WPEC S.A. in the amount of PLN 41 million,

• recognized an impairment loss on the non-current assets of Pol-Miedź Trans Sp. z o. o. in the amount of PLN 21 million,

• recognized an impairment loss on the non-current assets of health resorts (PGU Group) in the total amount of PLN 94 million.

Disclosures regarding the assessment of impairment of non-current assets are presented in part 3 of the consolidated financial statements.

As at 31 December 2020, the Group reported the carrying amount of investments in the Sierra Gorda SCM joint venture in the amount of PLN 0 (zero)

Our testing procedures included in particular:

• understanding and assessing the process of identifying evidence for impairment of assets or reducing an impairment loss previously recognized,

• understanding and assessing the correctness of the methods used for testing for impairment in accordance with the relevant financial reporting standards,

• understanding and assessing the principles for determining cash-generating units,

• a critical assessment of the assumptions and judgments adopted by the Management Board in determining the recoverable amount of individual cash-generating unit subject to impairment tests, including:

– the projection period of future cash flows based on the approved budgets of cash- generating units for which an impairment test was carried out and the level of revenues, operating margin and future replacement and investment expenditures assumed in them,

– the discount rate used (based on weighted average cost of capital),

– residual value, including residual growth rate after the forecast period,

• checking mathematical correctness and methodological coherence (using internal valuation experts) of valuation model based on discounted cash flows, prepared by the Parent Company’s Management Board with use of external experts,

• checking mathematical correctness and methodological coherence (using internal valuation experts) of valuation reports prepared by independent external experts,

• assessment of work done by external experts used by the Parent Company’s Management Board, including their competence and independence,

• assessment of the sensitivity analysis of the assumptions made by the Parent Company’s Management Board to the result of the impairment assessment,

• assessment of the correctness and completeness of disclosures regarding impairment tests in the consolidated financial statements.

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million and the impairment write-down recognized in previous years amounted to PLN 671 million.

During 2020, the Group did not identify indicators to reverse a previously recognized impairment loss.

Pursuant to IAS 36 "Impairment of Assets", the Management Board of the Parent Company conducts at the end of the reporting period, and in the event of special events also during the year, an assessment of the occurrence of premises indicating the possibility of impairment or reduction of a previously recognized write-off in relation to tangible and intangible assets fixed assets and investments in joint ventures.

In the event of occurrence of such indicators, the Management Board calculates the recoverable amount of cash- generating units.

Determination of the recoverable amount is associated with the need to adopt a number of significant assumptions and make judgments for each of the tested cash- generating units, including in particular the Parent Company's strategy towards individual entities, macroeconomic and market assumptions, predictions as to legal conditions, financial plans and cash flow forecasts.

Considering the inherent risk of uncertainty associated with significant estimates made by the Parent Company’s Management Board when measuring the recoverable amount of non-current assets, we have determined that this is a key audit matter.

Fair value measurement of derivatives and hedge accounting

The Group is a party to derivative transactions related to volatility of prices, interest rates and exchange rates. Disclosures related to derivative instruments are presented in note 7.2 of the consolidated financial statements.

The Group applies hedge accounting for cash flows. Some of the concluded derivative transactions are hedging instruments securing future cash flows. Some of the held hedging transactions do not constitute hedging instruments within the meaning of hedge accounting.

Our testing procedures included in particular:

• assessment of compliance of the accounting policy adopted by the Parent Company with respect to the initial recognition and subsequent measurement of derivative instruments with the relevant financial reporting standards,

• understanding and evaluation of the process of valuation of derivative instruments, including the adopted methodology and sources of obtaining market data and unobservable valuation parameters,

• verification of key parameters of selected derivatives to external independent data sources,

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The value of derivative financial assets as at 31 December 2020 amounted to PLN 999 million, including PLN 948 million under hedge accounting.

The value of derivative financial liabilities as at 31 December 2020 amounted to PLN 1,694 million, including PLN 1,405 million under hedge accounting.

