Boliden AB

Ladies and gentlemen, I'd like to welcome you to Boliden's Q1 2024 results presentation. My name is Olof Grenmark and I'm head of investor relations. Today, we will have a results presentation led by our president and CEO, Mikael Staffas, and our CFO, Håkan Gabrielsson. Mikael, welcome.

Thank you, Olof, and good morning to all of you out there. We are today broadcasting this from the city or the town of Boliden. We're doing that as part of our 100-year celebrations. We will later today have our AGM, and in connection with this AGM, we have had a full week here of activities, all commemorating our 100 years of history. So it's good to have all of you here as well, even though it's in an electronic form. Now, when we look into the quarter that we've just had, it's been in a sense a tough quarter, but it's also been a kind of difficult quarter for you all to be calculating on. If you look on the positive side and start on, we've had important steps happening during the quarter regarding the future proofing of the business. As you know from the Capital Market Day, We have gone ahead with the new investment in a tank house in Rönnskär. We've also gone ahead with the extension of the Boliden area, as was talked about then. Also the ODA, the ITIC and the Kristineberg projects, the big projects we've been doing for the last couple of years are approaching completion and that's still going on well. The autonomous hauling trucks in ITIC have been inaugurated during the quarter and have worked out fine so far. And we also continued to develop our portfolio of low CO2 products and we have launched our low CO2 nickel in this quarter. A large part of the What's happened to us during the quarter has been political strikes in Finland. These strikes have been, number one, not part of our discussion. It's not been us who has been a part of these negotiations. It's been other people, and we have only been the consequences of it. We first had two relatively short strikes, but that hit us very hard and meant that we lost maybe up to seven days from those two strikes together as Finland was closing down for officially two days at the time. But for us, ramping down and wrapping up took more time. And then towards the end of the quarter, we had a almost four-week-long blockage and strike in the ports and the railroad system in Finland, which made it difficult for us to operate. But we managed to produce through it, but we had problems delivering. And we'll get back to the numbers around that. In the beginning of January, sometimes you lose when you're going into spring. You'll forget about that. It's just about a month ago. It was real winter. And the winter in northern Sweden and northern Finland was, even for our own conditions, very severe. We had minus 35 degrees for a long time. And we had problems in the mines, but maybe even more in Rönnskär that was linked to this, which also caused power outages and other problems that we had to get production going. Generally speaking, for the quarter, the production in mines has been stable. It's been very good, and we have even a production record in Garpenberg in the quarter. The prices, if you look in the quarter, and here you have to be careful about your timing, in the quarter were actually negative, going quite negative in January and February. They picked up a little bit in March, but still ended, as an average for the quarter, ended on a negative note. Then after that, now in April, we all know already that we've had a very good run on the base metal prices, especially copper, and also to some extent on the precious metal prices in April. But that's, of course, not reflected in the numbers from Q1. Regarding Tara, we have worked intensively with our unions to work on a rescue plan to get going. And we have in April come to an agreement with the unions regarding a rescue plan. But in the Irish context, this agreement needs to be voted on by the union members. And that vote in itself is not in our control, it's in the control of the unions. We expect that to happen shortly, in the next few weeks, and we will get an answer on that vote then, and then we can tell you more about the actual agreement once it's been cleared and done into a done deal. The financial performance in the quarter is 1.2 billion SEC. We've had a free cash flow of a negative a billion and a half. The negative cash flow, Håkan will come back to that, has of course been influenced, for example, by the Finnish strikes. And the capex went according to the plans that we've had at about three and a half billion for the quarter. On the key projects, we talked about this at the Capital Market Day, but for those who did not listen then, we did at that time announce an increase in the CapEx for the ODA project. Based on that new baseline, we're doing quite fine and we're working hard for the ramp-up to happen in the end of this year. The Itik dam project is working well. We have already gotten part of the project operational and working, and the completion is expected towards the end of this year. The Kristineberg mine expansion, we're already mining from the Revliden ore body. The underground trolley trucks tests have worked very well. And we are working hard to get commissioning of the full electric system by early 2025. The Rönnsjö tankhouse, we announced a month ago, not that much has happened. We're