May 4 (Bloomberg) -- KGHM Polska Miedz SA of Poland, the copper producer with the largest European mine output, bought a 51 percent stake in a Canadian mining project, venturing abroad again after closing its Congo venture last year.
State-controlled KGHM, which had been negotiating the purchase since at least August last year, will pay $37 million for the stake in a joint venture with Abacus Mining & Exploration Corp., which will contribute its rights to the Afton-Ajax deposit in British Columbia, the Lubin, Poland-based miner said in a regulatory statement today. KGHM has the right to buy an additional 29 percent for $35 million.
KGHM, which last year said it planned to raise output to 700,000 tons a year from the current 500,000 by 2018, forecasts extraction of 50,000 tons a year at the mine for 23 years starting in 2013, and will arrange financing for a $535 million investment if it exercises the option on the 29 percent stake, it said in the statement.
KGHM plans to cut its dividend, saving cash for this year's 3.2 billion-zloty investment plan. Management last month proposed paying 600 million zloty, or 3 zloty a share, from its 2.54 billion-zloty 2009 net income, the lowest per-share value since 2005.
Shareholders at KGHM will vote on the dividend on May 17. The final payout has been higher than management's original proposal each year starting in 2005, as successive governments sought cash to cover budget shortfalls.
KGHM last year closed down its Congo operation after 13 years in which it didn't produce any copper.
The Polish company also acquired a one-year option to buy as much as 10 percent in Abacus for C$4.5 million ($4.4 million).