Derivatives are measured at fair value at the end of each reporting period or at transaction settlement date. In relation to instruments hedging future cash flows, gains and losses resulting from changes in the fair value of these instrument, in the portion which is effective, are deferred in other comprehensive income and accumulated in the capital for the valuation of financial instruments, until the transactions that are the subject of the hedge have an impact on financial result. As at 31 December 2020, the accumulated amount of other comprehensive income from the valuation of hedging derivatives recognized in equity amounted to PLN 998 million.

Estimating the fair value of derivatives and the effectiveness of the established hedging relationships is an area that requires a significant estimates by the Management Board as to future metal prices, interest rates and exchange rates, and involves the use of an appropriate instrument valuation model.

The application of hedge accounting is allowed only if the criteria strictly defined in IFRS 9 are met.

Considering the inherent risk of uncertainty related to significant estimates made by the Management Board, as well as the materiality of the impact of these transactions on the consolidated financial statements, we considered this to be a key audit matter.

• performing and independent valuations of derivatives at fair value, with the use of PwC's internal valuation experts, and comparing them with results of Group's valuations,

• verification, performed by internal PwC valuation expert, of the correctness of the application of hedge accounting, determining the part of an effective hedging relationship, conducting qualitative effectiveness tests and verification of the division of relationships into effective and ineffective portion,

• assessing the differences in the fair value measurement of derivative instruments between independent PwC valuations and the valuations prepared by the Group. In cases where the obtained results differed from those calculated by the management of the Parent Company, we assessed whether these differences are within acceptable ranges, taking into account the estimates of future metal prices, interest rates and exchange rates in the valuation,

• verification of disclosures in the consolidated financial statements in terms of meeting the requirements of the standards.

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Responsibility of the Management and Supervisory Board for the consolidated financial statements

The Management Board of the Parent Company is responsible for the preparation of the annua l consolidated financial statements that give a true and fair view of the Group’s financial position and resul ts of operations, in accordance with International Financial Reporting Standards as adopted by the European Union, the adopted accounting policies, the applicable laws and the Parent Company’s Articles of Association, and for such internal control as the Management Board determines is necessary to enable the prepara tion of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Parent Company’s Management Board is responsible for assessing the Group’s ability to continue as a going concern, disclosing,

as applicable, matters related to going concern and using the going concern basis of accounting unless the Management Board either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Parent Company’s Management Board and members of the Supervisory Board are obliged to ensure that the consolidated financial statements comply with the requirements specified in the Accounting Act of 29 September 1994 (“the Accounting Law” – Consolidated text: Journal of Laws of 2021, item 217, as amended). Members of the Supervisory Board are responsible for overseeing the financial reporting process.

Auditor’s responsibility for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assura nce about whether the consolidated finan cial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opini on. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the NSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influ ence economic decisions of users taken on the basi s of these consolidated financial statements.

The scope of the audit does not include an assurance on the Group’s future profitability nor the efficiency and effectiveness of the Parent Company’s Management Board conducting its affairs, now or in future.

As part of an audit in accordance with NSA, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control,

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control,

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Parent Company’s Management Board,

• conclude on the appropriateness of the Parent Company’s Management Board’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern,

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• evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation,

• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated to the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other information, including the Report on the operations

Other information

Other information comprises a Report on the Parent Company’s and Group’s operations for the financial year ended 31 December 2020 (“the Report on the operations”) and the corporate governance statement, which is separate parts of the Report on the operations, and the separate report on non-financial information referred to in Article 55(2b) of the Accounting Act, and separate consolidated report on payments to public administration (“Consolidated report on payments”) and the Annual Report for the financial year ended 31 December 2020 (together “Other Information”). Other information does not include the financial statements and our auditor’s report thereon.

Responsibility of the Management and Supervisory Board

The Management Board of the Parent Company is responsible for the preparation of the Other Information in accordance with the law.

The Parent Company’s Management Board and the members of the Supervisory Board are obliged to ensure that the Report on the operations including its separate parts and a separate Consolidated report on payments complies with the requirements of the Accounting Law.

Registered auditor’s responsibility

Our opinion on the consolidated financial statements does not cover the Other Information.