getting ready to start construction in a few weeks. And regarding the Boliden area extension, we have now gotten all the environmental application documentation and in for the environmental permits. It has been sent in and we're quite hopeful that that will be a quick process and get the permits that we need to be able to move ahead with that project. On ESG, we did not have the best of quarters regarding ESG in total. The CO2 emissions were down. That was relatively good, and it's worked according to plan compared to the comparison periods. The LTI frequency was higher than it's been in the previous quarters, and thus we... Yeah, we did not have a perfect quarter. This is partially linked to the cold weather, but also we've had lots of small things happening. The sick leave is slightly going down compared to the quarter last year, even though in this comparison here with the rolling 12 months is still a little bit up. But we have a sense that maybe we have turned a corner and start getting the sick leave numbers down a little bit. The market development, and this, of course, is something where you could talk a long time because lots of things are happening right now. We have had during the quarter a lower zinc, nickel, and lead prices going down. The copper improved a little bit in the quarter, but it's clearly down year on year. And remember now, these aren't data for q1 then as i said in q2 in early april all these numbers have gone up quite a lot the precious metals worked well with a all-time high gold in the quarter improved silver however weaker pgm The zinc benchmark came out and was established, and we have in our numbers a much lower zinc TC, which is of course negative for us, especially for our zinc smelters. The zinc benchmark TC has been established at 165 versus the 274 last year. The exchange rates, not big movements, but if you add it up totally for Boolean, actually slightly negative exchange rate adjustments comparing to the previous quarter. If you look at the prices and terms, you can see here that copper prices are, especially with the latest kind of uptick, actually on a quite healthy level. And you can see the copper industry, most people should make money with prices much higher than the cost. In zinc, yes, the zinc prices have come up, which means that there's a little bit of of air and you can also see that the cost level for zinc miners have gone down and it's of course linked at least partially to the lower tcs that are coming across here and you can see that in the nickel situation even though actually here also prices have come up slightly it's still a very dire situation for many nickel miners around and with the prices being lower than the cash cost for many operators in the nickel space If you then look into Boliden and look into our mine production, as I said, ITIC has had despite, you can say, having tough weather conditions in the early part of January, it produced, well, that's 10.6 million tons, toppling those extreme conditions that we had early part of the year. The grades are, you could say, record low at 0.15. We have guided for 0.17 for the year, and we still guide for 0.17 for the year, and the variance around that, I would say, is a normal variance that you get in individual quarters, but it's little bit safe to tell you and everybody else that this might be the lowest quarter that we will see of the grades in ITEC. In Garpenberg we actually have a new record in terms of mill production and especially we have gotten some increased efficiencies in the ore hoisting which is the bottleneck right now in the in the Carpenbury system and this is working all fine and the grades are interesting enough exactly what they were last year and very well included in the guidance we've done. Kevitsa at two and a half million tons in the quarter, that's on a 10 million pace for the year, which is exactly where the permit is and that's despite having lost seven days to the strike actions around there. So also the production in Kevitsa is moving ahead And the copper grades and nickel grades are moving up and are now in line with the guidance. And the issues that we had last year should now be in the history for us. The Boulinere was also caught by the very cold conditions and had a seven-day mill stop during the quarter, but in otherwise good production. And Terra has been in care of maintenance during the quarter. On the smelter side, it's been a little more struggling. Rönnskjær has had issues with weak production, hard hit by the winter conditions, and then a little bit difficult getting it fully up to speed. In Haiavalta, also weak production coming partially from the political strike that hit Haiavalta pretty hard, but also some other process disturbances. In Kokkola, actually very good and stable production. If it wouldn't have been for the political strikes, we could have had a very good quarter in Kokkola. In Odda, we are having the first full quarter with the cell house number four permanently closed, which is part of the extension project that it will go down. So we have a little bit of a different baseline, but according to that one, it's been producing relatively well, and our small lead smeltery in Bergse has been producing quite well. If we then look over to the financial summary, I will give it over to you, Håkan, to go through the financial numbers.