In connection with our audit of the consolidated financial statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the information in the consolidated financial statements, our knowledge obtained in our audit, or otherwise appears to be materially misstated. If, based on the work performed, we identified a material misstatement in the Other Information, we are obliged to inform about it in our audit report. In accordance with the requirements of the Law on the Registered Auditors, we are also obliged to issue an opinion on whether the Report on the operations has been prepared in accordance with the law and is consistent with information included in annual consolidated financial statements.

Moreover, we are obliged to issue an opinion on whether the Group provided the required information in its corporate governance statement and to inform whether the Group prepared a separate report on non-financial information.

We obtained the Report on the operations before the date of this audit report, and the Annual Report will become available after that date.

If we identify a material misstatement in the Annual Report, we are obliged to inform the Parent Company’s Supervisory Board.

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Opinion on the Report on the operations

Based on the work we carried out during our audit, in our opinion, the Report on the operations:

• has been prepared in accordance with the requirements of Article 49 of the Accounting Act para. 71 of the Regulation of the Minister of Finance dated 29 March 2018 on current and periodical information submitted by issuers of securities and conditions for considering as equivalent the information required under the legislation of a non-Member State (“Regulation on current information” – Journal of Laws 2018, item 757),

• is consistent with the information in the consolidated financial statements.

Moreover, based on the knowledge of the Group and its environment obtained during our audit, we have not identified any material misstatements in the Report on the operations.

Opinion on the corporate governance statement

In our opinion, in its corporate governance statement, the Group included information set out in para. 70.6 (5) of the Regulation on current information. In addition, in our opinion, information specified in paragraph 70.6 (5)(c)–(f), (h) and (i) of the said Regulation included in the corporate governance statement are consistent with the applicable provisions of the law and with information included in the consolidated financial statements.

Information on non-financial information

In accordance with the requirements of the Act on the Registered Auditors, we confirm that the Group has included in its Report on the operations, information on the preparation of a separate report on non-financial information referred to in Article 55(2c) of the Accounting Act and that the Company has prepared such a separate report.

We have not performed any assurance work relating to the separate report on non-financial information and we do not provide any assurance with regard to it.

Report on other legal and regulatory requirements

Report on the compliance of the format of consolidated financial statements with the requirements of the European Single Electronic Format (“ESEF”)

Pursuant to Annex no. 2 to our audit engagement letter we have been engaged by the Management Board of the Parent Company to conduct a reasonable assurance engagement for the verification of compliance with the applicable requirements of the electronic reporting format of the consolidated financial statements of KGHM Polska Miedź S.A. Group for the year ended 31 December 2020 (the “Electronic Reporting Format of the Consolidated Financial Statements”).

Description of a subject matter and applicable criteria

The Electronic Reporting Format of the Consolidated Financial Statements has been applied by the Management Board of the Parent Company to comply with the requirements of art. 3 and 4 of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the “ESEF Regulation”). The applicable requirements regarding the Electronic Reporting Format of the Consolidated Financial Statements are contained in the ESEF Regulation.

The requirements described in the preceding sentence determine the basis for application of the Electronic Reporting Format of the Consolidated Financial Statements and, in our

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opinion, constitute appropriate criteria to form a reasonable assurance conclusion.

Responsibility of the Management Board and the Supervisory Board

The Management Board of the Parent Company is responsible for the application of the Electronic Reporting Format of the consolidated financial statements that complies with the requirements of the ESEF Regulation.

This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF taxonomy and designing, implementing and maintaining internal controls relevant for the preparation of the Electronic Reporting Format of the Consolidated Financial Statements which is free from material non-compliance with the requirements of the ESEF Regulation.

Members of the Supervisory Board are responsible for overseeing the financial reporting process.

Our responsibility

Our responsibility was to form a reasonable assurance conclusion whether the Electronic Reporting Format of the Consolidated Financial Statements complies, in all material aspects, with the ESEF Regulation.

We conducted our engagement in accordance with National Standard on Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical Financial Information’, in the wording of the International Standard on Assurance Services 3000 (Revised) as issued by the National Council of Statutory Auditors (KSUA 3000 (Z)). This standard requires that we comply with ethical requirements, plan and perform procedures to obtain reasonable assurance whether the Electronic Reporting Format of the consolidated financial statements is prepared, in all material aspects, in accordance with the applicable requirements.

Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in accordance with KSUA 3000 (Z) will always detect the existing material misstatement.

Quality control requirements

We apply the provisions of the resolution of the National Council of Statutory Auditors on the principles of internal quality control in the wording of the International Standard on Quality Control 1 (IAASB) and accordingly maintain a comprehensive system of quality control, including documented policies and procedures regarding compliance with ethical requirements,

professional standards and applicable legal and regulatory requirements.

We comply with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (“IESBA Code”) and accepted by the resolution of the National Council of Statutory Auditors, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Summary of the work performed

Our planned and performed procedures were aimed at obtaining reasonable assurance that the Electronic Reporting Format of the Consolidated Financial Statements was applied, in all material aspects, in accordance with the applicable requirements and such application is free from material errors or omissions. Our procedures included mainly:

● obtaining an understanding of the internal control system and processes relevant to the application of the Electronic Reporting Format of the consolidated financial statements, including the preparation of the XHTML format, marking up the consolidated financial statements,

● verification that the XHTML format was applied properly,

● evaluating the completeness of marking up the consolidated financial statements using the iXBRL markup language according to the requirements of the implementation of electronic format as described in the ESEF Regulation,

● evaluating the appropriateness of the Group’s' use of XBRL markups selected from the ESEF taxonomy and the creation of extension markups where no suitable element in the ESEF taxonomy has been identified; and

● evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.

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Conclusion

In our opinion, based on the procedures performed, the Electronic Reporting Format of the Consolidated Financial Statements complies, in all material respects, with the ESEF Regulation.

Statement on the provision of non-audit services

To the best of our knowledge and belief, we declare that the non-audit services we have provided to the Parent Company and its subsidiaries are in accordance with the applicable laws and regulations in Poland and that we have not provided any non-audit services prohibited under Article 5(1) of the EU regulation and Article 136 of the Law on Registered Auditors.

During the audited period, we provided to the Parent Company, and its controlled entities in the European Union, the following non-audit services which were not disclosed in the Group’s Directors’ Report or in the consolidated financial statements:

● Certifying Service regarding the correct calculation of the value of the intensity of electricity consumption, arithmetic average of incurred costs of electricity used for own needs and unit gross added value determined in accordance with the guidelines contained in Article 52 para. 3 and Article 53 para. 2 and 3 of the Act on renewable energy sources of 20 February 2015, and the Regulation of the Minister of Climate of 27 August 2020 o the method of calculating the intensity of electricity consumption by industrial users,

● Attestation Service in the scope of responsible supply chain for gold and silver

in accordance with LBMA responsible Gold Guidance and LBMA Responsible Silver Guidance,

● Attestation Service in the scope of calculation of excise duty ratio in accordance with requirements of Article 31d para. 8 of Excise Duty Act of 6 December 2008,

● Attestation service providing reasonable assurance in the scope of verification of compliance with the applicable requirements of the Electronic Reporting Format for the consolidated financial statements of the KGHM Polska Miedź S.A. Group. for the year ended 31 December 2020 in order to meet the requirements of art. 3 and 4 of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the “ESEF Regulation”),

● Attestation Service in the scope of including information required by the Polish Act on Public Offerings in the Remuneration Report.

Appointment

We have been appointed to audit the annual consolidated financial statements of the Group by the Resolution of the Supervisory Board of 7 December 2018 for the period of three years, i.e. 2019-2021. We have been auditing the Group’s financial statements without interruption since the financial year ended 31 December 2019, i.e. for 2 consecutive years.

The Key Registered Auditor responsible for the audit on behalf of PricewaterhouseCoopers Polska spółka z ograniczoną odpowiedzialnością Audyt sp.k., a company entered on the list of Registered Audit Companies with the number 144., is Katarzyna Ignaszak.

Katarzyna Ignaszak

Key Registered Auditor

No. 11715

Wrocław, 24 March 2021