Thank you, Michael, and good morning. Well, just to recapitulate the numbers a bit, we have reported an EBIT excluding process inventories of 1.2 billion, capex of 3.4, and a cash flow of a negative 1.5 billion. Looking by business areas and comparing to the previous quarter, Q4, mines are on a similar level. We had grades a bit on the low side in ITEC this quarter within normal variations. But on the other hand, we had very strong throughput, for example, in Garpenberg. Smelters is down 505 million compared to 985 last quarter. Smelters is where we see most of the impact from the political strikes and the cold weather in the start of the quarter. And then finally, other N eliminations, a negative 2.41. This varies over time, but this is also where we see quite a bit of impact from the strikes as material have piled up. Looking at the profit deviation year-in-year, comparing Q1 of this year to Q1 of last year, we are down. Prices and terms are down by about 1 billion. In there, metal prices explains roughly 700 million krona. And this is primarily zinc and nickel coming, that has decreased compared to last year. We also see lower currencies, lower premiums, and byproduct prices, each about 100 million negative on this change, and then lower treatment charges. When it comes to the TECs, the treatment charges, we do not have the full effect yet in this quarter. When looking at volumes and cost and so on, the care maintenance of Tara, of course, is a very important part. So looking at the volume, which is 1.379 down, and backing out the effect of Tara in care maintenance, we have about 700 million volume decline left. The political strikes and the cold weather add up to about 500 million altogether in the quarter. And then we have a significant effect from the lack of a tank house after the fire in Rönnskär. As you recall, we have guided for about a billion lost profit per quarter as a result of that. And this is, of course, a part in this comparison. Also, we have slightly lower grades in Itik. Costs are lower than last year. Again, Tara being in care and maintenance explains a big part of it, but we have also seen lower costs for energy and consumables in this quarter. Moving on to the next comparison, comparing Q1 of this year with Q4 of last year, the sequential comparison. Again, prices are down. We have about 100 million negative impact from currencies and about 150 million negative impact from lower premiums. TCs also has a negative impact, but again, we haven't seen the full impact this quarter yet. Volumes are down 600 million. Out of that, 500 million is what we've communicated around cold weather and strikes. And in addition, we have a negative impact of about 150 million connected to the lower grades this quarter in ITEC. And again, on the cost side, slightly lower costs than last quarter. We had some one-off maintenance costs in ITEC last quarter. In addition, we see a slightly lower cost for energy and consumers. Moving on then to the cash flow. It's a negative 1.5 billion. We are in a peak spending in the ODA project, which is visible in these numbers. And I think there are two parts of this cash flow that I would like to comment a bit more on. One is the cash flow from working capital that came out clearly better than we expected and clearly better than what we have indicated in previous calls. First of all, the strike was well managed by our Finnish units. which meant that we tied less capital than expected. We also had delays in incoming vessels, which meant that some concentrate payments that we expected to do before the quarter end has been pushed over to April. And that means that we have been tying a bit more working capital in the earlier parts of April. The second part that stands out here is the paid tax. As we talked about in the previous webcast connected to after the Q4 closing, we had an unusually low tax paid in Q4, and we talked about a significant amount in catching up now in Q1, and that is exactly what has happened. As you can see, the taxes paid this quarter is on the same level as last year in spite of lower earnings, and that will of course normalize as we go forward in the year. Finally, then, on the balance sheet and capital structure, we are at a gearing of around 20%. And the net payment capacity is just short of 15 billion Swedish kronor, so a robust balance sheet and a robust financing supporting us going forward. So with that, I hand over again to Michael.